VVIP chopper scam: All you need to know about what went wrong

AgustaWestland AW101 (Source: PTI)
Following on the heels of the political fistfight over the Ishrat Jahan case, now its the AgustaWestland VVIP chopper deal and the alleged scam associated with it that has found its way into the ongoing tussle between Bharatiya Janata Party (BJP) and Congress. 

Both parties were on Tuesday headed for an escalating confrontation over allegations of bribery in the Rs 3,700 crore VVIP helicopter deal struck during the United Progressive Alliance regime. 

The alleged scam, which was arguably overshadowed by coal-gate and the spectrum scam, came back to haunt the Congress after, in a 225-page judgement, a judge at the Milan Court of Appeals found that bribes were paid by the firm to Indian officials to get the contract for the supply of 12 AW101 choppers.  

BJP picked up on Italian reports based on the judgement, which cited notes from middlemen involved in the deal, to take aim at Congress President Sonia Gandhi. 

One particular note from a middleman reportedly described Gandhi as the "driving force" behind the deal. 

Additionally, addressing a press conference, Union Minister Ravi Shankar Prasad said that then defence minister AK Antony had, in March 2013, said that corruption had taken places in the purchase of VVIP choppers and that bribes had been taken. He asked Antony to come clean on it.

With the political fight over the alleged scam escalating in the Parliament, let us look into the details of the issue. 

What was the deal all about: 

The requirement for VVIP helicopters was raised by the Indian Air Force (IAF) in the early 2000s. 

After rounds of evaluations and changes in requirements, it was only in February 2010 that the contract was signed for 12 AgustaWestland AW-101s. 

The deal was valued at Rs 3,700 crore.

The helicopters were meant for ferrying top Indian dignitaries, including the prime minister. The AW-101 helicopter, which was eventually purchased after an almost decade-long process, is also used by the President of the US. Besides enhanced reliability that is provided by its three engines, the helicopter is fitted with advanced electronic equipment that can detect and neutralise threats.

In fact, as on early 2013, the company had already delivered three helicopters to the IAF. 

What went wrong: 

On February 12, 2013, the Italian police arrested Giuseppe Orsi, the head of defence group Finmeccanica SpA, the parent company of AgustaWestland, on a warrant alleging that he had paid bribes to win the Indian VVIP chopper contract, reported Reuters

According to the report, prosecutors accused Chief Executive and Chairman Orsi in the arrest warrant of "paying bribes to intermediaries to secure the sale of 12 helicopters in a 560 million euro ($749 million) deal when he was head of the group's AgustaWestland unit".

In light of the arrest, the Indian Ministry of Defence (MoD) ordered a Central Bureau of Investigation (CBI) probe into allegations that kickbacks were paid to Indian middlemen to secure the deal.

A shadow had been cast on the deal an year earlier, when reports first appeared in the Italian media about a probe by Italian investigators into the affairs of Finmeccanica, and then widened to include the sale of VVIP helicopters to India. 

At the same time, the remaining payment of Rs 2,400 crore to AgustaWestland, along with the delivery of nine helicopters from the company was put on hold, until the closure of an investigation by the CBI.

By then, India has already paid around 30% of the committed amount. 

Meanwhile, Italian investigation reports suggested that Guido Haschke and Christian Michael were the main middlemen in the deal.

According to the report filed by Italian investigators in an Italian court, the middlemen had agreed for a 7.5% commission in the Rs 3,700 crore deal.

In March of 2013. the CBI said that it had found evidence against former Indian Air Force chief S P Tyagi that suggested that he had extended favours to the UK-based AgustaWestland by changing specification requirements for the VVIP choppers. The agency registered a first information report (FIR) against Tyagi and 12 others.

In its FIR, the CBI also included two top IDS officials — CEO Satish Bagrodia (brother of former Union minister Santosh Bagrodia), and MD Pratap Agarwal — who had not been named in its preliminary inquiry.

Days later, the CBI issued lookout notices for Tyagi, his three cousins and five others, named in its FIR. 

With the Enforcement Directorate indicating that it would bring the deal under its scanner and the a Joint Parliamentary Committee conducting its own probe, it was only in January of 2014 that the deal was finally scrapped by the MoD.

What happened next: 

A fortnight after cancelling the contract, the MoD has encashed a guarantee of over Rs 250 crore deposited by AgustaWestland in the State Bank of India, the Daily Pioneer reported.

However, India still had to recover bank guarantees worth Rs 2,134 crore deposited in Italian banks. 

In an RTI reply in early 2014, the IAF had said that euro 83,439,303 (15% of the contract value) and euro 166,878,607 (30% of contract value), totalling to about Rs 2,134 crore (according to the then exchange rates), were deposited as bank guarantee by the company in Deutsche Bank, Milan, Italy.

In late March that year, an Italian court allowed India to encash bank guarantees worth about Rs 1,818 crore deposited by AgustaWestland in Italian banks.

"The Milan court partially upheld the complaint lodged by the Indian Defence Ministry and thereby revoked the order issued by the judge on last March 17," said a statement by Finmecannica.

The judgement came after a lower court had rejected India's request regarding the bank guarantees earlier. 

The Tyagi angle:  

According to an Indian Express report from April, 2016, the Italian Court of Appeals has observed that there are “unmistakable indications regarding corruption of an Indian officer”.  

The observation pointed at then Air Chief Marshal Tyagi. 

According to the report, the judgement reads: “Ultimately, there are no elements of certainty to affirm this beyond any reasonable doubt that the reduction in the operating rate was chosen contrary to the public (duty) and that Marshal Tyagi…made specific acts contrary to his duty; it remains anyway the wrongfulness of his conduct, for having offered to cooperate with AW [Agusta Westland] in economic operation which prohibited all forms of mediation, and for having received large compensation in relation to its institutional activity...” 

The Italian Court's observation comes just months after the ED, in September of last year, attached assets worth about Rs 7 crore alleged to be in the name of cousins of the former IAF chief.

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