Home » india news » Explained: how #AgustaWestland deal turned into a scam

Explained: how #AgustaWestland deal turned into a scam

Catch Team | Updated on: 10 February 2017, 1:50 IST

Since news of its CEO's arrest broke in 2013, the Italian helicopter builder AgustaWestland and its parent company Finmeccanica have become almost household names in India.

The company is at the centre of a corruption scandal that has kept the Indian political class and the media occupied over the past few years.

The Air Force had placed an order with AgustaWestland for 12 helicopters to fly the president, the prime minister and other VVIPs. The deal was finalised in 2010 when the UPA was in power.

The deal came under a cloud when the authorities in Switzerland arrested Guido Ralph Haschke, a middleman, for allegedly taking 51 million euros from AgustaWestland to land it the contract. 

Last October, the ED attached five properties of belonging to cousins of former IAF chief SP Tyagi

In February 2013, the Italian police arrested Giuseppe Orsi, the CEO and chairman of Finmeccanica, for allegedly paying Rs 360 crore in bribes to intermediaries to secure the deal for AgustaWestland.

After a lull, the AgustaWestland deal is back in the headlines after an Italian court identified former Indian Air Force chief SP Tyagi as one of the people who had allegedly received kickbacks from the company.

In India, similar allegations have been levelled at senior Congress leaders, including Sonia Gandhi, Manmohan Singh, AK Antony and Ahmad Patel.

Here's a lowdown on the case:

What's AgustaWestland deal?

In 2010, AgustaWestland won the Rs 3,546 crore contract to supply a dozen 12 AW-101 helicopters to the Air Force. Eight of the helicopters were meant to be used for transporting VVIPs such as the president, prime minister, vice president, while four were to be used for "other duties".

It was reasoned that new helicopters were required because the old VVIP fleet of Russian Mi-8s had a low "service ceiling", which is the altitude at which a helicopter can fly. Also, Mi-8s couldn't take off in the dark.

In 2005, the defence ministry issued tenders for helicopters with a service ceiling of of 6,000 metres. This was controversially reduced to 4,500 metres in the second tender issued in 2006. This last-minute tweak in specifications is attributed to Tyagi.

What's the deal controversial?

Following Orsi's arrest, India froze the pending payments for the choppers, although it had already paid Rs 1,620 crore, 45% of the contract value, and accepted three helicopters. The defence ministry also ordered a CBI enquiry, which led to an FIR being registered against 13 persons in March 2013.

In the meantime, the Enforcement Directorate began probing the deal under the Prevention of Money Laundering Act. In October 2015, the ED attached five prime residential properties belonging to Sanjeev Tyagi, Sandeep Tyagi and Rajeev Tyagi - cousins of the former IAF chief - as "proceeds of crime".

In 2014, the ED had registered a criminal case under the Prevention of Money Laundering Act, claiming the middlemen Christian Michel, Carlo Gerosa and Haschke had paid Rs 423 crore to Indian officials to swing the deal in favour of AgustaWestland. Of this, Rs 7.68 crore was paid to the Tyagi brothers.

The Italian court order mentions Sonia, Manmohan, Ahmed Patel, but doesn't accuse them of corruption

The Indian investigations into the deal have been slow. The focus is on Michel, a British citizen whose father Wolfgang Max Michel Richard is reported to have had "links" with the Congress in the 1980s and 90s.

The investigations are unlikely to move any faster as the CBI's judicial requests to eight countries for information remain unanswered. The only positive so far is that the government has reportedly recovered most of the money paid to AgustaWestland.

What are the latest revelations?

Last month, an Italian appeals court, overturning the 2014 judgment of a lower court, ruled there was enough evidence to prove the AgustaWestland deal was marked by corruption. Specifically, it noted that payments had been made to members of the Tyagi family, and that some of this money was sent to the former IAF chief himself.

For its ruling, the court relied mostly on taped phone conversations between Guido Haschke and Carlo Gerosa.

Have Congress leaders been named?

The Italian court order mentions Sonia Gandhi, Manmohan Singh and Ahmed Patel. But it doesn't accuse them of any corruption.

The order references Michel's letter to AgustaWestland'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. But there's nothing in the letter to indict her.

The court has mentioned Manmohan and Patel in the order but in the context of corporate lobbying, not for any wrongdoing. However, a handwritten note has allegedly been found in which Orsi directs his staff to persuade Italian diplomats to ask Manmohan to "scuttle the probe by non-cooperation from the Indian government's side".

First published: 28 April 2016, 10:02 IST