Our hands are clean," Defence Minister A.K. Antony told the media at a press conference in Delhi on February 19, holding his right hand up in his characteristic half wave. "We have nothing to hide." It was Antony's Manmohan Singh moment: A man of impeccable personal integrity accused of looking the other way when corruption took place on his watch.
Antony defended his ministry's inaction over the chopper scam where Italian arms firm Finmeccanica allegedly first inflated the price of the Rs.3,546 crore deal to buy 12 AW-101 choppers and used middlemen to skim and split an estimated Rs.350 crore in kickbacks. Although Finmeccanica CEO Guiseppe Orsi was arrested on bribery charges in Italy on February 12, it took Antony two days to order a CBI probe and three days to suspend payments for the deal. The deal was key to Italy becoming a powerhouse of arms exports to India, rising from No. 12 in 2007 to No. 5 by 2011, according to the Stockholm Institute of Peace Research Institute. Much of that rise had to do with Finmeccanica, the world's eighth largest defence firm, and its CEO Orsi who presided over an intricate network of middlemen based in Milan, London, Lugano and Delhi.
The purchase of 12 AW-101 VVIP choppers was not what the iaf calls an 'operational requirement'. It does not alter the balance of power with China or Pakistan. What it did, however, was partially swing the Indian helicopter market towards Finmeccanica, which now has annual sales of Rs.1,000 crore in India through a clutch of eight civil and military subsidiary firms.
The Italian government owns a majority 32 per cent controlling stake in the company which officially entered India in 2007. In 2008, over shots of espresso in his glass-fronted office at the Eros Corporate Tower in Nehru Place, Delhi, Paolo Girasole, Finmeccanica's then country manager, told india today his sales target: $1 billion in annual sales each year for the next five years, a lofty goal for a country ranked a lowly number 12 in the list of arms suppliers to India. Italy then had only supplied a few radars and torpedoes for Indian warships in the 1980s. Over 80 per cent of India's tanks, fighter jets and warships were of Russian origin and Indian arms imports of $10 billion (Rs.55,000 crore) between 2007 and 2011 only cemented this stranglehold. The French, British and the Israelis supplied what the Russians couldn't provide: Radars, missiles, defence electronics and drones.
In 2008, French Ambassador Jerome Bonnafant laughed when asked about competition from Italy. But the foundations of this partnership had already been laid during a 2005 state visit to New Delhi by Italian President Carlo Azeglio Ciampi in February 2005. In the president's delegation was an Italian businessman, Carlo Gerosa, now 67. Gerosa told his Italian interrogators last year that he knew then Finmeccanica CEO Giorgio Zappa and met Orsi, then CEO of AgustaWestland, on his trip to India. Evidently, a friendship was forged that would play out in India. It was during Ciampi's visit that Gerosa helped arrange a meeting between then iaf head Air Chief Marshal S.P. Tyagi and Zappa. Soon after, Gerosa says he was signed up by Orsi for 100,000 euros every six months. The race for the VVIP helicopter contract was underway.
Methods of the Mayfair Set
"India is not just a sellers' market," Girasole had said in 2008, "this is a market for industrial partnerships.†Italian police investigations into the bribery case reveal that these partnerships, forged at family weddings and holidays in exotic European destinations, cut across a clutch of middlemen in India and abroad that Finmeccanica employed.
Chief among them was Christian Michel, 52, the son of established London-based arms dealer Wolfgang 'Waly' Michel. Michel Sr, 84, a Briton of German origin who died in London last year, owned Global Services Trade Commerce headquartered in London and Global Service FZE with its headquarters in Dubai. In 2004, he dragged French jet maker Dassault to court for reneging on commissions it owed him for the sale of 10 Mirage 2000 fighters to the Indian Air Force. The father-son duo worked out of a small two-room office in central London's Mayfair district with a single employee, a secretary.
Michel Jr was a frequent visitor to New Delhi where he always stayed at the Claridges hotel on Aurangzeb Road. He was seen chatting with aviation firm executives at the biannual Aero India 2013 between February 6 and 10 in Bangalore. He is named by Italian police as an "intermediary in the conclusion of agreements" and "provided resources needed to pay for corrupt Indian officials". The arrest and remand notice on the four Italians in the case filed by Italian police on February 11, outlines Michel Jr's role: "Christian Michel, consultant to AgustaWestland S.p.A. pledged and essentially corresponding, to lead three brothers Julie Tyagi, Docsa Tyagi and Sandeep Tyagi, the sum of money, not exactly calculated in totality, to Air Chief Marshal Shashi Tyagi, chief of staff of the Indian Air Force from 2004 to 2007... publicly authorised in the limit of the India State, to execute and to have done an act in opposition to the demands of the department".
The Shadowy World of the Tyagis
Among the middlemen who approached AgustaWestland with offers of business was flamboyant arms agent Abhishek Verma who is charged with possessing military secrets under the Official Secrets Act. He is currently in jail, with his wife, Anca Neacsu, on charges of possessing secret military procurement plans. In a letter dated August 7, 2009, AgustaWestland offered Verma's now-estranged New York-based partner C. Edmonds Allen a commission on the sale of their helicopters. One of the contracts was for a single helicopter to be used during the 2010 Commonwealth Games. The deal for the helicopter didn't go through. But the company was unfazed. Verma, evidently, was only one of several middlemen employed by them.
Italian investigators say the Tyagi brothers were already in touch with AgustaWestland. The agents who entered the scene, according to the Italian police, were the Tyagi brothers Rajeev 'Docsa', Sanjeev 'Julie' and Sandeep, the three Indian middlemen in the deal who may have received Rs.350 crore in kickbacks. The trio are well-connected in political, bureaucratic, business and social circles. The oldest, Rajeev, is a qualified doctor, explaining the moniker, but he is never known to have practised. Docsa was an effective networker, close to leaders in both the Congress and BJP. He shot into the limelight as one of actor Amitabh Bachchan's campaign managers when he contested and won the Lok Sabha election from Allahabad in 1984. He worked out of the actor's 2A, Motilal Nehru Marg residence in the Capital and allegedly leveraged his proximity to Bachchan with Rajiv Gandhi. Later, Docsa even managed Atal Bihari Vajpayee's Lucknow constituency.
It was Sanjeev Tyagi aka 'Julie', 57, a former air force official, who was the link to the defence business. The employee of a leading private arms firm recalls hearing his name a few years ago when he called a Serbian arms firm for a tie-up. "I backed off when I was told Sanjeev Tyagi would contact me on their behalf," he says.
Sanjeev Tyagi met Carlo Gerosa at a wedding in Lugano, Italy, in 2001. Sanjeev put Gerosa and Haschke-by now AgustaWestland's middlemen- in touch with his cousin Air Chief Marshal S.P. Tyagi. Prosecution documents say the air chief met the two middlemen six or seven times between 2004 and 2007, while he was in service. Though he denied any links with the deal in a television interview. The former air chief is a key link as per Italian investigations. The bribes of 12 million euros were made over two years and masked in little driblets of 510,000 euros. The money travelled through a network of front companies in Tunisia, Mauritius and Delhi. Gerosa's company in Tunisia was, quite appropriately, called Gordian Services.
Finmeccanica's then country head Girasole left India in March 2012 after his name came up in transcripts presented in the preliminary inquiry. The Italian police recorded middlemen Haschke and Gerosa as saying Girasole was paid up to 10,000 euros a month between 2009 and 2012. Girasole is not the subject of the Italian investigation. As the CBI begins groping around this complex case, the middlemen are confident they won't get caught. "It will take them at least 10 years to find the trail to Mauritius," Hashcke bragged to Gerosa in one of the intercepts by the Italian police.
A Whiff Again of Bofors
A Finmeccanica press statement insisted that its companies fully complied with Indian laws: "Finmeccanica is confident that AgustaWestland will demonstrate that it has fully complied with Indian law."
Tata Power SED hinted at the Italian firm's deep inroads into the mod, particularly the air force, which gave them inside information on the tender. "They were so confident of bagging the contract that they bid alone," a Tata executive says.
That the wheels of the world's largest arms industry are greased with liquor, women and cash is the world's worst kept secret. Andrew Feinstein, a former South African MP-turned-anti-corruption crusader, in his 2011 book The Shadow World, on the global arms industry, writes about an unnamed senior Indian Army general in Delhi who would not allow an arms salesman past his door without a bottle of Blue Label. "The endemic corruption so evident in the ill-fated Bofors deal has not disappeared despite haphazard attempts to debar companies caught paying bribes," he writes.
The mod reaction to such bribery is haphazard because it does not stop corruption. Instead, it only ends up shooting itself in the foot by affecting defence preparedness. The blacklist of four major arms firms from Singapore, Germany, Israel and South Africa has paralysed the process of acquiring modern artillery and anti-aircraft guns for the Army over a decade. Globally, arms firms are blacklisted only in the serious case of weapons proliferation to rogue states. "If kickbacks are detected during a defence deal, we should first establish the quantum of wrongdoing and then penalise errant firms, recover the bribe money from them or cancel contracts, not merely blacklist them," says Major General (retired) Mrinal Suman. To blacklist the company, the mod needs the CBI to chargesheet the firm. Italian authorities have not cooperated with the CBI officials who landed in Rome on February 19 because with only mod press clippings at their disposal, the investigating agency has not registered a criminal case. The CBI's hopes rest on an Italian lawyer they have hired to establish the role of Indians in the case.
The prospect of facing an angry Opposition in the Budget session of Parliament on February 21 has caused at least one upa minister to wish for early elections. "At least it will end our misery," he said. "Today, it is a helicopter, tomorrow it will be a ship and a submarine the day after." BJP has compared the AgustaWestland case to the Bofors pay-off case, which dominated Indian elections in 1989 and unseated Rajiv Gandhi from power.
BJP is intent on clamouring for Antony's resignation for his inaction. The Congress's battle is political, and A.K. Antony, No. 2 in the Cabinet, is too valuable to the highest command to be a scapegoat.
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As Antony pleads innocence, the helicopter scam underlines how Italy has emerged as one of the biggest arms suppliers to India over the past five years : The Big Story - India Today
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