Indian Diplomat Returns Home From U.S. After Fraud Spat

Photographer: Mohammed Jaffer/AP Photo

Devyani Khobragade, who served as India’s deputy consul general in New York, during the India Studies Stony Brook University fund raiser event at Long Island, New York, on Dec. 8, 2013. Close

Devyani Khobragade, who served as India’s deputy consul general in New York, during the... Read More

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Photographer: Mohammed Jaffer/AP Photo

Devyani Khobragade, who served as India’s deputy consul general in New York, during the India Studies Stony Brook University fund raiser event at Long Island, New York, on Dec. 8, 2013.

Devyani Khobragade, the Indian diplomat accused of visa fraud for allegedly underpaying her babysitter, returned home from the U.S. after she was indicted in a case that roiled relations between the two countries.

In fallout from the dispute sparked by the diplomat’s arrest and strip-search in New York, the Obama administration will comply with a demand by the Indian government that it withdraw one U.S. diplomat, State Department spokeswoman Jen Psaki said in Washington. The diplomat wasn’t identified.

“We deeply regret that the India government felt it was necessary to expel one of our diplomatic personnel,” Psaki said at a briefing. “We expect, and hope, that this will now come to closure, and the Indians will now take significant steps with us to improve our relationship and return it to a more constructive place.”

Khobragade, 39, was charged Jan. 9 with making “multiple false representations” to U.S. authorities to obtain a visa for the caretaker, and the State Department later ordered her to leave the country after India denied waiving her diplomatic immunity. She arrived in New Delhi by plane late yesterday local time and left the airport without making a comment.

Khobragade’s return to India may resolve a diplomatic row that threatened to jeopardize a growing economic relationship as annual trade in goods and services between the countries nears $100 billion. The dispute put a cloud over President Barack Obama’s goal of strengthening U.S.-India ties.

Photographer: Emmanuel Dunand/AFP/Getty Images

An Indian national flag flies over India's consulate general building in New York. Close

An Indian national flag flies over India's consulate general building in New York.

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Photographer: Emmanuel Dunand/AFP/Getty Images

An Indian national flag flies over India's consulate general building in New York.

“This isolated episode is not indicative of the close and mutually respectful ties that we share,” White House press secretary Jay Carney told reporters yesterday in Washington.

‘Reputational Harm’

Even though the case is being resolved, “it caused waves that will take time to resolve and it has caused reputational harm on both sides,” P.J. Crowley, a former State Department spokesman, said in an e-mail. “Wounds do heal, but as always, they leave a scar.”

India’s Ministry of External Affairs said yesterday that Khobragade had been transferred to a post in New Delhi and that it had declined a U.S. request to waive her diplomatic immunity.

Strip Search

Khobragade said the charges against her were false and baseless, Press Trust of India reported yesterday, citing comments she gave before boarding the plane back to India.

“Treating a human being in such an inhumane way has been an utter violation of human rights,” Uttam Khobragade, the diplomat’s father and a former Indian bureaucrat, told reporters in televised comments, referring to his daughter. “I’m very grateful to the Indian government. They did everything that could’ve been done.”

Khobragade, first charged Dec. 12, was accused of paying her babysitter about $3.31 per hour, below the New York minimum wage of $7.25 per hour. Her case triggered Indian outrage over reports that she was arrested in front of her daughter’s school in upper Manhattan and then strip-searched while being held with other female suspects. She was released on $250,000 bond, which was unsecured.

Manhattan U.S. Attorney Preet Bharara has said the strip-search was standard practice in an arrest. The incident sparked an uproar in India as the nation of 1.2 billion people prepares for elections in a few months.

‘Temporary Hiccup’

“Ultimately, this will just be a temporary hiccup which won’t prevent India and the U.S. from siding together on more serious issues,” said Harinder Sekhon, who has written two books on India-U.S. relations. “Both sides need to show more maturity and end these tit-for-tat actions, which will only further complicate the relationship.”

The Indian government demonstrated its displeasure through a variety of small reprisals, including removing some security barriers at the U.S. embassy in New Delhi, lifting traffic-violation exemptions for U.S. embassy cars, and ordering the American Center, a venue in central New Delhi for U.S. cultural programs, to halt its activities.

The U.S. countered by postponing anticipated visits to India by Energy Secretary Ernest Moniz and Nisha Desai Biswal, the U.S. assistant secretary of state responsible for India.

Trips Postponed

During a visit in November 2010, Obama called the relationship with India “one of the defining and indispensable partnerships of the 21st century.”

Indian Prime Minister Manmohan Singh, who was Obama’s first official diplomatic guest in 2009, last week described a deal with the U.S. that allowed it to import nuclear technology as his greatest achievement during a decade in power. He told reporters in New Delhi that diplomacy should be given a chance to resolve the recent “hiccups” in relations.

Raymond Vickery, a top U.S. trade official under President Bill Clinton and now a senior director at the Albright Stonebridge Group in Washington, said that expanding trade and investment has been “the underlying driver” in U.S.-India relations.

Speaking before the late legal developments, Vickery said business relations hadn’t yet been hurt by the dispute. The bilateral trade in goods and services reached $92.5 billion in 2012 from $59.9 billion in 2009, the first year of the Obama administration, according to a joint statement following U.S.- India economic talks in October.

Business Ties

Indian foreign direct investment in the U.S. surged 23-fold to about $5.2 billion in the 10 years through 2012, making India one of the fastest growing sources of investment into the U.S., according to the statement.

At a hearing in Manhattan, Khobragade’s lawyer Daniel Arshack said he told her not to board an Air India plane on the afternoon of Jan. 9 because “there was at least a possibility that it would be viewed as flight” from prosecution.

Arshack said his client had “diplomatic status” and told U.S. District Judge Shira Scheindlin that she no longer had jurisdiction over the case.

“I was not willing to permit her to depart without appearing before your honor,” Arshack said. He asked Scheindlin to vacate his client’s bail.

Scheindlin later agreed that Khobragade wouldn’t be accused of bail-jumping if she agreed to the State Department’s request to depart. The judge deferred a decision on bail to a later date.

Diplomatic Status

“We are pleased that the United States Department of State did the right thing today by recognizing the diplomatic status to which Dr. Khobragade has always been entitled,” Arshack said in a statement issued late Jan. 9. He said the government committed a series of “blunders.”

The visa fraud charge against Khobragade carries a maximum prison term of 10 years, while the false statements charge has a maximum term of five years, according to prosecutors in Bharara’s office.

In a contract Khobragade submitted as part of the visa application, the diplomat said she paid the babysitter $9.75 an hour, State Department Special Agent Mark Smith said in the original criminal complaint. In a second contract, the diplomat agreed to pay the babysitter 30,000 rupees a month, or $573, the U.S. said, which came out to $3.31 an hour. New York’s minimum wage is $7.25 per hour.

“Khobragade did not want to pay the victim the required wages under U.S. law or provide the victim with other protections against exploitative work conditions mandated by U.S. law (and widely publicized to foreign diplomats and foreign officials),” according to the indictment.

Job Shift

After her arrest, Khobragade was named by her country to serve as a member of its permanent mission to the United Nations, a position that gave her a higher level of diplomatic immunity than she enjoyed as deputy consul general at India’s consulate general in New York.

The U.S. accepted the request to accredit Khobragade to the UN mission, according to a State Department news release. Seeking to deny such a request would be almost without precedent, except in matters of national security including espionage, the department said.

The U.S. first asked for a waiver of diplomatic immunity, which India subsequently denied, then requested that she return to India, the department said.

The case is U.S. v. Khobragade, 14-cr-00008, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Patricia Hurtado in Federal Court in Manhattan at

pathurtado@bloomberg.net; Terry Atlas in Washington at tatlas@bloomberg.net

To contact the editors responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net; Michael Hytha at mhytha@bloomberg.net; John Walcott at jwalcott9@bloomberg.net

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