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When bad guy Raoul Silva (Javier Bardem) and James Bond face off in some of the most daring stunt scenes of Skyfall, a little role went unnoticed—that of two helicopters, AW101 and AW159. In somewhat less heroic circumstances, one of these choppers, the AW101, finds itself at the centre of a probe in Italy over a deal with the Indian government.
In February 2010, AgustaWestland won a Rs 3,546-crore contract for 12 AW101 helicopters. For most observers of India's military acquisition process, this deal was unlike any they had seen before. The process worked like clockwork—right from the time that tenders were floated in late 2006 to the trials, evaluations, government approvals and financial negotiations. It took the government just over three years to commit Rs 3,546 crore to AgustaWestland for the purchase of 12 new helicopters to replace the older-generation Russian machines that were used to transport senior government functionaries. So while other key acquisitions got shelved, the finance ministry, then headed by Pranab Mukherjee, cleared the chopper deal. In fact, the deal was pushed through after the Special Protection Group, then headed by B V Wanchoo, insisted that the helicopters were urgently needed due to security implications.
At a press conference on February 16, 2010, when asked why the VVIP helicopters got preference over other acquisitions, Defence Minister A K Antony said, "Not only the Air Force but the SPG was also involved. They told us that due to the security scenario, we should consider this proposal and the Finance Ministry also agreed to take their comments and it was cleared by the Cabinet Committee on Security."
The helicopters were to join India's VVIP aircraft fleet, which already has five Embraer 135 jets and three Boeing VVIP aircraft, in 2012. But earlier this year, Italian investigators began probing allegations that AgustaWestland paid a commission of Euro 51 million (over Rs 350 crore) to Switzerland-based consultant Guido Ralph Haschke to facilitate the India deal.
As Italy continues to probe the men and methods used to allegedly launder money, the Agusta deal points to an elaborate network of agents, businessmen, government officials and even politicians in India who could be involved in swinging the deal.
As reported by The Indian Express in a series of articles, the names of several Indians have already surfaced in the preliminary inquiry report that has been filed by Italian investigators in a court in Naples.
The investigation started last year after an open succession war between Francesco Guarguanglini, who was then heading Finmeccanica, the parent company of Agusta, and his successor, Giuseppe Orsi, who now heads the Italian company. Meanwhile, late last year, Silvio Berlusconi's coalition government, which had as coalition partners parties such as the far-right Lega Nord (now alleged to have received kickbacks to swing the deal in Italy), was replaced by one led by technocrat Mario Monti. This prompted Lorenzo Borgogni, a former top employee of Finmeccanica and an Orsi-baiter, to blow the whistle on Agusta's deal with the Indian government. Borgogni told prosecutors in a detailed statement that kickbacks were paid by AgustaWestland for the Indian contract through the use of middlemen and that the total amount came up to Euro 51 million.
Borgogni detailed how the money was paid through a network of middlemen and consultants, with the main allegation being that at least Euro 10 million was funnelled back to Italy and paid to the Lega Nord party in return for its support to Orsi's bid to become president of Finmeccanica.
In his interrogation, which is part of the 568-page report by Italian investigators, Borgogni says the company decided to divert funds for commissions, knowing how risky it is to hire agents for Indian deals.
"Paid mediation is forbidden in India. And this is very risky because if India comes to know, it can cancel the contract and blacklist Finmeccanica, as it happened earlier with a French company, I think. So the money comes out of Agusta and goes to Haschke and to Michel, from Michel to Orsi, from Orsi to Lega Nord (political party)," Borgogni says in the investigation report.
With this as the starting point, Italian prosecutors began an elaborate inquiry—involving planting of bugs, intercepting phone conversations, shadowing and tailing key suspects, scrutinising finances and recording secret audio and video clips—to establish if irregularities took place. The inquiry, which runs into hundreds of pages of evidence ranging from taped conversations to seized papers and confessions of business partners and associates of the key players, brings out several facts that point to money laundering and corruption in connection with the VVIP deal.
THE MONEY FLOW
While facts continue to emerge in the case, the money trail has allegedly led to two middlemen who managed to 'fix' the deal in India. One is Switzerland-based Guido Haschke, who was allegedly used by AgustaWestland to swing the Indian contract. Haschke and his business partner Carlo Gerosa, both Italian nationals, are old India hands. They are partners in Aeromatrix, a Chandigarh-based engineering and IT outsourcing company that is also being investigated for suspected money laundering. Haschke and Gerosa have closely worked with the AgustaWestland team in New Delhi and have, in the past, received contracts worth millions from Finmeccanica for various consultancy services and contracts in India.
A taped conversation between Haschke and Gerosa clearly points to Haschke's knowledge that money was paid off in India and that illegal work was afoot. In the conversation, he worries about explaining his business in India to his wife.
"She is vague. She's fine, then angry, then she is all nice and sweet, then angry again...Now I have to think about what I should tell her...Somehow I have to explain to her what the f*#^ I earn from India," he says. When Gerosa responds by saying he can explain that they are doing a project together, Haschke says, "At some point in time, she will want to know what we do together, given that we go to India together."
In other recordings, besides talking about money being funnelled into India and discussing their possible defence in Indian courts for laundering Euro 10-15 million, Haschke elaborates on how he has destroyed all evidence linking him to the Indian VVIP deal.
"I cleaned every single piece of paper from my office. I completely cleaned the computer...Actually, you know what I did? I removed my old computer and now there is a new one where there is nothing. So even if they search for erased data, they will not find anything. Now I am deleting all emails which passed through Carlo's (Gerosa's) server in the office," Haschke says in a conversation with Gerosa.
For the Italian investigators, establishing the roles of Haschke and Gerosa in the deal wasn't too difficult given their India business and the fact that Gerosa is an old friend of Indian businessman Sanjeev Kumar 'Julie' Tyagi. The Indian businessman, a known consultant in the power sector, is well connected in the power circles of New Delhi and even the military establishment. Former Air Chief Marshal SP Tyagi, who was heading the Air Force when specifications were drawn up and tenders were floated for the VVIP helicopter deal in 2006, is a cousin of Julie Tyagi's. Investigations reveal that Julie Tyagi is one of the rings in this complex web of middlemen who allegedly influenced the deal.
In a conversation recorded on March 1 between Haschke and Gerosa, Julie Tyagi's name comes up when they discuss how important it is for them to ensure that their names don't leak. "The only one who has no risks is Julie, because we are those in the front," says Gerosa.
But the biggest fish in the pond so far is London-based Christian Michel, a British national who has allegedly been paid Euro 30 million, the lion's share of the kickback that was meant to be distributed to those in the Indian and Italian establishments. Michel is a little-known but highly connected businessman who is said to have high-level political contacts in India and has won admirers for his easy access to top Indian politicians and members of the establishment.
Little has emerged till now on his Indian connections in this particular deal but according to the Italian investigation, he was a crucial part of the contract and was the one who allegedly pumped back Euro 10 million into Italy—money that was paid to Orsi and handed over to the political parties. However, since Michel did not operate from Italy, the initial probe report does not record how he operated in the entire deal.
There are several snatches of conversations and other evidence that do point to his role in the deal, including a "two step approach" by AgustaWestland in which the commission was allegedly divided between Haschke and Michel. According to media reports in Italy on the probe, prosecutors have named Michel as "one of the two mediators" in the deal. The reports say that according to the line of investigation, AgustaWestland initially paid Haschke Euro 41 million as part of a contract for the Indian deal but this was increased by Euro 10 million when Michel came into the picture.
What next for India?
So far, the Italian investigation has been limited to establishing that a) illegal commissions were paid, b) money laundering took place in which funds were routed to India through Tunisia and Mauritius and c) politicians and businessmen in Italy illegally benefited from the contract. The scope of the Italian probe will end at the point where the alleged commission money reaches India. The probe will not go into who was paid the money in the Indian establishment or how the funds were worked around within the power circles of New Delhi.
An Indian investigation, if any, will have to start from this point. So far, the government hasn't been fast enough to respond to revelations that threaten to open a can of worms for India's defence and political circles. The defence ministry did request the Italian government for information on their probe, but it is a futile exercise since the prosecutors undertaking the investigation are unlikely to divulge information to a foreign nation's defence or external affairs ministry. The government has now taken "serious note" of the alleged irregularities in the deal, with the Ministry of External Affairs calling in the Italian ambassador and telling him that New Delhi was serious about the information it had sought from Rome about the probe.
THE KEY PLAYERS
Guido Haschke & Carlo Gerosa
Haschke, a Switzerland-based businessman, has been operating in India for several years. He was allegedly one of the two agents used by AgustaWestland to swing the Indian contract. Haschke worked closely with the Agusta team in New Delhi and has in the past allegedly received contracts worth millions from Finmeccanica, the parent company of AgustaWestland, for various consultancy services and contracts in India. He had been detained by Swiss authorities on money laundering charges but is now out on bail. Haschke, along with his partner Carlo Gerosa, another Italian and a old India hand, own Chandigarh-based Aeromatrix, an engineering and IT outsourcing company that is being investigated for suspected money laundering.
Sanjeev Kumar Tyagi
Delhi-based businessman Sanjeev Kumar 'Julie' Tyagi is an old friend of Gerosa's. A consultant in the power sector, Julie has an office on New Delhi's Feroz Shah Road as well as a house in the posh Sainik Farms. The well-connected Tyagi is known to move around in luxury cars and said to have major investments in real-estate. His older brother 'Jolly' Tyagi has dabbled in politics in the past. The duo are known to be close to leaders and functionaries in the BJP. Former Air Chief Marshal SP Tyagi is Julie's cousin.
The low-profile London-based consultant allegedly got the lion's share of the Euro 51 million commission. Michel is know for his connections in the Congress party and access to the government—much like his father Wolfgang Richard Max Michel had when he operated in India in the 80s and 90s. Old timers recall Wolfgang, who died earlier this year, as a controversial businessman who worked extensively in Indian government circles for several years. Christian's sister Caroline heads the literary agency Peters Fraser Dunlop and was recently listed in the top 500 of the 'Tatler List' that rates influential people in the UK.
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