Post Election results as predicted by IDF this is a retrospective IDF Analysis of the AW-101 Agusta Helicopter Deal that initially was a political scandal purely in Italy connected with Berlisconi’s party in 2012 which lost.
It had repercussions in India as price was inflated and selection was one sided for Italy with tailored QRs thrust on the IAF and it’s Chief had to hold the baby. It is time the baby is thrown out with the muddied bath water of so far untraceable coloured moneys.
IDF heard in Italy Berloscini’s party may have been looked after through excess charged to India by Finmeccanica for elections so party in power that beat Berloscini. investigated the cost in Italy and sent Orsi and Spangolini to jail but now both are let off. Can India follow suit as pre elections, AW 101 was a big big issue but no charges have been framed. India must move on by charging or close cases but DPP and how MOD works needs attention for Make In India with PM Modi as powerful as never before to take personal interest.
Looking back the QRs of the VIP helicopters were pegged for 3 engines and special 1.8 mtrs height in the cabin that NSA Brajesh Misra supported and that has a connection if pennies drop. The Kashmiri SPG head played ball when he went to Italy and cleared emergency medical equipment and IAF chose an Israeli EW and missile avoidance systems. By luck IDF flew in the S-92 of Sirkosky over Delhi with a full woman crew that Obama chose over AW 101 that USA had chosen, but AW 101 became too costly. It did not qualify in height for Indian QRs and did not have three engines which inflates price and some Israel and IAF fitted Italian EW suites were objected by USA.
Multiple trials were done on equivalent helicopter in UK not AW-101 as it was not there and it became a a repeat of the 40 SU-27/30S India bought which were actually SU-27s updated by IRKUT and the 40 were to be sent back but 15 lay at Pune Lohegaon IAF station rotting and became Karbar (Junk)like the AW 39 Westland helicopters that Rajiv Gandhi bought for Pawan Hans with Sea Kings that Navy still flies awaiting 24 Lockheed Sirkosky NH-60Rs for which an LOI has been issued. The AW-39s were sold as scrap.
News is coming in from Italy that Giuseppe Orsi, former CEO of the Italian Government controlled defence group Leonardo previously known as Finmeccanica, and Bruno Spagnolini, Head Agusta Westland, are both cleared of corruption charges by Italy’s highest court which acquitted them citing a lack of sufficient proof. The lower court had giving them prison sentences of four and 4-1/2 years. India must get copy of judgment to see the repercussions that CBI and lawyers can use.
Like in Italy India’s CBI is struggling with the AW 101 case and has even taken an Air Chief in and out of custody in a money laundering case with others caught from Dubai which is still on going in India. Ennio Amodio, a lawyer representing Orsi, said the Supreme Court decision would inevitably have repercussions on the trial in India.”Clearly the Indian authorities will have to take note of the fact that at the end of a very detailed probe it was found there had never been any corruption,” he said.
The AW 101 case was a big political issue in India before the elections and earlier in Italy with Berloscini when it opened in 2012 and Finmeccanica was black listed and it tarnished the company’s reputation at a time when India was importing radars and torpedoes from Leonardo as the world’s biggest arms buyers. The Italian group has always said the case was against individuals rather than the company itself. Micheal Christian has been in custody with a Saxena and Khaitan and others including Tyagi brothers being investigated.
India cancelled the helicopter contract in 2013 after Orsi was arrested, but Agusta Westland opposed India’s decision. The contract remains suspended and the subject of international arbitration in Paris. India should fine Agusta which is acceptable to Agusta and let India’s VIPs fly in the world’s best VIP helicopters as three lie idle in Palam and IAF VIP qualified pilots are rearing to fly VIPs
In brief if one reads the excellent in depth analysis done by http://trishul-trident.blogspot.in/ on the AW-101 scandal it will be clear that proving where the illegal money went to Indians is like it went for the Bofors, HDW and Scorpene war room leak ways with a Verma who was in jail and Lt Cdr Sankaran absconding.
Indian politicians in power are not fools and need money to survive elections when electoral bonds were not there. Thanks to misuse use by NRIs and the Vodapone $4.1 billion deal via Mauritius it was stopped with retrospective law in the budget. Only Parliament can change it as BJP has been returned to power and must turn a new leaf.
BJP is clean today, but had clever politicians earlier and built up a corpus and the new young Indian voter and women have given the mandate to PM Modi and any one analyzing daily life knows it. Money in India has different colours which PM Modi is trying to stop and will tax the rich to keep his promise to give lacs to the poor. But IDF hopes the AW-101 case sees closure or the charges get framed and not linger on like the Adarsh case which both affect India’s fine Armed Forces. The other good news that came in was Israeli helped Techsar 2B radar satellite was launched by ISRO’s PSLV and IAF fired a light weight BrahMos missile from a SU-30MKI on to a Naval Target in the Andaman’s and stock market has jumped !
India is set to be a world power and is respected as a destination and in a decade will be a power for sure and PM Modi is an amazing leader with ideas but his last cricket team seemed lacking. As a second marriage, this time it may be even better ! IDF will put forth suggestions on both issues when RM FM and EAM and the next Defence Secretary is announced. With BJP victory it is acche din the new voter and women who voted for PM Modi in full force look forward to. Shan No Varuna.
and the power of NDA has gone to its head as the OROP impasse showed and now a fine IAF is being pilloried in public gaze with little proof so far, as a property here and there bought at Filey rates is not what money changed hands.
20. Italy’s Cruel Judicial Farce & India’s Pathetic Politicians
22. Whenever there emerges a cocktail made up of a notoriously trigger-happy bunch of Italian state prosecutors, pathetic Indian politicians—both those in power and those voted out of power—so full of unconscionable behavior, a cabal of unscrupulous Italian citizens masquerading as product marketers, and hyper-ventilating Indian broadcast TV channels, the end-result can only be mayhem and obfuscation, with the truth nowhere in sight. On February 14, 2013 India’s Ministry of Defence (MoD) had produced a document that—had anyone bothered to read it—most notably the Italian magistrates—they would have indisputably cleared all Indian citizens of any wrongdoing by removing the motive for corruption.
24. All that the three-year trials process in Italy has produced so far is the indictment and sentencing of Orsi former CEO Finmeccanica; and Spagnolini CEO of AgustaWestland. UK has changed Finmeccanica to Leonardo on 28th April, 2016 like ARMARIS did to DCNS and later Navantia walked out and Lt Cdr Sankaran is on the run living abroad.
26. No material evidence to date has come to light about any direct or indirect money-trail that leads to any Indian official or politician, nor of any wrongdoing done by anyone from either the MoD or the Indian Air Force (IAF). Worse, the material evidence gathered from the alleged middlemen—Haschke and Gerossa and Christian Michel and now his girl friend clearly show them to be groping in the dark and being totally unaware of how exactly the MoD’s procurement-related decision-making process works.
28. For, had the Government even had the slightest idea about who had the final say in selecting the VVIP helicopters, they would have clearly mentioned the post of Director of the Special Protection Group (SPG) as being the key and most critical stakeholder of the VVIP helicopter selection process. Yet, nowhere is the SPG’s Director mentioned in any piece of paper containing the handwritten notations of these alleged middlemen. Nor is there any material evidence of any money laundering exercise involving any financial institution. Only a man’s word that of Hashke that money was to be paid to some initials.
30. In 2009 the IAF’s Technical Evaluation Committee (TEC) shortlisted three helicopters and accordingly competitive flight evaluations were conducted. Since AgustaWestland’s AW-101 was not certified for operating at an altitude of 6,000 metres, it did not participate in the flight evaluations. Russia’s Mi-172 could not comply with 7 mandatory Operational Requirements (OR). After flight evaluations, only Eurocopter’s EC-225 was found suitable for acquisition. On November 19, 2003 a meeting was taken by Brajesh Mishra, the then Principal Secretary-cum-National Security Adviser (NSA) to the then Prime Minister Atal Behari Vajpayee on this subject. In this meeting, Mishra had observed that his main concern was that the framing of the mandatory ORs had led India effectively into a single vendor situation. It was also noted that very rarely have India’s Presidents or Prime Ministers have made visits to places involving flying at an altitude beyond 4,500 metres. In the meeting it was therefore decided to make the mandatory OR for an operational altitude 4,500 metres. So in essence BJP began the way QR was changed ! IAF followed suit and the Tyagi brothers like Sankaran for the Scorpenes kept Finmeccanica informed which information is provided as Consultancy and is paid in crores. If the Tyagi brothers have paid taxes its legal.
32. All political parties employ media, ad companies and consultants for elections and will that become illegal in India which in Defence deals has become sophisticated. Another company in Chandigarh took on the soft ware off set route so it was legal too.
34. The higher flying ceiling of 6,000 metres, and the mandated internal cabin height of 1.8 metres could be made desirable ORs. Later, a letter dated December 22, 2003 from Mishra to the then Chief of the Air Staff (CAS) of the IAF, ACM Srinivasapuram Krishnaswamy, stating that it was unfortunate that neither PMO nor the Special Protection Group (SPG) was consulted while framing these mandatory ORs. Mishra suggested that the CAS and the Defence Secretary may jointly review the matter to draw up realistic mandatory ORs satisfying operational, security and convenience requirements of VVIPs, and also set in motion a fast-track process for selection and acquisition of the replacement helicopters. In pursuance of this directive, the ORs were deliberated at length between IAF, NSA, SPG and MoD between March, 2005 to September, 2006 and the indicated changes were incorporated. No ambiguity is thus possible: the decision to lower the service ceiling requirement was official and above-board. It was taken during a meeting chaired by the PM’s Principal Secretary-cum-NSA, was followed up in writing with the IAF’s CAS, and was reviewed by the then-Defence Secretary. Subsequently, the revised ORs were deliberated at length for 18 months by the involved SPG and IAF authorities before becoming effective, and were all included in the final RFP document. The acceptance of necessity (AON) for the procurement of 12 VVIP helicopters was accorded by the MoD’s Defence Acquisition Council (DAC) under the ‘Buy’ category with 30% industrial offsets on January 3, 2006.
36. Next, the RFP was issued to six OEMs on September 27, 2006. Three OEMs—Sikorsky (S-92), AgustaWestland (AW-101) and Rosoboronexport (Mi-172 ) responded to the RFP. Rosoboronexport did not submit the mandated earnest money deposit and the Integrity Pact, along with the Technical and Commercial Proposals (TCP). It had been made clear to Rosoboronexport in February 2007 that this was a global tender and hence every contractual clause would apply to all vendors without exception. As no Integrity Pact and earnest money deposit were received from Rosoboronexport, the Mi-172’s TCP was not accepted. Subsequently, a team comprising officials of the IAF and SPG carried out Field Evaluation Trials (FET) of the AW-101 in the UK and of the S-92 in the US from January 16, 2008 till February 19, 2008. The FET team submitted its report in April 2008 and recommended the AW-101 for service induction. The IAF’s own internal Staff Evaluation Report (SER) concluded that the S-92 was non-compliant with respect to four staff qualitative requirements (SQR)m these being the absence of a missile approach warning system (MAWS), service ceiling of 4.5km, deficient drift-down altitude, and deficient hover-out-of-ground-effect parameters. In addition, the AW-101, unlike the S-92, featured a high tail-boom since it would allow the VVIP’s motorised vehicles to come right next to the rear-ramp and not expose the protected persons to a threat from anyone in the vicinity. The SER thus assessed AW-101 to be fully compliant with all SQRs.
38. The Technical Oversight Committee (TOC) constituted by the MoD on August 6, 2008 found that the FETs, compliance to SQRs and selection of the competing OEMs were all done according to the prescribed/mandated procedures. A Contract Negotiations Committee (CNC) was subsequently constituted and it carried out negotiations with AgustaWestland between September 19, 2008 and January 21, 2009. While the CNC was progressing with negotiations, the IAF recommended the inclusion of Traffic Collision Avoidance System (TCAS-II) and Enhanced Ground Proximity Warning System (EGPWS) as additional fitments for all 12 AW-101s, while the SPG recommended the inclusion of integral MEDEVAC systems for 8 of the 12 VVIP helicopters. These additional equipment were considered to be essential for safe and effective operation of the helicopters in the VVIP transportation role. The CNC, thereafter, recommended contract signature at a negotiated fixed-price of €556.262 million ($827 million), or Rs.3,550 crore. The draft contract was next submitted for approval by the Cabinet Committee on National Security (CCNS) and was approved by the CCNS on January 18, 2010. Consequently, the MoD inked the contract with AgustaWestland for 12 AW-101s each powered by three Rolls-Royce/Turbomeca RTM-322 engines on February 8, 2010.
40. The AW-101 procurement contract included specific contractual provisions against bribery and the use of undue influence. Article 22 of the contract dealt with penalty for use of undue influence. This clause entitled the ‘Buyer’ to cancel the contract with the ‘Seller’ and recover from it the amount of any loss arising from such cancellations. Article 23 of the contract dealing with agents and agency commission required the ‘Seller’ to confirm and declare that it had not engaged any individual or firm, whether Indian or foreign, whosoever, to intercede, facilitate or in any way to recommend to the Government of India or any of its functionaries, whether officially or unofficially, to award of the contract to the ‘Seller’ nor had any amount been paid, promised or intended to be paid to any such individual or firm in respect of any such intercession, facilitation or recommendation. This clause further entitled the ‘Buyer’ to consider cancellation of the contract without any entitlement or compensation to the ‘Seller’ who shall be liable to refund all payments made by the ‘Buyer’ in terms of the contract along with interest. In addition to the above contractual provisions, Agusta Westland had signed an Integrity Pact with the Government of India. The validity of this Integrity Pact is from the date of its signing and extends up to five years or the complete execution of the contract, whichever is later. Under the Integrity Pact, the ‘Seller’ OEM committed itself to take all measures necessary to prevent corrupt practices, unfair means and illegal activities during any stage of the bid or during any pre-contract or post-contract stage. Any breach of the provisions of the Integrity Pact entitled the ‘Buyer’ to take actions against the ‘Seller’ which included forfeiture of the earnest money, performance bond, cancellation of the contract without giving any compensation, recovery of all the sums already paid with interest, cancellation of any other contracts with the bidder, and to debar the bidder from entering into any bid from the Government of India for a minimum period of five years, which may be extended.
42. By July 2012 IAF pilots began AW-101-related flying conversion training in the UK, and the first AW-101 arrived at the Palam air base on December 20, 2012 while the second was delivered on December 22 and the third on December 24, 2012. Earlier, in October 2012, the MoD’s Defence Secretary wrote to the Ministry of External Affairs’ )MEA) Secretary (West) to take up the matter of alleged corrupt practices related the the AW-101 procurement contract with the UK in view of the alleged involvement of a British citizen (James Christian Michel), and the fact that the contract was signed with UK-based AgustaWestland. In November 2012, the MEA’s Secretary (West) replied to Defence Secretary, stating that “the UK authorities (i.e. the UK Serious Fraud Office https://www.sfo.gov.uk/about-us/) were waiting for the results of the Italian investigation in order to ascertain whether there are further actions to take”.
44. However, by late 2013 Indian Defence Minister Arackaparambil Kurien Antony single-handedly took the decision to first block progress-payments to AgustaWestland, then to cancel the contract, and finally to sue for payment of the surety and performance bonds that the company had placed in escrow, on the basis of unproven allegations. In doing so, Antony ignored a fundamental legal and moral principle: that the accused is innocent until proven guilty. This is unconscionable behavior for a Union Cabinet Minister in “the world’s largest democracy,” and can only be explained by motives other that a constitutional duty to his mission. The reality is that Antony, as the upcoming general election neared, even wanted to put AgustaWestland and Finmeccanica, its corporate parent, on the government’s blacklist, until he was blocked by the Government of India’s Solicitor-General. By January 2014, the MoD had cancelled the €566 million contract, as well as encashed €228 million of AgustaWestland’s €278 million performance bond, which dented the OEM’s cash position and that of its holding company Finmeccanica. All of this for no other reason than an Indian minister’s overwhelming pre-occupation with his political future.
47. Here is what India’s Directorate General of Civil Aviation (DGCA) says about the Mi-17 family of helicopters: “The MGB drives the hydraulic pumps. Hydraulic power is required for the flying controls. The hydraulic system has OM-15 hydraulic oil. Hydraulic System has a main and standby system. Both systems have independent tanks, pumps, accumulators and pipelines. However, both the pipelines feed only a single booster, which in turn moves the control surfaces. There are a total of 4 boosters in the system. One critical weakness in the system is that if there is a leakage in the booster, there is a possibility of the entire oil from both the main and the standby systems leaking out. The emergency procedure for a total hydraulic failure is to have both pilots flying the aircraft in unison to a landing. The Mi 17V-5, which is a military version of the Mi-17, is being flown by the IAF and Border Security Force. As per the Flight Manual of this aircraft, the crew is to abandon the aircraft in case of total hydraulic failure. In case they cannot, then they have to resort to flying by both pilots to land immediately. Therefore, the procedure given in the Mi-17’s Flight Manual for total hydraulic does not inspire confidence in the pilots. All of them feel that this aircraft cannot be flown with a total hydraulic failure. They feel that this aircraft cannot even be taxied on ground with total hydraulic failure.”
49. And finally, to add insult to injury, Italian state prosecutors will be the only characters in this sorry story to escape unscathed.
51. So, if all those pathetic politicians (both of the ruling national coalition and those of the UPA-1/2 coalitions) in Lutyens’ Delhi are indeed serious about seeking the truth while ensuring that the prestige of the IAF and the survivability of India’s NCA are assured, then they better take heed of how Taiwan had overcome a similar crisis in the not-too-distant past. The details of this case are as follows:
53. On August 31, 1991 France and Taiwan signed the ‘Bravo Contract’ to supply six Lafayette-class guided-missile frigates (FFG) for a total of US$2.5 billion. The buyer of the FFGs was the Plans Office of the Republic of China Navy (RoCN), acting on behalf Taiwan. The FFGs were to be built by DCNS. Shortly thereafter, the authorities in Taiwan accused the French state-owned ELF Aquitaine of having paid bribes through Thomson CSF (now THALES Group) to persuade both French government and RoCN authorities to approve the contract and launched an investigation. Taiwan initiated arbitration proceedings against DCNI during the second half of 2010. The case was eventually heard by the International Chamber of Commerce’s International Court of Arbitration. The court found that THALES Group had violated the anti-corruption terms of the contract and was therefore liable to repay all bribes, plus associated interest and legal fees. THALES appealed, and the decision was upheld by the Paris Court of Appeal, ordering THALES Group to pay compensation to Taiwan in the amount of €630 million (US$913 million). The French government and THALES Group announced the payment of the fine, with the French government paying approximately 72.54%, or around €457 million, and THALES Group the remainder.
58. The Rebuttals
59. The Comptroller and Auditor General (CAG) had submitted a report on the acquisition of helicopters for Very Very Important Persons (VVIPs) on August 13, 2013. The audit sought to examine the process of acquisition of VVIP helicopters and its compliance with the Defence Procurement Procedure (DPP), the prescribed procedure for procurement in the defence services. The report can be read here: