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Offline Ajai Singh

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‎The Italian Helicopter Scam - Agusta Westland
« on: February 25, 2013, 18:14:44 PM »

The Italian Helicopter Scam & its remediation
Dr. Subramanian Swamy

In August 1999, just after the so-called Kargil military conflict, the Indian army made a strong plea for a high altitude flying helicopter, since the two combat areas where maximum Indian casualties took place was Tiger Hill at 18, 000 feet and Siachen at 17,500 feet. IAF Chetak and Cheetah could land at those heights but could carry only 4 combat troops per flight.

The IAF also pitched in for new generation helicopter to replace Mi-8 version for the VVIP ferrying, which was incapable of night flying and above 9000 feet.

With the parameters in mind, the IAF was authorized to issue a RFP, in March 2002. Four suppliers applied. After a preliminary analysis, three suppliers were selected for flight evaluation.

Agusta Westland’s A-101 failed to make the list after flight evaluation--because it could not fly at 18, 000 feet and above. India’s swadeshi produced Dhruv helicopter could fly 20,000 feet, but was not certified at that time, and so it was never considered.

That left two—Russian Mi-172 and M/s Eurocopter EC-225. After Operational Requirements were considered, the Russian copter got disqualified. That left one choice—EC-225, which was therefore selected by the IAF. It was decided to order 8 helicopters.

Enter Brijesh Mishra. He, as Principal Secretary to the Prime Minister, called a meeting on November 19, 2003. He rebuked the IAF for not being cognizant of the needs of VVIP, who he observed rarely go flying above 14, 000 feet. He added that if even if they do, as Defence Minister George Fernandes used to, viz., fly to Siachen, then such VVIPs can used the Chetak.

Mishra made sure that IAF understood what he was saying by shooting off a letter dated December 22, 2003 to the IAF disapproving of the framing the Operational Requirements[ORs] without consulting him or SPG Chief on VVIP needs including the height of the helicopter entry door.

Exit NDA from union government and enter UPA. But Mishra’s letter was curiously honoured by the UPA government on the invisible informal direction, through the PMO, of Ms. Sonia Gandhi.

Therefore meetings were re-convened of the IAF, with PMO and SPG invited from March 2005, and the new ORs finalized in September 2006. The max heights were revised downwards to 4500 meters i.e., 14, 000 feet. It was also decided to order from 8 to 12 helicopters, with four specially decorated for VVIPs. A call for intent to buy was then issued. Six vendors responded.

Agusta Westland of Italy was back in the reckoning in the RFP along with five others. The formalities of testing and evaluation were gone through.

By February 2008, only two were left for choice: S-92 of M/s Sikorsky of US, and AW-101 of Agusta Westland of Italy[originally of UK, but which went bankrupt after selling helicopters to Pawan Hans in the 1980s. Italian government then bought it].

Field trials attended by the SPG as well disqualified the S-92 on the basis of a specially quality requirements [SQR]. Thereafter SPG Chief Wanchoo flew for two weeks visit to Italy in 2009 to give the Italians the good news—they had been selected thanks to the “rehanuma” Ms. Sonia Gandhi.

The deal worth over Euro 556 million was inked and sealed on February 8, 2010 after the Cabinet Committee on Security cleared a month earlier.

The nitty gritty of who gets what was worked out by Mr. Abhishek Verma, the son of the Hindi teacher of Ms. Sonia Gandhi. In gratitude for the Hindi taught, Ms. Sonia Gandhi agreed to become Patron of Verma Foundation AG, a benefactor of the deserving in the field of arms trade.

That bribes were paid in this deal is well established by the Italian government investigation. A 568 page Report prepared by Italian Special Police has been filed in the Milan Court which can be officially accessed by the CBI if they ask the Court with a Letter Rogatory[LR] and not by flying off for a jaunt as they have done lst week.

This Report accessed by me informally refers to a total bribe paid of Euro 51 million or about Rs 470 crores. Of this Rs 200 crores has been paid, reverentially referred to as “The Family”. The receivers are relatives of Ms. Sonia Gandhi.

The great facilitator in this deal, Mr Brijesh Mishra has a daughter, Jyotsna, married to an Italian belt manufacturer, who live in Italy. It needs to be found out she got anything. Brijesh Mishra in 2011 was decorated with Padma Vibhushan by our Rashtrapati.

What can we Indians do now?

First, the CBI must be forced to take out a LR, and go to Milan to access the Italian documents. The government should set a SIT of CBI, ED, SFIO, RAW and IB under CBI chairmanship.

Second, Abhishek Verma must be taken into custody for interrogation. Ex IAF Chief Tyagi must be also interrogated along with his relatives and intermediaries such as Aeromatrix.

Third, Christian Michel must be traced through the Interpol and arrested for interrogation. Thereafter, Mr. Rahul Gandhi, and his two Italian aunties, Anushka and Nadia [on the duo’s next visit to India] should be questioned on whether they had met him before the deal was inked and sealed, in Dubai at Hyatt Hotel in the company of a Keralite liquor Dada.

Fourth, one us Indian activists against corruption, such as Action Committee Against Corruption in India [ACACI] should go to the Supreme Court with a PIL and ask CBI to be monitored in its investigation.

Fifth, the Defence Minister must invoke Article 23 of the Purchase Contract to suspend the purchases [only 4 of the 12 helicopters delivered so far] with a threat of cancellation if they don’t come clean on what happened.

Finally, the Prime Minister Dr. Manmohan Singh should tender a public apology for approving this corrupt deal in the CCS, knowing fully well what was happening.

« Last Edit: March 26, 2013, 09:12:45 AM by Ajai Singh »

Offline Ajai Singh

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Re: ‎The Italian Helicopter Scam & its remediation
« Reply #1 on: February 28, 2013, 14:31:40 PM »[email protected]@@&categoryId=-196361#latestComment

The Allen alert
By Syed Nazakat
Monday, February 25, 2013 9:53 hrs IST

On April 19, 2012, the Ministry of Defence alerted the Central Bureau of Investigation and the Directorate General of Economic Enforcement about the leak of classified documents related to defence procurement. The ministry was tipped-off in style—through an email sent directly to Union Defence Minister A.K. Antony. The mail triggered a probe, at least 10 months before the Italian police arrested top executives of Finmeccanica, the parent company of AgustaWestland, the controversial Anglo-Italian chopper firm accused of paying bribes to swing India's VVIP chopper deal.

The mail Antony got in March 2012 came from C. Edmonds Allen, an escrow agent with links to arms dealers. Allen had even handled a $205 million-deal in LGT Bank, Liechtenstein, for a Delhi-based arms dealer. To validate his accusations, Allen attached eight secret military documents. Among them were papers dealing with the procurement of surveillance aircraft for the Research and Analysis Wing, a report on the procurement of next generation submarines for the Indian Navy and the entire acquisition plan of the Indian Air Force.

Speaking to THE WEEK from New York, Allen said: “I gave them enough material to nab these guys. But I saw no investigation. I do not know why they waited for the Italian investigation to start the probe.” It appears that the CBI and the ED acted initially on the alert from the defence ministry, and then sat back. They, or at least the ED, contacted Allen, and questioned him in New York.

The defence ministry was flabbergasted by how such highly-classified documents had reached a foreigner. All that Allen would divulge was that the documents were sourced by a murky network of arms dealers in India and leaked to foreign defence contractors. The documents also revealed the labyrinthine corruption in India's deal to buy helicopters from AgustaWestland.

To be doubly sure, the ministry sent the documents to the Government Examiner of Questioned Documents, a body authorised to validate the documents. The examiner confirmed that the documents attached to Allen's mail were “secret in nature and their disclosure was prejudicial to safety, security and interest of India”.

Given the sensitive nature of the documents, the defence ministry again wrote to the CBI on August 24, 2012, to investigate the leak of classified documents from the ministry. The ED was already conducting its investigation on Italy-based money laundering. In 2009, while probing the case of alleged hawala dealer Naresh Kumar Jain, the agency had identified Capri in northern Italy as the base of an India-specific money laundering racket. Despite multiple trails leading to Italy, neither the CBI nor the ED made any progress until the Italian police arrested Finmeccanica's Chief Executive Officer Giuseppe Orsi in Milan on February 12, on accusations of corruption linked to the sale of AW101 helicopters to India.

Fresh details reveal that in 2009 AgustaWestland had sought the help of New York-based consultancy firm Ganton Ltd to swing a possible helicopter deal with the Delhi Police. During this time, AgustaWestland was negotiating the VVIP helicopter deal with the defence ministry, too. Allen, the whistleblower, was former president of Ganton.

AgustaWestland knew that the Delhi Police had been asking the home ministry for helicopters since 1996, for aerial surveillance of the national capital. The demand was expected to become stronger ahead of the Commonwealth Games in 2010. Usually, the Delhi Police hires helicopters from the Air Force or the Border Security Force.

As before, this time, too, the home ministry turned down the proposal, citing lack of infrastructure and lack of trained manpower required to maintain the helicopters. Delhi Police Commissioner Neeraj Kumar has denied any negotiation with the company. “At that time, I was the special commissioner of police (administration),” Kumar told reporters in Delhi. “This thought [procurement of AgustaWestland helicopters] had not even come into our minds.”

But, THE WEEK has with it the copy of an agreement between AgustaWestland and Ganton Ltd, dated August 7, 2009 (AG/ME/09/166). In the document, AgustaWestland has offered commissions to Ganton Ltd to help strike a deal with the Delhi Police. The agreement was “on non-exclusive basis, in the promotion and negotiation of... AW119, AW109 and AW139 helicopters for the Delhi Police.” AgustaWestland offered Ganton an 8 per cent commission for helicopter sales and a 15 per cent commission on sale of spare parts. The agreement was signed by Bruno Spagnolini, former CEO of AgustaWestland, who also was arrested recently in Italy.

Spagnolini and Orsi, according to the 64-page Italian probe report which contains conversations and details of money laundering to India, had used services of Delhi-based arms dealer Abhishek Verma, who is currently in Tihar jail. They had paid bribes amounting to $27 million through two Switzerland-based intermediaries, Guido Haschke and Carlo Gerosa, to secure the Rs.3,600 crore helicopter deal. For its part, AgustaWestland allegedly used software companies IDS India and IDS Tunisia as front firms to cover up payments to officials in India.

Desperate to bag the helicopter deal, Spagnolini and Orsi allegedly used a British middleman, too—Christian Michel, 52, of Chelsea, the UK. A known figure in Delhi's arms dealer circuit, Michel is accused of linking AgustaWestland to India's former Air chief marshal S.P. Tyagi.

According to court documents, Michel, as a consultant to AgustaWestland, had “promised and effectively funnelled, through the brothers Juli Tyagi, Docsa Tyagi and Sandeep Tyagi, sums of money, whose full amount has not been fully quantified, to Marshal S.P. Tyagi, the head of the Indian Air Force from 2004 to 2007, to carry out and for having carried out an act contrary to his official duty.”

Air chief marshal Tyagi has strongly denied any wrongdoing. “I retired from the service in 2007, and the deal was signed in 2010,” he said. “I am shocked that my name has been dragged into this.”

Michel holds crucial information about the case as he has been operating from Delhi for many years, said the investigators. He is believed to be living in Dubai, where he also runs a runs a company called Global Trade and Commerce. THE WEEK's attempts to contact him at his businesses in Dubai failed.

The crucial allegation is that the middlemen, through Tyagi, reduced the operating ceiling mentioned in the initial tender. “[They] intervened in the tender, changing it to favour AgustaWestland by changing the operating requirements, bringing the altitude requirement down from 18,000ft to 15,000ft,” the Italian arrest warrant alleges. “This allowed AgustaWestland [which otherwise would not have qualified] to take part in the tender.”

In a 35-point statement, the defence ministry has denied that procurement procedures had been manipulated to allow AgustaWestland to win the contract. “On November 19, 2003, a meeting was taken by Principal Secretary [Brajesh Mishra] to PM [Atal Bihari Vajpayee] on this [altitude] subject. In the meeting, the Principal Secretary observed that his main concern was that the framing of the mandatory requirements has led us effectively into a single-vendor situation. It was also noted that Prime Minister and President have rarely made visits to places involving flying at an altitude beyond 4,500m [around 14,800ft],” reads the defence ministry statement. Subsequently, the operational altitude was reduced.

The Italian probe actually started in Naples, to investigate whether there were connections between the Italian mafia, the corporate world and the government officials. Many see the probe as a tussle between Italian Prime Minister Mario Monti and former prime minister Silvio Berlusconi, who has denounced the probe and called it “a suicide act against our economy”.

But the probe has gone much beyond Italy, as fresh details have disclosed that cash was sent via a web of middlemen and companies in the UK, Switzerland, Italy, Tunisia and Mauritius to pay kickbacks in India.

According to court documents, Delhi-based arms dealers with links to AgustaWestland had scheduled meetings with top defence ministry officials in South Block. One such meeting was organised by Abhishek Verma, between Swiss small-arms firm Sig Sauer and defence ministry officials and politicians. On December 5, 2011, he received Ron Cohen and Michael Leuke, the two top executives of Sig Sauer, in Delhi and arranged their meetings with the director-general (defence acquisition), director-general (special frontier force), joint secretary of the home ministry and with other senior bureaucrats. At the Verma estate in Delhi, he hosted a gala reception for them, attended by many retired Army officers.

“The focus of our investigation is to find out the nature of involvement of people within the defence ministry in fixing the deals,” said a senior CBI officer. “No deal is possible without their involvement.”

India has launched its own investigation into the allegations of corruption. The government has sent a four-man delegation to Italy, jointly led by Arun Kumar Bal, joint secretary, ministry of defence, and Mahipal Yadav of the CBI. Finmeccanica could be blacklisted for several years in India if the corruption allegations are proven.

As per the Integrity Pact, which AgustaWestland had signed with the defence ministry, a bidder is prohibited from offering, directly or through intermediaries, commission, fees, brokerage or even a gift to the buyer. Any breach of the provisions of the integrity pact by the vendor entitles the defence ministry to take actions against them, which includes forfeiture of the earnest money, performance bond, cancellation of the contract without giving any compensation, to recover all the sums already paid with interest, to cancel any other contracts with the bidder and to debar the bidder from entering into any bid from the Indian government for a minimum period of five years, which can be extended.

The defence ministry has issued a show cause notice to AgustaWestland to explain, within seven days, why the Indian government should not terminate the agreement for 12 helicopters under the integrity pact. In a statement, Finmeccanica said it had never broken Indian law in the 40 years it had been operating in this strategic market, adding that it was confident that AgustaWestland would be able to show it had acted lawfully.

Meanwhile, the defence ministry has put the VVIP helicopter deal on hold. The case has put immense pressure on Antony, whose ministry has been buffeted by a string of graft cases. “Whosoever is responsible must be brought to justice at the earliest and must receive maximum punishment,” Antony told reporters in Delhi. “It is the resolve of the entire government. We will show no mercy.” When asked whether he would resign over the controversy, Antony said he will explain everything in Parliament. “We have nothing to hide. Our hands are very clean,” he said.

The kickbacks in the helicopter deal have cast a shadow on India's procurement plans. Indian Rotorcraft Ltd, a joint venture between Tata Sons and AgustaWestland was established for the AW119 helicopters. As per the 2010 agreement, Indian Rotorcraft was responsible for the final assembly, completion and delivery of the AW119s, while AgustaWestland had to manage global marketing and sales. The first aircraft was scheduled for delivery from GMR Aerospace Park, Hyderabad, in 2011. If AgustaWestland is blacklisted, the joint venture will be on shaky ground.

The process to acquire 197 high-altitude reconnaissance and surveillance helicopters, worth $600 million for the Indian Air Force and the Indian Army, is already hit by allegations of kickbacks. A document seized from the home of alleged middleman Guido Haschke by Italian prosecutors has revealed that a serving Indian Army brigadier, who oversaw the flight trials of the choppers, had asked for $5 million in January 2010, days before the trials began.

AgustaWestland was eventually disqualified from the bid in May 2010 on technical grounds. The Army refused to comment on the case, saying it was not aware of the probe in Italy. However, a senior defence ministry official told THE WEEK that “the Army's own probe had found that the allegations against the brigadier were baseless.”

Last year, former Army chief General V.K. Singh had shocked the country when he said that a retired general walked into his room at the Army headquarters and offered him a bribe of Rs.14 crore to clear the deal to procure overpriced Tatra trucks for the Army.

And, the move to replace the INSAS rifle with 65,000 new assault rifles in 2014 has hit a rough patch. Sig Sauer was the front-runner to win the Rs.4,850 crore contract. Now that Sig Sauer's ties with arms dealers are known, the deal might be scrapped.

And, all eyes are on the much awaited Dassault Rafale fighter jet deal, for which the tender was issued in August 2007. Out of six global military aviation giants, French firm Dassault bagged the Rs.55,000-crore deal. Allegations that Michel has also worked with Dassault have put a question mark on the deal, too. Coincidentally, joint secretary Bal also heads the contract negotiation committee of the fighter jet project. There are speculations that India may review the fighter jet deal, though it seems most unlikely at the moment.

But the hope of a review prompted visiting British Prime Minister David Cameron to say that the Eurofighter Typhoon, which is partly built in Britain, remained an attractive option. Calling the Typhoon a superior aircraft, Cameron said the consortium that built it had said it would “look again” at the price tag.

Under scrutiny

The AgustaWestland helicopter scam has raised questions about a number of other deals.

Light utility helicopter

The deal to procure 197 light utility helicopters for the Army and Air Force was stalled because of 
allegations of tender deviations. A serving brigadier allegedly demanded $5 million from an Italian company to fix the deal.

Fighter jet deal

Christian Michel, the London-based middleman who allegedly got 30 million euros in the AgustaWestland helicopter contract, has also worked with Dassault, the French company short-listed to supply medium multi-role combat aircraft to India. The $20-billion deal is one of India's biggest defence contracts. Arun Kumar Bal, joint secretary in the defence ministry who was sent to Italy to gather evidence in the AgustaWestland helicopter scam, heads the contract negotiation committee in the fighter jet project.

Surveillance aircraft for R&AW

Israeli company Elbit Systems was allegedly in touch with arms dealers on a highly classified tender to procure two surveillance aircraft for electronic intelligence for the R&AW. Investigators suspect the arms dealers might have facilitated the $350-million deal.

Sig Sauer rifle

Swiss small arms manufacturer Sig Sauer allegedly sought services of a Delhi-based arms dealer to win the contract of the 5.56mm/7.62mm rifle. Army is planning to buy 65,000 rifles for Rs.4,850 crore and induct them by mid-2014.

Will Finmeccanica be blacklisted?

State-controlled Finmeccanica, Italy's second largest employer after Fiat, could be blacklisted for several years in India if it is proven that its subsidiary AgustaWestland hired middlemen or paid commission to win the helicopter deal. The defence ministry has issued a show-cause notice to AgustaWestland.

As per the Integrity Pact that AgustaWestland had signed with the defence ministry, a bidder is prohibited to offer, directly or through intermediaries, commission, fees, brokerage or even a gift to the buyer. Any breach of the provisions of the pact by Finmeccanica or AgustaWestland entitles the ministry to take action against them, which includes forfeiture of the earnest money, cancellation of the contract without any compensation, recovery of all the payments with interest, cancellation of other contracts with the bidder and debarring the bidder from any bids for at least five years.

Offline Ajai Singh

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Re: ‎The Italian Helicopter Scam & its remediation
« Reply #2 on: March 05, 2013, 17:28:17 PM »

VVIP chopper scandal: CBI questions Aeromatrix CEO; Enforcement Directorate begins probe
Reported by Sunetra Choudhury | Updated: March 05, 2013 21:44 IST
New Delhi: The Central Bureau of Investigation (CBI), which is probing the Rs. 3600-crore helicopter deal, questioned the CEO of Aeromatrix, Praveen Bakshi, for second day in a row today.
Italian prosecutors claim that Chandigarh-bases Aeromatrix and IDS Infotech were allegedly used along with their directors and senior executives to route bribes to India along with other firms in the UK, Mauritius and Tunisia.
CBI sources said Mr Bakshi was questioned in detail about the structure of its company, relations with alleged Italian middlemen Guido Ralph Hashcke and Carlo Gerosa and the engineering contracts with Mauritius-based firms. Both Gerosa and Haschke were directors of Aeromatrix at the time the deal was signed.
India had signed an agreement to buy 12 helicopters from Anglo-Italian company, Agusta Westland (AW).
Meanwhile, the Enforcement Directorate (ED), which is probing arms dealer Abhishek Verma, has also begun a probe into allegations of pay-offs in the deal, sources said. The investigating agency will be looking into the accounts of IDS Infotech and Aeromatrix, they added.
Sources said the ED will begin by checking whether the two companies had the necessary clearances from the Software Technology Park of India (STPI), mandatory for exporting software. Both companies have explained the payments as remuneration for software development. The agency will also check if the companies submitted their periodical reports with the Reserve Bank of India as per government rules.
The ED will also question Mr Bakshi as well as the executives of IDS Infotech.
After the scandal broke, US attorney Edward Allen had forwarded emails between Abhishek Verma and Agusta Westland to Indian agencies in the last week of February, but investigators say they have found no link between Mr Verma and the VVIP chopper deal yet. Mr Allen's 25-page testimony recorded by the CBI-ED team in October is expected to be part of a chargesheet soon.

Offline Ajai Singh

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Re: ‎The Italian Helicopter Scam & its remediation
« Reply #3 on: March 12, 2013, 09:33:04 AM »

Is UPA serious about finding the guilty?

This scam offers a multi-media crash course to the nation on money laundering, which continues unabated.
Finmeccanica chairman and chief executive officer, Giuseppe Orsi poses in a helicopter during the opening ceremony of a new terminal of Vertiporto dell’Urbe in Rome on 19 January, 2009. Orsi has inherited a corruption crisis of an over $750 million helicofter a very short break, it's scandal time again for the UPA. The government had in 2010 signed a deal worth over Rs 3,800 crore to buy 12 helicopters for use by VVIPs, from Agusta Westland, an arm of Italian company Finmeccanica. Interestingly, the deal was clinched after the 2005 visit of then Italian President Carlo Azeglio Ciampi, which after meetings with Prime Minister Manmohan Singh and Congress president Sonia Gandhi, was used for an "under-the-radar meeting between then Air chief S.P. Tyagi and Finmeccanica officials".

The Agusta Westland deal is being called Bofors 2. But Agusta Westland is a trifle different, and far surpasses Bofors in its planning, networking, execution and end use. The first information about it, like in Bofors, came from Europe, in this case Italy. But unlike the Bofors scam, there were already serious investigations going on about Finmeccanica and Agusta Westland before Italian courts, long before the news hit the Indian media and public.

The investigation was apparently triggered by in-house Finmeccanica rivalries, between its previous head Francesco Guarguaglini, and his successor, Giuseppe Orsi (now under arrest). After the ouster of Silvio Berlusconi's coalition government, another former Finmeccanica employee, Lorenzo Borgogni, who had fallen out with Orsi, decided to spill the beans. He provided detailed statements regarding the identities of the middlemen and the distribution of kickbacks paid by Agusta to Indians, totalling 51 million euro. As reported in La Repubblica in February 2012, Borgogni told prosecutors that slush funds were generated after a "sudden" escalation of price by 10 million euro per helicopter in 2010. The Indian government bought 12 choppers and paid 120 million euro extra.

Bit by bit, these names have been surfacing in our media. The Indian public is being introduced to the deep, subterranean network of defence middlemen who flourish in our capital, merrily swinging deals, luring defence and police seniors, bureaucrats and politicians, least afraid of Indian law that prohibits middlemen or payment of commission in defence contracts. The names of Haschke, Gerosa and Christian Michel will soon become household names like Ottavio Quattrocchi. This scam also offers a multi-media crash course to the nation on money laundering that continues unabated, and the shadowy alleys of defence deals, ghost off-shore companies, front companies, bogus engineering contracts, tweaking technical specifications and field trials, political and governmental connivance, and money trails traversing continents.

But what is really novel about Borgogni's information is that at least 10 million euro was reportedly funnelled back to Italy and paid to the Lega Nord party (which was a partner in Berlusconi's coalition) in return for its support to Orsi's bid to become president of Finmeccanica. Silvio Berlusconi, himself a leader in political corruption and other excesses, has been handsomely supportive of his good friend Orsi and went to the extent of condoning his actions of bribery and kickbacks. This is what he says, "Bribes ... are not crimes. We're talking about paying a commission to someone in that country... Why, because those are the rules in that country. The fact that there is risk of [Italian] magistrates intervening I consider to be economic suicide." Well, Berlusconi wants to have an influential voice after the general election due in Italy next week, and would appreciate Indian money reaching his ally the Lega Nord through his good offices, the cooperation of his friend Orsi, and the humungous influence of the Italian segment of Indian governance. Is that the reason why the Italian law enforcement agencies are so concerned about the kickbacks from India? And my fellow citizens, please note, our money illegally siphoned out of our country is not merely being used for personal enrichment of the agents, as was the case during the Bofors era, but is being injected into the political system of Italy, so as to support a political party to keep the exploitative partnership between the two countries and Italian imperialism alive. This is the unprecedented, innovative contribution of the present scam where it surpasses the Bofors scam. If it is a fact that Indian money is being used to fund elections in Italy, then in political theory and economics, it would imply that India has been reduced to a colony of Italy. I'm sure if an economist does a study of the amount of money looted from India and stashed in offshore accounts by the UPA government, and channelled through various economies, not Indian, it will far exceed whatever the British exploited from us.

Here's another matter about the Agusta scam that is deeply disturbing. An agreement has been seized that discusses the division of the kickbacks of 52 million euro between Guido Haschke and Christian Michel. Michel agrees to cut his commission by 2 million euro to accommodate the demand of Haschke and "the family".

Questions upon questions are emerging. Why did the government sit quiet for almost a year after the Italian investigations began, with Defence Minister A.K. Antony actually certifying in Parliament that everything was fine with the deal? Salman Khurshid has novel answers for this, that cancelling the deal would "affect our defence preparedness". How did VVIP helicopters that even the US could not afford, have anything to do with defence preparedness is of course something he cannot explain.

Let me now summarise the incriminating circumstantial evidence:

1. The helicopter purchase is obviously not for the defence of the country, but for use of some VIPs.

2. Do we need such expensive toys for our already-pampered elite of the elite?

3. There is no evidence indicating transparency: global tenders were not invited. That itself is a serious criminal offence of every public servant who participated in this purchase agreement.

5. The price was suddenly increased by 10 million euro per helicopter. Who initiated this increase, who negotiated and who finally approved to make virtually a gift to Italy of the aam admi's tax paid money? This is a horrendous criminal breach of trust, for which all participants in this deal, high or low, must submit to custodial interrogation, something the CBI invariably insists for lesser mortals.

6. The involvement of "the family" is reportedly established through seized documents. Who are they? What efforts is government making to disclose their identity?

I entreat the Prime Minister, please don't hoodwink the nation by the government's routine response that the CBI and the JPC will go into these matters. The nation has had enough of them. We have seen their record in protecting national interest in the Bofors case. Let there be an SIT herein demanded. The BJP has made a sound demand for it.

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Re: ‎The Italian Helicopter Scam & its remediation
« Reply #4 on: March 12, 2013, 09:34:42 AM »

Augusta: The cover-up begins

Despite their deceptive exterior, the CBI and JPCs are only voices of the ruling government.
CBI named former Air Force Chief SP Tyagi in its preliminary enquiry into the Augusta-Westland bribery charges.
s expected and in predictable fashion, the Agusta Westland scam appeared to recede into the background this week, and not only because it was a week of budgets. But thanks to the exposure by the Italian courts and the details provided by them, the people of India have seen for themselves the flourishing and lucrative partnership in corruption that has thrived between the two regimes. In the background of the scam and the can of worms it has revealed about the government, clearly, several leaders of the Congress would have had high stakes in the Italian election, with their political interests intersecting substantially. Not surprising therefore, that the people of India have showed a much livelier curiosity regarding its outcome. Well, the Italian election is over, and for the moment Berlusconi's hopes of leading the next government have crashed, along with his semi-Fascist ally, the Lega Nord, despite them reportedly having received election funds from the commissions mulcted from the aam aadmi of India. And the repercussions of this on the Indian Italian scam partnership have yet to fully unfold.

The government and Sonia Gandhi loyalists remained quiet and still for one long year after the scam surfaced in Italy. Berlusconi's departure in November 2011 would have unnerved them considerably. Perhaps they hoped that the storm would not reach India, and felt confident that even if it did, they had enough leverage over the media to snuff it out. Perhaps they thought that Berlusconi would return, and then it would be business as usual. It is only when the situation was fast becoming threatening and irreversible, starting with the sustained exposures in many newspapers, and ending with Orsi's arrest, that Sonia Gandhi and her loyalists started their Standard Operating Procedures for diffusion and cover up of the scam. The country is by now ever so familiar with the drill, that it can forecast every sequential detail well in advance.

They have immense ability to suppress scams, having done so successfully for so many decades now, through loyal spokesmen who at the snap of a finger will swear to the falsest absurdities. In the first instance, subversion and destruction of evidence must start at the investigation and judicial front, through the help of captive CBI that is forced to bungle, as it did in the Bofors case to destroy it judicially. Alongside, politically, appoint a JPC, where the Congress will have numerical advantage and indulge in bullying tactics, and give the government a clean chit. Bureaucrats and policemen are aware that any assistance they give in tough times by complicity, active or passive, is a credit card in their hands which can be encashed when the time is right. Even today, surviving and conniving bureaucrats of the Bofors era continue to encash them for patronage and largesse. And those involved in the Agusta Westland scam have already started encashing them.

In my previous article, I have raised specific questions about the evidence, direct and circumstantial, that gives enough information about the Indian culprits who are involved in this bribery scam. Yet, the Defence Minister looked the other way for one whole year, and gave a clean chit to the deal when the matter was raised in Parliament. Only after the matter was getting out of control and damning evidence kept mounting from Italy about Indian accomplices and "the family", leading to the arrest of the Orsi, did the same Defence Minister order a CBI enquiry. What would this imply: either that the Defence Minister was not speaking the truth in the first instance when he spoke to Parliament, or that today, the same Defence Minister admits that he approved a highly questionable defence contract that is being investigated in, of all places, in the supplier country. Antony's plaintive lamentations that the guilty will be punished ran beautifully according to the tired script dictated by his boss. So predictable and ridiculous.

Coming to the CBI team's visit to Italy, it seems like a damp squib, though not too many details are available in the public domain. Obviously, it is just a ruse to buy time. There is enough circumstantial evidence which mandates immediate arrest, custodial interrogation and securing evidence before the culprits get time to make the evidence disappear. Clearly, the same obfuscating and subversive techniques of the Congress Party are at play, and the people of India know it.

The government and CBI owe an explanation to the people and must inform the public about the following points :

A) What was the brief given to the CBI and exactly what did the CBI achieve in Italy?

B) Was the CBI instructed to assure the Italian authorities, including the judiciary, that India is interested to discover the identity of every culprit, however politically powerful, and whether or not having some Italian connection?

C) What were the written applications or communications made to or exchanged with the Italian authorities? Full particulars of the contents and the responses from the Italians must be informed to the people of India.

D) Have the CBI or the government discovered who procured and how the order of the Italian magistrate running into 50 pages was circulating in India? Has the CBI obtained a certified copy?

E) Will the government inform the nation what diplomatic efforts have been made to secure the evidence of the Indian culprits and the extent of their involvement and what further steps they are intending to take?

F) What is the final advice of our Italian lawyers, who I presume are being paid with our taxpayers' money?

G) The Opposition in Parliament was right that the JPC investigation is a joke. The real action is happening in Italy not India, where the tentacles of the captive CBI cannot reach, and the JPC's writ does not run. But would the government be willing to accept the proposal that the JPC should be headed by an expert with knowledge of criminal law both Indian and Italian, and also familiarity with the well-practised tricks of investigating agencies and other accused adept at suppressing evidence?

H) Will the government instruct the CBI to disclose all steps taken in the course of investigation except those where the disclosure will frustrate the investigation?

A reading of the Italian court order makes it abundantly clear that "the family Tyagi" that is repeatedly referred to does not merely mean Tyagi, and his children or relatives. It clearly refers to the collective family of conspirators. My public advice to S.P. Tyagi is to come clean and speak the whole truth and nothing but the truth. All faiths teach us that the road to paradise is not paved with illegally acquired money, but with the extent of public good one has accomplished. At least now he should express contrition and remorse, and I give him my personal assurance, that no harm will come to him.

The country is crying for a government that protects its national interest. It is feeling helpless and frustrated when it is confronted, day after day, with acts of the UPA government and the Hand that controls it, brazenly violating its trust and plundering the nation. The CBI and JPCs can do nothing to redeem the situation, as their past history amply proves. Despite their deceptive exterior, they are only voices of the ruling government. The present CVC, I am informed, is the same man who as Defence Secretary approved the deal, and is now summoning his own files. All beautifully orchestrated.

Only an SIT answerable to the Supreme Court can provide truthful answers to the nation.

Offline Ajai Singh

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Re: ‎The Italian Helicopter Scam & its remediation
« Reply #5 on: March 18, 2013, 18:04:37 PM »
Purchase of Helicopters for VVIP: A Procedural Appraisal
(Published in Defence and Security Alert March 2013)
by Major General Mrinal Suman

Defence deals the world over are regularly criticised for lack of transparency. Whereas governments claim to strike a fine balance between open competition and secrecy needs, it is generally alleged that security concerns are over-played to avoid public scrutiny. Resultantly, aspersions are often cast about the prevalence of corrupt practices and underhand dealings.  It is generally suspected that interested participants can skew the whole procurement process by influencing decision makers by decadent means.
India is no exception. Every major deal has got mired in controversies.  Questions have been raised with regard to the procurement procedure followed and financial improprieties. Therefore, the case of AgustaWestland has not come as a bolt from the blue for the knowledgeable. It was to be expected. The surprising part is the delay in its exposé. Media is agog with rumours of middlemen playing a decisive role to swing the deal.
With a view to silence the vociferous skeptics and clarify matters, the Ministry of Defence (MoD) issued a detailed fact sheet on 14 February 2013. It gives a chronology of the important procedural milestones of the deal. MoD certainly deserves credit for not hiding behind the façade of secrecy and putting the facts in public domain.

An endeavour has been made here to analyse the MoD fact sheet and carry out a broad procedural audit to check whether the process followed is beyond reproach. It entails ascertaining compliance of the salient provisions the Defence Procurement Procedure (DPP) and identifying infirmities, if any. Five key issues have been discussed in this article.  

1. Change of Parameters

      a)    MoD Fact Sheet

Request for Proposals (RFP) was initially issued in March 2002. Amongst other parameters, it specified that the helicopter must be able to fly up to 6000 meters. As only a single vendor emerged fully compliant, orders were issued to revisit the parameters and reduce flying ceiling to 4500 meters as the VVIP rarely fly over 4500 meters. The Air Force was asked to co-opt Home Ministry and the Special Protection Group (SPG) in framing parameters to ensure that all operational, security and convenience requirements are duly satisfied.

b)    Observations

Parameters are minimum performance attributes that are essential for the equipment to be able to carry out the envisaged functions. They are formulated through a long drawn, evolutionary and consultative process. Parameters keep undergoing changes as newer inputs become available. The concerned Service Headquarters (SHQ) is empowered to change them prior to the issuance of RFP. However, once RFP is issued, they become firm and no change/deviation is allowed.

Parameters are required to be framed to generate maximum competition and not be tailor-made to help a particular vendor. DPP mandates that in the event of a single vendor emerging successful, the case should be aborted. A fresh RFP has to be issued with revised parameters.

However, decision making must be objective.  In case parameters are changed either to facilitate entry of a vendor or to eliminate potential competitors, it is a serious act of fraudulent conduct. 

In view of the above, orders to reduce flying ceiling to 4500 meters were totally in order and in national interests. It generated more competition and was a cheaper option as helicopters with higher flying ceiling invariably cost considerably more.

2. Trial Evaluation

      a)    MoD Fact Sheet

A fresh RFP for 12 helicopters (instead of 8 planned earlier) with revised parameters was issued to six vendors in September 2006. Three vendors, namely M/s Sikorsky, USA (S-92 helicopter), M/s AgustaWestland, UK (EH-101 helicopter) and M/s Rosoboronexport, Russia (Mi-172 helicopter) responded. The techno-commercial proposal of M/s Rosoboronexport was not considered as the company had failed to deposit earnest money and declined to sign the integrity pact.

Technical Equipment Committee carried out paper evaluation of the technical proposals of M/s Sikorsky and M/s AgustaWestland. Finding their helicopters to be compliant with the parameters, it recommended their field evaluation trials. SPG was co-opted in the trials which were carried out in respect of M/s Sikorsky in USA and M/s AgustaWestland in UK during the period January-February 2008. Report was submitted in April 2008, recommending AW-101 AgustaWestland for induction.

b)    Observations

MoD was right in eliminating M/s Rosoboronexport as it had declined to fulfil mandatory requirements.
As regards field evaluation trials, two aspects are intriguing. One, trials were carried out in foreign lands, in total contravention of DPP which stipulates that these should be conducted by the user in all conditions where the equipment is likely to be deployed. Instead of asking the manufacturers of the short listed equipment to send the equipment to India on ‘no-cost no-commitment’ basis, as is the standard norm, SHQ deputed trial teams abroad.
It needs to be recalled here that during the same period, evaluation trials in the case of multi-role combat aircraft were being carried out at Leh (high altitude), Jaisalmer (hot weather) and Bangalore (plains).   
Conduct of trials in India is an extremely critical prerequisite. India has varied terrain, climatic conditions and topography. These are totally different than those prevailing in the UK and the USA. For example, equipment found suitable for dust-free Europe has been found wanting in Indian environment with rubber parts and seals drying up prematurely.
Two, field trials were started in January and the report submitted in April. It must be an all time   record of exceptional efficiency. Detailed evaluation of high-tech helicopters including validation of the support system and maintainability aspects was carried out in mere two months; that too for machines on which safety and security of nation’s VVIP depended. Compare it with the time taken in the trial evaluation of multi-role combat aircraft.
3. Non-compliance by Sikorsky Helicopter

      a)    MoD Fact Sheet

The Staff Evaluation Report of Air HQ concluded that Sikorsky S-92 helicopter was non-compliant with respect to four essential parameters, namely missile approach warning system, service ceiling of 4500 meters, drift-down altitude and hover out of ground effect. Therefore, the helicopter was not recommended for induction. On the other hand AgustaWestland AW-101 was found to be fully compliant.   

      b)    Observations

The aim of field trials is to validate performance claims made by the vendors in actual terrain and climatic conditions. As stated above, only those vendors are called to participate in field evaluation trials whose technical proposals confirm compliance with all parameters.
It is apparent that Sikorsky S-92 would not have been invited for trials unless it had claimed that its helicopter could perform as stipulated. Sikorsky Aircraft is one of the leading helicopter manufacturers in the world. It possibly could not be unaware of the inadequacies/limitations of its machine as regards Indian parameters. For example, it knew that it did not possess missile approach warning system. Similarly, why did it claim that its helicopter could fly at 4500 meters?
It is a worrisome matter. Did a company of Sikorsky’s stature lie and make false claims in its technical proposal or were the parameters altered during the trials? DPP explicitly states that parameters not mentioned in RFP are not to be considered for field evaluation.
4. Commercial Negotiations

      a)    MoD Fact Sheet

Contract Negotiation Committee (CNC) carried out discussions between September 2008 and January 2009. While the CNC discussions were in progress, Air HQ recommended inclusion of Traffic Collision Avoidance System (TCAS-II) and Enhanced Ground Proximity Warning System (EGPWS) for all 12 helicopters. SPG concurred. In addition, SPG recommended inclusion of Medical Evacuation System (Medevac) for 8 helicopters. These additional requirements were considered essential for safe and effective operation of the helicopters in VVIP transportation role.
CNC recommended conclusion of the contract for Euro 556.262 million. The Cabinet Committee for Security approved the proposal on 18 January 2010 and the contract was signed within 20 days on 08 February 2010.

      b)    Observations

It is not understood as to why the requirement of TCAS-II, EGPWS and Medevac could not be foreseen before the issuance of RFP in September 2006. CNC commenced work in September 2008. What new developments had taken place in the intervening period of two years that necessitated these add-on systems?
The underlying principle of DPP is to follow ‘single-stage two-bid system’.  It implies that vendors have to submit their technical and commercial bids at the outset, albeit in separate sealed envelopes. It ensures that that the commercial offers remain competitive in nature and guards against the possibility of the successful vendor increasing his commercial quote at a later stage. That is the reason why DPP does not allow any change in the configuration of equipment after the issuance of RFP.
By demanding additional systems at CNC stage, MoD made a mockery of its own procurement procedure. It was a patently wrong and gratuitous step. It provided a windfall opportunity to AgustaWestland to quote any price that it wanted to for the add-on systems. It will be interesting to know the basic cost quoted by AgustaWestland in its sealed offer and the increase demanded on account of the new additions.
CNC is required to establish a benchmark for the reasonableness of price prior to the opening of the commercial offer. Once the price quoted by the vendor is found to be within the benchmark, no further price negotiations are considered necessary. It is not known as to what benchmark was established by CNC and whether the quote of AgustaWestland was well within it.
5. Probity Aspects

       a)    MoD Fact Sheet

The contract includes exhaustive probity provisions. Article 22 deals with the use of undue influence and empowers the government to cancel the contract and recover loss arising from such cancellation. Article 23 debars employment of agents. 
An Integrity Pact has also been signed. As per the pact, in case of any breach, the government can recover sums paid, impose financial penalties and debar the seller from participating in any deal for a minimum period of five years. 

       b)    Observations

There are two aspects that need clarification. As per Clause 19 of the standard contract given in DPP, if it is discovered at any stage that the seller had paid commission to agents, the amount so paid has to be refunded to the government.

Secondly and more critically, Clause 20 mandates that an undertaking be obtained from the seller to provide access to his books of account in case the government suspects breach of any probity provisions.
The fact sheet issued by MoD is silent on both the above counts.


Although MoD has claimed to have followed the laid down procedure, the following key aspects need further elucidation:-

(i)   Why were trials not carried out in India as mandated in DPP?
(ii)   Why were additional systems included in the purchase package at CNC stage?
(iii)   Has Sikorsky Aircraft been questioned for knowingly making false claims in its technical proposal and thereby wasting India’s time and resources in infructuous trials?
(iv)   Does the contract include clauses regarding refund of agents’ commission and inspection of books of account of the seller?

A word of caution will be in order here. Before initiating any action, the government must have conclusive proof of a breach of probity provisions having taken place. Therefore, the case must be investigated thoroughly. In case any misdemeanour is proved, appropriate and rational action should be taken against both the seller and the others involved. Punitive action must always be well considered and commensurate with the degree of transgression. It does not have to be blacklisting at the outset. *****

Offline Ajai Singh

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Re: ‎The Italian Helicopter Scam & its remediation
« Reply #6 on: March 26, 2013, 09:03:38 AM »

The AgustaWestland Helicopter Scam?
 An article by DSA Team     

The Arms Acquisition Process in India has been slowed to a crawl due to a series of scams. The basic fact is that by 1990, the entire Indian arms inventory obtained from the former Soviet Union had become due for turnover. That is the time that the USSR collapsed and the Indian economy itself came close to collapse. As such, the armed forces were clearly told to wait till the Indian economy revived.The recapitalisation of the armed forces’ capital stocks was put off by over two decades. This severely constrained India’s response options to Pakistan’s Proxy War in Jammu and Kashmir and India was forced to fight reactively in its own territory. By the start of 21st century, the liberalised Indian Economy gained traction. However, the recapitalisation of the capital military stock remained confined to a crawl as the political leadership moved excruciatingly slowly on defence deals, ostensibly to obviate corruption. As a result, the Indian Air Force’s (IAF) squadron strength today is falling rapidly as the MiGs are well past their service life; and no Rafales or Light Combat Aircrafts (LCA) seem to be visible on the horizon. Our submarine strength is rapidly declining as the Kilos retire but the Scorpenes are not available. After the Bofors Scam in 1987, the Indian Army has been without its mainstay of firepower – Medium Guns. Its Air Defence (AD) Artillery is of the 1960s and 70s vintage. Its light helicopter fleet, is also from the same era and is about to fall out of the skies. Its tank fleet is night blind and sans ammunition. The previous Army Chief’s letter had raised an outcry by listing these voids last year but public memory is woefully short.

The AgustaWestland scam could not have therefore come at a worse time. It is amazing that despite the Defence Minister’s strongly articulated antipathy to corruption in defence deals, these scams continue to surface after virtually every defence purchase. The resultant media outcry usually leads to the deal cancellations and blacklisting of the firms concerned. In the process the only ones to really suffer are the Armed Forces. The acquisition of badly needed weapon systems gets delayed by decades with huge attendant cost overruns to the national exchequer. The pity is, for all these setbacks to the defence of the country, no culprits have ever been caught so far and given exemplary punishment.

The ministry bureaucrats who negotiate the actual deal seem teflon coated, take no responsibility and go scot free. The Bofors was an excellent gun. 450 were purchased outright and a 1,000 were to be manufactured in the country before the scam surfaced. The real losers were the Indian Army. The AgustaWestland deal was worth € 560 million. Of this, € 51 million was paid as kickbacks. Of this some € 30 million were disbursed in India and € 10 million given to Italian politicians to secure Giuseppe Orsi’s promotion in Finmeccanica. This amounts to a kickback of virtually 10 per cent of the deal amount, which is huge. Generally international bribes / commissions amount to 2-3 per cent of the overall cost of the deal.

The initial media outcry was focused on the former Air Chief. It was alleged that he had tweaked the helicopters altitude requirements from 18,000 ft to 15,000 ft to accommodate Agusta. It later came to light that this decision had been taken some two years before the commencement of his tenure by the then NSA of the NDA government to rightly avoid a single vendor situation.

The Bofors was an excellent gun. 450 were purchased outrightand a 1,000 were to be manufactured in the country before the scam surfaced. The real losers were the Indian Army.

The trial evaluations were carried out after the said Air Chief retired and the contract was signed only in 2010. As such, logically it is difficult to establish a quid pro quo with the former Air Chief. The entire spin doctoring exercise in hindsight appeared to be probably aimed at diverting attention from the primary bribe takers amongst the politico-bureaucratic nexus, defaming the Indian Armed Forces and setting up a convenient fall guy. Those who know the mechanics of the Indian arms acquisition process are aware that the Service Chiefs and Headquarters play at best a limited role. They cannot by themselves change any GSQRs, once the RFP is issued. Subsequent media reports have mentioned the role of Abhishek Verma – who reportedly has close links with the ruling establishment and is one of the main commission agents for most arms deals in the capital.

Generally, it would be a waste of time to look for any infirmities in the process of the deal. Usually there are none. In fact, this acquisition process is deliberately dragged out so that the authorised rent collectors can collect their commissions at each stage – simply for letting the process go through. These rent collectors seem to be very well known to the arms dealers in Delhi, have excellent political links and powerful patrons who save and shield them from all enquiries and harm. In the AgustaWestland case unfortunately, as per the fact sheet put out by the Ministry of Defence (MoD) itself, there are some startling infirmities in the process, namely:

Why were the trials not carried out in India under actual operating conditions? These trials were hurriedly completed in just two months in Italy and the USA, which is somewhat of a record. The normal practice is to get the equipment to India under a no cost-no commitment clause.

Why were additional systems like Traffic Avoidance System, Enhanced Ground Proximity System and Medical Evacuation system added at the Contract Negotiation State? As per the DPP this should have been in the RFP. Inserting them subsequently was illegal and enabled the vendor to make huge profits.

There is something about the speed with which this VVIP deal was concluded that raised suspicion. The involvement of the SPG added its share of ambiguity and the then SPG Chief himself went to Italy.

On the whole this is a disturbing state of affairs. This vitiated arms acquisition process has caused a huge setback to our defence preparedness and further slowed down the arms acquisition process. Huge windows of vulnerability have been created, which could now last beyond 2020. An ill-informed Indian public simply does not comprehend the great dangers that this political rent collection in our arms deals is posing to our National Security.

What then, should we do?

The best outcome of the whole sordid deal would be if we were finally pushed into creating a viable Defence Industrial Base in India that involves our vibrant Private sector in a major way. The FDI cap in Defence collaborations should be raised to 49 per cent to start with and India’s major multinationals must be involved
in a big way.

Deals should not routinely be cancelled. Emphasis should shift to following the money trail and punishing the bribe takers. We cannot afford a piquant situation where we blacklist half the defence firms of the world and needlessly delay the induction of quality and proven equipment.

However, the AgustaWestland deal, in particular, merits cancellation. The Finance Ministry has imposed a cut in the Defence Capital Acquisition process of Rs 10,000 crore. To avoid cutting funds for combat equipment, we could do away preferentially with this luxury copter deal for our VVIPs. Having failed to get the armed forces their basic weapon systems they can afford to fly cattle class for some time!

The Mi-17 fleet has stood us well in the past and could suffice for future VVIP duties. This will at least spare funds for combat equipment and send the right message to all vendors. India has to begin somewhere to cleanse this rotten system and a good place to start would be right here and now.

Offline Ajai Singh

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Re: ‎The Italian Helicopter Scam & its remediation
« Reply #7 on: March 26, 2013, 09:11:54 AM »

A single person cannot subvert the procurement system
Brijesh D. Jayal

A report by prosecutors filed in Italy in connection with the arrest of the chief executive officer of Finmeccanica, Giuseppe Orsi, has alleged that the then Indian air force chief was instrumental in swinging the Indian VVIP helicopter deal and was paid a certain amount of money, not yet quantified, through intermediaries. The report claimed that technical requirements were tweaked by the then air chief to enable the Italian helicopter to qualify and he also named three of his relatives as intermediaries.

Not surprisingly, this news spread like wildfire and the media, especially electronic, went wild. For a few days, the face of the erstwhile chief accompanied every bit of news on the subject. In the eyes of the nation, he was already damned. Like everything else in our volatile political climate, the debate soon took on political overtones and a partisan blame game began.

Without necessarily having to give the chief a clean chit, the ministry of defence did not choose to assure the people unequivocally that our defence procurement systems are robust enough not to be influenced by any one individual, irrespective of rank or status. The lone voice of sanity was that of Jaswant Singh, when he counselled, “We should not make wild allegations against a former Air Chief. It is not in the interest of both the Air Force and the country. The probe is on. Let’s wait.” Having been both a distinguished soldier and a defence and a foreign minister, he understood more than any other the destruction such media hype was causing to the very fabric of our armed forces. Even this wise counsel was soon drowned in political one-upmanship.

It is not this writer’s case to defend the erstwhile chief or his actions in the absence of being in possession of the full facts of the case, which in any case is the subject of an investigation. But having served for nearly a decade in various capacities in the planning and procurement side of the air force headquarters, one can say with some confidence that one individual cannot subvert the procurement system. It can only happen when compromises are made at multiple levels, both military and civil, through patronage, persuasion or pelf or a combination of these.

That there are to be no agents dealing in weapon systems has been the mantra of the defence ministry now for decades, yet their existence must be the worst kept secret in Lutyens’ Delhi. Recent reports have indicated that not only does this faceless tribe exist, but it moves around in high circles and has access to Lutyens’s elite bhawans and social circuits. The unspoken truth is that the system demonizes them in public, but flirts with them in private. If the apex levels of our national security and defence management are either unaware of their existence or unable to defang them, the question that naturally follows is whether national security itself is in secure hands.

The primary charge levelled at the erstwhile air chief is that he conspired to lower the services qualitative requirements of operating altitude enabling the AgustaWestland AW101 helicopter to enter the race from which otherwise it was excluded. The defence minister and the recent MoD release, on the other hand, are on record saying that all laid down procurement procedures were meticulously followed. Taking both these statements to be factually correct, two conclusions emerge. First, that our defence procurement procedures are so devoid of checks and balances that one single individual within the system can distort it, and second, that the MoD has suddenly loosened its suffocating stranglehold on the armed forces, giving the chiefs adequate rope to swing a Rs 3,760 crore deal. As even a novice in the arms business in Delhi will tell you, both conclusions are patently false.

In the midst of this gathering storm, the MoD has issued a press release giving out the sequence of events. It reveals that an acquisition process for VVIP helicopters commenced in March 2002 and culminated in the EC-225 of M/S Eurocopter being found suitable for acquisition after flight evaluation. In November 2003, the principal secretary to the prime minister convened a meeting voicing concern that the mandatory requirements stipulated by the IAF had resulted in a single vendor situation. Ostensibly to widen the choice of prospective vendors, the meeting decided to modify the mandatory altitude requirement to 4.5 kilometres whilst leaving the 6 km altitude to be desirable. It further added 1.8 metre cabin height as a desirable requirement.

The principal secretary then followed this up in December 2003 with a letter to the defence secretary and the chief of the army staff voicing concern that neither the Prime Minister’s Office nor the Special Protection Group had been consulted whilst formulating the SQRs and suggesting that realistic mandatory requirements be drawn up and the acquisition process be put on a fast track. A strange suggestion considering that in the earlier meeting the decision to change these requirements had already been taken!

In the words of the MoD “In pursuance of the above directive, the ORs were deliberated at length between IAF, NSA, SPG/PMO and MoD between March, 2005 to September, 2006 and the above indicated changes were incorporated.” The devil, however, is in the detail, as it is this deliberative process that was ultimately misused to regularize an irregular decision. It would be interesting to know how many within the system stood for professional integrity and probity and those that failed and their compulsions. Clearly one victim was the professionalism that must form the bedrock of the formulation of SQRs.

The MoD release fails to clarify that the professional expertise for aerial transportation of VIPs resides in the Air HQ Communication Squadron and it is part of the SQR process. It is also silent on whether the entire SQR process was revisited as per the procurement procedure or circumvented through this unconventional route.

Some interesting points emerge from this. The primary concern of the principal secretary to the prime minister was a single vendor situation. At the time, the Defence Procurement Procedure 2002 (version June, 2003) was very much in existence although it was to come into force from June 30, 2003. Notwithstanding this, there did exist an earlier policy and the entire process was proceeding under the authority of the defence acquisition council chaired by the defence minister. The DPP recognizes the reality of a single vendor situation arising even at a tender stage and leaves the authority to decide with the defence minister.

It was contrary to the letter and spirit of the procurement procedure for the PMO to have interfered, especially at the crucial decision making stage. The MoD release glosses over this vital violation of procedure, which not only halted the induction process that was nearing completion, but under the guise of the issues of single vendor and revision of SQRs, also paved the way for the AgustaWestland helicopter to join the race. The IAF chief at the time of the PMO’s intervention was the predecessor to the chief under fire, although the formal changes to the SQR took place under the latter’s watch.

The formulation of SQRs is a highly professional and technical process. It involves a deep consultative process under the leadership of the air force HQ and includes prospective users and concerned agencies even outside of the air force HQ. Once evolved, the SQRs are approved by the staff equipment policy committee. Changes, if any, can only be with approval of the defence minister.

In such a situation, an intervention by the principal secretary to the prime minister and the silent acquiescence by the MoD and the air force HQ speaks volumes of the arbitrariness of the way this procurement was handled. Had the PMO addressed its concerns to the defence minister as head of the defence acquisition council and let matters evolve till the proposal came to the cabinet committee on security, it would have acted in keeping with the letter and spirit of the procurement procedure. By stooping to take on the role of changing the SQRs, it acted arbitrarily and in violation of the procedures. If IAF professionals then acted as mere doormats, it is indeed a sad reflection.

The MoD release claims that “the procurement case was progressed in accordance with the established procurement procedure in a transparent manner with all stages of procurement being followed meticulously”. On the contrary, agencies external to the defence procurement process interfered at two crucial junctures. First, to halt procurement of a selected helicopter in the final stages and then to meddle with SQRs to allow the AgustaWestland helicopter to enter the race. By remaining a mute spectator, the MoD and the air force HQ became complicit. The rest is history and the chickens are now coming home to roost.

Now that the Central Bureau of Investigation has initiated a preliminary inquiry and the Rajya Sabha debated the issue and set up a joint parliamentary committee, the choppergate typhoon that hit New Delhi will pass, soon to be forgotten. If past performance is any indicator, the end is predictable. A few reputations and careers of servicemen will be destroyed, the arms agents will move on to the next deal and the real perpetrators and beneficiaries will live to enrich themselves another day, and all that the nation will be left with are the SQRs with their sanctity open to abuse and the morale of the armed forces further eroded.

The author is a retired air marshal of the Indian Air Force

Offline Ajai Singh

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Re: ‎The Italian Helicopter Scam - Agusta Westland
« Reply #8 on: April 16, 2013, 11:11:34 AM »

‘Agusta owners named in offshore documents’

Italian media organisations have claimed that the owners of the helicopter company have wealth stashed abroad.
The owners of AgustaWestland, are among the 200 Italians names on the list of those who have wealth stashed in offshore havens. This has been claimed by II Fatto Quotidiano, a leading Italian news daily.

The newspaper has based its story on a joint investigation conducted by the journalists of L'Espresso, a newspaper published from Italy and International Consortium of International Journalists (ICIJ).

AgustaWestland is presently facing a Central Bureau of India (CBI) inquiry in India to ascertain whether kickbacks were paid in the Rs 3,700 cr deal to buy 12 high-security VVIP helicopters from the company.

According to the article published in II Fatto Quotidiano, on 4 April, the investigation revealed instances of offshore money laundering practices. The newspaper alleges that a complex structure of trusts was formed in the Cook Islands in 2002 involving affluent families from Italy's Lombardy region. A local businesswoman, Silvana Inzadi, allegedly played the lead role in setting up the trust.

As per Quotidiano, there were three families in this trust: Agusta, manufacturers of military helicopters; Merloni, owners of one of the largest home appliance companies in Europe; and jewellers Pederzani. Agusta was represented by Domenico Agusta, Corrado Agusta and Maria Cristina Agusta.

The trust was set up with the objective to help three charities: Italian Union of Blind and Visually impaired, LILA (Italian League for the fight against Aids) and the Centre for Abused Children. These trusts, were set up allegedly to disguise money laundering activities from officials. According to Giornalettismo, an online newspaper published from Italy, the abbreviation of the offshore companies that were created is SICC, CTC101 and EETC 202.

Most of these offshore companies are owned by launderers from China, Hong Kong, Taiwan, the Russian Federation and former Soviet republics. Perusal of the data has revealed that Cyprus, Cook Islands, Seychelles and Panama are the preferred destinations to set up such companies, which only exist on paper. According to a study by the London based non-governmental organisation Tax Justice Network, an amount between $21-32 trillion is stashed away in these tax haven countries.

Despite repeated emails, neither ICIJ nor Gerard Ryle, director of ICIJ, offered any comments on whether the organisation was contemplating the sharing of data with media organisations and if no, then the reasons for that.

The incriminating data passed on to ICIJ more than a year ago, in a computer hard drive, was provided by an anonymous source, and is close to 260 gigabytes. It contains records of more than two million emails and other confidential documents, casting a net on more than 130,000 people from 170 countries, who have allegedly deposited their money in tax havens.

Offline Ajai Singh

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Re: ‎The Italian Helicopter Scam - Agusta Westland
« Reply #9 on: October 06, 2013, 18:52:55 PM »
The Pioneer

Saturday, 05 October 2013 | PNS | New Delhi

AgustaWestland has decided to invoke the ‘arbitration’ clause after the suspension of its contract for supply of 12 VVIP helicopters even as IAF chief Air Chief NAK Browne on Friday said a decision has to be taken fast as the present fleet of MI-8 helicopters will be phased out by next year.

Mentioning that the IAF has informed the operational situation to the Government, Browne said the contract for 12 AgustaWestland VVIP helicopters was frozen in February this year. At that point of time, UK-based company had supplied three helicopters and remaining nine were to be inducted over a period of one year.

He said the present fleet of Russian made MI-8 helicopters have entered the last phase of their operational life and will be grounded by next year. The three Agusta helicopters, including two passenger and one cargo helicopters, are now used for routine flying so as to maintain them in flying condition, Browne said, adding the IAF has limited spare parts for these machines.

The Defence Ministry had suspended the contract following allegations of kickbacks worth over Rs 360 crore in the nearly Rs 4,000 crore deal on the grounds that the company had violated integrity pact which prohibits lobbying and commissions for contracts.

Denying any wrongdoing, AgustaWestland maintained all along that it did not violate any conditions of the contract. In the latest development, the company in a statement on Friday said it was compelled to go in for arbitration as the Defence Ministry refused to have a dialogue with it over all these months. “Following the suspension of the contract to supply AW101 VVIP helicopters to India — a sanction not provided for the under contract — a request was made to India’s Ministry of Defence by AgustaWestland in April 2013 invoking the contractual provision for bilateral discussions. Since then there have been a series of further requests for discussions. Regrettably, to date, there has been no response from India’s MoD,” the statement said.

“The company’s earnest desire is to have a dialogue with the Indian authorities. AgustaWestland remains totally committed to working with the Government of India to resolve the issues confronting us and to allow the Indian armed forces to receive the equipment they need,” it said. “However, we do not see how we can achieve this if a dialogue is not established. The ongoing need to resolve this issue has left AgustaWestland with no option but to invoke arbitration through Counsel; the next step prescribed by the contract. This is not a step we take lightly,” according to the statement.

While the arbitration proceedings themselves are confidential, the issues in question relate to the unilateral suspension of the contract. Neither the contract nor the associated Integrity Pact confers such rights on the Indian MoD, the company said.
« Last Edit: October 06, 2013, 19:18:58 PM by anon1984 »

Offline Ajai Singh

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Re: ‎The Italian Helicopter Scam - Agusta Westland
« Reply #10 on: October 14, 2013, 19:37:49 PM »
The New Indian Express

Defence Ministry notice to Agusta for cancelling chopper deal
Published: 14th October 2013 09:01 PM

  • The IAF has already received three helicopters and delivery of the rest has been put on hold. (File/PTI)

Armed with fresh details on the alleged kickbacks, India has initiated steps to cancel the Rs 3,600 crore chopper deal with Anglo-Italian firm AgustaWestland by issuing a show cause notice to it in this regard.

The latest initiative by the Defence Ministry comes soon after the Attorney General gave his opinion that there was breach of contractual obligations and the integrity pact by the firm, sources said here.

The Defence Ministry has issued a show cause notice to the firm for cancellation of the deal and given it four weeks time to respond to it, they said.

The ministry has also gathered important details during the ongoing investigations in the deal in both India and Italy since February.

The government has already frozen the contract for supply of 12 AW-101 VVIP choppers to the IAF after allegations that Rs 360 crore were paid as bribe in which two top officials of the company were accused.

The IAF has already received three helicopters and delivery of the rest has been put on hold.

Last week, the company said it has invoked arbitration proceedingsagainst the Defence Ministry for "unilaterally" freezing the deal.

The Law Ministry has also told the Defence Ministry that the arbitration proceedings initiated by AgustaWestland are also not binding on it.

The sources claimed that the government had been preparing to issue the notice for cancellation much before AgustaWestland took the step.

The Defence Ministry had earlier issued a show cause notice to AgustaWestland on February 15 asking it to explain within seven days the bribery allegations against it after the alleged scam was exposed in Italy.

In the notice, the company was asked why the Rs 3,600 crore deal of 2010 should not be scrapped. In its reply, AgustaWestland had denied the allegations.

Former IAF chief S P Tyagi is among those under cloud in connection with the kickback charges. The CAG also recently highlighted loopholes in the deal.

Soon after the arrest of the firm's former CEO, Guiseppe Orsi, in Italy in connection with the case, Defence Minister A K Antony had suspended the payments to be made to it along with the delivery it was due to make to IAF of the remaining nine choppers.
« Last Edit: October 14, 2013, 19:40:08 PM by Z »

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