Six Defendants Indicted In Alleged Conspiracy To Bribe Government Officials In India To Mine Titanium Minerals
CHICAGO — A federal indictment returned under seal in June 2013 and unsealed today charges six foreign nationals, including a Ukrainian businessman and a government official in India, with participating in an alleged international racketeering conspiracy involving bribes of state and central government officials in India to allow the mining of titanium minerals. Beginning in 2006, the defendants allegedly conspired to pay at least $18.5 million in bribes to secure licenses to mine minerals in the eastern coastal Indian state of Andhra Pradesh. The mining project was expected to generate more than $500 million annually from the sale of titanium products, including sales to unnamed “Company A,” headquartered in Chicago.
One defendant, DMITRY FIRTASH, aka “Dmytro Firtash” and “DF,” 48, a Ukrainian businessman, was arrested March 12 in Vienna, Austria. Firtash was released from custody on March 21 after posting 125 million euros (approximately $174 million) bail, and he pledged to remain in Austria until the end of extradition proceedings.
Five other defendants remain at large: ANDRAS KNOPP, 75, a Hungarian businessman; SUREN GEVORGYAN, 40, of Ukraine; GAJENDRA LAL, 50, an Indian national and permanent resident of the United States who formerly resided in Winston-Salem, N.C.; PERIYASAMY SUNDERALINGAM, aka “Sunder,” 60, of Sri Lanka; and K.V.P. RAMACHANDRA RAO, aka “KVP,” and “Dr. KVP,” 65, a Member of Parliament in India who was an official of the state government of Andhra Pradesh and a close advisor to the nowdeceased chief minister of the State of Andhra Pradesh, Y.S. Rajasekhara Reddy.
“Criminal conspiracies that extend beyond our borders are not beyond our reach,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois. “We will use all of the tools and resources available to us to ensure the integrity of global business transactions that involve U.S. commerce,” he said.
“Fighting global corruption is part of the fabric of the Department of Justice,” said Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division. “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.”
Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, said: “This case is another example of the FBI’s willingness to aggressively investigate corrupt conduct around the globe. With the assistance of our law enforcement partners, both foreign and domestic, we will continue to pursue those who allegedly bribe foreign officials in return for lucrative business contracts.”
The five-count indictment was returned under seal by a federal grand jury in Chicago on June 20, 2013. All six defendants were charged with one count each of racketeering conspiracy and money laundering conspiracy, and two counts of interstate travel in aid of racketeering. Five defendants, excluding Rao, were charged with one count of conspiracy to violate the federal Foreign Corrupt Practices Act.
As described in the indictment, Firtash controls Group DF, an international conglomerate of companies that was directly and indirectly owned by Group DF Limited, a British Virgin Islands company. 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 state government of Andhra Pradesh 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 entering into a supply agreement in which Bothli Trade would sell 5 million to 12 million pounds of titanium sponge from the Indian project to Company A on an annual basis. The mining project required licenses and approval of both the Andhra Pradesh state government and the central government of India before the licenses could be issued.
The racketeering conspiracy count alleges that the defendants:
- used U.S. 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;
- used Group DF, including its business reputation and financial resources, to advance, participate in, and finance the project, as well as to fund, transfer, and conceal bribe payments connected with the project; and
- used threats and intimidation to advance the interests of the enterprise’s illegal activities.
According to the indictment, Firtash was the leader of the enterprise and oversaw, directed and guided certain of its illegal activities. Firtash allegedly:
- caused the direct and indirect participation of certain Group DF companies in the project;
- met with Indian government officials, including Chief Minister Reddy, to discuss the project and its progress;
- authorized 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;
- 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
- appointed various subordinates to oversee efforts to obtain the licenses through bribery.
Knopp allegedly supervised the enterprise and, together with Firtash, met with Indian government officials. Knopp also met with Company A representatives to discuss supplying titanium products from the project. Gevorgyan allegedly traveled to Seattle and met with Company A representatives. Gevorgyan also engaged in other activities, including allegedly signing false documents, monitoring bribe payments, and coordinating transfers of money to be used for bribes. Lal, also known as “Gaj,” allegedly engaged in similar activities, 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.
Sunderalingam allegedly met with Rao to determine the total amount of bribes and advised others on the results of the meeting, and identified various foreign bank accounts held in the names of nominees outside India that could be used to funnel bribes to Rao. Rao allegedly solicited bribes for himself and others in return for approving licenses for the project, and warned other defendants concerning the threat of a possible law enforcement investigation of the project.
As part of both the racketeering and money laundering conspiracies, the indictment alleges that one or more of the defendants caused funds to be transferred to and from the United States to promote the bribery of public officials in India. The indictment lists 57 transfers of funds between various entities, some controlled by Group DF, in various amounts totaling $10,597,050, beginning April 28, 2006, through July 13, 2010.
The indictment seeks forfeiture from Firtash of his interests in Group DF Limited and its assets, including 14 companies registered in Austria and 18 companies registered in the British Virgin Islands, as well as 127 other companies registered in Cyprus, Germany, Hungary, the Netherlands, Seychelles, Switzerland, the United Kingdom, and one unknown jurisdiction, and all funds in 41 bank accounts in several of those same countries. Further, the indictment seeks forfeiture from all six defendants of more than $10.59 million.
The charges in the indictment carry the following maximum penalties on each count: racketeering conspiracy ― 20 years in prison and a $250,000 fine; money laundering conspiracy ― 20 years and a $500,000 fine, or a fine totaling twice the value of the funds involved in the money laundering; interstate travel in aid of racketeering ― five years and a $250,000 fine; and conspiracy to violate the Foreign Corrupt Practices Act ― five years in prison and a $250,000 fine. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
The case is being investigated by the Chicago Office of the FBI. The government is being represented in court by Assistant U.S. Attorneys Amarjeet Bhachu and Michael Donovan, and Trial Attorney Ryan Rohlfsen, of the Criminal Division’s Fraud Section.
The Justice Department has worked closely with and has received significant assistance from its law enforcement counterparts in Austria, as well as the Hungarian National Police, and greatly appreciates their assistance in this matter. Significant assistance was also provided by the Criminal Division’s Office of International Affairs.
An indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proof beyond a reasonable doubt.