New Delhi: As the Opposition clamours for action against Indian businessman Gautam Adani following his indictment by American prosecutors on the charge of bribery, there are two precedents of Indian law enforcement agencies initiating criminal cases in wake of revelations made by the US’ Department of Justice (DOJ).
In October 2016, the Central Bureau of Investigation (CBI) had filed a case against officials of the Ministry of Defence (MoD) under provisions of criminal conspiracy and the Prevention of Corruption Act (PCA) in connection with the deal of three aircraft from Brazilian aircraft manufacturer Embraer.
Similarly, it had booked unknown officials of the National Highway Authority of India (NHAI) and US-based engineering firm CDM Smith on the charge of bribery in February 2018.
The CBI action came months after these companies made disclosures to the US authorities on paying bribes while carrying out transactions with the Indian government.
While these two cases were not filed explicitly on the disclosures made by these companies in America, Experts point out that the CBI has the mandate to start an inquiry against government officials who may be involved in the Adani bribery scandal, based on findings made public by the DOJ in the indictment.
A former senior CBI officer said that the CBI can certainly begin a preliminary inquiry into the matter, since there is alleged involvement of government officials and that it falls under the Prevention of Corruption Act.
“There are precedents of the CBI starting an investigation following indictments in the US. They can do it in this as well, provided there is intent. But they will have to write to the US authorities for them to share whatever information they have regarding it, to take any action. If there are allegations of corruption and involvement of senior government functionaries, then it definitely can be probed by the agency,” the officer told ThePrint.
Senior advocate Vikas Pahwa told ThePrint that the allegations of bribery involving Gautam Adani reportedly pertain to acts that allegedly occurred in India and involve Indian government officials.
Such allegations fall squarely under the purview of Indian law, specifically the PCA, and under this framework, any investigation or prosecution must be conducted by competent Indian authorities, such as the CBI or the Anti-Corruption Branch of the police, and tried in Indian courts, Pahwa said.
ThePrint takes a look at previous instances when the CBI initiated investigation based on somewhat the same information made available by the US Department of Justice in the above-mentioned cases.
Also Read: How an indictment works in the US legal system & what comes next for Gautam Adani, others
The Embraer jet case
In October 2016, the DOJ released a deferred prsoecution agreement disclosing Embraer of paying bribes to officials of the four governments, including those of India, for selling its highly specialised military aircraft.
The deferred prosecution agreements are reached between prosecutors and defendants in which the former offers defendants amnesty in exchange for meeting certain requirements such as them accepting facts that without an agreement would support indictment as well paying up hefty penalties.
Before the DOJ went public on 26 October 2016 that Embraer agreed to pay more than $107 mn to settle charges slapped by the US authorities for corrupt practices, the CBI had on 18 October filed a case against unknown MoD officials, the Brazilian aviation firm and middleman Vipin Khanna, Singapore-based Interdev Pvt Ltd, and others.
The US deferred prosecution agreement revealed that Embraer signed an agreement with a UK-based agency on the direction of an agent in January 2005 on the condition of paying Khanna a commission of 9 percent of total value of defence contracts received from the Indian Air Force (IAF).
It further elaborated the process of Embraer getting the contract and said that less than a month after the firm signed an agreement with a UK-based firm, the company signed a MoU with the Defence Research and Development Organisation (DRDO) to help in the development of a new early warning radar system for the IAF. Three years after the original agreement, Embraer got the contract to supply three EMB 145 AEW ‘Netra’ aircraft at the cost of approximately $ 208 mn.
Two months after registering the case, the CBI sent its team to America in December 2016 where they met representatives from the US Department of Justice, the Federal Bureau of Investigation (FBI), the Security and Exchange Commission (SEC) as well as the Federal Prosecutor of Brazil.
The American authorties had found Embraer violated the Foreign Corrupt Practices Act and that its action came under the purview of the Act because the firm was listed on the New York Stock Exchange (NYSE). Bribes were paid based on agreement signed with its US-based susbsidary Embraer Representations LLC, it was found.
Similarly the case of Gautam Adani, his nephew and other top Adani executives came under the jurisdiction of the US authorities such as the Securities and Exchange Commission, as the bribery allegations were made against top executives of the Azure Power Global, which was listed on the NYSE until its delisting in November last year.
In its chargesheet filed on 1 June last year, the CBI alleged that Vipin Khanna received kickbacks of $ 5.76 mn, which was routed through Singapore-based shell company Interdev Aviation which received payment from a Switzerland-based subsidiary of Embraer. Khanna used the kickback to distribute among the MoD officials, it added.
Khanna’s name was removed from the proceedings after his death in 2019.
His son Arvind Khanna along with advocate Gautam Khetan negotiated the kickback amount between Embraer and Khannas along with the director of a Delhi-based firm used for exchange of bribes, according to the CBI chargesheet.
However, the case has not reached even the stage of trial as the CBI conceded in the court in September that the investigation is still ongoing to “unearth the larger conspiracy”. While it filed a status report before the Rouse Avenue Court and sought commencement of trial based on the first chargesheet, the court has refused to go ahead with trial on a “half-baked” chargesheet.
The NHAI bribery case
The case came into the public view in India after a letter by a senior counsel of the DOJ’s Criminal Division dated 21 June 2017 reached the counsel of Boston-based engineering and construction company CDM Smith, informing him of closure of a case of corrupt practices involving its Indian arm.
CDM India paid approximately $ 1.18 mn to NHAI officials for securing a contract between 2011 and 2015, according to the letter.
As the letter created a furore in India, the NHAI released a statement in July 2017, saying that CDM India at the time was barred from participating in the future bidding due to deficiency in one of its projects.
“In view of the seriousness of the charges, NHAI has initiated an internal investigation into alleged payment of bribe money to its officials as reported in the media,” the Authority said in its statement.
Months later in February 2018, the CBI booked unknown officials of the NHAI, CDM Smith and its Indian arm, and its senior executives under sections of forgery and criminal conspiracy along with relevant sections of the PCA. It, however, is yet to file a chargesheet.
Similarly, the Ministry of Railways had also launched an internal inquiry in 2022 after the SEC had revealed that software major Oracle was guilty of creating a pool fund amounting to $ 4 lakh to bribe officials of a railway PSU in 2019 and fined it to the tune of $ 23 mn. The CBI is yet to file an FIR in the case.
(Edited by Tony Rai)
Also Read: How Gautam Adani’s business partners tried to place entire ‘bribery blame’ on him, nephew Sagar