Senior politician KVP Ramachandra Rao, Ukrainian tycoon named in $18.5 million mine scam

Hyderabad: Dr K.V.P. Ramachandra Rao, senior politician and close adviser of late chief minister Y.S. Rajasekhar Reddy, has been named along with Ukrainian industrialist Dmitry Firtash and four others by a US grand jury for their suspected roles in an $18.5 million scheme to bribe Indian officials for a titanium mining contract in Andhra Pradesh, the US Justice Department said on Wednesday.

Mr Firtash, who was arrested in March in Austria, was allegedly the mastermind behind the multimillion-dollar scam, said US Justice authorities. He had also allegedly met Dr YSR to discuss a joint venture between his company and the state government.

Dr Ramachandra Rao was not available for comment.

Beginning in 2006, the defendants allegedly conspired to pay at least $18.5 million in bribes to secure licences to mine minerals in AP. The mining project was expected to generate more than $500 million annually from the sale of titanium products, including sales to an unnamed firm, identified as “Company A”, headquartered in Chicago.

The indictment alleges that one of the accused, P. Sunderalingam, a Sri Lankan national, met Dr Ramachandra Rao to allegedly determine the total amount of bribes to be given, and advised others on the results of the meeting.

Mr Sunderalingam identified various foreign bank accounts held in the names of nominees outside India that could be used to “funnel bribes” to Dr Ramachandra Rao who allegedly solicited bribes for himself and others in return for approving licences for the project.

Mr Sunderalingam allegedly warned other defendants concerning the threat of a possible law enforcement investigation of the project. In April 2006, Bothli Trade, a subsidiary company owned by Mr Firtash’s Group DF, and the government of AP, had agreed to set up a joint venture to mine various minerals, including ilmenite, a mineral which may be processed into various titanium-based products.

In February 2007, Company A entered into an agreement with another subsidiary company of Group DF, Ostchem Holding, through Bothli Trade, to work towards a further agreement that would allow Bothli Trade the ability to supply £5 million to £12 million of titanium sponge from the Indian project to Company A on an annual basis.

The mining project required licences and approval of both the AP state government and the Central government before the licences could be issued.

As alleged in the indictment, the accused 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.