Group Assignment

On
“AgustaWestland Scam”

Under the supervision of

Prof. Ashok Advani

Aakriti Mishra – PGFA 1901

CASE BACKGROUND

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In 2013, an investigation began due to the allegations of bribery and corruption in the
purchase of a new fleet of helicopters. This scam is referred to as Chopper Scam or
Choppergate by media and press and it involved senior officials and helicopter
manufacturer AgustaWestland. Many Indian politicians and military officers have
been accused of accepting the bribes from AgustaWestland to win the contract of
Rs.3600 crores. The Congress led UPA government signed a contract of purchasing
12 AW101 helicopters for Indian Air Force in February 2010 with a UK based
helicopter manufacturing company AgustaWestland and these helicopters were to be
used for ferrying the President and the Prime Minister of India and other VVIPs.

The controversy came into light with the arrest of Giuseppe Orsi, CEO of
Finmeccanica (AgustaWestland parent company), by Italian authorities and the
following day A.K. Antony, Indian Defence Minister ordered a probe. The deal was
also put on hold on February,2013 as Orsi was accused for bribing the middlemen to
secure deal with IAF.

The key players in Choppergate scam were former Air Chief Marshal S.P. Tyagi and
Christian Michel. S.P Tyagi was arrested on December,2016 on the grounds that he
played a huge role for reducing the operational ceiling of the helicopters from 6000m
to 4500m due to which AgustaWestland was able to qualify for the contract. Among
3 middlemen Christian Michel was accused of influencing the officials to swing the
deal and for that purpose he received about 42.27 million euros. The other 2
middlemen were Guido Haschke and Carlos Gerosa.

Further in 2014, UPA government cancelled the deal with AgustaWestland on the
grounds that the integrity pact has been violated. India has recovered Rs.16.2 billion
however entire amount is not returned by AW as that amount is kept because 3
helicopters were already delivered.

After 1999 Kargil war, choppers were required that can operate at the height of
6000m and at the same time can be used for VVIP’s as Mi-8s were not comfortable.
Taking the advantage of this situation the scam aroused.

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This case is still running and it is an example of how much efforts are put in by the so
called trusted authorities and the companies to make money and break the rules
easily.

WHAT HAPPENED, WHY IT HAPPENED AND THE MAGNITUDE OF EVENT?

India is largest importer of weapons and it spends around $100b on it. Good missiles
have been made but tanks choppers had to be imported as defence industry has not
yet flourished. Huge amount is always involved in import deal for weapons and it
becomes obvious that chances of corruption will increase.

In February 2010, India required 12 AW101 helicopters for Indian Air Force which
will be used for ferrying the President and the Prime Minister of India and other
VVIPs. The deal costed Rs3600cr.To make the Italian company AgustaWestland
qualify for the deal technical specifications were changed. Service ceiling of
helicopter were lowered from 6000m to 4500m with the help of former Air Chief
Marshal S.P. Tyagi. Kickbacks were paid to win the bid of VVIP chopper deal with
IAF.

Investigation

During February 2013 the deal was put on hold as arrest of Giuseppe Orsi,
Chairman of Finmeccanica and Bruno Spagnolini, CEO of AgustaWestland was
made by Italian jurisdiction on the grounds of bribing the middlemen to attain the
deal. Currently Giuseppe Orsi has been sentenced to four-and-a-half-year jail term
and Bruno Spagnolini for four-year jail term and two are ordered to pay 7.5 million
euros.

CBI and ED began the investigation and found out in 2013 that Abhishek Verma, the
billionaire Indian arms dealer and his wife Anca Neacsu to be the suspects where in
Abhishek played a role of middlemen and secured CCS clearance from Cabinet
Committee. Part of bribe were sent to the Abhishek’s company i.e. Altas Defence
Systems accounts in Mauritius and to Altas group Ltd in Bermuda and other parts
were sent to his wife’s company in New York i.e. Ganton Ltd. These funds were
further sent to Indian Politicians who were to be benefitted by this scam.

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Christian Mitchel, UK born who lived in UAE came into light for playing a role of
middlemen by taking 30 million euros from AgustaWestland and bribing the Indian
officials and politicians with that money to attain the deal. A non-bailable warrant was
issued against him and it was found out that he possessed properties and provident
funds in India and visited 300 times from 1997 to 2013 to make the deal happen. He
floated in Delhi with 2 Indians Rajeev Saxena and Gaurav Khaitan. He used his
Dubai based company Global Services for parking and laundering bribes. His diaries
were seized by Italian police and was handed over to CBI and it was mentioned that
he might have paid 6 million euros to IAF officers and 8.4 million euros to
bureaucrats and 15-16 million to a political family that remains unidentified. In 2018
he was extradited from UAE to India.

AgustaWestland Christian Mitchel

Rajeev Saxena
IAF Officials
Ratul Puri
Politicians
Gaurav Khaitan
Bureaucrats
Others

The magnitude of event was such that it became a huge kickback defence
controversy where in the role of former PM Manmohan Singh, Sonia Gandhi, former
defence minister AK Antony and former IAF chief SP Tyagi was put to question.

The Italian court said that bribes were sent in the form of wire transfers and cash to
SP Tyagi and 3 of his cousins. Sonia Gandhi’s name came into picture while Mitchel
was being interrogated and he mentioned to be in touch with Mrs. Gandhi and it was
also mentioned in his seized diary about “political family”.

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This case became so crucial during the elections that BJP attacked Congress by
mentioning this scam every now and then. In many campaigns Modi used its
government success of bringing Christian Mitchel to India.

PROCESS FAILURES AND SYSTEM FAILURES THAT TOOK PLACE LEADING

The intention was to purchase choppers for defence purpose and to ferry VVIPs. The
sole purpose was neglected and the privileged businessmen, politicians and
government officials took the advantage of their position for personal gain i.e. to earn
more money. There were many process and system failures which led to this event.

 Firstly, Abhishek Verma was able to get the CCS clearance for tweaking the
technical specifications and making the deal happen with the help of politicians
without getting questioned.
 SP Tyagi used his position and was also involved in changing the technical
specifications. He used his position of and was not even questioned while
proposing the change of specification of 6000m to 4500m. This shows the sheer
negligence of government and its officials.
 The choppers were tested overseas and IAF norms for testing were also
neglected but still no authority questioned about it. This shows that Indian
authorities are non-serious about its rules and regulation and are okay if any
company outside India is trying to exploit us.
 Even with the non-bailable warrant many suspects were able to get bail and tried
to escape.
 It was the Italian Jurisdiction that helped India to know about the scam that
happened otherwise Indian authority had no idea about it.
 Fake companies were made just to fulfil the purpose of money laundering.
 The deal was cancelled in 2014 and it took so much time to bring the name of
Christian Mitchel. Extraditions have not worked well for India. Christian Mitchel
was born in UK who lived in Dubai thus extraditing to a third country was very
challenging.
 CAG (Comptroller and Auditor General of India) is responsible for supreme audit
and in this case it should have commented on the deal and fulfilled its duty
ethically.

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EFFECT ON STAKEHOLDERS

UPA and BJP government

The AW scam is an opportunity for the BJP government to criticise the UPA
government to win the elections. Even in 2018 it used the extradition of Mitchel as a
great victory and attacked the opposition party. This scam hampered the reputation
of UPA government. Also the officials like AK Antony and other politicians lost their
reputation.

Indian Public

Payment of helicopters were retrieved but delivery of 3 helicopters was done thus
that amount was not considered by the company. All the investments are made by
government on the basis of tax paid by the public. It is the duty of the government to
make the investments with maturity and avoid personal benefits.

AgustaWestland

This scam affected the reputation of the company and due to this scam it also had to
return the US$230 million to the Indian government that is approx. 45% of the total
contract value.

Government Officials

This scam dented the reputation of former IAF chief SP Tyagi and due to this a
person who was took to oath to serve the nation was forced to land in jail with a non-
bailable warrant.

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UNETHICAL CONDUCT OF PEOPLE INVOLVED

1. SP Tyagi

The former Air Force Chief changed the operational ceiling of helicopter from 6000m
to 4500 risking the lives of VVIPs and air force officials. The height of 6000m was
proposed because of Siachen glaciers. Additionally, the choppers were not even
tested in India and trials were held overseas where the IAF conditions for testing
were neglected. Many technical requirements were altered for making the deal
happen.

2. Docsa, Julie, Sandeep Tyagi

Corruption was the unethical code of conduct of brothers of SP Tyagi who directly
received the bribe. It is not always necessary that if one is involved in an unethical
act then the other should also support.

3. Gautam Khaitan (Advocate)

Aeromatrix was an Indian firm that provided designs and engineering services to the
Finmeccanica. Gautam Khiatan being a board of Director of the company was
involved to route the bribe amount into India.

Advocate means a helper who fights for a cause but the opposite happened and
Khaitan involved himself in a scam.

4. Christian Michel

Being a businessman it is not always about being money minded. The basic duty of
a businessman is to make sure that his business runs smoothly in such a manner
that it causes least harm to others. Being unethical can damage the reputation of a

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company and a person and the same case happened with Mitchel. To earn money,
he hampered his reputation and involved himself and others in corruption.

5. Carlo Gerosa and Guido Haschke

The other two middlemen mentioned above were closely interacting with Tyagi
brothers on chopper deal. Again the ethical behaviour was ignored and personal
gains was a priority.

6. AK Anthony

Under his watch the deal was signed. Many technical specifications were relaxed
and rules were broken to place an order with AW that was not even a manufacturing
but a trading agency. Being a former defence minister it was his duty to handle the
deals carefully and avoid personal interest but he himself tried to put his national
security to threat.

7. Sonia Gandhi and Ahmed Patel

Though not confirmed but there is a surety that UPA government was involved in this
scam. A government serving its nation should be an idol for its public but personal
interest was put to priority and bribes were taken. The Italian court mentioned in its
judgement that Sonia Gandhi and her sectary Ahmed Patel were the driving force
behind this deal.

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RECCOMENDATIONS AND REMEDIES FOR PROCESSES AND PEOPLE

 India’s success rate is low when it comes to extradition and bringing back
fugitives thus India should conclude extradition treaties with as many countries as
possible by bilateral negotiations and diplomacy. This case should be solved as
soon as possible as it will influence many cases in U.K. courts which includes
Vijay Mallya’s and Nirav Modi’s.
 There should be a strict regulation that no one is allowed to abscond. The
passport and their property should be seized and defaulters should be looked for
in a short period of time.
 To increase the transparency in every deal proper information should be given to
leader of opposition (LOP) in parliament.
 Secret service agencies of country should keep a watch on Army Chiefs and
Defence Minister in these sensitive issues.
 File regular RTI’s related to expenditure of armed forces.
 Know who you are dealing with and keep a check on defence budget.
 Resist pressure in every situation and take time to know about the company and
its origin and quality of products produced.
 Bail should not be granted on a non-bailable warrant.
 The government can consider specialised officers who are equipped with
financial and legal know how to detect frauds and investigate scams at an early
stage.

Currently BJP has created CDS (Chief of Defence staff) that is a major step to avoid
these type of scams in future.

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 CONCLUSION

Corruption in India has affected the economy in many ways. It hinders sustainable
development and respect for the human rights. Many officials use their position for
the personal gain which is a major problem with today’s government. Also every
business goes into a business to make money but it gives them no right to involve
themselves in unethical scams and scandals. Any duty should be performed on
ethical grounds.

Bribing was involved and it has been proved by the court. Rules were bent and
broken so that AW gets the deal. UPA ministers, bureaucrats, middlemen and
servicemen were involved in this scam. Again with this scam India has been
exposed to worldwide in respect of how corrupt our system is and as a nation our
reputation was hampered.

At the end India has been trying to get the evidences from all the sources and other
countries regarding this scam.

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