When reports first emerged last year, as part of an investigation in Italy, that Agusta Westland's sale of 12 AW101 helicopters to India was tainted by kickbacks, Defence Minister AK Antony immediately ordered a probe by his Ministry. Given his reputation for personal probity, 'St Antony' signalled that he would get to the bottom of the Rs 3,548-crore deal to secure helicopters for VVIPs; he even instructed Indian diplomats in Italy to keep track of the investigation there and keep him informed.
But, of course, the cardinal rule of investigations into corruption in India is that if you don't want to find evidence of corruption, you won't. So after writing proforma letters to the Italian and British authorities, the babus in the Defence Ministry expressed an inability to carry forward the investigation since there had been no response from those countries. (Perhaps the letters were sent by Speed Post...)
If Antony and Defence Ministry officials really wanted the investigation to yield results - and names - there were plenty of leads to be had closer home, in Indian media reports. The Indian Express, which has inarguably done the most diligent follow-through on the Agusta Westland deal, has over the past year published several reports on the Indian end of the transaction, particularly the allegation that Indian middlemen too had received kickbacks to seal the deal. The newspaper had even published the names of the beneficiaries, including - sensationally - a 'Julie' Tyagi, the cousin of the former Air Force chief SP Tyagi, during whose tenure the Agusta Westland deal was finalised in 2006.
But perhaps in the belief that the story had gone cold, and that nothing would come of it, neither 'St Antony' nor his babus acted on these potent leads. Today, the folly of that decision is coming back to bite them - and haunt the UPA government.
It now turns out that SP Tyagi has been formally named by Italian investigators as one of those to whom Finmeccanica, the parent company of Agusta Westland, paid bribes to swing the deal in favour of the company. Carrying forward its diligent investigation, Indian Express reports (here), citing the preliminary inquiry report that Italian investigators filed to secure the arrest of Finmeccanica CEO Giuseppe Orsi on Tuesday, that Italian prosecutors have alleged that SP Tyagi was instrumental in clinching the deal and was paid "certain amount of money, not yet quantified" through intermediaries.
The revelation is a bombshell that should have enormous repercussions, even in a country long inured to sensational allegations about corruption in defence deals. This is perhaps the first time that a Service chief has been formally named by foreign investigators as the beneficiary of a bribe paid to secure a defence contract.
The Indian Express further reveals that the Italian preliminary inquiry report names Julie Tyagi (whose official name is Sanjeev Kumar Tyagi) and two of his brothers - referred to as Sandeep Tyagi and Docsa Tyagi - as the Indian intermediaries who were paid kickbacks, which they then passed on to Indian officials. The payments were facilitated by Orsi, who was arrested on Tuesday, two other middlemen - Guido Haschke and Christian Michel - and Carlo Gerosa, a business associate. Haschke and Michael are middlemen who are known to be active in the defence procurement industry in India, with claimed links to both the Congress and the BJP.
The most sensational portion of the preliminary inquiry report is where it says that the facilitators "promised and managed to pay, through brothers Julie Tyagi, Docsa Tyagi and Sandeep Tyagi, a certain amount of money, not yet quantified, to Air Chief Marshal Shashi Tyagi, Chief of Staff in the Indian Air Force from 2004 to 2007 - a public officer or anyway in charge of functions and activities equivalent to those of a public officer in India - to perform and for having performed a deed against his office duties."
Significantly, the technical requirements for the contract were tweaked by India to allow the AgustaWestland helicopter to enter the bidding process, the report adds. The first tender that was floated for the purchase of 12 VVIP helicopters specified that the helicopters should be able to fly at 6,000 metres. But in a second tender, floated in 2006, lowered that altitude specification, which allowed the AW 101 to qualify.
The preliminary enquiry report alleges that kickbacks of the order of 51 million euros (about Rs 400 crore) were paid - much of it in India, but also in Italy.
Last year, when SP Tyagi's name first cropped as a close relative of Julie Tyagi, the Delhi-based businessman and consultant, the former Air Chief had acknowledged that the two were indeed related, but denied that they had any business links. Today, following the sensation allegation from Italian prosecutors, the Air Chief may have yet more explaining to do.
But it appears that in this case, the 'money trail' may not be easy to establish. In an earlier recorded conversation that Italian investigators have audio recordings of, the middleman Haschke tells Gerosa that if he were questioned by Indian courts about the alleged kickbacks, he would say that he blew up the money on "ballerinas and champagne". In any case, since the kickbacks had been paid in cash, there would be no money trail, he said.
According to documents submitted last year by Italian investigators, during the conversation, Gerosa plays the role of an Indian judge to test Haschke's reflexes at lying about the 'slush funds' that he had received from Finmeccanica (some of which were paid to Italian politicians).
In that role, Gerosa asks Haschke: "Tell us, you collected the money, where have you kept it?"
To which, Haschke responds: "Eh, I collected it, it's my f***ing business where I have kept it. I didn't pay anyone."
Gerosa: "Ok, but where have you kept it?"
Haschke: "I wasted it on ballerinas and champgne. And then...
Gerosa: "Yes, but 10-15 million euros on ballerinas and champagne..."
Haschke: "Ballerinas and champagne. They anyway have to demonstrate I took it (the money)...
In another part of the conversation, while discussing the payments to Julie Tyagi, Gerosa says that Indian prosecutors would never be able to prove corruption in the deal - because the payments were made in cash. In any case, he says, the Indian investigators are "morons' and there is no link.
Gerosa says at one point that while both Haschke and himself, being men in the front, were vulnerable, "the only one who has no risks is Julie... There is really no link there because, I mean... cash."
To which Haschke says: "Exactly, so they (the judges) will never be able to prove that corruption was there.
All this material has been floating around in Italian and Indian media accounts for many months now. If Antony or his Defence Ministry officials needed leads to investigate, they needn't have been waiting for responses from foreign governments.
On Tuesday, after news of Orsi's arrest became public, the Indian government ordered an investigation by the CBI into the allegations. Given the CBI's record of investigations into corruption cases, it seems fair to say that this is just another ploy to bury the matter.
What does it say of a government that, even after the high-decibel clamour for action against corruption in high places, including in defence deals, it has failed to act when presented with strong enough leads in a case where, today, the former Air Chief of the country stands accused of having accepted bribes.
When former Army chief Gen VK Singh made his sensational claim last year that he had personally been offered a bribe by a former army officer who was now an arms agent, it created quite a stir. But the outrage of that moment dissipated soon enough in the campaign of calumny against VK Singh for having blown the whistle on corruption in defence procurement. VK Singh has subsequently shown himself to be less than balanced in his political pronouncements, but that ought not to take anything away from his expose of corruption.
A generation ago, the Bofors scandal broke because of a revelation by the Swedish National Radio about kickbacks paid to the family associates of Rajiv Gandhi. Investigators in India effectively tried their damnedest to torpedo that investigation at every stage, but because there was a Swedish whistleblower who had an interest in getting the truth out (to target his own government's culpability in the deal), the skeletons just kept tumbling out.
Likewise, today, the investigation in Italy began with allegations that Italian politicians had been paid bribes in the Agusta Westland's deals - not just in India but elsewhere. India came on the radar only peripherally. But now that the facts are out, and a former Air Chief stands accused of having accepted bribes, the least that the government owes is an honest investigation into the scandal, which has the potential to grow bigger.