CORRUPTION IN DEFENCE DEALS. PARTITIONED INDIA

Date: 15/02/2013

cOURTESY: The Daily Mail, London, 15 Feb 2013.
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How the deal was done: Did a chance meeting at a wedding set the scene for Tyagis' Rs 87 crore bribe? By Rohan Venkataramakrishnan
PUBLISHED: 01:21, 15 February 2013 | UPDATED: 01:21, 15 February 2013

..Weddings are meant to bring people together, but one such celebration in Lugano, Italy over a decade ago is alleged to have had implications much bigger than simple matrimony.
It allegedly set off a chain of events that would culminate in a 12 million (Rs 86.83 crore) bribe to ensure a 560 million (Rs 3,546 crore) helicopter deal.
It was at this wedding that Guido Haschke Ralph - one of the alleged intermediaries in the Finmeccanica scam whose business partner Carlo Gerosa's daughter was getting married - had an opportunity to meet one of the Tyagi brothers, who it is claimed acted as the bridge between the Italian company and former Air Chief Marshal S P Tyagi.
In 2005, Carlo Gerosa heard from the Tyagi brothers that the Indian government was looking to purchase VVIP helicopters

Immediately after former Italian President Carlo Ciampi had visited India a meeting between one of Finmeccanica's top executives and the IAF chief was arranged
"My partner, Gerosa, has been close to the Tyagi family for a long time," Haschke said, while being interrogated by Italian authorities.
"The relation he had with the Tyagis was so close that at the marriage of the daughter of my partner, I met Julie Tyagi."
It was apparently Gerosa's close contact with the Tyagis, cousins of the former IAF chief, that first tipped Haschke off to the possibility of a deal.
More...VVIP helicopter deal rattles UPA Government as Italian investigators' report reveals 51MILLION bribe trail
MAIL TODAY COMMENT: No space for lethargy in chopper scam inquiry

In 2005, Gerosa heard from the Tyagi brothers that the Indian government was looking to purchase VVIP helicopters.
"On the same occasion, or anyway around the same time, Gerosa also told me that a direct cousin to the Tyagis has become Chief of Staff in the Indian Air Force.
"Knowing this, Carlo and I had the idea to try to get a contact within AgustaWestland," Haschke said during the interrogation.
Haschke had already interacted with people in Finmeccanica before, but in the energy sector, not arms. After some market research, though, Haschke and Gerosa singled out AgustaWestland.

"I had learnt that India was using low-quality and obsolete Russian helicopters. The possible competitors, apart from the Russians, were the Sikorsky (Americans) and the Eurocopter (French). But I had no relations with either the French or the Americans," Haschke said.
The alleged arms agent then leveraged his contacts to meet Giuseppe Orsi, the CEO of Finmeccanica.
This happened in 2005, right after former Italian President Carlo Ciampi had visited India, when a meeting between one of Finmeccanica's top executives and the then IAF chief was arranged.
Meeting Orsi, Haschke attempted to show off his close connections with the Indian Air Force officials to convince the Italian company boss, even suggesting that he had arranged the Finmeccanica meet with the Air Chief Marshal.
Later that year, AgustaWestland signed its first "consultancy contract" with Gordian, a company linked to Haschke.
This "arrangement" would eventually involve an initial payment of 400,000 (Rs 2.89 crore), of which Gerosa and Haschke would pocket 300,000 (Rs 2.17 crore) with the rest going to the Tyagi brothers, even though the middlemen had allegedly promised to give half to the Indians.
"The money was given to Julie in cash during our frequent trips to India. I specify that the agreement was with the Tyagi family, but that the money was materially given only to Julie," Haschke said.

He added, after being questioned by the prosecution on whether money had been remitted to bank accounts in Switzerland or elsewhere, that this was done by activating prepaid credit cards at 'Corner Bank'.
The rest of the bribe, given as "commission" through "engineering contracts" for non-existent work, was calculated as a percentage of the eventual deal's 560 million value.
"Of the 20 million (Rs 144.72 crore), the consideration to the Tyagis was 12 million," Haschke told the Italian authorities.
'Giving bribes is part of doing business globally'

Defending Finmeccanica's jailed ex-chief executive officer Giuseppe Orsi, Italy's three-time former Prime Minister Silvio Berlusconi on Thursday said bribes are a necessary part of doing business globally.
"Bribes are a phenomenon that exists and it's useless to deny the existence of these necessary situations," Berlusconi said in a televised interview.

"These 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 former Premier was quoted as saying by Bloomberg.
Silvio Berlusconi (left) has come out in the defence of Finmeccanica ex-chief Giuseppe Orsi (right)

In February 2010, India had inked the deal to acquire the 12 three-engine AW-101 helicopters from AgustaWestland for the IAF's elite Communication Squadron, which ferries the President, PM and other VVIPs.
The deal came under the scanner of Italian agencies after allegations of kickbacks given in India surfaced.
The agencies arrested Orsi on Tuesday as part of their probe related to international corruption. It is alleged that Orsi, who was heading the helicopter unit, when the deal was struck, was involved in the bribery.
Around 50 million (approximately Rs 362 crore), about 10 per cent of the deal, was alleged to have been given as bribe to ensure that the company won the contract.
Italian news agency ANSA quoted Berlusconi as saying that probes by Italian prosecutors into contracts Italian firms sign abroad were a form of economic suicide.
"Everyone knows that as well as the tenders, agreements between governments are also involved," Berlusconi said. He added: "The fact that there is the risk of magistrates intervening I consider to be economic suicide."
Delhi-based lawyer Gautam Khaitan insists he was only involved with Aeromatrix in a legal capacity
Delhi lawyer denies role in shady deal Delhi-based lawyer Gautam Khaitan says he was taken aback when his name cropped up in Italy's investigation into the helicopter scam and rubbished rumours he was party to any shady deal.
A former director on the board of the Chandigarh-based Aeromatrix, the Supreme Court lawyer says he resigned from the post as soon as the allegations against the company first surfaced.
"When this news was first telecast sometime around October 2012, we immediately resigned from the board of directors of Aeromatrix," Khaitan said in a statement on Thursday.
Refraining from delving into details about Aeromatrix, he asserted that he was simply a "lawyer, not a businessman".
Khaitan runs a law firm in South Delhi's Defence Colony area. He said that after resigning from Aeromatrix, he had requested the shareholders to transfer their nominee shareholding, which was subscribed by them for the purposes of the company's formation.
The taped conversations released by Italian investigators featured references to Khaitan, a business partner of Guido Haschke Ralph - an alleged middleman in the Finmeccanica scam, Sanjeev Kumar Tyagi, a cousin of former Air Chief Marshal S P Tyagi, and Aeromatrix.
"The amount subscribed by us was Rs 1 lakh only, the minimum capital requirement for formation of the company," Khaitan added, further clarifying that he was not aware of the operations of the company.
He also claimed that there was no irregularity in the operations of Aeromatrix till the time he was on the board of directors.
Khaitan went on to say that as of now, he was only involved with Aeromatrix as a lawyer.
Expressing shock over the news reports regarding his involvement, he said: "Other than what I read in the newspapers about this deal, I have no information about this or any other defence deal. There is no question of any wrongdoing."
Jaswant Singh, former defence minister and Bharatiya Janata Party (BJP) leader
NDA's role in deal BJP leader and former defence minister Jaswant Singh has come out in support of beleaguered former Air Chief Marshal S P Tyagi and admitted that the changes in the tender for the Finmeccanica helicopter deal were made during the NDA regime.
"We should not make wild allegations against a former air chief," Singh said.
On being asked about Tyagi's statement that the specifications in the tender were changed in 2003 under the NDA, Singh said "Yes, what he has said is true."
However, party leader Arun Jaitley said: "The tender was issued, finalised, awarded under the UPA government. Those responsible must be taken to task."


Mambo Italiano
The arrest of Finmeccanica CEO Giuseppe Orsi on allegations of corruption sheds some light on the murky nexus of politics and business in Italy, a country as riven with crony capitalism as India.

Orsi had been appointed as the company's chairman by Prime Minister Mario Monti in 2011 following a probe into the practices of the previous chairman Pier Francesco Guarguaglini and his wife, who was heading a Finmeccanica subsidiary.

The Italian government is a 30 per cent shareholder in the company. Considering elections are imminent, Monti - who is running for PM - could face serious threats from former PM Silvio Berlusconi, who has publicly praised Orsi for his alleged bribery.
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