VVIP chopper scam - Part II - Col Ranbir Lamba

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 Agusta Westland 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, 

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.

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. 

 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.CEO of AgustaWestland and Guiseppe Orsi, chairman of the Italian parent company Finmeccanica on the charges of bribing 3 middlemen to secure the deal with the Indian Air Force.

The Tyagi angle:

In 2014, the Italian court investigating the chopper scam named former chief of the IAF, SP Tyagi in the scam, stating that he was bribed by Finmeccanicato sign the deal with

However, in 2015, the Italian Court acquitted Tyagi, stating that there was no corruption by Indian officials.
In the second biggest Defence controversy following the Bofors Scam, then PM Manmohan Singh,UPA chairperson Sonia Gandhi, and former chief of Indian Air Force SP Tyagi has been put to questioning.

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 . 

How is SP Tyagi connected to the scam?

The AW 101 choppers couldn’t make the cut after flight evaluation because they couldn’t fly at or above18,000 ft, while that was the key requirement of the Indian Air Force as urged to the Defence Ministry.
A CBI report said that prior to Tyagi being appointed as Air Force chief, the IAF had ‘’vehemently opposed’’ the lowering of the altitude requirement.

after Tyagi was appointed the chief and the IAF “conceded to reduce” altitude requirements, allowing AgustaWestland to re-enter the bidding process.
In recent investigations by the Milan Court of Appeals, particularly in its 225-page judgment, Tyagi’s name appeared more than once. The judgment said, “So, in the absence of contrary indications, it must be concluded that the reward bestowed to

to ‘Tyagi family’ (including three of his cousins) for their work in support of AW in relation to the race of the Government (of) India for military helicopters  

€10,500,000.”
How is Sonia Gandhi involved in the Scam?

The conversations between the three bribed middlemen, namely: Carlos Gerosa, Christian Michel and Guildo Haschke — have mentioned ‘Mrs Gandhi’ as being the ‘driving 

force behind the VIP’ and her close aides Ahmed Patel and Pranab Mukherjee — the latter is referred to as being the ‘British High Commissioner’.
In a letter dated 15 March, 2008, Christian Michel wrote to Peter Hulet, the then head of India region sales and liaison for AgustaWestland, saying “Dear Peter, since Mrs Gandhi is the driving force.AgustaWestland, saying “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 adviser Prime Minister Manmohan Singh obviously the main figure, then there’s Ahmed Patel Secretary”.

 

 But this changed just
All allegations false, have nothing to hide: Sonia Gandhi on VVIP chopper controversy

One of the key requirements in that RFP was that the competing helicopters must be able to fly at altitudes around 6,000 metres with a full load.

After trials, only one helicopter -- the Eurocopter’s EC 225 -- was able to fly at that altitude.

In 2003, the IAF sent its evaluation report to the PMO. Brajesh Mishra, then national security adviser and principal secretary to then prime minister Atal Bihari Vajpayee, asked the Special Protection Group that guards India’s VVIPs, for its comments.

The SPG apparently said the EC-225 was unsuitable because its cabin height was too short (at 1.39 metres) and that neither the VIPs nor the SPG personnel would be able to stand upright inside such a cabin.

Mishra then wrote to Air Chief Marshal S Krishnaswamy who had taken over from ACM Tipnis in 2001, expressing concern on two points: A single vendor situation had arisen because of the specification that said the helicopters must be able to fly at altitudes around 6,000 metres and that the SPG’s inputs were not taken.

‘It is unfortunate that SPG wasn’t taken on board...

and the defence secretary work out the specifications in consultation with the SPG..’

So, the IAF, in consultation with the SPG, drew up the entire Air Staff Qualitative Requirement once again. That was in 2003.
The new specifications said the helicopters must be able to fly at an altitude of 4,500 metres and that its cabin must be at least 1.80 m in height.

A)Siachen glacier, located in the eastern Karakoram Range in the Himalayas, is one of the five largest glaciers in the Karakoram, situated at an average altitude of 18,000 ft above sea level. 

B)Meanwhile, Air Marshal S P Tyagi took over as IAF chief in 2004. It took Air Headquarters and the defence ministry’s acquisition wing another three years to issue a fresh Request For the Proposal. That was in 2006.

By then Vajpayee’s National Democratic Alliance government had been ousted, and the United Progressive Alliance was in power.

The new RFP, which went by the specifications finalised in 2003, was issued to six different vendors when Pranab Mukherjee, now India’s President, was the defence minister.

Three companies -- the makers of Mi-172, Sikorsky which made the S-92 helicopters and AgustaWestland’s AWA101 -- responded to the RFP.

Meanwhile, the defence ministry put in place a new concept -- the Defence Procurement Procedure.

Under this, all companies that bid for contracts above Rs 1 billion have to sign an integrity pact that binds the companies to give an undertaking that no bribes would be paid or that agents would be used in the contracts.

The Russian company that manufacturers the Mi-172 withdrew from the competition at an early stage refusing to sign the integrity contract!

That left Agusta Westland and Sikorsky in the race. By now this was late 2007.

Fali H Major, himself a helicopter pilot, had meanwhile taken over as the IAF chief.

The evaluations and trials of the S-92 and AW101 began and continued over the next couple of years (2008-2009).
According to IAF sources, the S-92 was found to be non-compliant on four counts:
1. It could not reach 15,000 feet without maximum power.
2. Its 'hover out off ground effect' was insufficient.
3. Its drift down altitude did not meet the requirement.
4. Its missile airborne warning system was not up to the mark.

AgustaWestland, with its three engines, was a bonus, according to IAF test pilots since one engine failure still meant it had two engines to fall back upon.

Sometime in 2009, 

Air HQ sent its recommendation to the defence ministry and after going through stringent financial and technical requirements mandatory under the DPP, a contract was signed in February 2010.

By this time, Air Chief Marshal P V Naik was the air chief.

The first of the AW 101 AgustaWestland helicopters arrived in India in late 2012. 

Two more helicopters followed in quick succession.

When a controversy over the deal emerged in 2013 with the arrest of Agusta's parent organisation Finmeccanica CEO Giuseppe Orsi by Italian authorities, the then United Progressive Alliance government cancelled the deal, recovered the advance paid to the chopper manufacturer and instituted a probe against the alleged middlemen and beneficiaries

So were there middlemen? Who were they and why were they present in getting the deal in spite of India disallowing them to function here?

Allegedly, Guido Ralph Haschke, his partner Carlos Gerosa and London-based consultant Christian Michel were paid kickbacks totalling € (around Rs 4 billion) in the Rs 36 billion deal for 12 VVIP helicopters inked with AgustaWestland, the UK-based subsidiary of Italian conglomerate Finmeccanica, in February 2010.

The Central Bureau of Investigation’s First Information Report says: ‘Guido Haschke and Carlo Gerosa managed to send €5.6 million (over Rs 470 million) through the Mohali-based IDS Infotech and Chandigarh-based Aeromatrix Info Solutions Private Limited to India and kept the remaining amount of about €24.30 million (around Rs 2.05 billion) received from AgustaWestland with themselves in the account of IDS Tunisia.’

Haschke had earlier claimed that €6 million (over Rs 510 million) were paid to IAF officers and €8.4 million (around Rs 710 million) to bureaucrats, with politicians also getting a cut in the AgustaWestland deal.

Prosecutors have claimed that money was paid to close associates of former Indian Air Force chief SP Tyagi, who is named as a prime accused in the Italian prosecution case. Italian prosecutors have also alleged that another part of the bribe money was paid through UK-based consultant Christian Michel to political entities in India, and speculated that senior leaders of the then ruling party, Congress, were among the recipients. 

Was Congress president Sonia Gandhi named in the court hearing in Italy? Why?

Prosecutors in an Italian court produced a note purportedly written by Christian Michel revealing that he had advised the people handling the VVIP helicopter deal on the company’s behalf to target people close to Congress president Sonia Gandhi, including the prime minister and some of her closest advisers, to win the contract.

The note written in March 2008 by middleman Christian Michel to Peter Hullet, India head of the Anglo-Italian company, was produced by the prosecutors in an Italian court where a trial is underway in the bribe scam.

In the note, Michel reportedly termed Sonia as the driving force behind the deal and advised Hullet to 'target' people close to her to clinch the deal.

"Dear Peter, since Sonia Gandhi is the driving force behind VIP will no longer fly in the MI-8. Gandhi and her closest advisers are the people who the British ambassador should target," said the letter of Michel seized by the probe team. This letter was seized from the home of arrested middlemen Guido Haschke in early 2013.

What does the April 16 verdict of the Italian appeals court say about involvement of Indian politicians in the payoffs?

Michel's note reportedly mentions among others, Sonia’s political secretary Ahmed Patel, Pranab Mukherjee, M Veerappa Moily, then national security adviser M K Narayanan and Vinay Kumar, a defence ministry official in charge of IAF procurement.

The 225-page judgment of the appeal court in Milan says Haschke identified all the Congress leaders, when their photos were shown to him during the trial by the Italian prosecution.

Page No 163 and 164 name Manmohan Singh and details that Orsi used Italian leadership and diplomats to contact the then prime minister to scuttle the probe by non-cooperation from the Indian Government's side.

In Page 163, the judgment produces a handwritten note by Orsi from jail in July 2013 asking his people to contact then Italian Prime Minister Monti or Ambassador Teracciano to call Dr Singh.

"Call Monti or amb. Teracciano in my name to ask him to call the PM Singh," said the note seized from the prison cell of Orsi. The judgment in several areas blames the non-cooperation from Indian authorities including the Defence Ministry and other probe agencies in 2013, when the Congress-led UPA was in power.

What does the judgment say about former air chief Tyagi's role?

The judgement has a separate 17-page chapter on SP Tyagi explaining the grounds on which it came to the conclusion on the corruption of the former IAF chief.

Tyagi is alleged to have intervened in favour of AgustaWestland for the VVIP helicopters competition.

The Italian court order said that payments to Tyagi and his family -- including three of his cousins, were mcoade in cash and through wire transfers......

Col lamba