Anatomy of AgustaWestland helicopter deal

With the arrest of Finmeccanica CEO Orsi Giuseppe in Italy for his role in arranging kickbacks for the Indian VVIP chopper deal and the CBI inquiry that was subsequently ordered, the focus is back on a widespread investigation in Italy that has exposed a net of fixers and middlemen.

While in the past investigation reports discussed the cast of characters and how money was to be paid for favours, the latest report filed in Italian courts is more significant as it details the money trail. The report specifically talks about how a major part of the alleged Euro 51 million kickbacks was arranged and received by players in Italy, India and Switzerland.

At the heart of the money trail are three engineering consultancy companies IDS Tunisia, IDS India and Chandigarh-based Aeromatrix.

According to the investigation report, Finmecannica officials allegedly routed money to the middlemen by giving out dubious consultancy contracts to these three firms. The report claimed that payments were made between 2007 and 2011 and calculated the total money channeled through this at over Euro 21 million.

The Italian investigation report into the Rs 3,546 crore VVIP chopper scandal claims that while the middlemen were paid at least Euro 400,000 upfront by Finmecannica in 2005 for bribing officials in India, the rest of the kickbacks came through inflated bills and invoices that were in the guise of engineering contracts in the 2007-11 period.

The report says that Finmecannica CEO Giuseppe Orsi agreed first for a 5 per cent contract with the middlemen Guido Haschke, Carlo Gerosa and UK consultant Christian Michel to swing the contract.

"The amounts agreed between AgustaWestland representatives, Giuseppe Orsi and Spagnolini Bruno, with the mediators Haschke Guido Ralph, Gerosa Carlo and also Christian Mitchell were also inclusive of bribes to be paid to Indian public officials to perform deeds which were against their office duties and in particular to manipulate the tender regarding the acquisition of the above mentioned helicopters," the report specifically states.

The report alleges that a major part of the Euro 51 million kickbacks that were allegedly paid came in the form of monthly remittances that were disguised as payments made for engineering contracts.

In evidence that they have managed to piece together, Italian investigators claim that at least Euro 21 million was paid through engineering contracts on a monthly basis between 2007 and 2011. The payments were allegedly made through two companies IDS India and IDS Tunisia.

The report says that that money was paid partly through a "consultancy contract between AW and Gordian Services Sarl (a company which is attributable to them)" and later engineering contracts.

"They signed engineering contracts with companies IDS India and IDS Tunisia, to cover up the payment (still underway) of money to pay Indian public officials and the mediators Haschke and Gerosa (the two Switzerland-based middlemen), in an economic operation in which compensations for mediation's were not allowed," the report says.

As per the records mentioned in the report, a monthly payment of Euro 510,000 was being made to the IDS companies and that no taxes were being paid on the same. The report has detailed list of modes of payments made and says that the payments were to continue till as late as December 2012.

While the report alleges that part of the money was routed to the three Tyagi brothers who have been named and was allegedly also shared with former Air Chief SP Tyagi, there are not many details on how and where the money was routed to in India.

The Italian Probe

TIMELINE

2005-06: Carlo Gerosa and Guido Haschke, business partners based in Switzerland, approach AgustaWestland claiming they can help it with the Indian contract. Key contention that the technical requirements of the contract can be tweaked allegedly swung the deal.

2006: Agusta officials 'tie up' with Haschke and Gerosa, sign consultancy contracts. Deal is that Euro 51 million commission will be paid, partly through engineering consultancy contracts for bagging the deal. UK-based consultant Christian Michel too enters the picture.

2007: After the down selection of AgustaWestland for the contract along with an American contender, payments start funneling in from the consultancy contracts. At first they are small ranging from Euro 111,000 to 286,987 but over next few years swell up to an average of Euro 550,000 per month.

2009-10: Contract is bagged by AgustaWestland. Payments made through engineering contracts continue.

2011: An Agusta insider spills the beans to Italian investigators. Inquiry is ordered, including wire traps, phone taps, car bugging and electronic surveillance.

2012: Italian prosecutors start filing cases. Name Indian players, reveal a nexus of arms agents and fixers.

2013: Finmeccanica CEO held, former Indian Air Chief named as receiving bribes.

THE CAST

ORSI Giuseppe, CEO and president of Finmeccanica from May 4, 2011, previously CEO of AgustaWestland Holdings NV from 2005 to May 2011

SPAGNOLINI Bruno, CEO from May 2011 of AgustaWestland Holdings NV based in Holland

HASCHKE Guido Ralph, chief and partner of Gadit SA of Lugano and Gordian Services SARL based in Tunis

GEROSA Carlo, Haschke's partner in the above companies

Plea in SC against deal

A DELHI lawyer on Wednesday filed a PIL in the Supreme Court in the controversial AgustaWestland VVIP chopper deal and demanded quashing of the entire procurement contract, besides an investigation by a Special Investigation Team (SIT).

The petition by advocate M L Sharma claimed it was imperative for a fair investigation into the matter that a SIT, under the monitoring of the apex court, is set up in the wake of the failure of the government to act in the matter until now.

The petition contended that the CBI was apparently controlled by the government and hence there will be manipulations if it solely investigated the matter. Sharma also pointed out that the deal was cleared by the Finance Ministry, then headed by Pranab Mukherjee, who is now the President.

"Action has been taken in Italy on the VVIP helicopter scam. The CEO of the company has been arrested. But no action has been taken here. The country which would have benefited from the deal has taken action while the country which lost money has not done anything," said the petition.

Citing the Bofors probe, the petition raised the "apprehension" of the CBI investigation getting scuttled by extraneous factors and so requested the court for appointing an SIT, coupled with a judicial scrutiny.

The PIL demanded directives for quashing the 2010 contract with Finmeccanica Italy for the supply of 12 AW101 helicopters. ENS

From the Italian probe report

"They promised and managed to pay, through brothers Juli Tyagi, Docsa Tyagi and Sandeep Tyagi, a certain amount of money, not yet quantified, to Marshal Tyagi Shashi, Chief of Staff in the Indian Air Force from 2004 to 2007 a public officer or anyway in charge of functions and activities equivalent to those of a public officer in India to perform and to have performed a deed against his office duties."

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