Shadow of a scam
Will the BJP's strategy to pin the blame for the AgustaWestland scam on Sonia Gandhi work?
May 4, 2016 | UPDATED 15:00 IST
Sonia Gandhi
On a hot May morning, with the temperature touching 40 degrees in Lutyens' Delhi, the Congress party's communications chief Randeep Surjewala fights sleep and a barrage of phone calls from Congress bigwigs and the media as he crafts a counterattack strategy for the next day's Parliament session. It has been like this for nearly a week now since a political war of words broke out, with the BJP directly targeting Congress president Sonia Gandhiand her close advisors in Parliament and outside, hurling a fusillade of bribery accusations in the Rs 3,600 crore VVIP helicopter deal signed with Italian firm AgustaWestland by the UPA in 2010. Surjewala's late-night discussions over the scam with Sonia Gandhi's political secretary Ahmed Patel stretch into the wee hours. He now steels Jyotiraditya Scindia, his party's chief whip in the Lok Sabha, to tackle queries on the helicopter bribery scandal.
The immediate impetus for the BJP's broadside against the Gandhis was the April 7 judgement of a court in Milan, convicting two executives-former CEO Giuseppe Orsi and head of the helicopter division, Bruno Spagnolini-of Italian helicopter maker Finmeccanica, for bribery. They were sentenced to four-and-a-half and four years in prison respectively for paying out bribes to the tune of 30 million Euros (in a variety of deals involving various countries).
The parallels with the 1987 Bofors scandal are unmistakable: both are defence bribery scandals which surfaced overseas but which had the potential of inflicting grievous domestic political harm. The Milan court's 225-page judgement painstakingly documented how a ring of middlemen had allegedly bribed family members of the then air force chief SP Tyagi and possibly, bureaucrats and politicians, to change tender specifications and knock a rival helicopter firm out of contention.
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At the BJP party headquarters on 11, Ashoka Road, a short distance away from Surjewala's war room, BJP president Amit Shah revels at the Congress's discomfiture. For his party, even a link as tenuous as a mention of party president Sonia Gandhi in the court judgement is a godsend to remind the electorate just why they had voted the UPA out. In this case, it was a scam that descended from the skies. "We came to power on a promise to strike at corruption and we are committed to fulfill it by taking it in the right direction," Shah told India Today.
The party leadership is going by the instincts of the rank and file that Sonia should not be let off if there is evidence. As one partyman puts it: "Vajpayeeji paid a heavy price for being soft on the Nehru-Gandhi family by looking the other way when the family could have been brought to account for its misdemeanours. Modi can ill-afford to do so or else he will lose his USP."
Sonia Gandhi's only response so far has been measured. "I have done nothing wrong," she told media in the capital on April 28. "The (NDA) government is there for two years; an inquiry is there. Why don't they complete it as early as possible and impartially?"
On May 4, Union defence minister Manohar Parrikar listed the various loopholes in the VVIP chopper deal , mentioning how the maximum altitude of the choppers in the contract was reduced to favour the AgustaWestland machine. "A situation was created in which the EC-225 was eliminated." The Italian firm did not field a VVIP variant of the chopper for the trials which American firm Sikorsky did. "The country wants to know who benefitted from the corruption."
"We are committed to taking the case to its logical end," said parliamentary affairs minister Venkaiah Naidu, "but we are not trying to fix Sonia Gandhi. It is the Italian court that named her. A red corner notice stands issued to middleman Christian Michel. Once he comes?he will reveal. And logical action will follow."
Shah, credited with converting the JNU controversy and the Bharat Mata slogan into rallying points for the BJP, hopes to do the same with AgustaWestland. He is now exhorting state BJP presidents across the country to extract maximum political mileage out of the scam. The party's slogan writers have been entrusted with coining slogans lampooning the Congress. Shah's plan is simple. Keep the scam alive till the crucial Uttar Pradesh assembly elections next year, and, if possible, beyond, to the 2019 general elections. At the BJP parliamentary party meeting on May 2, Naidu asked party MPs to collect all AW papers, to explain the scam to their constituents.
So far, the BJP's sound-and-fury strategy is working. It threw the Congress off-guard just as it had planned to target the government over a botched attempt to impose President's rule in Uttarakhand and the drought in several regions of the country. They now have to close ranks to shield the party president from attack.
The AW note also targeted Sonia Gandhi's closest political aides, particularly her political advisor Ahmed Patel. His initials 'AP' figure in a bribe menu of bureaucrats, politicians and air force officials. The hand-written note, which records how the total commission of 30 million Euros was divided among the alleged beneficiaries, is purported to have been written by Italian middleman Guido Ralph Haschke and dictated by Michel.
The BJP strategy of acrimony seems to have paid off in Parliament at least. Congress sources concede that the ruling party has managed to divert attention away from GST, Uttarakhand and the drought. The Congress has been reeling under a welter of charges of late: from Rahul Gandhi's citizenship controversy (Swamy alleged he had declared himself to be a British citizen), the then home minister P. Chidambaram changing the affidavit in the Ishrat Jahan case and the alleged disproportionate assets case against his son Karti. AgustaWestland allows the Modi government, it would seem, to finally respond to Rahul Gandhi's devastating suit-boot sarkar salvo that tagged the Modi government as anti-poor.
"The Modi government is all about catchy slogans, and Prime Minister Modi knows his government has done little to translate these slogans into action. So to divert public scrutiny, the government is busy levelling false allegations against the Congress," says Congress Lok Sabha MP Kamal Nath.
Subramanian Swamy holds forth in Parliament
Surjewala's team has marshaled his own set of counter-allegations questioning, among other things, the two-year delay in not taking action against AgustaWestland. "Viewed in light of no action against Agusta for two years, the real intrigue and conspiracy lies at the doorstep of the Modi government," he alleges. The Congress has questioned the presence of air chief Tyagi on the advisory board of the Vivekananda Foundation founded by NSA Ajit Doval, and why they should have allowed the company to participate in defence contracts in partnerships, particularly an FIPB permission last October and CAG raps for two BJP governments-Chhattisgarh and Rajasthan-over the purchase of helicopters from AW resulting in losses of Rs 65 lakh and Rs 1.14 crore respectively to the public exchequer.
Will the charges stick?
The BJP claimed victory in the National Herald case where Subramanian Swamy alleged criminal misappropriation by both Sonia Gandhi and her son. They had to personally appear in court last December to get bail. Will the charges in the helicopter bribery case stick? Going by the evidence so far, it seems extremely unlikely. The Italian court verdict does not indict Sonia Gandhi, it merely mentions her name four times, twice each on page 193 and 204 of the judgement.
The BJP claimed victory in the National Herald case where Subramanian Swamy alleged criminal misappropriation by both Sonia Gandhi and her son. They had to personally appear in court last December to get bail. Will the charges in the helicopter bribery case stick? Going by the evidence so far, it seems extremely unlikely. The Italian court verdict does not indict Sonia Gandhi, it merely mentions her name four times, twice each on page 193 and 204 of the judgement.
The links between the payoffs and beneficiaries are as tenuous as the alleged ledger entries of cash payments to 27 Indian politicians from L.K. Advani to V.C. Shukla in the Jain Hawala diary case which shook New Delhi in 1996. The Delhi High Court acquitted all politicians in that case ruling that the diary entries were inadmissible as evidence. "The hand-written note listing alleged bribe recipients in the AgustaWestland case has persuasive, not evidentiary value. Without corroborative evidence, it is useless,"says Deepak Jena, a New Delhi-based Supreme Court lawyer.
A crucial lifeline for the Congress president appeared from an unexpected quarter-a May 3 interview to an Indian TV channel NewsX by Judge Marco Maiga who delivered the April 7 verdict in the Milan court. "We have no evidence against Sonia Gandhi," the judge said, "only a mention of her in a fax...the translation of the fax was sent to Michel. In the fax, Gandhi has been indicated as someone who will fly in the VVIP helicopters. (In reality, the choppers were for the head of state and government). Maiga admits that AP in the note could stand for Ahmed Patel, but calls it only a hypothesis.
"Let the CBI and ED collect evidence against me and arrest me if I'm found guilty," Patel told India Today. "Nowhere does the Italian court verdict mention I was paid any money by anyone," he says, dismissing the note as fake.
"It's strange that the government is throwing mud at the Opposition when it has all the investigative agencies at its disposal. Find the culprits and punish them," says K. Raju, Rahul Gandhi's political advisor and head of the SC cell of the party.
An indication of the BJP's hardening stand on the issue is the privilege motion it has moved in Parliament against Ghulam Nabi Azad for alleging that PM Modi pressed his Italian counterpart for evidence implicating Sonia Gandhi in the AgustaWestland case in exchange for freeing the Italian marines. However, a small section of the BJP leadership is wary of doing anything to arrest Sonia Gandhi because that could trigger a sympathy wave like the one that swept Indira Gandhi back to power in 1980.
Enter the flying Ferraris
That bribes were paid so that the firm could bag the Rs 3,600 crore helicopter contract in 2010 is now beyond doubt. Investigations by the Italian prosecutors in 2013 detailed a sum of 30 million Euros which the middlemen skimmed off the deal and split between Italian executives and Indian officials. The furious war of words in Parliament masks a fitful investigation by the CBI and the ED that has been under way for nearly three years into what Orsi called the case of the 'Flying Ferraris' in a 2010 interview to an Indian newspaper. Orsi was referring to the AW-101's luxe appeal, but it was a case of misplaced priorities when it came to the armed forces who struggled with vintage helicopters, particularly the army whose ageing Cheetah choppers maintained an air bridge to Siachen and the navy whose dwindling fleet of 1980s-era Sea King helicopters seriously impaired its ability to hunt enemy submarines at sea.
That bribes were paid so that the firm could bag the Rs 3,600 crore helicopter contract in 2010 is now beyond doubt. Investigations by the Italian prosecutors in 2013 detailed a sum of 30 million Euros which the middlemen skimmed off the deal and split between Italian executives and Indian officials. The furious war of words in Parliament masks a fitful investigation by the CBI and the ED that has been under way for nearly three years into what Orsi called the case of the 'Flying Ferraris' in a 2010 interview to an Indian newspaper. Orsi was referring to the AW-101's luxe appeal, but it was a case of misplaced priorities when it came to the armed forces who struggled with vintage helicopters, particularly the army whose ageing Cheetah choppers maintained an air bridge to Siachen and the navy whose dwindling fleet of 1980s-era Sea King helicopters seriously impaired its ability to hunt enemy submarines at sea.
Finmeccanica, the world's ninth largest arms firm with a turnover of 13 billion Euros, wanted to break into the Indian military helicopter market.
AW did not even make the cut when the IAF proposed to replace its ageing VVIP fleet in 1999. France's Eurocopter (now Airbus helicopters) EC-225 met all the requirements for the initial tender, which was cancelled in 2002 because it was the sole contender.
In a revised Request for Proposals (RFP) in 2006, the altitude requirement of the helicopter was reduced from 6,000 metres to 4,500 metres and introduced a mandatory cabin height requirement of 1.8 metres and a new drift-down parameter.
The CBI believes it was a decision taken in a March 2005 meeting (see box) where air chief Tyagi, former SPG chief B.V. Wanchoo and former NSA M.K. Narayanan were all present, that instantly tipped the scales in favour of the AW-101. This is the 'criminal conspiracy' angle mentioned in its FIR, and has questioned all those present in the 2005 meeting, .
A March 2013 report of the Comptroller and Auditor General highlighted egregious lapses in the contract and concluded that the process of acquiring the helicopters "from framing of quality requirements to the conclusion of the contract differed from established procurement procedures". The report said that "lowering of the altitude requirement was against the operational requirement of the helicopters, especially in many areas of the north and northeast of India". The revised requirements in 2006 made the competition more restrictive instead of broad-based. The fresh RFP went to six vendors instead of 11 in 2002.
The Congress quotes a Press Information Bureau release of 2013 which says the mandatory operational altitude was changed in 2003 by the Vajpayee government so that more choppers could enter the contest.
The CAG report notes a second departure from rules-the 2008 Field Evaluation Trial of the EH-101 was not conducted on the actual helicopter. Though the 2006 RFP had mandated the trials be conducted in India, they were carried out abroad.
UPA-era defence minister A.K. Antony denies any wrongdoing and says it was his government that started the CBI inquiry. "The UPA government handed over the investigation to CBI on February 12, 2013, and cancelled the deal with Agusta on January 1, 2014. We confiscated three helicopters and recovered Rs 2,062 crore by confiscating bank guarantees as against the total payment of Rs 1,620 crore made to Agusta. In addition, we filed Rs 3,000 crore in arbitration against Agusta for violating the integrity clause."
Antony says the UPA government had even proposed to set up a Joint Parliamentary Committee on the Agusta deal in March 2013, but the BJP refused to participate in it.
Italian authorities, however, say that the UPA government was reluctant to cooperate in the AW probe. The only evidence they supplied Italian prosecutors, Judge Maiga told an Indian news channel, were publicly available documents. These included a copy of the MoD's RFP in the helicopter tender and the CAG report which spoke of anomalies in the deal.
The April 7 verdict passed by an appellate court in Milan had followed Orsi and Spagnolini's appeal. The duo had been arrested and probed by the Italian police in 2013 but were acquitted of corruption charges by a lower court in October 2014. It was their appeal against the false invoicing charges that unravelled the case.
The task before the CBI, which registered an FIR on March 14, 2013, is now to conclusively link the money to the 'criminal conspiracy' that it says favoured AgustaWestland.
This task is going to be Herculean. For several years now, payoffs for arms deals have been routed through multiple countries and tax havens that are tight-lipped about such transactions-precisely why they are chosen.
Wiretaps of middlemen Haschke and Carlo Gerosa by Italian police in 2013 revealed the circuitous route the bribe money took to reach beneficiaries in India. "Don't worry," goes Haschke's much-publicised assurance to Gerosa, "we have built such a complex maze of companies to route bribes to India that even after the probe, no one would be caught. Even if investigations find the companies, it would take agencies 10 years to reach Mauritius."
The CBI sent letters rogatory to a total of eight countries-Italy, Tunisia, Mauritius in 2013 and the UAE, UK, Switzerland, Singapore and British Virgin Islands in 2014-asking for details of the bank transactions, but is yet to get replies to any of them.
The CBI's 2014 FIR names a dozen individuals. These include Sanjeev, Rajeev and Sandeep Tyagi, cousins of ex-air chief Tyagi; Finmeccanica officials Orsi and Spagnolini, alleged middlemen Haschke, Gerosa and Michel, lawyer Gautam Khaitan and Praveen Bakshi, CEO of the Chandigarh-based firm Aeromatrix. Last year, the ED registered cases against 21 individuals under the Prevention of Money Laundering Act and confiscated Michel's property in Delhi worth Rs 11 crore.
Michel told India Today television that he was ready to submit documents related to the case through the Indian embassy, adding he would hire a lawyer to move India courts very soon. He claimed never to have met the Gandhi family ever. He dismissed the letter he sent to Hulet as a forgery for which he had sued Haschke.
The Bofors shadow
The Italian connection in this growing scandal inevitably recalls the spectre of the infamous Bofors deal that has haunted Rajiv Gandhi's legacy. The AW case shot to prominence in 2013, in the same city where Bofors middleman, Italian businessman Ottavio Quattrocchi, breathed his last in 2013. The Bofors scandal began with an April 1987 broadcast on Swedish radio and followed up by an Indian newspaper, triggering off a political backlash against the Rajiv government. AgustaWestland was a year-long investigation by Italian prosecutors which culminated in the 2016 convictions by the Italian appellate court.
The Italian connection in this growing scandal inevitably recalls the spectre of the infamous Bofors deal that has haunted Rajiv Gandhi's legacy. The AW case shot to prominence in 2013, in the same city where Bofors middleman, Italian businessman Ottavio Quattrocchi, breathed his last in 2013. The Bofors scandal began with an April 1987 broadcast on Swedish radio and followed up by an Indian newspaper, triggering off a political backlash against the Rajiv government. AgustaWestland was a year-long investigation by Italian prosecutors which culminated in the 2016 convictions by the Italian appellate court.
Choppergate's 'Quattrocchi', investigating officials say, is Christian James Michel, 55, a UK national who jets between offices in London, Dubai and New Delhi. An established arms dealer, Michel had successfully sued French warplane manufacturer Dassault over a 2000 contract for the sale of 10 Mirage 2000 jets worth 346 million Euros to the IAF. Dassault had to pay Michel an unspecified sum in an out-of-court settlement.
Union telecom minister Ravi Shankar Prasad alleges the Congress let Michel flee India in February 2013. Last year, the CBI issued a non-bailable warrant against him. Michel breathed easy after the 2014 verdict by the Italian lower court absolved the Finmeccanica executives of corruption. The court also suspended the warrant Indian authorities had issued. Michel now holds the key to the payoffs made to Indian officials in the helicopter scam.
"The sad thing in India is that investigations start, there is a media frenzy and nothing comes of it," says London-based solicitor Sarosh Zaiwalla. who specialises in international litigation. "If there is political will, there will be a way, because today with the low tolerance for corruption and money laundering, countries can be persuaded to act on defaulters."
Former CBI director R.K. Raghavan says a combination of legal and diplomatic pressure will be needed if the bribery investigation is to reach a conclusion. "It could take months or years for the money trail to be clearly established and the accused brought to book," he says. Until then, it will remain a Bofors-like political spectre hovering over the Congress. Which suits the BJP.
Follow the writer on Twitter @sandeepunnithan
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