Embraer Deal: CBI Probe to Continue Despite US Settlement, Says Manohar Parrikar

New Delhi: Brazilian aircraft manufacturer Embraer cannot escape Indian laws just because it has struck a settlement with American authorities over corruption in sale of planes to India and three other countries, Defence Minister Manohar Parrikar said on Tuesday.

He said a new blacklisting policy will be finalised next month.

"In American law, criminal processes can be compounded (settlement through payment of fines). However, in India, criminal law is not compounded unless the acts are of very minor nature," Parrikar said.

On being asked whether the three planes supplied by Embraer to the IAF for Airborne Early Warning and Control System (AEW&CS) will be grounded, the Defence Minister said there was no question of grounding the planes.

"I can assure you that national requirement is a priority. In fact, I am coming out with a proposal or guidelines for blacklisting. The next Defence Acquisition Council (DAC) will finalise it," he said. "It cannot be a knee jerk reaction. Proper decision making is required," he added.

Embraer has agreed to pay over $205 million to resolve charges of corruption and making bribe payments to officials in foreign nations, including $5.76 million allegedly being paid to an agent in India, in connection with the sale of three military aircraft for Indian Air Force.

Under the settlement, apart from the $107 million penalty to the US Justice Department as part of a deferred prosecution agreement, Embraer must also pay more than $98 million in disgorgement and interest to the Securities and Exchange Commission (SEC).

According to the company's admissions, Embraer executives and employees paid bribes to government officials and falsified books and records in connection with aircraft sales to foreign governments and state-owned entities in multiple countries.

Parrikar said the Embraer deal was being discussed and efforts were being taken to fine-tune it.

"The basic concept is that a criminal activity should be punished with a ban. But to what extent the ban should be, will be decided as per the national security. Giving exemption will also be based on national security," he said.

"If I have a platform where a company has been banned, I cannot stop operating the platform, because the company which is now blacklisted had supplied me the platform. Whose loss is it?," he asked.