Talk about the long arm of the law. In an unprecedented case, the US Justice Department has indicted a sitting Rajya Sabha MP from Andhra Pradesh in a bribery and corruption case that took place in India, banking on the fact that US financial institutions were used in the transactions. Six other foreign nationals, including a Ukrainian billionaire and an Indian-American businessman, were also indicted in the same case.
According to a federal indictment unsealed on Wednesday, beginning in 2006, Rajya Sabha MP KVP Ramachandra Rao, an acolyte of the former Andhra chief minister YS Rajasekhara Reddy, and five other defendants, allegedly conspired to pay at least $18.5 million to Indian officials in bribes to secure licences to mine minerals in Andhra Pradesh. The mining project was expected to generate more than $500 million annually from the sale of titanium products, including sales to an unnamed “Company A,” headquartered in Chicago.
Among the companies involved in the conspiracy was Group DF Limited, a British Virgin Islands company controlled by Ukrainian billionaire Dmitry Firtash. Group DF companies include: Ostchem Holding AG, an Austrian company in the business of mining and processing minerals, including titanium; Global Energy Mining and Minerals Limited, a Hungarian company, and Bothli Trade AG, a Swiss company, for which Global Energy Mining and Minerals was the majority shareholder.
In April 2006, Bothli Trade and the Andhra Pradesh government agreed to set up a joint venture to mine various minerals, including ilmenite, a mineral that may be processed into various titanium-based products such as titanium sponge. In February 2007, Company A entered into an agreement with Ostchem Holding, through Bothli Trade, to work toward a further agreement that would allow Bothli Trade the ability to supply 5 million to 12 million pounds of titanium sponge from the Indian project to Company A on an annual basis. The mining project required licences and approval of both the Andhra Pradesh state government and the central government of India.
According to the indictment, the defendants “used US financial institutions to engage in the international transmission of millions of dollars for the purpose of bribing Indian public officials to obtain approval of the necessary licences for the project.” They allegedly financed the project and transferred and concealed bribe payments through Group DF, and used threats and intimidation to advance the interests of the enterprise’s illegal activities.
Firtash, the indictment said, was the leader of the enterprise and he allegedly met with Indian government officials, including then chief minister YS Rajasekhara Reddy, to discuss the project and its progress, and authorized payment of at least $18.5 million in bribes to both state and central government officials in India to secure the approval of licences for the project. Firtash also allegedly directed his subordinates to create documents to make it falsely appear that money transferred for the purpose of paying these bribes was transferred for legitimate commercial purposes, and he appointed subordinates to oversee efforts to obtain the licences through bribery.
The indictment also named Gajendra Lal, 50, an Indian national and permanent resident of the United States, who was allegedly the fixer and who recommended whether, and in what manner, to pay certain bribes to government officials. The indictment lists 57 transfers of funds between various entities, some controlled by Group DF, in various amounts totaling more than $10.59 million beginning April 28, 2006, through July 13, 2010.
The indictment, involving an Indian lawmaker, is unprecedented, and is clearly a slap in the face for India, with its dreadful reputation for corruption. But it also opens a can of worms on whether an Indian MP can be tried in a US court for acts of bribery that allegedly took place in India.
In fact, the statements by the DoJ and the FBI about the case records and appreciates the “significant assistance” received from law enforcement counterparts in Austria and Hungary, where Firtash was arrested and released on bail of $174 million last month subject to his extradition, but it makes no mention of Indian cooperation or what fate awaits Rao.
But in remarks that should shame New Delhi, the US officials prosecuting the case warned that the indictment is an “unmistakable message that we will root out and attack foreign bribery and bring to justice those who improperly influence foreign officials, wherever we find them.”
“Criminal conspiracies that extend beyond our borders are not beyond our reach,” said US attorney Zachary Fardon of Northern Illinois, which handled the case. “We will use all of the tools and resources available to us to ensure the integrity of global business transactions that involve US commerce.”