Former Indian Air Force chief S P Tyagi, his cousin Sanjeev alias Julie Tyagi and lawyer-businessman Gautam Khaitan were arrested by the CBI Friday in connection with the Rs 3,600-crore AgustaWestland VVIP helicopter deal case.
This is the first time that a military chief of the country — retired or serving — has been arrested in a probe into alleged corruption in defence procurement. He and the others are to be produced in a Delhi court Saturday.
As first reported by The Indian Express on February 13, 2013, Italian investigators first alleged that the Tyagis received bribes to swing the deal in favour of AgustaWestland, a wholly owned subsidiary of Finmeccanica, by tweaking technical requirements of the tender.
WATCH: Former Air Chief SP Tyagi Arrested – All You Need To Know
Khaitan was allegedly the main cog in a money-laundering wheel that facilitated the movement of bribes through a maze of companies.
CBI spokesperson Devpreet Singh said: “It was alleged that Chief of Air Staff (CAS) entered into criminal conspiracy with other accused persons and in 2005, conceded to change IAF’s consistent stand — that service ceiling of VVIP helicopters 6,000 metres was an inescapable operational necessity — and reduced the same to 4,500 metres.”
Such changes in operational requirements, Singh said, made the private company (AgustaWestland) eligible to participate in the request for proposal for VVIP helicopters.
“It was revealed during investigation that such undue favours were allegedly shown to said UK-based private company by accepting illegal gratification from the accused vendors through middlemen/relatives including his cousin and an advocate etc. who accepted the illegal gratification for exercising influence through illegal means, or using personal influence over the concerned public servants,” the CBI spokesperson said.
In February 2010, the UPA government had signed a contract with AgustaWestland International Ltd (AWIL) for supply of 12 AW 101 VVIP helicopters at an aggregated price of Rs 3726.96 crore. The government cancelled the deal in January 2014 “on grounds of breach of the pre-contract integrity pact and the agreement” by AWIL.
CBI sources said the Tyagi brothers and Khaitan were called for questioning Friday morning and were arrested in the afternoon after they did not cooperate in the investigation.
CBI officials claimed to have collected evidence against the Tyagis and Khaitan, which includes information on their financial transactions. Details of the evidence were not, however, shared by the agency.
Earlier this year, Italian authorities had shared 1.5 lakh documents related to the deal and the alleged bribes. These documents, CBI sources said, “were helpful”.
The CBI alleged that Indians were paid bribes of Rs 362 crore to swing the deal in favour of AgustaWestland. Is probe found that bribes were allegedly paid through a complex web of companies and middlemen based in Italy, UK, Tunisia, Mauritius, Singapore, British Virgin Islands, Switzerland and the UAE. Letters rogatory were sent to these entities and, sources said, the BVI and Tunisia have “partially replied”.
The Enforcement Directorate (ED), also investigating the case, too filed chargesheets against Khaitan and alleged middleman Christian Michel.
According to the ED chargesheets, cousins of S P Tyagi played a major role in bringing in middlemen to swing the deal for AgustaWestland and had begun negotiating even before Tyagi became IAF chief in January 2005.
Investigations found that Guido Haschke, who had been brought into the deal in 2004, allegedly by the Tyagi brothers, was so confident of their abilities that he had begun payments to them from AgustaWestland in 2004 itself.
The ED prosecution complaint notes: “Tyagi brothers namely Sanjeev, Rajeev and Sandeep, cousins of S P Tyagi, who had long acquaintance with Guido Haschke and Carlo Gerosa (another alleged middleman)… entered into a consultancy contract with Gordan Services Sarl, Tunisia in 2004. Gordon Services was linked to Haschke and Gerosa. The Tyagi brothers received Euro 1.26 lakh after May 2004 and Euro 2 lakh after February 2005 .Tyagi brothers, including S P Tyagi, also received some amount in cash.”
In June, the ED told a Delhi special court that Christian Michel allegedly received Euro 30 million as kickbacks and sent cash packets to various people through his driver and regularly met Indian individuals, including cousins of S P Tyagi, while brokering the deal.
According to investigations conducted by CBI and ED, in the offset category (work to be mandatorily done in India), AgustaWestland set aside Euro 70 million which would be transferred to the companies floated by two groups of alleged middlemen — one led by Haschke and Gerosa and the other by Christian Michel.
“The real deal was, however, that of the Euro 70 million, only 30 per cent would be utilised for actual work including engineering services and media handling while the rest would be diverted to pay bribes,” an investigator said.
To facilitate this, a maze of companies was created to move money across borders and camouflage bribes. While Christian Michel set up Global Services FZE in Dubai, Haschke set up IDS Tunisia, IDS Mauritius and Aeromatrix. Michel was supposed to get Euro 42 million while Haschke was to be given Euro 28 million, investigators claimed.
The CBI had filed an FIR in the case on March 14, 2013 after a preliminary enquiry. The FIR named Tyagi and 12 other individuals as accused, besides four companies — Finmeccanica, AgustaWestland, IDS Infotech and Aeromatrix.
Individuals named in the FIR include Finmeccanica officials Giuseppe Orsi and Bruno Spagnolini, the Tyagi family, alleged middlemen Carlo Gerosa, Christian Michel and Guido Haschke, advocate Gautam Khaitan, formerly associated with Aeromatrix, and its CEO Praveen Bakshi.
The FIR was filed on the basis of documents the CBI received from Italy and files from the Ministry of Defence which it said “indicate criminal conspiracy to make alterations in the requirement of helicopter specifications which suited AgustaWestland”.
A particular document produced in the Milan Court of Appeals which, on April 8, convicted Orsi and Spagnolini on charges of corruption, had also brought Congress politicians and some bureaucrats under the scanner. The document mentioned codes like “AP”, “Fam”, “Pol” and “Bur” against payments that needed to be made. The codes, officials said, have been interpreted as Ahmed Patel, family of S P Tyagi, politicians and bureaucrats respectively. Christian Michel, however, claimed that this document was forged by Haschke.
Rejecting the charge and seeking a probe, Ahmed Patel declared he would quit Rajya Sabha and public life if any wrongdoing on his part was established. Defence Minister Manohar Parrikar too angered the Congress when he targeted the party’s leadership, saying “it appears that an invincible hand was guiding the action or inaction of CBI and ED. the country wants to know who instigated, who supported and who benefited from the corruption. we cannot let this pass”.