the deal final

7/28/2019 The Deal Final

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The story and scandal behind the Rs 3,546 crore deal for VVIP choppers thatis under probe on corruption charges in Italy, reportsMANU PUBBY

AGUSTA WESTLAND

THE DEAL

E X P R E S S I N V E S T I G A T I O N


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Indian helicopter deal sparks corruption row in Italy 3

Antony orders probe into VVIP copter deal 4

VVIP helicopters: Italian firm says deal above board 4

India helicopter deal: Italy probes Euro 51 mn payoff 5

Antony seeks report on Italy chopper deal investigation 6Italian under probe was active in Indian defence sector 6

Consultant in chopper deal held in Europe 8

Get probe details from Italy, Antony tells officials in MoD 9

Italy probe focuses on UK consultant 10

Lens on chopper firms India head over commission 11

Army officer sought $5 mn bribe: Italy probe 12

Ex-IAF pilot among 3 Indians named in VVIP helicopter probe 13

MoD asks Italy for info, promises strong action 14

In taped conversations, middleman talks about his unnamed Indian boss 15

Indian officials are morons, will take years to track links, middlemen said 17

I will tell Indian judges I spent 10-15 million euros on ballerinas, champagne 19

Chopper deal kickbacks: 'India changed tech requirements to help Italian firm' 20

Records confirm tender was altered, allowing AgustaWestland to qualify 21

Chop-a-deal 23

PHOTOGRAPHS COURTESY : www.agustawestland.com

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Contents

THE AFTERMATH I-XI

THE STORY BEFORE


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ITALIAN INVESTIGATORS Tuesday alleged that

business conglomerate Finmeccanica bribed S P

Tyagi when he was chief of the Indian Air Force to

swing the controversial AgustaWestland VVIP

chopper deal in favour of the company.

The allegation is made in a preliminary inquiry

report of the suspected corruption in the Rs 3,546

crore deal filed by prosecutors in Italy on Tuesday.

The 64-page report, filed in the tribunal of Busto

Arsizio city for the arrest of Finmeccanica CEO

Giuseppe Orsi, gives details of the case being

investigated by Italian prosecutors and alleges that

the then air chief, S P Tyagi, was instrumental in

swinging the deal and was paid "certain amount

of money, not yet quantified" through interme-

diaries.

Several attempts to reach Tyagi for his comment

were not successful.

Last October, when The Indian Express hadreported that Julie Tyagi, an Indian businessman

named by Italian prosecutors in the alleged kick-

backs probe, was closely related to S P Tyagi, the

former air chief had confirmed to the newspaper

that he was related to Julie but had also said they

had no business links.

This is the first time that a service chief has been

named in a probe into alleged corruption in the

procurement of defence systems.

The report, a copy of which is with The Indian

Express, alleges that technical requirements for

the contract were tweaked by India to allow the

AgustaWestland chopper enter the bidding pro-

cess and that kickbacks of 51 million euros (about

Rs 370 crore) were paid in Italy and India.

The Italian report names three brothers Julie

Tyagi, Docsa Tyagi and Sandeep Tyagi as the

Indian intermediaries who allegedly got kickbacks

and passed it on to Indian officials. It says Finmec-

canica's Orsi and alleged middlemen GuidoHaschke, Carlo Gerosa and Christian Michel facili-

VVIP chopper deal probe: Ex-IAF Chief Tyagiwas bribed to swing deal

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THE AFTERMATH


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tated the payments to India.

Julie Tyagi is the Indian businessman who had

been named in October as a relative of S P Tyagi.

"They promised and managed to pay, through

brothers Julie Tyagi, Docsa Tyagi and SandeepTyagi, a certain amount of money, not yet quanti-

fied, to Air Chief Marshal Shashi Tyagi, 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 offi-

cer in India - to perform and for having performed

a deed against his office duties," the report says.

The report also named Britain-based consul-

tant Christian Michel as the other major middle-

man in the deal. It alleges that Michel was paid a

"total amount of about 30 million euros, partly

destined to support the corrupt activity meant to

bag the order and partly to implement the con-

tract".

The report discusses the Indian contract in

detail and alleges that technical requirements

were tweaked to ensure that the Italian chopper

qualifies. As first reported by The Indian Express,

the service ceiling requirements for the contract

were changed by the Defence ministry before the

tenders were issued in 2006, giving AgustaWest-

land a chance to qualify."Haschke and Gerosa, through the Tyagi broth-

ers, in turn through their cousin Shashi Tyagi

managed first to change the tender details, in a

favourable way to AgustaWestland, modifying the

'operational ceiling' from 18,000 ft to 15,000 ft of

altitude, thus allowing AgustaWestland (which

otherwise could not have even submitted an

offer) to take part in the tender," the report says.

It alleges that the flight trials were also

tweaked. The trials were conducted after Tyagi

retired in 2007.

"Then they managed to introduce a compara-

tive flight trial with non-functional engine, thus

facilitating AgustaWestland helicopters, the only

ones which had three engines. In this way, they

managed to get the contract to AgustaWestland,"

the report says.

THE DEFENCEministry Tuesday ordered a CBI

probe into corruption allegations in the Rs 3,546

crore deal to procure VVIP helicopters for the Indi-

an Air Force after the CEO of the Italian firm sup-

plying them was arrested for his suspected role in

arranging bribes to bag the contract.

Giuseppe Orsi, CEO of Finmeccanica group, was

arrested by Italian authorities Tuesday morning

and arrest warrants were also issued for the two

Switzerland-based middlemen who allegedly paid

bribes in India Italian nationals Guido Haschke

and Carlo Gerosa. Britain-based consultant Chris-

tian Michel has also been named in the

chargesheet.

Orsi was arrested for his alleged role in arrang-

ing bribes amounting to 51 million euros to sell 12AW 101 choppers to the IAF. The Indian Express

was the first to report the scandal and had detailed

the alleged nexus ofmiddlemen involved in the

deal in a series of reports last year.

Hours after the arrests, the Defence ministry

issued a detailed statement which said that it had

tried to get information about the probe from Italy

and Britain the contract was signed with

AgustaWestland, UK but had been unsuccessful.

The ministry decided to ask the CBI to take over

the probe due to the arrests.

"Since no specific input has been received so far

from the two governments, MoD has decided to

refer the case to CBI for inquiry," the statement

said. "The contract signed with AgustaWestland

includes specific contractual provisions against

bribery and the use ofundue influence as well asan Integrity Pact."

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CEO of helicopter firm arrested, CBI to probe


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With the CBI taking over the case, the focus is

expected to turn on the Indians named in the Ital-

ian probe for their alleged role in the kickbacks.

Besides the two Italian middlemen, the prelimi-

nary report filed by Italian prosecutors had namedan Indian businessman, Sanjeev Julie' Tyagi, as an

accused in the case.

The arrest is seen as a major blow for Finmecca-

nica, the parent company of AgustaWestland, that

has repeatedly denied that any bribes were paid.

After Orsi's arrest, the company said its "operating

activities and ongoing projects will continue as

usual".

"In addition, Finmeccanica expresses support

for its chairman and CEO, with the hope that clari-

ty is established quickly, whilst reaffirming its

confidence in the judges," the company said in a

statement. Orsi, who was heading AgustaWest-

land when the deal was signed in 2010, is now the

CEO of the parent Finmeccanica.

While a probe has been ordered and the Italian

firm is in danger of being blacklisted if its officials

are found guilty of violating the stringent anti-cor-

ruption laws, sources said it is still too early to saythat the deal will be cancelled. IAF officials said

that out of the 12 VVIP choppers, three have

already arrived in India and are undergoing flight

tests.

Three more choppers are expected by the mid-

dle of this year, followed by the rest. As of now, the

order has not been terminated, with the Indian

government likely to wait for a CBI report before

taking a decision.

As reported by The Indian Express, the Italian

probe is working on the lines that AgustaWestland

was favoured by the IAF for the mega contract

after bribes were allegedly paid to first alter the

technical requirements and then to swing the con-

tract in its favour.

The technical requirements of the contract were

changed drastically before September 2006 whenthe tenders were floated. While the original

requirements held that the choppers should be

able to attain an altitude of 6,000 m, this was

reduced to 4,500 m before floating tenders.

This change also enabled AgustaWestland to

enter the competition as it did not qualify earlier

due to the 6,000 m altitude requirement.

AN EXPRESS STORY

24 FEB '12 THE FIRST REPORT: 'Indian helicopter

deal sparks corruption row in Italy'. Next day,

Defence ministry sought report from Indian mis-

sion in Italy

25 APR THE ALLEGED BRIBE: 'India helicopter

deal: Italy probes Euro 51 mn payoff'

28 APR KEY MIDDLEMAN GUIDO HASCHKE'S

INDIA CONNECTION: 'Italian under probe was

active in India defence sector'

23 OCT The Express reports role and connectionsof UK-based Christian Michel, co-accused in the

case

25 OCT THE EXPRESS BEGINS SERIES OF

REPORTS TRACKING THE ITALIAN INVESTIGA-

TION: role of Finmeccanica's India head; Indian

middlemen, including a former IAF chief's kin; the

middlemen's taped conversations

NOV 1 KEY DISCLOSURE: probe has found India

tweaked technical requirements of contract to get

AgustaWestland into race. On Dec 3, The Express

reported that a govt probe had established the

tweak

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GRAPPLING WITH yet another scandal involving

bribery in the acquisition of expensive helicopters

for use by VVIPs, the government on Wednesday

promised that the guilty would not be spared,

even as former Air Chief S P Tyagi, whose name

figures in the allegations, pleaded innocence.

A day after ordering the CBI probe, Defence

Minister A K Antony told reporters that strong

action will be taken against those found guilty.

"Nobody will be spared whatever may be the

consequences," he told reporters on the alleged

Italian chopper scam.

The name of Tyagi has reportedly figured in the

alleged scam, but he has stoutly refuted the

bribery charge against him.

Media reports have suggested that Tyagi was

allegedly beneficiary in the kickbacks to the tune

of 10 per cent of the Rs 3600 crore deal.

"I am innocent. These allegations are totallybaseless and I am denying them categorically," he

told reporters, while welcoming a probe into the

"scandal", Tyagi said.

The former Air Chief, however, admitted that he

had met Carlo, purportedly named as middleman

in the Italian probe report, at his cousin's place.

"But when you say you have contact with him,

the answer is no. What connection could I have

with him. The entire process ofevaluation, trials,

contracts etc took place in 2010," he said.

Another scam has unfolded with the arrest of

the head of a state-controlled Italian aerospace

company yesterday. The company is suspected of

paying bribes of about Rs 362 crore in India to get

orders for helicopters to ferry Indian VVIPs,

prompting the government to order a CBI probe.

Antony said CBI has been asked to give an early

report on its probe into alleged kickbacks in the

AgustaWestland helicopter deal."Once we get the preliminary inquiry report

from CBI, strongest action will be taken against

those found guilty," he said.

Asked about reports of the alleged role ofTyagi

in the deal, the minister said, "I have no informa-

tion."

The Ministry of Defence also decided to put on

hold the receipt of the remaining nine of the 12

helicopters.

Giuseppe Orsi, the head of Italian defence and

aerospace giant Finmeccanica, was arrested on

Monday in relation to a probe into international

corruption.

He is suspected of involvement in the payment

of bribes regarding the sale to the Indian govern-

ment of 12 helicopters produced by Finmeccani-

ca's subsidiary AgustaWestland.

The Defence Minister said, "After the CBI report,

we will take serious action that may include can-

celling the deal."We don't want to jump the gun. We can get our

money back even at this stage," he said on the Rs

3600 crore deal.

Asked whether the money paid to the Italian

firm so far can be claimed back by the Indian gov-

ernment, Antony said, "If the Indian government

paid any amount of the money, as per the provi-

sions of the integrity pact, we can get back the

entire money we paid to the vendor."

He mentioned that the Defence Procurement

Procedure (DPP) governing all defence deals takes

care of the integrity pact by the foreign vendors.

"Not a single pie from the Indian government

we will lose. As per the DPP, any contract beyond

Rs 300 crores, before finalising the contract the

vendor will have to sign an integrity pact with the

Government of India, agreeing to our conditions. If

they violate that condition, they are liable to crim-

inal action," he said.The Defence Minister said companies are liable

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to be prosecuted and blacklisted for their lapses.

He referred to the actions taken by the govern-

ment in such cases, where six foreign defence

firms were blacklisted.

"I told you earlier that a CBI inquiry... after theirfirst report, they recommended certain actions

against companies. The moment we received the

complaint, we did not hesitate, we blacklisted six

companies. Out of that four are most powerful

international companies," he said.

Antony stressed that tough action will be taken

against the guilty, despite their stature.

"We are not bothered about who the companies

are, how strong they are and how influential they

are. But everything depends on the CBI inquiry.

The moment we get a report from the CBI, whoev-

er is found guilty, Indian or foreigners, we will take

strongest action against them. They will have to

pay the price for their lapses," he said.

Antony said the Indian government has been

trying to get details from Italy for the last 10

months.

"After we saw reports, the Indian media reports

of arrests and investigation going on in Italy,immediately we wrote to the Indian Ambassador

in Italy to get the details from the Italian govern-

ment and also the prosecutor who is conducting

the inquiry," he said.

The External Affairs Ministry was also brought

in the picture to seek a report from Italy and

Britain.

"The second step (was) through the Ministry of

External Affairs. Our government contacted the

Government of Italy and Government of United

Kingdom because AugustaWestland is a British

company and major shareholder is British. MEA

wrote to both the countries again," he said.

Both the countries were specifically askedabout alleged involvement of some Indians in the

scam.

"Second report came on involvement of some

Indians and we again asked both the governments

whether these allegations are true," he said.

Asked whether the scam will impact other deals

under consideration with AugustaWestland and

Finmeccanica, Antony said such an action will

depend on the result of CBI inquiry.

"Let CBI inquire this. Everything depends on CBI

inquiry on this...We have already given this issue

to the CBI. Let us see the progress of CBI inquiry. At

any stage of the inquiry, if anybody is guilty, any-

where in the deals, they will have to pay the price,"

he said.

Responding to a query that Special Protection

Group (SPG) had the final say in clearing the deal,

despite some objections by the Defence Ministry,

he said, "Initially Air Force and SPG, citing securityreasons, they had recommended this case. Beyond

that I cannot say anything at this moment. Every-

thing is now with the CBI."

On whether former SPG Chief B V Wanchoo's

name has allegedly surfaced, Antony said, "At this

moment I am not in the position to say anything

about the details. Let the CBI inquire that. I don't

want to say who is right, who is wrong. I am not a

judge, I am not the investigating officer."L

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THE ITALIAN investigative report into the Rs 3,546

crore VVIP chopper scandal claims that middle-

men were paid at least Euro 400,000 upfront by

Finmecannica for bribing officials in India and that

the rest of the kickbacks came thorough inflated

bills and invoices that were in the guise of engi-

neering contracts.

In the 64-page report that details the manner in

which money was routed to India for distrubution

to influence the deal, there is a mention that while

Euro 100,000 was paid in cash by Switzerland

based middleman Guido Hascke to the New Delhi

based Tyagi brothers, the rest came thorugh an

engineering contract with IDS, a Tunisia based

engineering consultancy.

The report says that Finmecannica CEO

Giuseppe Orsi, who is currently under arrest,

agreed first for a 5 percent contract with the mid-

dlemen to swing the contract.''The amounts agreed between Agusta West-

land representatives, Giuseppe Orsi and SPAGNO-

LINI 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.

Rough transcript of cover documents

ORSI Giuseppe, SPAGNOLINI Bruno, HASCHKE

Guido, GEROSA Carlo

aiming at embezzling funds in international

economic operations.

Their positions:

ORSI Giuseppe, CEO and president of Finmecca-

nica from 04.05.2011, previously CEO of

AgustaWestland Holdings N.V. from 2005 till May2011, and ?

SPAGNOLINI Bruno, CEO from May 2011 of

AgustaWestland Holdings N.V. based in Holland

and already CEO of AgustaWestland spa from

23.12.2004 till 13.06.2011

HASCHKE Guido Ralph, chief and partner of

GADIT S.A. of Lugano and GORDIAN SERVICES

S.A.R.L. based in Tunis

GEROSA Carlo, Haschke's partner in the above

companies

MICHEL Christian, owner ofGlobal Service

Trade Commerce based in London and ofGlobal

Service FZE based in Dubai, consultant for Agusta

Westland Spa

They promised and managed to pay, through

brothers Juli TYAGI, Docsa TYAGI and Sandeep

TYAGI, a certain amount of money, not yet quanti-

fied, to Marshall TYAGI Sashi, Chief of Staff in the

Indian Air Force from 2004 to 2007 a public offi-

cer or anyway in charge of functions and activitiesequivalent to those of a public officer in India - to

perform and to have performed a deed against his

office duties.

In particular:

HASCHKE, already consultant for other Finmec-

canica companies, came to know from his partner

Gerosa who was in close relations with the

brothers Juli, Docsa and Sandeep TYAGI that the

Indian Ministry of Defence was interested in buy-

ing helicopters to transport very important gov-

ernment people, and informed ORSI and SPAGNO-

LINI that he had good chances of success in the

tender that would have been shortly issued.

ORSI, as a representative of Agusta Westland

spa, designated HASCHKE to manage negotiations

in India, placing by his (Haschke's) side his (Orsi's)

trusted collaborator in the Indian market MICHEL

HASCHKE and GEROSA, through the TYAGI

brothers, in turn through their cousin TYAGI Sashi,managed first to change the tender details, in a

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favourable way to AgustaWestland spa, modifying

the "operational ceiling" from 18 thousand to 15

thousand feet of altitude, thus allowing

AgustaWestland spa (which otherwise could not

have even submitted an offer) to take part in thetender; then, they managed to introduce a com-

parative flight trial with non-functional engine,

thus facilitating AgustaWestland helicopters, the

only ones which had three engines. In this way

they managed to get the contract to AgustaWest-

land. The contract was inked between

AgustaWestland International Ltd and the Indian

Government on the 8th of February 2010, for the

supply of 12 AW101 helicopters at the agreed price

of 556 million euros;

ORSI and SPAGNOLINI, first, paid HASCHKE and

GEROSA, through a consultancy contract between

AW spa and Gordian Services Sarl (a company

which is attributable to them), an amount of

400.000 euros, of which 100.000 were paid cash to

the TYAGI brothers; later, 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 themediators HASCHKE and GEROSA, in an economic

operation in which compensations for mediations

were not allowed.

ORSI and SPAGNOLINI, moreover, paid MICHEL

Christian a total amount of about 30 million, partly

destined to support the corruptive activity meant to

bag the order and partly to implement the contract.

The Italian police has said several Indians,

including former Air Chief S P Tyagi, as facing alle-

gations of corruption in the Rs 3,546 crore VVIPchopper deal.

Allegations made are that Tyagi tweaked cer-

tain requirements to enable Italian helicopter firm

AugustaWestland procure the deal to sell 12 heli-

copters for the travel of VVIPs in India. The other

contender had quoted a price almost third the val-

ue of the AugustaWestland deal.

AugustaWestland chief Guiseppe Orsi and two

middlemen were arrested yesterday in Italy on

charges of accepting bribes to swing the deal in

India. Allegations are that part of the 51-million

dollar pay-off went to S P Tyagi.

The Indian Express had reported earlier that

Tyagi's relative Sanjeev Kumar (Julie) Tyagi was

named by Itlian prosecutors as involved in the deal

whose tender was floated in December 2006. Tya-

gi was then heading the Air Force.

S P Tyagi is a first cousin of Julie, a Delhi-based

businessman. He is one of three Indians beingprobed for suspected corruption in the Rs 3,546

crore deal.

The retired officer had confirmed to the paper

that he was related to Julie but said they had no

business links.

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WITH THE arrest of Finmeccanica CEO Orsi

Giuseppe in Italy for his role in arranging kick-backs 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 dis-

cussed the cast of characters and how money was

to be paid for favours, the latest report filed in Ital-

ian courts is more significant as it details the mon-

ey 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 engi-

neering consultancy companies IDS Tunisia, IDS

India and Chandigarh-based Aeromatrix.

According to the investigation report, Fin-

mecannica officials allegedly routed money to the

middlemen by giving out dubious consultancy

contracts to these three firms. The report claimedthat 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 offi-

cials 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 peri-

od.

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 offi-

cials to perform deeds which were against theiroffice 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 con-tracts.

"They signed engineering contracts with com-

panies 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 ofEuro 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 ofpayments made and says that the pay-

ments 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 routedto in India.

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THE ITALIAN PROBE

TIMELINE

2005-06: Carlo Gerosa and Guido Haschke, busi-

ness partners based in Switzerland, approach

AgustaWestland claiming they can help it with theIndian 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 AgustaWest-

land for the contract along with an American con-

tender, payments start funneling in from the con-

sultancy 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 Finmecca-

nica 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, chiefand partner of

Gadit SA ofLugano and Gordian Services SARLbased 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 theSupreme Court in the controversial AgustaWest-

land 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 gov-

ernment to act in the matter until now.

The petition contended that the CBI was appar-

ently 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 heli-

copter scam. The CEO of the company has been

arrested. But no action has been taken here. The

country which would have benefited from the dealhas 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 sup-

ply 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, Chiefof Staff in the Indian Air

Force from 2004 to 2007 a public officer or any-

way in charge of functions and activities equivalent

to those ofa public officer in India to perform andto have performed a deed against his office duties."

Copyright 2012 The Indian Express IX

TheIndianEXPRESS

eBOOK


12/39

A SWISS-based middleman who was allegedly

instrumental in fixing the IAF's controversial VVIP

chopper deal has confessed to Italian authorities

that he had met the then Air Chief S P Tyagi 6-7

times and had discussed the technical specifica-

tions for the contract with him.

The middleman, Guido Haschke, has also said

that he received 20 million euros as commission

and of this, 12 million euros were passed on to S P

Tyagi's Delhi-based businessmen cousins Julie

Tyagi, Docsa Tyagi and Sandeep Tyagi.

The confession was recorded before prosecu-

tors in November 2012, and included in the 64-

page investigation report filed on Tuesday for the

arrest of Finmeccanica CEO Giuseppe Orsi for his

suspected role in arranging bribes to bag the Indi-

an chopper contract.

The Indian Express was on Wednesday the first

to report that the Italian investigation report alsoalleged that Finmeccanica bribed Tyagi when he

was Air Chief to swing the chopper deal in favour

of its subsidiary AgustaWestland.

Tyagi, however, has denied the allegations and

demanded a probe. He said the alleged move to

favour AgustaWestland by changing the techni-

cal specifications to allow it to enter the bid had

taken place in 2003, a year before he became Air

Chief. He said he had learnt this from his col-

leagues and friends.

"I am not just ready for an inquiry but I want an

inquiry. I can say that the Air Force did not change

any requirements when I was the Chief," Tyagi told

reporters on Wednesday.

The former Air Chief also dismissed Haschke's

claims about their meetings and said his state-

ments were not true.

In his confession, Lugano-based consultant

Haschke one of the two key middlemen in thedeal along with Christian Michel has said that

his commission of 20 million euros or 3.5 per cent

of the chopper deal, was received through bogus

engineering contracts.

He has also claimed that he met Tyagi several

times, both before and after the technical require-

ments of the contract were allegedly changed.

Of the 20 million euros, Haschke has claimed

that 60 percent or 12 million euros was passed on

to the three Tyagi brothers, the Delhi-based busi-

nessmen who have been named in the investiga-

tion report.

The remaining 8 million euros, Haschke says,

was divided between him and his partner Carlo

Gerosa who had been active in the Indian business

sector for several years.

This is the first time a key middleman in the

deal is admitting to receiving and distributing

kickbacks. Italian prosecutors suspect that a total

of 51 million euros was paid as kickbacks in thedeal and Michel got 31 million euros.

"The agreement was made as an engineering

contract equal to 5 per cent of the order. The real

cost was of 1.5 per cent while the rest was actually

the commission for me and Gerosa, to be shared in

the following way: 60 per cent to the Tyagi family

and 40 per cent between me and Gerosa,"

Haschke's confession reads.

Haschke has also claimed that he met Tyagi sev-

eral times at the residence and office of his cousins

named in the Italian report.

"I personally met (Air Chief) Marshal Tyagi 6 or

7 times...(Tyagi's cousin) Julie was also there with

the other two brothers...the second time I met him

again in Delhi in 2005. This time in the office of the

three Tyagi brothers, who have a family business

as they are businessmen," he has said.

S P Tyagi dismissed the statement saying there

is "absolutely no truth" to them. "This is utter non-sense. There is no truth to this. It is correct that I

Copyright 2012 The Indian Express X

TheIndianEXPRESS

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Key middleman's confession: Met ex-IAFChief S P Tyagi 6-7 times


13/39

met some people in my cousin's house but my visit

was much after the tenders had been issued for

the contract," Tyagi told The Indian Express.

But Haschke has claimed that technical specifi-

cations of the deal were discussed in detail duringthe meetings.

"In this meeting we spoke about the heli-

copters. (Air Chief) Marshal Tyagi informed us that

the operational ceiling will be lowered. Carlo and I

thanked him for coming to the office. The meeting

was very short," Haschke has said.

He said he met the officer again around the end

of 2006.

"During this meeting we spoke about the tech-

nical specifications of the AW101 helicopters. The

operational ceiling had already been lowered. AW

had prepared a good technical document about

the 101 comparing it with the competitors...Tyagi

analysed it carefully and while giving it back he

told (AgustaWestland official) Lunardi to send it

officially to the Indian Air Force," the confession

statement reads.

Earlier on Wednesday, Tyagi told reporters that

two critical changes were carried out in the con-

tract requirements - one suggested by the Special

Protection Group (SPG) in charge ofVVIP security

and the other by the Defence ministry."As far as I know the process started in 2000 and

when it started, 18,000 ft was the height at which

the aircraft was to go. In 2003, the government

said that only one helicopter company can go at

18,000 ft - it was a French company - and as it was

the only one there was a problem," Tyagi said,

referring to the single-vendor situation that had

apparently arisen.

Tyagi added that some requirements were also

changed by the SPG in 2003 when they asked for a

higher cabin door on the chopper so that troops

could stand on the doors with their guns for addi-

tional security.

"The specifications were changed to 15,000 ft

and the cabin height was also increased as the SPG

could not stand on the doors with their guns,"

Tyagi said.

FORMER AIR Chief S P Tyagi Wednesday claimed

that it was the NDA government that had asked

for the change in the vital technical requirements

that Italian investigators believe helped the selec-

tion of the AgustaWestland helicopter for the

IAF's VVIP squadron.

Sources said that an NDA government cabinet

meeting in 2003 discussed lowering the chopper

altitude requirements for the deal, and it was

decided that the requirements would be relaxed

to enable the entry of more vendors for a fair and

competitive trial.

They said the decision was taken after it was

impressed upon then defence minister George

Fernandes that he should use other military air-craft to fly to Siachen glacier, as that needs a chop-

per which can fly at over 18,000 ft.

That cabinet meeting is also believed to have tak-

en the SPG's concerns into consideration. The SPG

had apparently stressed that bullet-proofseats were

vital for the VVIP chopper, and also had specific

requirements about the height of the aircraft's cabin.

Tyagi stressed that no changes in technical

specifications were made while he was heading

the Air Force they had been changed in 2003,

the year before he assumed office.

He also claimed that the changes were made on

the basis of a letter signed by the then national

security adviser Brajesh Mishra. "There was a let-

ter by Brajesh Mishra. He said the technical

requirements have to be changed," Tyagi told TheIndian Express.

Copyright 2012 The Indian Express XI

TheIndianEXPRESS

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Tech benchmark changed during NDA rule: Tyagi


14/39

Copyright 2012 The Indian Express 3

TheIndianEXPRESS

eBOOK

Aprobe by Italian prosecutors into allega-

tions of corruption against state-backed

defence major Finmeccanica has cast a

shadow over a multi-million dollar deal that the

company signed with India for 12 VVIP heli-

copters.

The Italian attorney generals office began a

probe last year into alleged unethical dealings by

the company, which has now widened to include

the Rs 3,546-crore contract with India, reports

from Italy say. Finmeccanica subsidiary Augusta

Westland signed the deal with the Indian Air

Force in 2010.

La Repubblica reported that the deal is being

investigated, and that a senior company official,

Lorenzo Borgogni, has told prosecutors that slushfunds were generated after a sudden escalation

of price by 10 million euros in 2010.

While it is not clear whether kickbacks were

paid in India, the money was allegedly used by a

top Finmeccanica official to bribe Italian political

parties.

Augusta Westland is one of Finmeccanicas

most profitable subsidiaries. Another subsidiary,

Selex Sistemi Integrati, which is also under inves-

tigation, recently won a 10 million-euro contract

to supply radars and other equipment for Indias

first indigenous aircraft carrier under construc-

tion in Kochi.

Augusta Westland won the contract for the

choppers to be used by the President, Prime

Minister and other top government functionaries

after its AW 101 edged out Sikorskys S-92Superhawk.

Indian helicopter deal sparks

corruption row in Italy

THE STORY BEFORE


15/39

Aday after The Indian Express brought to

light allegations of corruption against Ital-

ian defence manufacturer in a deal to sell

12 VVIP helicopters to India, Defence Minister A K

Antony on Friday ordered a probe into the matter.

Sources said that Defence Secretary Shashi Kant

Sharma has been asked to look into the allegations

of corruption in the Rs 3,548 crore deal that was

inked in 2010.

The probe by the defence ministry has been

ordered after it came to light that Italian prosecu-

tors are investigating allegations of corruption

against state-backed defence major Finmeccanica.

The probe is part of a widening investigation into

malpractices in the firm that has shaken Italy.

Reports from Italy suggest that slush funds were

generated after a sudden escalation ofprice by

10 million euros in 2010. While it is not clearwhether kickbacks were paid in India, the money

was allegedly used by a top Finmeccanica official

to bribe Italian political parties.

The minister has asked the defence secretary

to look into the matter. These allegations are a

matter of concern, an official said. While there

has been no probe into the matter by Indian

authorities yet, the deal had come under a shadow

in 2009 when the Finance Ministry had objected

to the steep price of the chopper and the elimina-

tion of the other contender that made it a single

vendor situation.

India had signed the deal to 12 choppers, eight

of which would be used for VVIP transportation

and four for other operations. The procurement

was to replace the Mi-8/17 helicopters that are

currently used to fly VIPs like the President, Prime

Minister and visiting dignitaries.

In 2010, Defence Minister AK Antony had said

that the Finance Ministry scuttled a mega tender to

procure mid air tankers to support fighter opera-

tions but cleared another contract to procure the

VVIP choppers because of the changed security

scenario.

While several questions had been raised on the

high price being quoted for the deal, Antony had

said that the Finance Ministry supported the heli-copter deal after the Special Protection Group

insisted that new choppers are required because

of the changed security scenario.

Not only the Air Force but the SPG also was

involved. They told us due to the security scenario,

we should consider this proposal and the Finance

Ministry also agreed to take their comments and it

was cleared in the Cabinet Committee on Security,

he had said.

Days after Defence Minister A K Antony

ordered a probe into allegations of cor-

ruption in a deal to purchase VVIP heli-

copters from AgustaWestland, the Italian firm has

asserted that there was no irregularity in thedeal and that it has not received any notice of an

investigation into the EUR 560 million contract.

In a statement issued on Monday, Finmeccani-

ca, the holding company for the Italian firm, has

said the contract was signed in 2010 after almost

two years of negotiation and there was a reduc-tion in the final price as compared to the original


TheIndianEXPRESS

eBOOK

Antony orders probe into VVIPcopter deal

VVIP helicopters: Italian firm says deal above board


16/39

In its biggest ever corruption probe into defence

agreements, Italy is investigating whether a

commission of 51 million Euros was paid by

helicopter manufacturer Agusta Westland to a

Switzerland-based consultant for a deal to sell 12

VVIP helicopters to India.

Reports from Italy say that investigators have

raided the offices of the consultant, Guido Ralph

Haschke, in Switzerland after a former top

employee of the helicopter company revealed that

he was hired to facilitate the Rs 3,546-crore dealwith India.

Haschke is well-known in the close-knit

defence business circles in New Delhi. He is know

to make frequent trips to India and is very familiar

Italy probes 51 m Euro payoff to agent for

copter deal with India with how the defence sector

works. The 62-year-old consultant is believed to

have dual citizenship of Switzerland and the US.

For India, the investigation can have bigger ram-

ifications if it is established that an agent was

indeed hired by the company to facilitate the VVIP

helicopter contract. As per Indian laws, it is illegalfor companies to hire agents for defence contracts.


TheIndianEXPRESS

eBOOK

India helicopter deal: Italy probesEuro 51 mn payoff

offer.

The statement came even as reports from Italy

suggested that investigators have informally

approached India for details of the contract that

was signed in February 2010 as part of the widen-ing probe into unethical practices by Finmeccanica

to win contracts.

Italian newspaper Il Messaggero reported on

Monday that as part of the investigations, requests

have been made informally to Indian authorities

for confirmation about the negotiations that led to

the signing of the contract.

However, sources here have said that they are

not aware of this development.

As first reported by The Indian Express, a probe byItalian prosecutors into allegations ofcorruption

against state-backed defence major Finmeccanica

has cast a shadow over a multi-million dollar deal

that the company signed with India for 12 VVIP heli-

copters.


17/39

Aday after The Indian Express reported

details of an Italian investigation into

commissions allegedly paid for the pro-

curement of 12 helicopters sold to India in Febru-

ary 2010, Defence Minister A K Antony asked for a

fresh report on the matter. His ministry said any

wrongdoing would attract the strict integrity

clause.

Antony has directed ministry officials to obtain

a report from the Indian embassy in Rome into the

investigations reported widely in the Italian

media into the role ofSwitzerland-based con-

sultant Guido Ralph Haschke, who allegedly

received a commission ofEuro 51 million (over Rs

350 crore) for the Rs 3,546-crore Indian deal.I will seriously pursue the inquiry, Antony

said, adding that he had asked for reports in Febru-

ary as well. The matter was first reported by The

Indian Express then.

In a statement today, the ministry said: Pre-

contract integrity pact has been signed between

(manufacturer) Agusta Westland and MoD. Any

complaint or allegation will be investigated and

contractual provisions invoked, in case any wrong-

doing is established, in addition to action that may

be required under law.

Agusta Westland denied any irregular con-

duct, which it said was confirmed by a recent

investigation by the Indian Ministry of Defence.

But the ministry made no mention of this.

The BJP today demanded to know what thegovernment is doing in the matter.


TheIndianEXPRESS

eBOOK

Antony seeks report on Italychopper deal investigation

After The Indian Express reported about the Italian

investigations in February, the Defence Ministry

had instructed the Indian embassy in Rome to fol-

low the probe and report back.

Haschke was also associated with the EmaarMGF group and as per SEBI records, was on its

board of directors in 2009 and has been listed as

an Independent and Non Executive Director and

Business Consultant. However, he is also men-

tioned to have resigned from the directorship the

same year due to personal reasons.

Italian investigators are reported to have acted

on the testimony of Lorenzo Borgogni, the former

head of external relations of Finmeccanica the

parent company of Agusta Westland in which he

has alleged that Haschke was initially hired as an

intermediary for a sum of 41 million Euros. This

compensation was alleged to have been hiked at

the last minute by 10 million Euros.

As per reports, Italian investigators are focus-

ing on this escalation of 10 million Euros, that

was allegedly used by the helicopter company

officials to bribe Italian political parties for plum

postings. Several documents regarding this

agreement are reported to have been recoveredby prosecutors who raided Haschkes offices in

Lugano, Switzerland.

THE DEAL

The VVIP chopper contract was won by Agusta

Westland in February 2010 after its AW 101

helicopters ousted Sikorskys S-92 Superhawk

in the contest to supply 12 helicopters that

would be used by the Indian PM, President and

other senior government functionaries. The

value of the deal was revealed as Rs 3,546 crore

by the Indian government. The Italian heli-

copters are set to join the increasing fleet of

VVIP aircraft that already comprises f ive

Embraer 135 jets and three Boeing VVIP

aircraft.


18/39


TheIndianEXPRESS

eBOOK

The consultant whose offices in

Switzerland were raided earlier this

week by Italian authorities as part of a

probe into corruption in a copter deal with

India is an offsets expert who has been

very active in the Indian defen ce sector.

Guido Ralph Haschke, who claims to pro-

vide Project Advisory Services, has in the

past few years worked with several Indian

companies and individuals either interested

in investing in Italian entities or hoping to

forge offset partnerships with foreign firms

that have won Indian defence contracts. He

was also briefly on the board of directors of

real estate gian t Emaar-MGF.

As reports from Italy indicate, investiga-

tors are probing an alleged Eu ro 51 million

contract that Haschke got from Finmeccani-ca the parent company of Agusta West-

land that sold the VVIP choppers to India

reportedly as offsets plan for the Indian

deal. The allegation is th at Euro 10 million

from this was pumped back as slush fund

and used to bribe Italian politicians. Italian

investigators are following leads provided

by a former top employee of the company,

who used to handle international relations.

The Italian probe has again brought into

question offsets contracts for the Rs 3,546

crore deal. As per the rules of defence pro-

curement, foreign firms are obliged to

invest more than 30 per cent of the value of

any deal they bag into the Indian defenc e

sector either public or private. In case of

the helicopter deal, Agu sta Westland has to

invest over Rs 1,00 0 crore in the Indian

defence production sector.Earlier, the offsets package for the VVIP

deal was alleged to involve indirect and ille-

gal offsets in violation of rules.

The offsets have been complicated by the

fact that the AW 101 chopper provid ed by

Agusta Westland is a civilian variant mak-

ing it hard to invest money in the form of

offsets into the defence sector in India.

Insiders say not just in the offsets con-

tract, Haschke had been active since the

deal with India was inked in February 2010

and had been meeting Indian companies

and investors. He was believed to have been

working on behalf of Agusta Westland.

Finmeccanica refuse d to comment on its

relationship with Haschke, telling The Indi-

an Express that it was unable to of fer any

view as the matter is under investigation.

Haschke too did not comment on the mat-ter.

Well-know in closeknit defence business

circles of New Delhi, Haschke is the manag-

ing director of more than seven consultancy

companies based in Europe. He is also the

chairman of a Luxembourg-based company,

Jori ssa SA. His li sted busi ness address in

Lugano, Switzerland, was among those raid-

ed by Italian investigators.

Educated in Milan, I taly, the 62-year-old

consultant is believed to hold dual citizen-

ship of Switzerland and the US. The compa-

ny says it is in no way connected with him

or his businesses anymore. Since his res-

ignation, Emaar MGF has had no business

links or associa tion with him in any capaci-

ty. He did not attend any board meetin g

during his appointment and, therefore, nev-

er participated in any company decisions, aspokesperson told The Indian Express.

Italian under probe was active inIndian defence sector


19/39


20/39


TheIndianEXPRESS

eBOOK

T

he probe into corruption charges by the Ital-

ian authorities into a contract for VVIP heli-

copters for India has taken a serious turnwith the Defence Ministry being instructed to get

details of the investigation from Rome.

Sources said Defence Minister A K Antony has

now instructed officials to write to Italian authori-

ties, requesting for information about the ongoing

probe into the 2010 contract in which India had

ordered 12 VVIP helicopters in a Rs 3,546-crore

deal.

As first reported by The Indian Express, the deal

had come under the scanner for corruption allega-

tions and Italy has been investigating the role of

two alleged middlemen who took a commission

from Agusta Westland to influence government

officials.

With fresh reports indicating the case has pro-

gressed beyond the initial stage and that Italian

authorities are probing the role of Indians in

alleged malpractices, the defence ministry has

decided to write to the Italian government.This marks a stronger interest in the case by the

Defence Ministry, given that in the past it had just

instructed the Indian embassy in Italy for a report

on ongoing investigation. The embassy report hadearlier this year said there were no indications that

the probe was specifically against the Indian chop-

per contract.

However, recent developments that include the

testimony given by Italian prosecutors in court,

have confirmed that the investigation pertains

mainly to the Indian helicopter contract. Defence

Ministry officials said the reports are being taken

seriously but refused to comment on what penal

action is possible against the manufacturer, in case

discrepancies are found.

While the first of the 12 helicopters on order are

expected to join service next month, the ministry

can invoke clauses of the integrity pact that is

standard for all defence contracts. According to the

pact, bank guarantees can be impounded if graft

charges are proven in the contract and a hefty fine

can also be imposed.

An offending company may also be blacklistedin case of serious charges.

Get probe details from Italy, Antonytells officials in MoD


21/39


TheIndianEXPRESS

eBOOK

The Italian probe into corruption charges in

the VVIP helicopter deal for the Indian Air

Force is now focusing on a highly connected

British consultant who was allegedly hired by the

chopper manufacturer, Agusta Westland, to influ-

ence the contract.

The consultant, identified as Christian Michel, is

being investigated for receiving a portion of theEuro 51 million contract that was given by the man-

ufacturer for Italian businessman Guido Haschke,

who had been arrested last week by the authorities

in Switzerland in connection with the case.

The name has generated controversy here as

Michel is a little known but highly connected con-

sultant who has been very active in the Indian

defence sector for the past several years and is

known for his links within the Indian government

establishment.

Sources said Michel has been associated with

Agusta Westland set up in India for the past few

years and is still actively involved in the Rs 3,546-

crore VVIP helicopter deal that was signed in 2010.

The consultant is known for regularly visiting New

Delhi where is in regular touch with Agusta West-

land officials.

British citizen Michel has been named as one

of the two mediators in the deal by Italian prose-cutors, according to media reports from Italy. The

line of investigation being followed, reports say, is

that Agusta Westland initially paid Haschke Euro

41 million as part of a contract for the Indian deal

but this was increased by Euro 10 million with

Michel coming into the picture. Michels role in

both Italy and India is under investigation.

For the Indian defence establishment, Michel is

a name that came to prominence in a controversialcase that was filed in French courts in 2004 in

which he had sued aircraft manufacturer Dassault

for allegedly not paying him a share in a contract

to sell fighter aircraft to the Indian Air Force.

Michel, who was the owner of a Panamanian

company, Keyser Incorporated, had taken Dassault

to court, alleging that the manufacturer had failed

to pay him a commission for the purchase of 10

additional Mirage 2000 jets at a cost of Euro 350

million by the Indian Air Force in September 2000.

The lawsuit was however struck down as the

courts held that the contract to share commission

between Michels company and Dassault had

expired two years prior to the signing of the con-

tract with the Indian Air Force.

With the Defence Ministry now requesting Italy

for sharing of information on the ongoing probe

into the VVIP helicopter deal, the role of the British

consultant and his contacts in India are likely tocome under scrutiny.

Italy probe focuses on UK consultant


22/39


TheIndianEXPRESS

eBOOK

The India head of helicopter manufacturer

Finmeccanica, which is being probed for

alleged corruption in a deal to sell VVIP

choppers to the Air Force, has come under the

scanner of Italian authorities who tapped his

phone conversations with the alleged middleman

in the Rs 3,546 crore contract.

Italian prosecutors, who have been investigat-

ing a series of corruption charges against Finmec-

canica, tapped the phone of alleged middleman

Guido Haschke as part of the probe into the deal

and have informed the court that they found

strong clues that a part of the commission paid

was routed through Mauritius and Tunisia. Inves-

tigators also claim to have taped conversations

between Haschke and unnamed Indian individu-

als.

Details of the Italian probe into the deal are con-

tained in a 100-page court order issued by the Tri-bunal of Naples Tuesday on the detention of for-

mer commercial director of Finmeccanica, Paolo

Pozzessere. The Indian defence ministry has so far

only sought reports on the probe in Italy from the

embassy in Rome.

While the court order, a copy of which is with

The Indian Express, mainly focuses on

Pozzesseres dealings in selling military equip-

ment to Panama and Brazil, a section is devoted to

the controversial Indian deal for 12 helicopters.

In this section, the court has noted that Italian

investigators are probing allegations that Swiss-

based consultant Haschke was paid 51 million

euros to swing the Indian deal and that a part of it -

10 million euros - was routed back to Italy and dis-

tributed to a political party.

However, responding to the court order, Fin-

meccanica said in a statement that the group or

any of its companies have not paid any form ofcompensation for mediation connected with the

contracts in question. It has said that Pozzessere

stood aside as commercial director ofFinmeccani-

ca Group in September 2011 and had since been

assigned a role in Russia, as part of industrial activ-

ities relating to partnerships in the regional air-

craft and defence electronics sectors.

While the court document does not have any

details about investigators having evidence that

money was also paid to Indian officials, it says the

prosecutors tapped phone conversations of

Haschke with the India head of the Finmeccanica,

Girasole Paolo, as well as some unnamed Indian

individuals.

Thanks to phone taps between Haschke and

his partner Gerosa Carlo and other Italian and Indi-

an individuals including Director Finmeccanica

India Girasole Paolo, elements were found that the

money was routed to Tunisia and Mauritius, the

document says.As reported by The Indian Express earlier,

Haschke and Carlo are partners and jointly run the

Chandigarh-based services company Aeromatrix

that specialises in aerospace among other sectors.

Haschke was on the board of Emaar MGF in the

past and is known for his connections in the Indian

military sector.

The court order dwells on the Indian VVIP heli-

copter deal probe as part of the evidence against

Pozzessere, who was in charge of foreign sales.

With reference to the supply of 12 Agusta West-

land VVIP helicopters to the Indian government,

accusations have emerged from the interrogation

of Borgogni Lorenzo (a former employee) that Gui-

do Ralph Haschke obtained 41 million euros for

mediation, which is forbidden by Indian law, the

order says.

It goes on to say that the allegation being

probed is that the 41 million euros fees wasincreased to 51 million euros allegedly to create

Lens on chopper firms India headover commission


23/39


TheIndianEXPRESS

eBOOK

Italian investigators probing suspected graft in

the AgustaWestland VVIP helicopter deal with

India say they have found what they believe are

documents of another tender for Army helicopters

that claim an Indian Army brigadier demanded a

bribe of $5 million to swing the contract for the

firm.

A memorandum seized from the home of

alleged middleman Guido Haschke by Italian prose-

cutors says the brigadier, who was in charge of the

flight trials of a contract for 197 light choppers,

asked for the money in January 2010, days before

the trials began.

The highly confidential letter is part of a pre-liminary chargesheet filed by Italian prosecutors in

a Naples court. The letter and other documents were

allegedly seized on April 23.

The letter claims the brigadier made contact in

Bangalore on January 16, 2010 and volunteered

information on the progress of the contract. He

allegedly shared details of the deficiencies found in

the competitors for the contract Russias Kamov,

Italian AgustaWestland and Eurocopter and asked

for the money to slant the trial in Agustas favour.

If an agreement is struck, the issues above will

become irrelevant. Furthermore, the trials will be

conducted in such a way as to favour his sponsors.

His request is 0.5 per cent, equal to approximately

USD 5 million, payable upon release of the finaltechnical report if contents are as promised, the

Army officer sought $5 mn bribe:Italy probe

black funds and route it to Italian political parties,

especially to Lega Nord.

Investigations into alleged corruption in the

deal picked up pace last week with the the arrest

of Haschke, who has since been released on bail.Haschke, who advertises himself as providing

Project Advisory Services, was arrested by Swiss

authorities for money laundering and other

charges.

Educated in Milan, the 62-year-old consultant

has dual citizenship of Italy and the US. He was

believed to have been working on behalf of Agusta

Westland which won the VVIP chopper deal in

2010 in an international competition for new gen-

eration helicopters that would be operated by the

IAF.

Another middleman who has come under the

scanner of Italian authorities is Christian Michel -

a little known but well-connected British consul-

tant who has been very active in the Indian mili-

tary business.

What the Italian court document says

Investigators are probing allegation that com-

mission of 51 mn euros paid for Indian VVIP chop-

per deal of 2010

Illegal commission paid to Switzerland-basedconsultant Guido Haschke

Haschke was in touch with Girasole Paolo, India

head of choppermaker Finmeccanica

TAPPED phone conversations between Haschke,

Paolo and unnamed Indians suggest that commis-

sion money was routed through Mauritius, Tunisia

VVIP chopper deal

In February 2010 Agusta Westland won a Rs

3,546 cr contract to supply 12 AW 101s after beat-

ing Sikorskys S-92 Superhawks. The helicopters

were set to join this year a fleet of aircraft used by

the PM, President and other senior government

functionaries.

Earlier this year, investigators in Italy began a

probe into alleged corruption by AgustaWestland

in securing deal.


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Three Indians are among 15 people being

probed by the Italian police in connection

with the suspected payment of bribes and

money laundering in the deal for VVIP heli-

copters for the Indian Air Force from

AgustaWestland, a preliminary report submit-

ted to a court in Naples has said.

The 568-page report, a copy of which is withThe Indian Express, contains extensive details

of the investigation into the Rs 3,546 crore deal

and covers several businessmen, consultants

and employees, including Indians. While the

probe is still on, a preliminary inquiry report

was given to the Naples Tribunal in July.

Besides alleged middlemen Guido Haschke

and Christian Michel, the report given to the

Naples court names Praveen Bakshi, the chief

officer of Chandigarh-based firm Aeromatrix,

Gautam Khaitan, a Delhi lawyer who repre-

sents Aeromatrix, and Sanjeev Kumar Tyagi, a

Delhi businessman and former air force pilot,

as those being investigated. Aeromatrix, a ser-

vices company which specialises in aerospace,

among others, is owned by Haschke and his

partner Carlo Gerosa, who is also being

probed.

The report, which includes interceptedphone calls and transcripts of conversations

recorded through bugs planted on Haschke,

makes a strong case for investigating allega-

tions that politicians and officials were bribed

in Italy and India to ensure the deal goes

through. It has several references to the above

mentioned names in phone conversations and

other recordings. The report says Girasalo Pao-

lo, the India-head of the helicopter company, isalso being probed.

Bakshi and Khaitan, when reached for their

comment by The Indian Express, denied they

had any role in dealings related to the defence

business. Bakshi said he is an officer of the

company performing administrative roles and

heard about the VVIP helicopter deal only from

media reports. Khaitan, who is currently

abroad, said he was in touch with Haschke as

his attorney and is in no way involved in or

aware of any defence dealings. Tyagi could not

be reached for his comment.

The report says the probe is focusing on: A)

Alleged corruption perpetrated by some top man-

agers of the subsidiaries, through bribes (also

international bribes) paid by Finmeccanica and its

subsidiaries to win tenders in foreign countries

and B) other practices involving top managers of

Finmeccanica subsidiaries and some political par-ties and their leaders, who were recipients of

Ex-IAF pilot among 3 Indiansnamed in VVIP helicopter probe

letter says.

The Army refused to comment, saying it is not

aware of the letter or its contents.

AgustaWestland was eventually disqualified

from the bid in May 2010. The Army went aheadwith trials involving Eurocopter and Kamov. The

defence ministry expected to take a final call on

the deal this month.

The seized letter details the meeting with the

brigadier and says he offered his services to help

eliminate the competition on technical grounds.

He is very keen on this as it is his last major

assignment before retiring, it says.He has requested a reply by tomorrow Jan 19.

We have said... we will give a final answer by close

of business Wednesday Jan 20, it letter says.


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dirty money coming from operations in point A.

AgustaWestland is a subsidiary of Italian con-

glomerate Finmeccanica.

The interrogation of a former senior employ-

ee of AgustaWestland, corroborated by phoneinterceptions, bugs in cars and houses of the

suspects and seized documents indicate that a

criminal conspiracy was hatched to commit

crimes like international corruption, money

laundering and illicit funds to political parties,

the report says.

Phone records produced as evidence in court

has several references to alleged bribe money

being transferred or hidden by Haschke.

AgustaWestland is believed to have paid the

mediators a commission of 41 million euros

which later became 51 million, the report says,

adding that Lorenzo Borgogni, a former senior

employee of the company claimed that two

agents were hired to push the India deal.

In particular, Borgogni talked about interna-

tional commercial operations and especiallyabout the supply of 12 helicopters from

AgustaWestland International Ltd. to the Indian

government thanks to the mediation of Guido

Ralph Haschke and Christian Michel. Indian law

does not allow any compensation for media-

tors, the report says.

Incidentally, when the helicopter deal probe

was first reported by The Indian Express in

March this year, Defence Minister A K Antony

had informed Parliament that no specific

probe is being conducted about India-related

transactions by Rome.

Aday after The Indian Express reported that

Italian investigators had stumbled upon

documents that claim an Indian Army

brigadier demanded a $5 million-bribe to swing a

deal for army helicopters, the Defence Ministry

said Friday that it has written to Rome requesting

information on the alleged involvement of the

officer.

Referring to a series of reports in this newspa-

per about the suspected corruption in the VVIP

chopper deal, the ministry issued a statement say-

ing the Italian government has been asked for an

early response to its request for information about

the probe there. It also said that strong action will

be taken against the offenders detected through

this probe. Sources said Defence Minster A K

Antony is very concerned about the corruption

allegations.In response to media reports alleging irregu-

larities in the contract for 12 helicopters from

AgustaWestland for VVIP use, the ministry of

defence has once again taken up the matter with

the Italian government through the ministry of

external affairs and has asked for an early response

on the issue, defence ministry spokesperson

Sitanshu Kar said.

Separately, AgustaWestland also denied any

wrongdoing. AgustaWestland has not committed

any form of irregularity during the tender for the

supply of AW101 helicopters to the Indian defence

ministry, it said in a statement.

The ministry, which in the past said it would not

react to media reports on the issue, has also asked

Italy to clarify if the role of middlemen in the deal

has come through. The Italian government has

been requested to provide details of the existence,

if any, of any middlemen or any individual or Indi-an entity in the above mentioned contract, Kar

MoD asks Italy for info, promisesstrong action


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The alleged middleman in the VVIP heli-

copter deal with Italy has admitted in taped

conversations that he laundered money in

India and talks about an unnamed Indian from

whom he takes orders.

The consultant, Switzerland-based Guido

Haschke, also expressed surprise in his conversa-

tions with colleagues that investigators found out

the correct amount of commission that was

allegedly paid for the deal. A conversation alsoreveals that he had an earlier agreement with

AgustaWestland for 5 per cent commission for

deals with an unknown Indian associate.

In a preliminary investigation report that runs

into 568 pages, Italian investigators have detailed

hundreds of hours of taped conversations in

which Haschke and his business associates are

heard to be speaking about commissions in the

helicopter deal and ways that money would be

laundered in India.

In some conversations, Haschke and his partnerCarlo Gerosa comes tantalisingly close to revealing

In taped conversations, middlemantalks about his unnamed Indian boss

said.

The Italian probe has referred to the role of two

middlemen, Guido Haschke and Christian Michel,

in the Rs 3,546 crore deal. While Haschke was

arrested in Switzerland and has since beenreleased, Michel is yet to be questioned.

On the letter found by Italian investigators

referring to a deal for light helicopters for the Indi-

an Army, the ministry said that details have been

requested. The MoD has asked the Italian govern-

ment and concerned agencies there through MEA

to provide the name and relevant documents

relating to the alleged involvement of a brigadierin the ongoing process for the acquisition of 197

light utility helicopters for the Indian Army, the

statement said.


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the name of a person in India from whom they

take orders. While the name has been recorded by

the investigators, the transcripts of the conversa-

tion that are contained in the report list it as

incomprehensible, possibly due to unfamiliaritywith Indian names.

Consider this conversation that was recorded in

Haschkes car (number TI304420) on March 3.

Gerosa:They just need to say: I take orders

(incomprehensible). I take orders from (incompre-

hensible) there in India, but we cant tell this open-

ly to Gautam (Khaitan, their Indian lawyer).

Haschke: He knows it very well.

G:He is our borderline. The orders ofmoney

laundering came from us, but he was doing the

real job.We are a real criminal association/con-

spiracy.

G: (incomprehensible)

H:Yes, I was thinking about it earlier. Because if

Gautam fears that Aeromatrix (Haschkes Indian

firm) might be involved, he already told me... you

heard no? Praveen (Bakshi, the chief officer of

Aeromatrix) is already very nervous

G:And Praveen is the only one who has nothingto worry about.

While the Italian probe is still on, the taped con-

versations point to a criminal conspiracy to fix

the Indian deal.

From the taps it emerges that AgustaWestland

paid Haschke and Gerosa 20 million euros as a

commission for mediating in the 12 helicopters

deal with India (rest paid to Michel). It shows how

the payments are made in favor of Tunisian com-

panies managed by the two Swiss men, Haschke

and Gerosa, and then from Tunisia again routed to

India and Mauritius in favor of companies (Aero-

matrix) managed de facto by Haschke, Gerosa and

Indian partners, the Italian investigation report

says.

The report says that out of the Euro 51 million

commissions, a majority part was allegedly divert-

ed to British consultant Christian Michel, who is

also under investigation. In this March 5 conversa-tion between Haschke and Bruno Spagnolini , CEO

of AgustaWestland, Michel is discussed.

Haschke: Sir, I with Chris (The report explains

that they are referring to Christian Michel the oth-

er mediator who got 30 million) it has been a long

time since we heard from each other. I mean, vol-untarily. I wonder if I should call him about this

matter

Spagnolini:No no no no no.

H:And that things go.

S: I also have his contact.

H: Exactly.

S: Lets see, I dont know, I dont think that.

H:Yes, if theres a need, you let me know. I hope

that (incomplete)..

Haschke has been recorded as being very sur-

prised that the commission amount became

known to investigators. Consider this conversation

that was also recorded on March 5 between

Hascke, Bruno Spagnolini , CEO of AgustaWestland

and a third executive called Digennaro in which

they discuss the Euro 51 million commission reve-

lations.

Digennaro: I mean, what surprises...

Hashke: Its the amount.Digennaro: Its the amount and the precision.

Haschke: That is what worries me.

Spagnolini:No actually, about the amount,

frankly speaking, I didnt know. Because I came

later, no? That is something that happened before,

when that other man was called. I have never

known all the amounts. Until we met over that

lunch, remember?Hachke: Yes and that was the

amount. This is what worries me.

Spagnolini:That was the amount.

Haschke: That was the amount.

The taped conversations also have a reference

to a contract with an Indian counterpart for the

VVIP deal by Haschke who says that he has figured

out his official position on the matter after sitting

down with AgustaWestland lawyers.

This conversation was in February this year:

Haschke: In any case, we have already decided,

together with AgustaWestland lawyer, which isour position, which is: Yes, initially I went there (to


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India) to make proposals about this VVIP deal, but I

was told that in India you can have no aid/assis-

tance, therefore the original 5 per cent contract

was not effective because it was not signed by

the...(Someone asks if the contract has been found by

Italian investigators)

Haschke: No, they havent found it. They

havent seized any offices, but even if they find it,

that contract is not valid because it was not signed

by the Indian counterpart and anyway it expired

much before the present contract.

Haschke: What was my role? Because I said ok,

you dont need my services fine, so I thought why

cant I outsource a portion of the work to Indian

companies, and so I first worked for IBS (IDS)

andAeromatrix and I was paid by them and not byAgustaWestland. This is the official version .

There are several more references in the report

to Haschkes role with AgustaWestland, his con-

versations with top executives of the company as

well as Indian connections. The tapes show that

Haschke stopped travelling to India since February

after his name appeared in the case.

The alleged middlemen in the AgustaWest-

land VVIP helicopter deal bragged that even

if Indian investigators probed their role,

they would find no money trail as the payments

were made in cash, and that they would not beable to identify Sanjeev Kumar Tyagi as the person

behind the affair, taped conversations that are part

of an Italian judicial report reveal.

In a conversation between business partners

Guido Haschke and Carlo Gerosa, the name of Tya-

gi a Delhi-based businessman who is also

known as Julie comes up as the duo talk about

payments being made in cash for the 2010 deal to

procure 12 VVIP helicopters, and brag that Indian

prosecutors would never be able to prove the cor-

ruption.

A part of the 568-page report records Gerosa as

saying that the only one who is safe from judicial

consequence is Julie as they (Indian investigators)

are morons and that there is no link.

Tyagi, who claims to be a former Air Force offi-

cer but was not actually commissioned into the

Force, is a Delhi-based consultant with an office in

the citys upmarket Ferozeshah Road area. He isbelieved to be active in the government sector,

particularly power.

The following conversation that was recorded

on March 1 between Haschke and Gerosa:

Haschke: The important (thing) is that my

name does not leak.Gerosa: Eh mine too. You are the first ring.

H:Understood.

G: If the first rings breaks I also come into the

picture.

H: Lets try to avoid that the first rings breaks,

first of all!

G:We all agree.

H:And in the meantime we go on with the job.

G:The only one who has no risks is Julie,

because we are those in the front.

G:There is really no link there because, I mean...

cash.

H: Exactly, so they (the judges) will never be

able to prove that corruption was there. They can

say that engineering was expensive, though it is

not even that expensive, but they can never say

corruption was there. This is the essence.

Italian investigators conclude from the long-

winding conversation that Gerosa was afraid thatIndian investigators could get some clues that cor-

Indian officials are morons, will takeyears to track links, middlemen said


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ruption took place for the Rs 3,546-crore deal.Haschke says they can claim that the engineer-

ing was expensive and nobody can ever say cor-

ruption took place. Gerosa disagrees and says

there are some clues, Haschke says with clues you

can be remanded but you cannot be sentenced.

Gerosa says it just needs the judge to be convinced

that corruption took place, it is not important if

you have the proof of how much was paid and to

whom, the report says.

The two Italian consultants, who were extensive-

ly trailed, tracked and bugged by investigators, also

brag about the fact that the commission paid has

been routed through Mauritius and that it would

take Indian sleuths years to track it down as they did

not know about the Mauritius link. The duo express

fear that their lawyer, Gautam Khaitan, may also get

arrested if money laundering was probed.

Here is a

the deal final

Documents