The Embraer controversy

In 2013, India was hit with a scandal over their their purchase of AgustaWestland AW101 helicopters to be used as VVIP transports for the Indian president and other officials. The deal was worth $530M USD, and a number of high ranking Indian officials were accused of accepting bribes to allow the deal to go through. Now the Congress party is facing another bribery scandal over a deal to buy AEW&C aircraft from Embraer. Embraer has been under investigation by US officials after a deal made with the Dominican Republic, that was expanded to include deals with Saudi Arabia, India, and six other nations.

In 2008, the DRDO signed a deal with Embraer to buy 3 EMB-145 aircraft to be modified into AEW&C aircraft. They were delivered from 2011 to 2013, and modifications will be completed this year. It's believed that Embraer paid an Indian middleman in the UK to get the deal approved. Meanwhile, Embraer has set aside $200M to pay any fines ordered by the US authorities. An Embraer employee has admitted to hearing a former sales director admit to paying kickbacks before selling 170 executive jets to Aramco, a Saudi owned oil company.

After the August Westland chopper scam, the Congress Party has found itself at the center of yet another potential defence scandal. A Brazilian newspaper reported on Thursday that Brazilian and US authorities were investigating bribes Brazilian aircraft manufacturer Embraer allegedly paid to acquire deals with Saudi Arabia and India. The deal with the Indian government was signed during former Prime Minister Manmohan Singh's tenure.

Here's your 10-point cheat-sheet on the Embraer controversy.

1. A $208 million deal
In 2008, the Defence Research and Development Organization (DRDO) signed a $208 million deal with Embraer for three EMB-145 planes modified to suit the DRDO's and the Indian Air Force's (IAF) requirements. The purchase was made after the UPA governent in 2004 sanctioned a Rs 1,800 DRDO project to develop 3 AEW&C (airborne early warning & control systems) to be mounted on EMB-145 jets.

economictimes.indiatimes.com...

a reply to: Zaphod58

I understand how a deal between a Brazilian firm and the Indian government can be crooked. I don't understand what give the US the right to fine the wrongdoers. I suspect I am missing something pretty obvious here.

a reply to: lacrimoniousfinale

Because a number of sub contractors for Embraer are US based companies, and at least some of the sales are going through the Pentagon Foreign Military Sales office. There are deals in something like 10 countries being scrutinized.

a reply to: Zaphod58

That's great, Zaph, thanks.

a reply to: Zaphod58

I hate to say this but that is really the way international business deals are done. Remember back in the late 70s when Lockheed was accused of bribes to get some business in Germany, Italy, Japan ? I flew the new CYA paperwork hot off the press and the head accountant to Frankfurt for the new document dissemination.

Embraer are the new kids on the block and do not know how to cover their tracks like some of the older and more established companies.

Back then Lockheed was in a world of hurt already with the L-1011 and were very close to going belly up. The government actually floated them a loan if I remember correctly..

It has always seemed to me it is only wrong when they get caught by someone wanting to wield an axe... for otherwise, like I said, that has been and is the way many companies have to do business internationally. Always someone in government or purchasing power who wants a little on the side .....for good luck ..

I have to say it would be so much better if they were the Defense Logistics and Development Organization.

a reply to: Zaphod58

Its a very complex world we live in.

Embraer has agreed to pay $205M in penalties to the US to settle the bribery charges.

www.flightglobal.com...

And now it comes out that a Saudi Aramco employee was found to have taken a bribe from Embraer for the purchase of three aircraft for the oil company. After finding out, the company took the maximum disciplinary actions against the employee. The amount wasn't given by the company, but the US Justice Department says that Embraer paid $1.65M for the contract. Saudi Aramco has since ceased all current and future dealings with Embraer.

www.wsj.com...

www.tradearabia.com...