India targets Swiss-based arms firm in corruption probe

Sat Jun 9, 2012 9:19am EDT
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By Satarupa Bhattacharjya and Arup Roychoudhury

NEW DELHI (Reuters) - An Indian businessman was charged on Saturday with attempting to bribe government officials in connection with allegations that Swiss-based Rheinmetall Air Defence AG paid him $530,000 to use his influence to stop the company from being blacklisted.

Abhishek Verma and his wife were arrested on Friday after the Central Bureau of Investigation (CBI) launched raids on 10 properties in and around New Delhi, including the home of a former Rheinmetall representative in India. The CBI said in a statement that it was investigating both Verma and the company.

Verma and his wife, Anca Neacsu, were charged in a New Delhi court under the Prevention of Corruption Act and face up to five years in prison if convicted. The magistrate ordered the couple to remain in custody for seven days for further questioning.

Earlier this year Rheinmetall Air Defence, part of Rheinmetall AG RHMG.DE, a German automotive parts and defence group, was placed on a blacklist of arms firms banned from doing business in India following corruption allegations that it strongly denied.

India's Defence Ministry has put in place strict guidelines for arms deals in an effort to crack down on bribery and corruption at a time when Asia's third-largest economy is on a weapons-buying spree to modernise its military. India is the world's largest arms buyer.

Documents provided to the CBI by C. Edmonds Allen, an American and a former business associate of Verma, show a $530,000 credit transfer from Rheinmetall to a New York bank account belonging to a U.S.-based company, Ganton Limited, which the CBI alleges was owned by Verma.

The documents, which have been made public, include a purchase order for "consultancy services" from Rheinmetall for the same amount.

A representative of Rheinmetall in New Delhi told Reuters she would seek an official company response to the CBI investigation but that it would be difficult to get because it was the weekend. There was no immediate response from Rheinmetall officials in Switzerland or Germany.   Continued...