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Reuters/Darrin Zammit Lupi
Smell of a scam.
ITALIAN JOB

AgustaWestland: The helicopter scam that’s unsettling India’s political class

By Manu Balachandran

On Monday (May 02), Shashindra Pal Tyagi, the former chief of the Indian Air Force (IAF), was questioned by government investigators over alleged kickbacks in a Rs3,600-crore ($542 million) helicopter deal that is sending shockwaves through India’s political firmament.

In the crosshairs are not just the retired brass of the Indian military establishment, but also the top guns of India’s grand old party. Little wonder that the ruling Bharatiya Janata Party (BJP) has come out all guns blazing at the Congress party and its leader, Sonia Gandhi.

The Narendra Modi government wants to know about Gandhi’s involvement—if any—in the deal signed between the Indian government and AgustaWestland, a subsidiary of the Italian government-owned Finmeccanica SpA, in 2010, when the Congress-led United Progressive Alliance held power in New Delhi.

An Italian court named Gandhi as the “driving force” behind the scam.

The BJP’s offensive came after an Italian court named Gandhi as the “driving force” behind the scam. Last Wednesday, India’s upper house, Rajya Sabha, was tense after opposition members disrupted proceedings when BJP leader Subramanian Swamy named Gandhi in connection with the case. His comments were later expunged.

“The moot question is who took the money in Agusta deal,” Manohar Parrikar, India’s defence minister, said on April 30. ”Those who were at the helm at the time when the deal was struck owe an explanation. The Italian court has clearly said that an amount of Rs125 crore was paid. It has even disclosed some names. The government of that day needs to answer.”

India’s supreme court has also agreed to hear a public interest litigation against Gandhi, former prime minister Manmohan Singh, and Ahmed Patel, Gandhi’s political secretary, in connection with the case. However, Gandhi herself has been defiant. “I am not afraid of anyone cornering me as there is no basis to that,” she said on April 28. “All the accusations they are throwing at us are false and baseless.”

What happened

In 2010, the Indian government and AgustaWestland signed a Rs3,546-crore deal to buy 12 AW-101 helicopters for the Indian Air Force (IAF). Manmohan Singh was prime minister then and Gandhi, the Congress chairperson—as she is now.

These helicopters were to replace the ageing Soviet-made Mi-8 choppers used to transport the president, prime minister, and the vice-president, among others.

Although the IAF had been demanding replacements since 1999, tenders for the project were issued only in 2005. These were later revised in 2006 and the deal was signed in February 2010. The Italian company even delivered three helicopters by 2013.

The remaining nine weren’t because India put the project on hold after the Italian police arrested the head of Finmeccanica SpA, Giuseppe Orsi, in Sept. 2013 on charges of paying bribes to win the contract.

In 2014, India scrapped the contract.

But for the Congress, trouble didn’t stop there.

In 2014, India scrapped the contract.

What seems to have pulled the party into the mess is a letter written by purported middleman Christian Michel to Peter Hulet, Agusta’s then India region sales and liaison head in March 2008. The letter reads: “Dear Peter, since Mrs. Gandhi is the driving force behind the VIP, she will no longer fly with MI8… Mrs. Gandhi and her closest advisers are the aim of the High Commissioner, senior advisor Prime Minister Manmohan Singh obviously the main figure, then there’s Ahmed Patel Secretary.”

Rajiv Pratap Rudy, a minister in the Modi cabinet, said: ”The truth is that the Italian court documents carry some facts and her (Gandhi’s) name is there. Names of some senior ministers (of UPA government) are also there. She must have some contacts in Italy. She should find out from her old relations why the court gave such order after two years.”

Last week, the Milan courts of appeal—similar to an Indian high court—also said there were “unmistakable indications regarding corruption” of an IAF officer. Since the crisis erupted, former IAF chief Tyagi has been under the scanner as his cousins were seen as beneficiaries of the deal. Tyagi is also accused of reducing the height requirement of the project, to allow AgustaWestland to participate in the project. Initially, the choppers were to have a ceiling requirement—the altitude at which they can fly—of 6,000 metres, but this was later revised to 4,500 metres.

Now, India’s Central Bureau of Investigation (CBI) is seeking the foreign ministry’s help for clarity on the matter before taking any action. Apart from the CBI, India’s Enforcement Directorate—the agency responsible for fighting economic crimes—has also summoned Tyagi in connection with the money-laundering probe. AgustaWestland had reportedly budgeted some 30 million euros for payment of commissions to politicians, air force officials, and bureaucrats.