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Explaining the VVIP chopper row that has rocked Parliament

Italy’s investigation into Finmeccanica’s alleged graft has raised enormous political dust in Parliament. Sushant Singh recaps.

Written by Sushant Singh |
Updated: December 9, 2016 6:37:51 pm
Agusta Westland deal, vvip chopper deal, vvip chopper scam, agusta westland scam, india chopper scam, vvip scam, india news, latest news In 2010, AgustaWestland signed a Rs 3,546 crore contract to supply 12 AW-101 helicopters to the IAF. Eight of these helicopters were to be used to transport VVIPs.

When, how did the controversy erupt?

On February 24, 2012, The Indian Express reported that an investigation begun by the Italian attorney general’s office into alleged unethical dealings by 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 AugustaWestland for the supply of helicopters. This paper subsequently reported the investigation and arrest in Switzerland later that year of Guido Ralph Haschke, a middleman who allegedly got 51 million eruros from AgustaWestland to swing the contract. 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.

WATCH VIDEO | Former Air Chief SP Tyagi Arrested In VVIP Chopper Scam

So, what was the AgustaWestland deal?

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In 2010, AgustaWestland signed a Rs 3,546 crore contract to supply 12 AW-101 helicopters to the IAF. 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 American chopper maker Sikorsky’s S-92 Superhawk to bag the contract.

The AW-101s were meant to replace the Soviet Mi-8 helicopters being used to transport the VVIPs, which had completed their technical life. 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.

Read: Govt says bribe-giver convicted, will identify taker, Sonia says do the probe

What did the probe by the Italians find?

The Italian probe, which started after allegations of corruption surfaced in February 2011, alleged that Orsi and others paid money through intermediaries, including Indian nationals and the US-born consultant, Haschke, who also has Italian nationality. The prosecutors alleged that those middlemen paid the former IAF chief, Air Chief Marshal S P Tyagi, through his cousins, to change the terms of the tender to allow AgustaWestland to win the Indian contract.

The Italian investigators secretly recorded conversations among Haschke, his business partner Carlo Gerosa, and two other individuals while travelling together in Switzerland. 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 Italians also acted on the testimony of Lorenzo Borgogni, former head of external relations at Finmeccanica, where he alleged that Haschke was hired as an “intermediary” whose compensation was hiked by Euro 10 million at the last minute to Euro 41 million. It was alleged that these 10 million euros were used to bribe Italian politicians.

Watch Video | Agusta Westland: Why Is It A Big Deal Politically Now?

How did the authorities in India react?

The day after the first report appeared in The Indian Express, then Defence Minister A K Antony ordered a probe into the allegations of corruption, and subsequently promised to “seriously pursue the inquiry”. The Defence Ministry said any wrongdoing would attract the strict integrity clause. Following Orsi’s arrest, India froze payments for the choppers, although it had already paid Rs 1,620 crore, 45% of the contract value, and accepted three helicopters. The Ministry also ordered a CBI inquiry, and the agency filed an FIR against 13 persons in March 2013. The Enforcement Directorate too began a probe under the Prevention of Money Laundering Act.

Read: We banned AgustaWestland, NDA opened door again, says Congress

What happened in the Italian courts?

In a 145-page judgment delivered in October 2014, a lower court acquitted Tyagi of all charges. It also acquitted Orsi and former AgustaWestland head Bruno Spagnolini of “charges of international corruption”, but convicted and sentenced them to two years on the lesser charge of “false invoicing”.

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. 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.

Why is the deal creating a storm in India?

One of the notes submitted to the court has the names of Sonia Gandhi and senior Congressmen Ahmed Patel and Oscar Fernandes among the people the intermediaries purportedly sought to target in order to swing the deal AgustaWestland’s way. A handwritten list of “budget expenditure items” lists the initials ‘AP’, and some scribbles that could be interpreted to indicate senior Indian officials, with some numbers against them. The court, however, refused to take cognizance of this note, calling it an “estimate” that did not prove anything.

Allegations of corruption in a deal signed with an Italian company during the UPA government, given Sonia’s Italian origins, have given the BJP ammunition to attack the Congress in Parliament, where the ruling party is under fire for dismissing the Uttarakhand government.

Read: Judgment not against us…hang me if they find anything against me, says Ahmed Patel

Indicted In Italy

Air Chief Marshal (retd) S P Tyagi

Tyagi was Chief of the Air Staff from 2004 to 2007, and is the only Indian to be indicted by the court. The judgment did not link the illegal payments to Tyagi changing the technical specifications of the choppers to favour AugstaWestland, but said that money was paid to Tyagi through his cousins. It was during Tyagi’s tenure that the altitude ceiling of the helicopters was reduced in the tender from 6,000 m to 4,500 m. However, investigations later showed that the technical specifications had been changed prior to his becoming Chief, on the orders of the Prime Minister’s Office.

Last October, the ED attached five prime residential properties belonging to Sanjeev Tyagi, Sandeep Tyagi and Rajeev Tyagi — all cousins of the former IAF chief — as the “proceeds of crime”. In 2014, the ED had registered a criminal case under the Prevention of Money Laundering Act, where it claimed that nearly Rs 423 crore was allegedly paid by Michel, Gerosa and Haschke to swing the deal in favour of AgustaWestland. The agency alleged that a bribe of about Rs 7.68 crore was paid by the alleged middlemen to the Tyagi brothers in two tranches, first by way of bank transfer, and then in cash.


Where are the three AW-101s?
The IAF is the custodian of these tri-engine helicopters that were delivered to India before the deal was scrapped. The choppers are parked at the Palam airbase in Delhi. The pilots who were trained to fly the machines have moved to other assignments. Meanwhile, the IAF has drawn out six Mi-17V5 helicopters for use by VVIPs.


Did India recover the money?
India had paid Rs 1,620 crore to AgustaWestland, and encashed the guarantee of Rs 250 crore held in Indian banks in January 2014. After winning a legal case in Italy in June 2014, the Indian government encashed guarantees of Rs 1,818 crore held in Italian banks, taking the total amount recovered so far to Rs 2,068 crore.


Haschke had his offices in Switzerland raided by Italian police in April 2012 before being subsequently arrested on charges including money laundering. He is one of the two alleged middlemen in the deal, and phonetaps by Italian investigators suggest he got commissions from AgustaWestland through companies in Tunisia and Mauritius that were controlled by him and his business partner Gerosa. Tapped conversations between the men mention Sanjeev ‘Juli’ Tyagi and lawyer Gautam Khaitan, who was subsequently arrested by the ED. Haschke and Gerosa were directors of the Chandigarh-based IT outsourcing firm Aeromatrix.

The well-connected British consultant, who had been very active in the Indian defence sector for several years at the time the scandal erupted, was allegedly hired by AgustaWestland to influence the contract, and got the lion’s share of the Euro 51 million commission. In an interview to The Hindu, Michel said he had never met Sonia Gandhi, and claimed he had written to PM Narendra Modi offering himself up for questioning, but had received no reply.

The Delhi-based businessman is a cousin of Air Chief Marshal (retd) S P Tyagi’s, and an old friend of Gerosa’s. Juli featured in conversations between Haschke and Gerosa that were taped by Italian investigators in 2012. In October 2014, the ED questioned Juli Tyagi.

The former CEO and chairman of Finmeccanica was arrested by Italian police on February 12, 2013, alleging that he paid bribes to intermediaries to secure the sale of the helicopters. On October 9, 2014, a lower court acquitted Orsi (and former AgustaWestland CEO Bruno Spagnolini) of corruption, but convicted them of the lesser charge of “falsifying invoices” and sentenced them to two years. On April 7, 2016, an Italian court of appeals overturned the verdict, and sentenced Orsi to four and a half years in prison for corruption and falsifying invoices.



The former AgustaWestland CEO was, along with Orsi, acquitted of some charges by an Italian lower court in 2014 before being convicted and sentenced to four years in jail by the appeals court this month. Both Spagnolini and Orsi were also ordered to pay fines of 7.5 million euros, a sum related to the amounts deemed to have been allegedly paid in bribes.


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