The Agusta Westland deal along with its excesses has its roots in the past. Back in 1985, India bought 21 Westland helicopters after Miss Thatcher persuaded Rajiv Gandhi as he went against the advice of his experts, who were against the sale. The money for the deal, put at nearly £65 million, came out of Britain’s aid budget, and was given to India specifically for purchasing the helicopters. Westland at the time was a solely British aerospace company that manufactured helicopters after World War II. However, the copters that were sold proved to be a disaster, killing over 10 passengers in two accidents. The whole deal was pushed through as a means of reviving Westland, which, at the time, was reeling under financial burden.
Wolfgang Max Michel Richard, a British businessman, a close aide to the Congress party was the facilitator of this transaction. Years later Christian Michel has filled in his father’s shoes in order to win the ₹36 billion (US$530 million) Indian contract for the supply of twelve AgustaWestland helicopters. In 1991, the Westland helicopters were withdrawn from service on safety grounds, after a number of subcommittee reviews, by the Director-General of Civil Aviation. Russian MI8 choppers were made to continue to serve the purpose for the next eight years. The Indian Air Force planned a proposal to replace the old and over-used MI-8 choppers used by VVIPs. So a global Request for Proposals (RFP) was issued in March 2002. The decision was finalised when George Fernandes was acting as defence minister and Air Chief Marshal S Krishnaswamy was IAF chief.
Several meetings were held between March 2005 and September 2006. With some changes approval for procurement of VVIP choppers were accorded during the tenure of Pranab Mukherjee as defense minister and S P Tyagi as chief of Indian Air Force. On September 27, 2006, RFP was issued to some six vendors. However, only three vendors responded to the RFP. These were Sikorsky from USA; AgustaWestland from UK and Rosoboronexport from Russia. In 2010, AgustaWestland signed a Rs 3,546 crore contract to supply 12 AW-101 helicopters to the IAF through a Special Purpose Vehicle (SPV). Eight of these helicopters were to be used to transport VVIPs such as the President, the Prime Minister, the Vice President and others, while four were to be used for other duties. Finmeccanica edged out Sikorsky’s S-92 Superhawk to bag the contract. The IAF also cited “service ceiling” — the altitude at which a helicopter can fly — and the Mi-8s’ lack of night-flying capabilities to seeking a new fleet of helicopters. The demand originated in 1999 and the tender was put out in 2005. The first tender had a service ceiling requirement of 6,000 metres, which was reduced by the Defence Ministry in the second tender in 2006 to 4,500 m.
A detailed fact-sheet, released by the Defence Ministry on February 14, 2013 said that operational requirements for VVIP helicopters were deliberated at length between the Air Force, the National Security Advisor, the Special Protection Group (SPG), the Prime Minister’s Office and the Defence Ministry and changes were incorporated regarding bringing down the operational altitude to 4,500 metres and the cabin height. Evidence before the Italian courts reveals that changes in technical requirements favoured Agusta Westland in the bidding process.
On February 24, 2012, it was reported that an investigation initiated by the Italian attorney general’s office into alleged unethical transactions of the state-backed defence major Finmeccanica had widened to include corruption in an over Rs 3,500-crore deal signed with India by the group’s subsidiary AgustaWestland for the supply of helicopters.
The Italian chargesheet gives details of interrogations of the middlemen and also relies on intercepted conversations in accordance with the Italian rules and legal provisions to elaborate upon the activities of Finmeccanica, nexus between the middlemen and their detailed knowledge about procurement of 12 AgustaWestland 101 helicopters by the Indian Defence Ministry.
One of the intercepts between the middlemen Mr. Carlos Gerosa and Mr.Guido Ralph Haschke which the report says is of “absolute importance” is dated November 19, 2012 which refers to the role played by Mr. Gautam Khaitan, a former board member of a Chandigarh-based tech firm for his alleged role in routing funds for kickbacks. The intercept also refers to the route of Mauritius and Tunisia which was allegedly used to launder money received as kickbacks.
Subsequently investigation continued and later that year Haschke, who allegedly got 51 million euros from AgustaWestland to swing the contract, was arrested in Switzerland. In February 2013, the Italian police arrested the Chief Executive and Chairman of Finmeccanica SpA, Giuseppe Orsi. The arrest warrant charged him with paying bribes of Rs 360 crore to intermediaries to secure the sale of the helicopters to India when he was head of the group’s AgustaWestland unit. The deal was put on hold.
Immediately in India, the CBI registered inquiry against 11 persons, including former IAF Air Chief Marshal S.P. Tyagi, and his cousins, besides four companies, for alleged kickbacks by AgustaWestland. The Enforcement Directorate, though delayed for a long period, also began a probe under the Prevention of Money Laundering Act. The government (UPA) moved a motion in the Rajya Sabha for the formation of a Joint Parliamentary Committee (JPC) to inquire into the allegations of payment of bribes in the acquisition of VVIP helicopters by the Ministry of Defence from M/s AgustaWestland and the role of alleged middlemen in the transaction. In January, 2014, the contract was finally terminated on the ground of breach of pre-contract integrity pact. The Enforcement Directorate (ED) finally on September, 2014, arrested Gautam Khaitan for laundering bribe money in the deal.
In October 2014, a lower court in Italy acquitted Tyagi of all charges. It also acquitted Orsi and former Agusta Westland head Bruno Spagnolini of “charges of international corruption”, but convicted and sentenced them to two years on the lesser charge of “false invoicing”. However, this month, the Milan Court of Appeals overturned the lower court verdict and ruled that Orsi and Spagnolini had paid bribes to Indian officials to win the contract. A note presented in the Italian court, sent by middleman Christian Michel asks an AgustaWestland employee to target key advisors to Sonia Gandhi The note also contains the bribes to be paid out to the kingpins. The court indicted Tyagi for being a beneficiary of the bribes. It said payments were made to Tyagi and his family, including three of his cousins, in cash and by wire transfer. The court order also has some evidence mentioning the names of Sonia Gandhi, former Prime Minister Manmohan Singh and senior Congress leader Ahmed Patel, but there is no evidence that they were bribed. Nor does the court order indict the three. Much of the court’s judgement relies on tapped phone conversations between the alleged middlemen of the deal – Haschke and Gerosa. More importantly, it has also identified that the UPA government wasn’t overly enthusiastic in helping out Italian authorities during their investigation.
The order references Michel’s letter to Agusta Westland’s India sales head, which notes that “Sonia is the driving force” and that her closest advisers should be targeted in order to clinch the deal. However, “Sonia as the driving force” behind the deal simply refers to the fact that the Congress leader no longer wanted to fly in the existing MI-8 choppers; not that she specifically wanted AgustaWestland helicopters. Manmohan Singh and Ahmed Patel’s names are mentioned a few times but mostly under circumstances more closely relatable with corporate lobbying and not with any illegal wrongdoing.
Targeting the previous UPA regime over the deal, the present Defence Minister Manohar Parrikar has ushered continuous onslaughts on the previous government but surprisingly rejected the opposition’s demand for a Supreme Court-monitored probe. The Defence Minister has further alleged the reluctance of the past government to investigate the matter citing repeated disruptions in the investigation. The former Defence Minister has hit back asking the Modi government to fast track the probe into the chopper scam and find out the truth as the UPA government had cancelled the contract and ordered a CBI investigation into it. The present government along with the ED has made extradition request for Mr. Michel to the U.K. authorities. The government also assured it had put on hold all procurement/acquisition cases in the pipeline of six companies figuring in the FIR registered by the CBI, namely: Agusta Westland International, U.K.; Finmeccanica, Italy, and its group companies.
The UPA government hasn’t shied away from raising concrete allegations against the Modi government regarding their complacency in the completion of the investigation. It has to gone on to cast a finger at the Vajpayee government. One cannot ignore that in spite of AgustaWestland being under investigation for alleged kickbacks, the Modi government decided to invite Finmeccanica back into India, make massive accommodation for FIPB approval as part of Make in India drive, when the rules restrict their entry for a period of 10 years.
Besides, CAG reports have stated that both the Rajasthan and Chhattisgarh state governments under the BJP bought Agusta Westland helicopters at exorbitant prices, which hint at a disquieting business relationship between the BJP leadership and Agusta Westland management. Interestingly if Christian Michel’s allegations in his notes are to be held true in regard of Sonia Gandhi and Ahmed Patel, one cannot a serious accusation that Michel has made in an official letter to the Permanent Court of Arbitration in The Hague that India’s Prime Minister Narendra Modi did a secret deal with his Italian counterpart Matteo Renzi to somehow embroil the Gandhi family in the Agusta Westland deal in exchange for freedom for the two Italian marines.
Questions are also raised against the sudden alterations in technical specifications for VVIP-helicopter purchase by lowering the height from 6000 metres to 4500 metres, made during the Vajapyee regime, few months away from the 2004 elections. An intriguing hurry to get another defence manufacturer in, just before a huge national election, raises more than eyebrows.
Answers to these questions may be found only with the swift proceeding of investigation. It’s unlikely that Indian investigation will move faster immediately or that the bribe-takers are likely to be indicted by Indian courts in the near future. The CBI’s judicial requests to eight countries are still pending and it is likely that only after information is shared between the various parties that the investigation can start picking up pace. National security is obviously of paramount importance. Till then, it can be only hoped that the matter does not go down the history of scams that plagued India, forgiven and forgotten.
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