Tag Archives: Brazil

CBI finds Embraer deal fixer, may unmask bribe recipients

TNN | Updated: Sep 29, 2016,

embraer-29-sep-2016NEW DELHI: CBI claimed on Wednesday that it has managed to track down a middleman, a foreign national, who was allegedly paid $5.5 million as commission by Brazilian company Embraer to bag a Rs 1,350 crore ($208 million) jet deal with India in 2008.

Sources said investigation has established that the payment was linked to the sale of jets to India. Although sources refused to identify the “middleman” or spell out his nationality citing confidentiality clause undergirding cooperation among investigating agencies, they said he is a controversial figure and has been known to be conduits for arms deals. “We will ask Embraer why did they pay such a big amount to the gentleman in connection with the deal with Defence Research and Development Organisation (DRDO) for airborne surveillance systems,” said a CBI officer, adding that the breakthrough could put the agency on the trail of other beneficiaries.
CBI sources said they will approch law agencies of some countries, including Brazil and UK, to get details on him and other aspects like the mode of payment. “That is how this business functions. The defence contractor pays the money to the middleman who, after retaining his own share, distributes the money to those who may help him swing the deal,” said a source.

DRDO to seek explanation from Embraer over kickback allegation

By: PTI | New Delhi | Published:September 10, The New Indian Express

The deal was signed in 2008 between Embraer and the DRDO for three aircraft equipped with indigenous radars for AEW&C (airborne early warning and control systems).DRDO_Logo_New copy

 

India’s defence research agency DRDO will seek explanation and details from Brazilian aircraft maker Embraer over alleged payment of kickbacks in the USD 208-million jet deal inked during the UPA regime. After receipt of information by the Defence Research and Development Organisation (DRDO), further steps may be initiated, the Defence Ministry said today after it emerged that the 2008 deal has come under the scanner of US authorities which have been probing Embraer for alleged payment of bribe to secure contracts.
“DRDO to seek explanation and details from manufacture of Embraer aircraft on media reports on aircraft deal signed in 2008. “On receipt of information by the DRDO, further steps may be initiated,” the Ministry said. The deal was signed in 2008 between Embraer and the DRDO for three aircraft equipped with indigenous radars for AEW&C (airborne early warning and control systems). The company has been under investigation by the United States Justice Department since 2010 when a contract with the Dominican Republic raised the Americans’ suspicions.
Since then, the investigation has widened to examine business dealings with eight more countries. “Investigations that have been opened by the government of the United States to establish whether Embraer paid bribes in order to obtain contracts abroad have affected deals that the Brazilian company closed with Saudi Arabia and India,” Brazalian newspaper Folha De São Paulo reported. It is suspected that a leading Indian middleman based in UK was roped in for the deal. DRDO chief S Christopher, who headed the AEW&S programme earlier, did not pick up calls or respond to messages.
Embraer is cooperating with the investigations and announced in July that it was expecting to reach a deal soon with American authorities, the paper said. The company has put USD 200 million aside to pay any eventual fines that come about as a result of the process. The company has not released details regarding the state of the investigations, but three people who have been following the case have confirmed to Folha that the deals concluded in Saudi Arabia and India are being examined, the paper reported.
In both cases, suspicions were underlined in May this year when an employee with more than 30 years at the company reached a plea-bargain agreement in investigations being conducted by the Federal Public Prosecutor’s Office in Brazil. Albert Phillip Close, Manager of Embraer’s defence area, told Prosecutor Marcello Miller that he had heard a former sales director who worked in Europe admit to American investigators the payment of commissions to facilitate the sale of aircraft to the Saudis.
In November of 2010, the company announced the delivery of two Embraer 170 executive jets to the Saudi Arabian
state-owned oil company Aramco. The amount of the deal was not announced at the time.

 

The Missile that Cannot Fire – Long delays, cost escalation damage DRDO’s reputation

Amarnath K, Menon and  Gaurav C. Sawant – April 13, 2012 – India Today 

The Defence Research and Development Organisation (DRDO) was set up in 1958 with a vision to “provide our defence services a decisive edge by equipping them with internationally competitive systems and solutions”. The DRDO has clearly failed in its mission.

There is no bigger indictment of India‘s premier organisation for research and development in military hardware than the fact that 54 years after its establishment, India still imports 70 per cent of its equipment requirements. In 1997, India best known defence bureaucrat and the then scientific adviser to defence minister, APJ Abdul Kalam, had said that India should bring the hare of imports in defence equipment purchases down to 30 per cent by 2005. No progress has been made. The percentage is still 70-30 in favour of imports.

DRDO`s list of successes is short-primarily the Agni and Prithvi missiles. Its list of failures is much longer.The Light Combat Aircraft (LCA) project, which was commissioned in 2001, is running late by four years. The costs have gone up from an original estimate of around Rs 3,300 crore to over Rs 5,780 crore. The Kaveri Engine for LCA is running late by 16 years and the cost has escalated by around 800 per cent.
In 2011, the Comptroller and Auditor General (CAG) put a serious question mark on drdo’s capabilities. “The organisation, which has a history of its projects suffering endemic time and cost overruns, needs to sanction projects and decide on a probable date of completion on the basis of a conservative assessment of technology available and a realistic costing system,” its report stated.

The CAG report also revealed that not all technologies developed by DRDO were suitable for use by the armed forces. The three services have rejected 70 per cent of the products developed at the Armament Research and Development Establishment (ARDE), Pune, in the last 15 years costing Rs 320 crore because the products did not meet their standard and requirement, The CAG report stated that in order to form a fair and balanced view of the success of the projects undertaken by drdo, 46 completed and nine ongoing projects worth Rs 387.35 crore were scrutinised in February 2011. Of the 46 completed and closed projects, only 13 closed projects, wrapped up at a cost of Rs 68 crore, underwent production. “Without close synergy between the users and the technology development agency, much of the development efforts would go in vain, as the success rate of projects in ARDE amply demonstrates,” the report said.

The army is not impressed by DRDO`s performance either. Says Major-General S.V. Thapliyal, a former deputy director-general for perspective planning at army headquarters in Delhi, “DRDO promises to manufacture. It nixes our plans to acquire from abroad; It does not meet the deadline. Worse, it does not maintain quality either. The soldier, the end user, is the worst sufferer.”

General V.P. Malik, who was chief of army staff during the Kargil War, has an interesting incident to narrate in his book Kargil From Surprise to Victory. In 1997, the army finalized plans to acquire the AN/TPQ-37 Fire finder radars from the US. Prices were negotiated and just before purchase, drdo offered to manufacture them at half the price and within two years. The government shot down the army’s plans to buy these radars. In 1999, during the Kargil War, the radars were desperately needed. Neither had DRDO manufactured them nor could they be procured from the US (post-1998 Pokhran tests there was an arms embargo). Several lives were lost in Pakistani shelling. Wlien Indo-US relations improved, India did buy these radars in 2003, but at almost twice the initial price. “The problem with drdo is that it is big on promise and small on delivery. There is no accountability in the system,” says Malik.

DRDO continues to mislead. On April 4, it claimed it had achieved a major milestone on an “indigenous” programme to develop a sophisticated radar to monitor the Indian airspace. The aircraft on which the radar is mounted—a modified Embraer EMB 1451-is imported from Brazil. drdo had to resort to the Embraer aircraft because its own efforts at producing an indigenous carrier had ended in disaster. Project Guardian Airawat was stalled in 1999 when its HS-748 turboprop aircraft crashed, killing eight crew members-engineers, scientists and Indian Air Force (IAF) officers-on board.
Under a Rs 1,050 crore agreement, Brazil’s Embraer will now act as the pverall systems integrator for the “indigenous” project, supplying the three jets, mounting the radar and electronics onto the plane’s fuselage and ensuring that the altered jets retain acceptable flight performance.

According to its original 2004 timeline, this project was to be completed by 2011. Now the delivery of the remaining two modified Embraer aircraft is only expected by mid-2013. The project will not be complete until 2014. Even then there are serious flaws in the project. IAF has pointed out that the Embraer EMB 1451 cannot fly above 4 0,000 ft and therefore is only of limited use in surveillance. “DRDO has a history of claiming foreign designs as its own, like the Arjun tank which is a derivative of the German Leopard,” says a source in the agency. ~
The technology development agency is also largely responsible for the fact highlighted by General V.K. Singh that 97 per cent of the army’s air defence is obsolete. The CAG report lists seven requirements of the army for air defence guns and the project status report. CAG notes the end result: “Even though three R&D projects and one staff project were undertaken, the air defence gun system could not be developed by DRDO to satisfy the frequently revised requirement of the user.”

Army air defence sources say DRDO is tinkering with World War II equipment instead of working on cutting-edge technology. “The chief downplayed the state of affairs. It is in dire straits,” says a top-ranking air defence officer.

“The air defence is in a very-sorry condition,” says Air Marshal A.K. Singh, former air officer commanding-in-chief, Western Air Command. “DRDO is not able to service the equipment. Even if systems are acquired from abroad and DRDO or Hindustan Aeronautics Limited is meant to service it, it fails.This leaves critical gaps in national defence,” he says.

The Government had constituted a committee for the first-ever external review of the agency in February 2007. The committee chaired by P. Rama Rao, ex‘secreta1y, Department of Science and Technology and former director, Defence Metallurgical Research Laboratory, Hyderabad, suggested that DRDO be restructured to make it a leaner organisation. It also recommended the setting up of a commercial arm of the organisation to make it a profitable entity, besides cutting back on delays in completing projects. “Delivery delayed is delivery denied,” said
Defence Minister A.K. Antony on delays in DRDO projects. But little progress has been made in the last five years on implementing the committee’s suggestions.

DRDO chief V.K. Saraswat is eager to put his house in order. He has called for the setting up of a Defence Technology DRDO chief V.K. Saraswat is eager to put his house in order. He has called for the setting up of a Defence Technology Commission as well as a bigger role for DRDO in picking production partners for products developed by the agency. Instead of the current practice of the Ministry of Defence arbitrarily nominating a defence public sector undertaking or an ordnance factory to build the product, usually when development is almost complete, DRDO would be able to select a capable partner company from the outset, from the private sector if necessary.

The defence organisation, which has an annual budget of over Rs 10,000 crore, now has no choice but to reinvent itself. The agency‘s research has drifted away from its core competence in recent times. It has been accused of “wasting time and precious resources” being engaged in research and development of technique for detection of pesticides in fruits, technology for dengue control, dental implants, foldable stretchers and berry juice.
The moribund agency is also suffering from employee attrition. Over the past five years, while the report of the Rama Rao Committee has languished, around 1,700 of its 7,900 engineers and scientists have left for better opportunities in private companies. The depletion of talent will be the last stage in what cynical insiders say is the process of converting DRDO into a dodo.