The Rs 3,546 crore AgustaWestland contract, signed in February 2010 to purchase 12 AW101 helicopters for the Indian Air Force to carry VIPs like the president and prime minister, was cancelled by the government in January 2014. This was within a year of the deal running into trouble in February 2013 with the arrest of Giuseppe Orsi, the CEO of AgustaWestland’s parent company Finmeccanica. Since then, the names of several middlemen, fixers, politicians, military personnel and their relatives have been doing the rounds in Indian and Italian courts. While the Italian Court of Appeals has convicted Orsi and former AgustaWestland head Bruno Spagnolini, the Indian leg of the investigation is still on. It’s undeniable that the case involves corruption, but the current political noise over the deal, revived after the Italian court’s judgment came into Indian hands, should not be allowed to interfere with the ongoing investigation, which must be completed impartially and without political point-scoring.
Although the Defence Procurement Policy (DPP) of 2001 had permitted defence agents, few had registered owing to the lack of clarity on rules. The ground had always remained fertile for middlemen and commissions. As a result, despite the UPA government’s rote recourse to blanket bans, blacklisting and pre-emptive freezes — which had impaired India’s military modernisation project by denying its armed forces access to indispensable technology and equipment — scams such as AgustaWestland could not be prevented. And yet, the AgustaWestland affair is one rare instance of India getting some things right. Wrongdoing was detected and the government had taken the right call in cancelling the deal to punish the firm, while stopping short of blacklisting it. Through the subsequent recovery of the bank guarantee between January and June 2014 — since AgustaWestland had violated the integrity pact — India had also recovered more than the 45 per cent of the total contract value paid to AgustaWestland.
Subsequent to the AgustaWestland scandal, although not consequent to it, Indian defence procurement has been undergoing several changes, with a much more transparent system in place under the new DPP that includes three key reforms: Legalising defence agents, reviewing blacklisting norms, and changing systemic attitudes. Whether the overhaul of the Indian defence sector sticks to the new roadmap or not, and whether or not it transforms itself fast enough, only time will tell. As far as the AgustaWestland case is concerned, the CBI must be urged to conclude its probe quickly and fairly, especially since the Italians have already wrapped up their investigation.