Air graft

On April 8, the Milan Court of Appeals ruled that the AgustaWestland deal involved payoffs to Indian officials. It sentenced to jail the former bosses of AgustaWestland and its parent company Finmeccanica, and mentioned former Air Chief Marshal S.P. Tyagi quite a few times.

This reopened a can of worms. For more than two years, the Central Bureau of Investigation and the Enforcement Directorate have been investigating the deal. But, with new facts coming to light, the scope of the investigation is expected to widen. A Union minister told THE WEEK that the investigation would now involve more Air Force officers and former defence ministry bureaucrats who were allegedly associated with the kickbacks.

The scam broke in 2012 when the Italian attorney general began investigating Finmeccanica's alleged wrongdoings, including in the VVIP helicopter deal with India. The deal for 12 helicopters, worth Rs 3,600 crore, was signed on February 8, 2010.

Italian agencies arrested one of the middlemen, Guido Haschke, in Switzerland. Apparently, AgustaWestland had paid him 51 million euros (Rs 390 crore approx.) to swing the contract in its favour.

Still, India did not scrap the contract. In fact, it had three of the 12 choppers delivered to Delhi. These have been lying at the Palam airbase ever since.

A major breakthrough came when the Italian police arrested Finmeccanica chairman Giuseppe Orsi in February 2013. The arrest warrant said he had given middlemen Rs 360 crore to secure the helicopter deal with India. Italian prosecutors alleged that those middlemen paid Tyagi, through his cousins, to change the terms of the tender to allow AgustaWestland to win the contract. A CBI officer said Tyagi accepted that he and his cousins Sanjeev and Rajeev Tyagi had been in touch with Orsi and Hashcke.

According to the Italian judicial report, Haschke spoke of money being routed through Mauritius and Tunisia, to make it difficult to trace, and referred to Indian investigators as “morons” who would take years to track down the links.

The Italian investigation also highlighted the involvement of British-born middleman Christen Michel.

In a knee-jerk reaction, India ordered a CBI investigation and scrapped the deal on January 1, 2014. However, there were no leads regarding some of the evidence, including a handwritten note that apparently mentioned politicians and government positions through abbreviations such as AP, JS, AM, AIR, CVC and FAM. Soon, the issue lost steam as an Italian lower court ruled that there was no corruption in the case.

However, with the recent judgment, India is now expanding the investigation to all possible corners. Among those who could be called for questioning are former Air Chief Marshal N.A.K. Browne and his close aides, Air Vice Marshal Shirish Mohan and Group Captain Vikas Sharma. Browne, then deputy chief of air staff, was in charge of procurements and oversaw the field evaluation trials that kicked AgustaWestland's rival, US firm Sikorsky, out of the bidding race.

The price Sikorsky had quoted for its twin-engine S-92 helicopter was almost 25 per cent lower than what AgustaWestland offered for its three-engined AW101 helicopter. However, India rejected Sikorsky's bid on four counts, the main reason being that its helicopter engine was not good enough for high-altitude operations. AgustaWestland, too, failed the trials, but was given another chance.

“Had Sikorsky remained in the race, it would have emerged as the lowest bidder, ensuring that AgustaWestland was out of it,” said a senior defence ministry officer.

“As Air Force chief, Browne was confident and controversial,” said an air marshal. Apparently, during the peak of Anna Hazare's anti-corruption movement, Browne gave defence minister A.K. Antony some bold advice. After a military parade, Antony was having a cup of tea with a journalist friend when Browne walked in. Apparently, he told Antony to tell Congress president Sonia Gandhi to use force against Hazare and Arvind Kejriwal, suggesting she beat them up with a stick. “A stunned Antony walked away without even taking cognisance of the advice,” said the air marshal.

Turbulent ride: Former Air Chief Marshal S.P. Tyagi at the CBI headquarters | PTI

After the rejection, said a Sikorsky executive, the firm wrote six letters to the Air Force and the defence ministry, seeking time to overcome the shortfalls. However, it was not given a chance.

“It seems there was an overall effort from the persons involved with the deal to make sure that no firm was left behind in the race to compete with AgustaWestland to help it win,” Parrikar told THE WEEK.

Government sources told THE WEEK that, after a thorough investigation of the case files, it was found that, at the time of bidding, AgustaWestland had hiked the price of the helicopters. Apparently, the firm offered the choppers at $46.20 million (Rs 300 crore approx.) apiece when, according to various sources in the international market, the same helicopter was available for about $25 million (Rs 166 crore approx.). In addition to getting more profit, the hike, it seems, was to ensure that the company had enough funds for kickbacks.

The defence ministry also compared the AgustaWestland chopper with other recent purchases, such as the American Chinook and Apache attack helicopters, which are far more complex machines. “The AW-101, which was procured at a cost of $46.20 million per helicopter in 2010, comes out only $8 million (Rs 53 crore approx.) less than the Apache attack helicopter when compared at the 2019 prices [when the latter are expected to be delivered], taking inflation into account,” said a senior government source.

“All these issues were never looked into and now they will be part of the investigation,” said an Enforcement Directorate official.