Jury terms it $18.5 mn conspiracy to secure mining licences
In a new embarrassment to the Congress on the eve of general elections, a US grand jury has indicted a party MP from Andhra Pradesh and five others for an alleged international conspiracy to pay at least $18.5 million in bribes to State and Central Government officials to allow the mining of titanium minerals in Andhra Pradesh.
A federal indictment, returned under seal in June 2013 and unsealed on Wednesday in Chicago, charges KVP Ramachandra Rao, a Congress member of Rajya Sabha and close advisor to the late Chief Minister YS Rajasekhara Reddy, and five others with one count each of racketeering and money laundering conspiracy, and two counts of inter-state travel in aid of racketeering.
Apart from the 65-year-old Rao, others charged include Ukrainian gas tycoon Dmitry Firtash, aka DF, 48, US-based Indian national Gajendra lal, 50, Hungarian businessman Andras Knopp, 75, Sri lankan national Periyasamy Sunderalingam, 60, and Ukrainian national Suren Gevorgyan, 40. While Firtash, dubbed the leader of the enterprise, was arrested in Vienna, Austria last month and then released on bail, the other five defendants remain at large.
“Firtash allegedly met with Indian Government officials, including Chief Minister (YS Rajaeskara) Reddy, to discuss the project and its progress, and authorised payment of at least $18.5 million in bribes to both State and Central Government officials in India to secure the approval of licenses for the project,” charges the indictment.
Rao, it alleges, solicited bribes for himself and others in return for approving licences for the project, and that he warned other defendants concerning the threat of a possible law enforcement investigation of the project. It further alleges that Sunderalingam met with Rao to determine the total amount of bribes and advised others on the results of the meeting, and he identified various foreign bank accounts held in the names of nominees outside India that could be used to funnel bribes to Rao.
Noting that the alleged conspiracy by the six defendants began in 2006, the indictment goes on to list 57 transfers of funds between various entities in various amounts totalling more than $10.59 million beginning April 28, 2006 through July 13, 2010. Some of the entities were controlled by Group DF, belonging to Ukrainian industrialist.
Overall, the indictment estimates that 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.
“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 licenses for the project,” the indictment alleges, adding: “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.”
It said Firtash also directed his subordinates to create documents to make it falsely appear that money transferred for the purpose of paying the bribes was transferred for legitimate commercial purposes, and he appointed various subordinates to oversee efforts to obtain the licenses through bribery.
As for lal, an Indian national with permanent residence in the US, the indictment alleges that he reported to Firtash and Knopp on the status of obtaining licenses, and recommended whether, and in what manner, to pay certain bribes to Government officials.
“Fighting global corruption is part of the fabric of the Department of Justice,” said Acting US Assistant Attorney General O’Neil, adding: “The charges against six foreign nationals announced today send the 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.”
Firtash’s Group DF is described as an international conglomerate of companies owned by Group DF limited, a British Virgin Islands company. Its companies include Ostchem Holding AG in Austria engaged in 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 which may be processed into various titanium-based products such as titanium sponge, a porous form of the mineral that occurs in the processing of titanium ore.
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 indictment says, noting that the mining project required licences and approval of both the Andhra Pradesh state government and the central government of India before the licenses could be issued.