Italian Court on AgustaWestland Case

On Monday, January 8, 2018, the Italian Court of Appeal of Milan has acquitted Giuseppe Orsi, former President of Italian defence and aerospace major Finmeccanica and Bruno Spagnolin, former CEO of its subsidiary AgustaWestland, of corruption charges involving a multi-crore deal with India for VVIP helicopters. The decision of the Court was based on lack of evidence on account of which the charges against the two executives could not be substantiated. The development came more than a year after a court sentenced Orsi to 4.5 years and Spagnolini to four years in jail on corruption charges related to a 3,600 crore contract to supply a dozen helicopters to New Delhi. The case against Orsi and Spagnolini was a result of an investigation launched in 2012.

Issue: 1 / 2018By Air Marshal B.K. Pandey (Retd)Photo(s): By AgustaWestland

In February 2010, the Ministry of Defence (MoD) under the UPA II Government had concluded a 3,600 crore contract with AgustaWestland, the British subsidiary of the Italian aerospace major Finmeccanica, to purchase 12 AW101 helicopters for Air Headquarters Communication Squadron based at Palam, New Delhi. These helicopters were required urgently to replace the obsolescent fleet of Mi-8 helicopters that had been modified for travel of the President and the Prime Minister of India as also other VVIPs from abroad visiting India as the guest of the Indian government.

On February 12, 2013, allegations of wrong-doing by top executives of Finmeccanica by way of bribery and corruption in the AW101 helicopter deal with the Indian MoD came to light when the Italian authorities arrested Giuseppe Orsi, the CEO of the parent company of AgustaWestland. Reacting to this development, the then Minister of Defence A.K. Antony immediately ordered investigations into the contract to ascertain whether the government functionaries as well as others on the Indian side were also involved in the wrong doings that had been alleged by the Italian authorities. Thus in effect, there were investigations into the alleged scam running in parallel in Italy and India.

On February 25, 2013, the Indian Central Bureau of Investigation (CBI) registered a Preliminary Enquiry against former Chief of the Air Staff, Air Chief Marshal S.P. Tyagi as well as a number of others and finally registered an FIR against them. Speaking on the issue on March 25, 2013, Defence Minister A.K. Antony stated, “Yes, corruption has taken place in the helicopter deal and bribes have been taken. The CBI is pursuing the case very vigorously”. However, it is not clear till date the basis on which such a categorical statement was made by a person in high office especially when the inquiry was yet incomplete and the reputation of a high ranking officer from the Indian Air Force (IAF) was at stake. Even though three helicopters had been received by the IAF by this time, the contract was cancelled by the MoD in January 2014 on grounds of breach of the Pre-Contract Integrity Pact and the payments made in advance, were fully recovered. The IAF however, has been left literally “holding the baby” as it is still in possession of the three AW101 VVIP helicopters that it cannot use.

On April 8, 2016, the Milan Court of Appeal overturned a lower court verdict and convicted Giuseppe Orsi to four years’ imprisonment for paying a hefty bribe to senior functionaries in India that included politicians, bureaucrats and officers of the IAF. However, on December 16, 2016, the Italian Supreme Court cancelled the conviction of April 8, 2016, by the Milan Court of Appeal and ordered a retrial. Meanwhile, on December 9, 2016, the CBI arrested Air Chief Marshal S.P. Tyagi along with a few others and remanded him to judicial custody till December 30, 2017. Finally, in September 2017, the CBI filed a charge sheet against him and nine others. In his defence, Air Chief Marshal S.P. Tyagi’s counsel had told the court that he was “a decorated war hero of the nation” and that “CBI, which was termed as a caged parrot by the Supreme Court, is trying to tarnish his image”. Also, that the decision to procure helicopters from AgustaWestland for travel by VVIPs, was a collective one and Prime Minister’s Office was also involved in the decision-making process.

On January 8, 2018, the third Court of Appeals of Milan finally acquitted the defendants on all charges. The reaction from the CBI is that this judgement will not impact their investigations as laws in this country are different from those in Italy and the probe here is independent of that in Italy. The CBI also claims that the investigators have succeeded in establishing a substantial part of the money trail. However, the counsel for the defendants in the case in India regard the judgement by the Italian Court as “a big slap on premier investigating agencies”. The counsel regards the whole process of investigation in India as “classic example of abuse of process of law for political motives”.

One tragic aspect of the sordid episode is that the IAF has been dragged needlessly into this ugly controversy as these helicopters were not meant for the armed forces, but for travel by VVIPs. As such, this exercise ought to have been undertaken by other agencies and not by the IAF. Tragically, this episode has damaged the institution of the Chief of the Air Staff and dented the morale of the IAF. Hopefully the latest developments in Italy will help reverse the damage and restore the prestige of the IAF.