Defence scam

Flying into fog

Print edition : March 22, 2013

An AgustaWestland helicotper on display at India Aviation 2010 exhibition and conference in Hyderabad in March 2010.

Air Chief Marshal S.P. Tyagi, former Chief of the Indian Air Force, a file photograph. The Central Bureau of Investigation has named him and five others as accused in its Preliminary Enquiry report. Photo: Rafiq Maqbool/AP

The probe into the AgustaWestland helicopter scam by a Joint Parliamentary Committee seems all set to follow the path of the other defence deal probes.

WHEN it comes to dealing with allegations of corruption in defence deals, the Indian establishment, whatever its political hue, has a standard and time-tested modus operandi. Strong denials about wrongdoing to start with, followed by a half-hearted acknowledgement that something could be wrong, and eventually the announcement of a blatantly inadequate probe that invariably fails to produce any substantive result.

The response to the charges of corruption, including bribe-taking by senior Indian politicians, on the Rs.3,600-crore AgustaWestland luxury helicopter deal is clearly and steadfastly following this copybook format.

As the first revelations about the scam appeared in October 2012 through the investigations carried out by the Italian government on Finmeccanica, of which AgustaWestland is a subsidiary, the leadership of the Congress-led United Progressive Alliance (UPA) government went into denial mode. The refrain was that nothing wrong could have happened under the Defence Ministry led by A.K. Antony, a senior politician known for his integrity and adherence to norms and procedures.

However, as more information emerged in the early months of 2013 from the Italian investigations with reference to specific names and companies, Antony came up with a qualified statement suggesting wrongdoing. He said rather cryptically that “something [has] happened somewhere”. On February 27, responding to a debate in the Rajya Sabha, the Minister said: “We have to go to the root of the scam and punish the culprits because every pie that the government spends comes from taxpayers.” He added that “whoever is responsible will have to bear serious consequences”.

But immediately after this seemingly impassioned presentation by the Minister in Parliament, a proposal was passed to initiate a probe by a Joint Parliamentary Committee (JPC), a mechanism that has repeatedly failed to produce tangible results in terms of investigations since it was first set up in 1986 to inquire into the allegations of corruption in the Bofors howitzer deal. “If the track record of JPC probes is anything to go by, they surely sound the death knell for the real quest for truth,” pointed out Indra Bhushan Singh, political analyst and senior advocate at the Lucknow Bench of the Allahabad High Court.

“The Bofors JPC probe headed by Congress leader B. Shankaranand was widely condemned as a blatant cover-up exercise to protect the real beneficiaries of the corruption in the deal and, in fact, became a factor that aggravated the popular anger against the then Congress government led by Rajiv Gandhi. In that sense, that JPC probe made its contribution to the rout of the Congress in the 1989 elections. Later JPC probes that went into the irregularities in securities and banking transactions in 1992 and into the stock market scam of 2001 have all come up with such reports that have virtually no credibility or acceptance among the public,” he said. The UPA has initiated the current JPC probe into the AgustaWestland scandal even as a JPC investigation into the 2G spectrum allocation scam has been charting a tumultuous course, marked by intense verbal tussles between ruling and opposition party members, over the past two years.

In the debate in Parliament, Bharatiya Janata Party leader Arun Jaitley, Leader of the Opposition in the Rajya Sabha, pointed towards the futility of the JPC exercise. He said the net product of the JPC that went into the Bofors scandal was such that it did not tally with the eventual first information report (FIR) and the charge sheet that came up through a separate criminal investigation. The Bofors JPC probe had characterised the money obtained by middlemen and other beneficiaries as “winding-up charges”, while the criminal investigations did point towards illegal gratification. Significantly, these criminal investigations, too, failed to pinpoint the politician beneficiaries of the scam.

Preliminary Enquiry report

As in the Bofors case, a criminal investigation by the Central Bureau of Investigation (CBI) has been initiated into the AgustaWestland deal. In its early stages, the CBI probe took Indian investigating officials to Italy with demands for details of the investigations in that country on Finmeccanica. After the initial forays into Italy, the CBI has filed a Preliminary Enquiry (PE) report, which has named as accused Air Chief Marshal S.P. Tyagi, former chief of the Indian Air Force (IAF), and his three cousins—Sanjiv Kumar (Julie) Tyagi, Dosca Tyagi and Sandip Tyagi—along with Gautam Khaitan and Pravin Bakshi, former director and chief executive officer respectively of Aeromatrix.

The Italian investigations showed that 21 million euros (about Rs.150 crore) were paid as kickbacks under the cover of engineering contracts reportedly through the companies IDS Tunisia and IDS India. Officially, the CBI has not revealed the next steps in the investigation. A senior Home Ministry official told Frontline that there was no clarity on this, and one need not be surprised if there were no more moves for a long time to come.

Several factors relating to the case as well as the past record of the country’s premier investigating agency, particularly in relation to probes into defence deals, have compounded this lack of clarity. To start with, there are doubts about the very parameters of the investigation. Will it be confined to the issue of the alleged kickbacks received by those identified as middlemen and the former Air Chief Marshal, who took up consultancy in the private sector after retirement, or will it look at the money trail completely? This question is pertinent in the context of the indications from the Italian investigations that bribes were paid to Indian politicians. Apart from this, it is not clear whether the CBI will revisit the processes and the sequence of ministerial and other interventions that happened in the seven years between 2003 and 2010 when the proposal for the deal was first mooted and ultimately finalised. There is little doubt that revisiting the processes is also important if the investigation has to be meaningful.

Defence Ministry’s fact sheet

The fact sheet published by the Ministry of Defence on February 14 following the Italian revelations recount the role that different Union Ministries had in taking the AgustaWestland deal forward between 2003 and 2010. The finalisation of the deal was in February 2010, when A.K. Antony was Defence Minister. But the technical and other parameters of the deal were discussed and processed when George Fernandes and Pranab Mukherjee held charge of the Defence Ministry in the National Democratic Alliance (NDA) and UPA governments respectively.

The roles played by Pranab Mukherjee—who was Minister for Defence in 2005, when the tenders were finalised, and is the President of India now—and former National Security Adviser (NSA) Brajesh Mishra are specifically referred to in the fact sheet. It also highlights the debate over some of the processes that had come up time and again between 2003 and 2010 in the Union government.

Central to these debates is the issue of tender norms, which were revised after the initial notification of the Request for Proposal (RFP). This revision of tender norms was essentially taken forward by Mishra, who was the NSA during the NDA regime which ended in 2004. The higher flying ceiling initially stipulated in the RFP was 6,000 metres. This condition made only the EC225 of Eurocopter of France eligible for acquisition.

In this situation Mishra met the then Prime Minister, Atal Bihari Vajpayee, with the argument that the framing of the mandatory requirements in the RFP had effectively led to a single-vendor situation and that this needed to be changed. It was also pointed out that the Prime Minister and the President, who were going to be the principal users of the luxury VVIP choppers that were to be procured, rarely made visits to places involving flying at an altitude above 4,500 m. Consequently, the higher flying ceiling was changed to 4,500 m.

With this change, there were three contenders. They were Sikorsky of the United States, with its S-92 helicopter; AgustaWestland of the United Kingdom, which presented the EH-101 helicopter; and Rosoboronexport of Russia, the manufacturer of the Mi-172 helicopter.

The fact sheet states that the Russian firm could not be considered because it had failed to deposit the earnest money and file the integrity clause, which was a mandatory requirement. This left the U.K. and the U.S. firms as contenders. After the field trials, the deal went to AgustaWestland. Delineating these steps, the fact sheet of the Ministry of Defence asserts that “the procurement case was, thus, progressed in accordance with the established procurement procedure in a transparent manner with all stages of procurement being followed meticulously”.

Two factors

Notwithstanding this assertion, there are two factors referred to in the fact sheet itself that require the attention of the CBI for any objective investigation into the deal. One of these is the revision in the number of helicopters to be procured. Initially, the understanding was that eight VVIP helicopters would be procured. This was changed after consultations between Defence Ministry, IAF and Special Protection Group (SPG) officials. The revision was to buy four more choppers under the non-VIP configuration. While the fact sheet explains this revision as one necessitated by security reasons, a number of defence observers have pointed out that the details of this reasoning need to be looked into by the CBI for a comprehensive probe.

Similarly, questions have been raised about the conduct of the field trials of both AgustaWestland and Sikorsky helicopters. The field trials were conducted in the U.K. and the U.S. respectively. “A chopper that would fly Indian VVIPs, mainly within India, should have certainly taken the extreme heat wave conditions that obtain in our country as one of the parameters for the field trial. It is not clear whether such a parameter was available in the field trials held in the U.K. and the U.S.,” a Defence Ministry official told Frontline.

Beyond all this, certain constitutional issues promise to hamper the investigation. Three key people involved in the finalisation of the deal are in positions of constitutional immunity now. They are President Pranab Mukherjee, who was the Defence Minister when the deal was being processed, and Governors M.K. Narayanan and Bharat Vir Wanchoo, National Security Adviser and SPG chief respectively at that time.

Can the CBI question these important personalities and review whether there was something wrong with the processes they cleared? As of now the CBI does not have a clear answer for this question. Given these factors, the AgustaWestland probe seems all set to follow the path of the other defence deal probes—Bofors, Barak missiles, aluminum coffin caskets and Tatra trucks. Much hue and cry for some time, but no concrete punitive measures.