Economy

Debating Agusta: Counter-Arguments, Probe Delays and a Six-Foot-Tall Ghulam Nabi Azad

Representational image. Credit: PTI

Representational image. Credit: PTI

New Delhi: The purchase of twelve helicopters for India’s air force in 2010 has dominated headlines over the past two weeks after an Italian court indicated that there was a strong “possibility or probability” that kick-backs were paid out to various Indian politicians and former IAF chief S.P. Tyagi by a group of middlemen. Wednesday saw a length discussion in parliament, especially the Rajya Sabha, over the $450-million AgustaWestland helicopter deal.

In the Rajya Sabha yesterday, prominent leaders of both the BJP and Congress showed up ostensibly to calmly and reasonably debate the finer points of the scandal, and come to a solution on what action needs to be taken next. What followed, however, was filled mostly with high-minded rhetoric, political bluster, heat but not enough light. 

As the dust settles on day one, The Wire cuts through the chaff and identifies the relevant aspects of the debate, the questions that the Congress and BJP need to answer, and the way ahead.

What do both the BJP and Congress agree on?

One of the major issues that the debate focused on was how the specifications of the defence contract were altered to make AgustaWestland an eligible contractor – specifically, the flight height requirement of the helicopters and the cabin height requirement. One of the two crucial allegations levelled against Tyagi is that he tweaked these specifications in order to benefit AgustaWestland.

However, what emerged from the debate yesterday re-affirmed a long-standing fact: that the specifications were first changed in 2003, when Vajpayee government officials (including National Security Adviser Brajesh Mishra) tweaked the flight height and cabin height requirements in order to avoid a single-vendor situation. This decision, according to a some reports, was also allegedly taken on the advice of the Special Protection Group that guards India’s VVIPs.

Both political parties appear to broadly agree on this. While BJP member of parliament Subramanian Swamy pointed out that changing the specifications was a crime, he didn’t directly address the points made by Congress leaders on when the requirements were changed, preferring instead to quip sarcastically that perhaps the cabin height requirement was changed to fit Congress leader Ghulam Nabi Azad, who is a little over six feet tall.

This is what the UPA government’s defence minister, A.K. Antony said in the debate:

The process started in 1999, and the RFP was issued in March, 2002. But the undisputed fact is, and I read:

“On November 19, 2003, a meeting was taken by the Principal Secretary to the P.M. on this subject. In the meeting, the Principal Secretary observed that his main concern was that the framing of the mandatory requirements has led us effectively into a single vendor situation. It was also noted that P.M. and President have rarely made visits to places involving flying at an altitude beyond 4500 metres.”

So, in the meeting, the first decision was to lower the altitude. It says, “In the meeting, it was decided to make the mandatory requirement for operational altitude 4500 metres from 6000 metres.”

It was a decision taken in a meeting presided over by the then Principal Secretary to the Prime Minister. I don’t blame him. But the decision to change the height was taken by the then PMO, the then Government, from 6000 metres to 4500 metres.

And, one more decision was taken at that time. “The higher flying ceiling of 6000 metres and a cabinet height of 1.8 metres could be made desirable operational requirements.” So, this height of 1.8 metres was also decided at that time. This is not an off-the-cuff remark. This is as per the official release of the Ministry of Defence dated 14th February, 2013. So, the height was reduced from 6000 metres to 4,500 metres and cabinet height was decided at 1.8 metres.

And this is what defence minister Manohar Parrikar said in response:

The PMO, in December, 2003 – I am confirming that – observed that the framing of mandatory ORs has effectively led to acquisition into a single-vendor situation. It was inter alia considered to make the operational altitude of 4,500 meters as mandatory and a higher flying ceiling of 6,000 meters and a cabin height of 1.8 meter as desirable operational requirement, ‘desirable’. ..

The cabin height of 1.8 metres was made mandatory in the revised Service Quality Requirements (of May 9, 2005)… These changes in SQRs eliminated the EC-225 helicopter which had met the Operational Requirements earlier and allowed AW-101 helicopter to enter the fray. As highlighted by the CAG in its Report, instead of making the SQRs broadbased to increase the competition, those were made more restrictive, thereby narrowing down the choices to a limited range of helicopters. The purpose of avoidance of resultant single vendor situation could not be met and the acquisition process, again, led to a resultant single vendor situation. In effect, by changing the SQRs, a situation was created in which EC-225 helicopter, which had met all Operational Requirements earlier, was eliminated by putting the requirement of 1.858 metres of cabin as an essential criterion from the competition and facilitated emergence of AW-101 as a single vendor.

So Antony and Parrikar agree that the decision to lower the operational altitude and raise the cabin height was taken by the Vajpayee government. Parrikar, however, said the higher cabin height was meant to be a ‘desirable’ rather than a ‘mandatory’ requirement, and by making it mandatory in 2005, the UPA government eliminated AgustaWestland’s competitors.

Apart from this, both parties agree that corruption is involved in the deal, that AgustaWestland, and perhaps its parent company Finmeccanica, need to be blacklisted, and that a full probe is necessary. They do not agree, however, on the methods by which all this should be achieved.

What questions and issues does the Congress still need to address?

Many of the allegations against the Congress party and its prominent leaders involve issues they can’t address directly. For instance: Sonia Gandhi being identified as the “driving force” of the AgustaWestland deal and Ahmed Patel being obliquely referred to as “AP” in a set of documents that detail how bribes were paid out to specific Indian politicians. A more detailed probe by Indian investigators – and cooperation from the AgustaWestland middlemen – are necessary before this can be addressed.

However, there are a number of issues: The Milan Court of Appeals specifically singled out the UPA-II government as being unhelpful when it came to the AgustaWestland investigation and even accuses the Manmohan Singh administration of intentionally holding back key information. Why did the UPA government show substantial disregard in helping out Italian authorities? Also, the delay in investigations by the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) in the immediate aftermath of the scandal happened under its watch. Should Congress leaders have demanded a faster investigation?

Other issues that the party needs to address is its behaviour and conduct with AgustaWestland and Finmeccanica after the scandal broke and the CEO of AgustaWestland was arrested in Italy. While the contract was put on hold immediately after it came to the notice of the public and steps were taken to retrieve the money already paid out, the Congress didn’t take steps to blacklist or debar Finmeccanica from other defence deals even a year after the scandal broke. Why was stronger action not taken and quicker steps not initiated to blacklist Finmeccanica? Antony said in the Rajya Sabha that the government was following procedures on the advice of its law officers:

We started the process of blacklisting. In February, 2014, we started the blacklisting process. The matter was referred to the Additional Solicitor General. He said, “It is not advisable at this stage…. .If you blacklist the company now, it will affect our case for reimbursement of bank guarantee. It will affect us and it will also affect the criminal proceedings in Italy. So, you have to wait.”

The veracity of this claim needs to be checked against the documentary record.

Last but not least, the decision to change the helicopter specifications were taken first by the Vajpayee government in 2003, the final request for proposal went out during Tyagi’s tenure in 2006, when Pranab Mukherjee was defence minister. Why were the 2003 specifications used if the Congress now believes it to have been a wrong decision that benefitted AgustaWestland?

What questions and issues does the BJP still need to address?

First and foremost is the question of when the requirements for the helicopter purchase were changed. If one of the BJP’s main arguments rests on the fact that Gandhi and Tyagi tweaked the flight height and cabin height specifications to favour AgustaWestland – as Subramanian Swamy argued – it doesn’t bode well for them the changes were first initiated during 2003 when the NDA government was in power. Either they need to agree that the change in requirements was above the board, or change tactics against the Congress.

Secondly, while finance minister Arun Jaitley did take the most concrete steps to blacklist AgustaWestland and Finmeccanica, it doesn’t explain why both companies were allowed to participate and bid for other defence projects as part of Modi’s ‘Make In India’ campaign. While it could be that India’s defence sector couldn’t afford a complete ban, it does raise questions around the government’s commitment to transparency in public sector purchases. This what Congress MP Abhishek Manu Singhvi said about the ongoing involvement of AgustWestland in a project with Tatas, which the government has yet to respond to:

What I am astonished at is that when this point was raised by us at a press briefing, the answer was very funny. The answer was, “Yes, we, the FIPB in the Modi Government, have issued it, but you gave them the industrial licence in 2012.” Sir, how is that a relevant answer when in 2012 there was no AgustaWestland issue? And, I would like to ask if the President of the ruling party calls this a ‘bogus company’ just four days ago, then surely the Government respects its own President of its ruling party. They should have asked him before issuing an FIPB approval for foreign investment to this so-called ‘bogus company’. This tainted company is further allowed, Sir, on the 18th to 22nd of February, 2015 to enter the Air Force Station at Yelahanka, Bangalore to participate in the aero displays. ..(Interruptions).. This is on 18th February, 2015. I want to ..(Interruptions).. I want to remind you, Sir, that this is the company which the President of the ruling party calls a ‘bogus company’ and a tainted company.

Where does the investigation go from here?

One of the most crucial pieces of information that have come out during the AgustaWestland debate is how slow the investigation into the scandal has been. For instance, according to reports, the ED took almost 16 months to initiate a proper investigation into the bribery allegations exposed in 2013, because the CBI did not share a copy of its case with the ED. Although even after receiving the documents the ED dragged its own feet for almost six months.

During the Rajya Sabha debate, Defence Minister Manohar Parikkar referred to these delays and claimed that an “invisible hand” was behind them. While there are numerous challenges to investigating this case – as it involves the cooperation of countries such as Tunisia in order to identify the chain of money laundering – it seems a little puzzling why greater priority and resources have not been sunk into the investigation by both parties.

The Congress has called for a Supreme Court-monitored CBI probe into the chopper deal, while also calling for strong action against Finmeccanica. The BJP, however, believes that the current inquiry is sufficient enough to focus on “those named in the Italian court judgment”. While it is clear that both parties are seeking probes to increase the heat on the other, a more decisive investigation needs to be launched.

AgustaWestland middleman Christian Michel has previously offered to come to India to help in investigations and is still willing to do so as long he is not arrested. Michel has claimed that he offered help to Modi in the past but was rebuffed. There has been no independent confirmation of Michel’s claim.

Judging by the past record of wrongdoing involving influential people – Bofors, IPL irregularities and Lalit Modi, the black money investigations – governments have tended to see greater political value in leaving these cases unsolved and unresolved than in actually investigating, prosecuting and punishing the guilty. Whether the Supreme Court monitors probe or some other form of oversight is created, care must be taken to ensure the AgustaWestland case does not go the same way.

  • ashok759

    Should we blame the public for being cynical ? Specifications are changed, ostensibly to avoid a single vendor situation and then those changed specifications are used to ensure that a favoured firm alone remains in the fray. Instead of getting diverted by issues like 6,000 / 4,500 metres and 1.8 metres, the laser like focus should be on getting to who was sitting on the other side of the see saw. A responsible appellate court has convicted two top officials for giving bribes to secure an arms contract. Common sense suggests the recipients must have been those who took the decision to award the contract. Not an impossible task for investigators to find out their identities.