Modi Government's Inaction in Graft Case is Counter to UN Treaty, US Justice Department Suggests

As Modi’s CBI drags its feet, US authorities have also obliquely reminded India of its obligations under the UN Convention Against Corruption and the Palmero Convention

Hyderabad: The US Department of Justice’s (DoJ) decision to expressly link the indictment of a Ukrainian oligarch – accused of orchestrating a bribing conspiracy worth $18.5 million aimed at securing mining permits in India – to organised Russian crime may throw a larger spotlight on the role that senior Congress politician K.V.P. Ramachandra Rao (aka KVP) allegedly played in the affair.

Three years ago, the DoJ made public the indictment of six people including Ukrainian oil and gas magnate Dmytro Firtash and Congress Rajya Sabha MP  KVP. A few months ago, The Wire reported on the American effort to extradite Firtash from Austria and how it had brought the focus back on a now-forgotten mining scandal in Andhra Pradesh that involved Rao –  a politician with deep cross-party connections.

The US effort to extradite Firtash from Austria – where he is currently free on bail – has taken many twists and turns. In early June, the Ukrainian businessman filed a motion in the northern district court of Illinois, asking it to dismiss the international racketeering and bribery charges filed against him. He is currently facing bribery charges on five counts in the Chicago court and faces up to 50 years in prison if the case eventually goes against him.

Last week, US prosecutors filed a 155-page petition in the Chicago court, countering the arguments made by Firtash and Andras Knopp – a Hungarian businessman who was also indicted and is a long-time associate of Firtash.

In its petition, the DoJ has expressly referred to Knopp and Firtash as “upper-echelon associates of Russian organised crime” while reminding the Narendra Modi government, which is yet to properly investigate the Indian end of the case, of its obligations under two international conventions against transnational corruption.

“Firtash and Knopp have been identified by United States law enforcement as two upper-echelon associates of Russian organised crime; their prosecution will disrupt this organised crime group and prevent it from taking further criminal acts within the United States,” the petition said.

“This prosecution therefore seeks to protect this country, its commerce and its citizens from the corrupting influence and withering effects of international organised crime. Moreover, this prosecution also takes aim at the corruption of foreign public officials, a concern that [the US] Congress has identified as a threat to global security.”

Prosecutors reiterated that KVP, a key player in the alleged scam from India, had accepted bribes for himself.

“Defendant Periyasamy Sunderalingam performed several roles on behalf of the enterprise. Among them, he met with Indian public official and defendant K.V.P. Ramachandra Rao (commonly known as and referred to herein as “KVP”) for the purpose of determining the total amount of bribes to be paid to Indian public officials; and monitored bribe payments. KVP served the criminal enterprise by abusing his position as an official of the State of Andhra Pradesh and close adviser to the Chief Minister of Andhra Pradesh to solicit bribes and by agreeing to accept bribe money, including money for his own benefit, in return for the approval of licenses for the project.”

US reminds India of Palermo convention

One of Firtash’s main arguments advanced in favour of dismissing the indictment was to cite inaction by India – the main “venue” in which the crime had taken place. American federal prosecutors, however, have rejected this line of thinking.

“The defendants also argue that their prosecution here is unreasonable under Section 403(2)(g) of the Restatement, which relates to ‘the extent to which another state may have an interest in regulating the activity.’ They claim that here, due to the indictment’s allegation of the violation of Indian anti-corruption laws, ‘India, not the United States, has that interest’,” the petition said.

The prosecutors go onto to argue that the US has obligations under several international conventions – the same obligations that India is also saddled with.

“This is a case that does not concern India alone: this enterprise carried out its illegal activities here, within the territory of the United States, over the span of several years, and it is this country in which the enterprise hoped to sell millions of pounds of illegally obtained goods. That said, both India and the United States have signed international treaties that commit both parties to criminalise efforts to bribe foreign officials; both countries are parties to the Palermo Convention and the UNCAC, which specifically provide that the signatories will take measures to prosecute the bribery of foreign officials.

It is not unreasonable for the United States to comply with its international legal obligations, particularly where India has agreed to participate in the very same international frameworkAnd, if there is any issue that must be resolved with India that is a matter for the political branches to resolve with their counterparts in [India], rather than matters for the judicial branch. ” (emphasis added by The Wire)

Citing the pending nature of  Firtash’s extradition case in Austria,  US authorities also requested the Chicago court to enter an order denying the motions without prejudice to the both Firtash and Knopp’s right to present themselves after the Austrian extradition proceedings have concluded.

“As a matter of international comity, as well as in deference to the orderly process established by the treaty, which represents an international legal obligation of the United States, this court should decline to rule on Firtash’s motion to dismiss until the proceedings in Austria have concluded and he appears here –particularly since his motion was filed after the Austrian appellate court ordered his extradition to the United States,” the petition filed by US authorities said.

Trouble for Trump as Lisa Page recruited  

The Washington Post recently reported that more trouble is in the offing for President Trump as special counsel Robert S. Mueller III had included Lisa Page, a DoJ trial attorney, into his team. Mueller is overseeing the investigation into Russia’s role in the 2016 President election.

“It appears he (Mr Muller) has recruited an experienced Justice Department trial attorney, Lisa Page, a little-known figure outside the halls of Main Justice but one whose résumé boasts intriguing hints about where Mueller’s Russia investigation might lead. Page has deep experience with money laundering and organised crime cases, including investigations where she’s partnered with an FBI task force in Budapest, Hungary, that focuses on eastern European organised crime. That Budapest task force helped put together the still-unfolding money laundering case against Ukrainian oligarch Dmitry Firtash, a one-time business partner of [Paul] Manafort,” a Wired news report stated.

Other media reports have also speculated that Mueller could be investigating potential money-laundering by Trump team members.

India allowed ownership change, APMDC in dark

Why is the Hungarian connection relevant? The mining scandal in Andhra Pradesh goes back to 2006, when Swiss-based Bothli Trade AG, which was part of the OST Chem Holding group owned by Firtash, entered into a memorandum of understanding (MoU) with the Andhra Pradesh Mineral Development Corporation (APMDC) to set up a titanium project in the state.

As per the MoU, a joint venture was formed in which Bothli Trade AG held 74% stake and the remaining stake was owned by APMDC. Later, a private limited company called AP Coastal Sands and Metals Private Limited was incorporated. Gajendra Lal, one of the accused in the present case, was the director of the company.

The shareholding agreement for the JV was drawn up on October 9, 2007 and it was agreed that Bothli Trade AG could only transfer its shareholding after a period of three years.

However, according to Andhra Pradesh government documents accessed by The Wire, Bothli Trade AG had already transferred its share to Global Energy Mining & Minerals Limited (GEMM), a Hungary-based company.

In fact, Bothli Trade AG was taken over by GEMM in May 2007 itself, but this piece of information was deliberately suppressed from APMDC. GEMM, earlier known as Euro Trans Gas (ETG), is also owned by Firtash. Hungarian-born Knopp was Firtash’s second in-charge at the company and was a key person in negotiating new gas trading deals with Kazakhstan, Turkmenistan and Uzbekistan.

According to GEMM, it holds 92.5% stake in Bothili Trade AG. Furthermore, according to AP government documents, GEMM had applied to the finance ministry’s Foreign Investment Promotion Board (FIPB) for approval for investment in AP Coastal Sands and Metals Pvt Ltd, but this information was not passed on by Bothili Trade AG even after the FIPB had given its green signal.

Money was then transferred from Bothli Trade AG to different companies even after GEMM’s take-over. Firtash had seven companies registered in Hungary, according to the indictment. Most of the financial activities took place in Hungary after the share transfer.

Including Page in Muller’s team is therefore a key decision, as media reports indicate she is familiar with the activities of the Russian mafia in Hungary.

Wiretap scenario

Both Firtash and Andras Knopp have protested to the Chicago court that the indictment does not allege the venue in this district was foreseeable to them. But US prosecutors are confident a wiretap phone call recording will prove the charges.

Indeed, according to reports, the US is confident the evidence at trial will show that Firtash and Knopp could foresee the venue of the crime would be the Chicago district. The DoJ will introduce a wiretap phone call demonstrating that Firtash was personally advised by Knopp that the latter planned to travel to Chicago to meet with Company A (the company that would benefit from the Andhra Pradesh mining project, identified by media reports as Boeing Corporation) concerning the project, and will also prove that Firtash gave advice to Knopp about what to do during that meeting.

Since the DoJ’s indictment was unsealed, the National Central Bureau-Interpol CBI, the Hyderabad high court and KVP have played a game of political hot potato with scant progress. Indian investigating agencies have yet to register a formal case.

Gulam Shaik Budan, is a Hyderabad based investigative journalist.