Sunday, 17 February 2013

Seeking evidence of wrongdoing, defence official heading for Rome



Italian court rejects Indian request for documents. So on what basis will the MoD invoke the Integrity Clause? 

By Ajai Shukla
Business Standard, 17th Feb 13

A day after the defence ministry (MoD) stated that it had “initiated action for cancellation of contract for procurement of 12 AW101 helicopters for the use of VVIPs”, the ministry announced today that it was sending a senior official to Italy to ascertain facts in the case.

An MoD release today stated: “MoD is deputing a senior Joint Secretary to Italy to gather as much evidence as possible relating to the allegations of corruption in the acquisition of 12 AW 101 VVIP helicopters for Indian Air Force. The Official, Shri AK Bal, will be leaving for Rome as early as on Monday.”

The legal action initiated by the MoD yesterday amounted to the issue of a show cause notice to AgustaWestland “seeking cancellation of contract and taking other actions as per the terms of the contract and the Integrity Pact.” The Anglo-Italian company has been given seven days to respond.

On Wednesday, the MoD had put all payments to AgustaWestland on hold. With the show cause notice on Friday, the MoD declared, “The operation of the contract has been put on hold”.

Questions are already being raised over the legal basis on which the MoD was proceeding to cancel the contract, given that the Italian investigation was still ongoing. Prosecutors in that country have filed an investigation report, but the process of trial has not even begun. The arrest on Tuesday of Giuseppe Orsi, the CEO of Finmeccanica (the parent company of AgustaWestland, which sold the AW101 helicopters to India) was carried out based on the investigation report.

Today, AgustaWestland pointed out that the Indian MoD had only issued a show cause notice. An official release said, “The Indian Authorities have not cancelled the contract but have requested some clarifications within seven days. AgustaWestland is preparing its answer to timely meet the Indian authorities’ request (sic).”

Flatly rejecting any illegality on its part, AgustaWestland has stated that it “is confident that the full compliance with the law of its conduct and the conduct of its past and present Senior Executives and Managers will be demonstrated soon.”

Giuseppe Orsi, the arrested CEO of Finmeccanica, headed AgustaWestland at the time the contract for twelve AW101 helicopters was signed with India.

That the MoD’s response is more political than legal is evident from the worry within the IAF and the bewilderment of officials in the ministry’s acquisition wing. Senior IAF officials are concerned at the possibility of the Communications Squadron, having to fly VVIPs like the prime minister and the president with just three AW101 helicopters (which have already been delivered), while a fresh acquisition process is launched for nine more helicopters, typically involving a decade-long delay.

The MoD’s acquisition wing is even more perturbed. Officials say that about 35% of the total contract payment of Rs 4,000 crore has already been paid. Since just three helicopters have been received, cancelling the contract at this stage would involve a significant financial loss.

[Typically, 15% of the overall amount is paid at the signing of the contract, with the remaining amount linked to production and delivery milestones.]

MoD officials also point to the obvious difficulties in invoking the integrity clause at this stage when the Italian investigation has not yet even come to trial. So far, no Italian court has found wrongdoing; and the Indian Central Bureau of Investigation (CBI) has only now been asked to investigate the case.

“The talk about cancelling the contract is all political. Legally speaking, the MoD cannot invoke the Integrity Clause against AgustaWestland until either an Italian or Indian court finds wrongdoing,” says a top IAF officer.

According to the MoD’s lengthy factsheet released on Thursday, “both the contract and integrity pact signed with M/s AgustaWestland, U.K., contain specific provisions by which strict action including cancellation of contract, recovery of payment, blacklisting and penal action can be taken against the vendors.  Government is determined to take all possible legal and administrative action against the guilty parties and accordingly has ordered a thorough probe by CBI.”

11 comments:

Anonymous said...

what amounts to... breach of... indian integrity pact... if finmeccanica /AW... proves... did an accounting fraud... their arse is saved... orsi fried... egg on MoD/GoI...

Anonymous said...

I don't think that goi has the balls to cancle the deal of sonia ghandhi ka maika and rahul ka nanihal.THANK YOU MR.RAJIV GANDHI/ NEHRU/ KHAN WHAT EVER.BUT LET ME TELL YOU ONE THING THAT THE ERA OF NEHRU GANDHI KHAN FAMILY IS OVER AND ONE DAY WHEN EVERY INDIAN WILL COME TO KNOW THE TRUTH ABOUT NEHRU FAMILY THEN SONIA AND RAHUL WHO IS NOT EVEN AN INDIAN CITIZEN WILL SEND BACK TO THEIR RESPECTIVE MAIKA AND NANIHAL.

Anonymous said...

hey shukla ji i guess that no more of ur blog readers r interested in dis case. d media has blown it out of proportions...let d cbi do their job...and we d foolish citizens of this godforsaken country shall wait in vain as in d bofors case. Not just d politicians and bureaucrats but our fellow scribes r also corrupt. Even Mr Katju(PCI chairman) has biased political views...

Mr. RA said...

Nothing will happen as nothing has ever happened.

Anonymous said...

Arrest of Mr Orsi was based on proof of bribes paid/money transferred illegally. An Italian arrest warrant cannot be issued or fulfilled without proof. It is true that this "proof" has not been shared with India so far. However that is more due to the independence of the judiciary and the political system in Italy and if you have read the Italian newspapers they clearly say that the proof will be shared with India-it is a matter of time.

So 1. Proof exists that AW paid bribes and 2. This proof is with Italians and not Indians currently.

Now what will happen next. Anybody's guess. Will the names of the people who received money be made public? NO. Will the deal get cancelled? YES. Once the Italian proof is shared with India.

My take. Since the money would have been taken by the "family", and Cover Up Bureau of India(CBI) is already in Italy, a settlement will be reached. CBI will destroy the evidence (Bofors) and the deal will go through. AK Antony will blacklist FinnMeccanica and the AW101 will be be used without support and have the same fate as the Westland helis rotting at Bandra today.

Thinking what are the other possibilities here.

Guru said...

Saw you interviewing Shashi Tyagi. Few questions, Ajai.

1. Why did you not specifically ask him about his meeting the middlemen (5-6 times)and updating tender developments with them, amongst other things, which is one of the major allegations against him?

2. The Air Force is alleged to have changed a requirement that the helicopters have 3 engines (to enable AW-101 to participate) from 2 engines.The SPG or PMO could not have given this requirement? Why did you not raise this issue with Shashi Tyagi?

Also, my 2 cents on this interview. It was almost like a tea-party discussion. There was no pointed facts presented to the ex-Chief and his viewpoints were just taken on face value. You could have used your extensive background information to play here.

Broadsword said...

@ Guru

Go back and see the interview again.

1. I specifically asked Tyagi about whether he had met Haschke, Michel and Gerosa... and he categorically denied meeting them from the time the VVIP helicopter was first talked about (1999) to the time that the RfP was issued, i.e. when the specifications had been frozen. (He admitted to meeting them before 1999)

2. There was no three-engine requirement at any stage.

As for your 2 cents on the interview... that it was like a tea party... I prefer to interview that way. It is not my style to behave like an interrogator. I ask the questions politely, ask the follow ups politely, and if the person does not answer either... the intelligent viewer can see that he is dodging. I don't need to say it, except for the most foolish kind of viewer.

Which I don't cater to.

Anonymous said...

@Guru, I think Ajai's programme aims to be the opposite of the c***p dished out by the likes of Arnab Goswami, and we should be thankful for that.

Goswami et al think the viewers are idiots while Ajai's programme assumes that we are intelligent.

Subho said...

I strongly believe that serving the show cause notice to AW was the right thing to do under the circumstances. It puts AW on the defensive and shifts the burden on to them to prove their innocence to a degree. While the MoD cannot cancel the contract at this time by invoking the Integrity clause in a matter that is sub-judice, I'd be surprised if there aren't other clauses that provides the MoD leverage in the matter. What it does is sends a strong message to the ecosystem that the days of "business as usual" are over and potential vendors should be ready to play ball or else be barred from one of the largest export market for defence equipment!

Anonymous said...

The air chief leaves no room to show case his love for Pilatus Pc7.. can we ask him why did the IAF change the SQRs for the trainer aircraft and made it to suit PC7, relaxing 0/0 ejection, cockpit pressurisation, 0-99% percentile pilots , auto trim control device and 7 other parameters. Why was he in such a rush to buy 37 more before his retirement....If someone compares it is exactly the AW helicopter sequence....Wake up and smell some cofee before we have another disgraced service chief....
Pilatus always knew that if the PC 21 which was compliant with all IAF requirements is contested they will loose as it is costlier than the Korean KT1 and T6C....and hence the IAF chaged the specs to suit the PC7 which is a low cost option...
The entire project cost is 700 Million USD...Divide this by 75 and you get a cost of almost 50 crores per aircraft. Whom are we fooling trying to show the cost of PC 7 as 31 crores...
Also Swiss are a neutral state and will never allow armed variant of the PC7 aircraft for Close air support on Irregular warfare....All we have bought is a lame trainer for the next 30 years or so...

Can IAF annswer who is gonna maintain the PC 7....as the MTOT as still not been contracted and the swiss will mint money with this...remember the Korean objection....the IAF said the deal was all fair....ditto like the one in Augusta Westland case.....

Swiss aircraft...swiss banks ...all the more easy to set it all.....SHame.......

Jada Erin said...

The actual lawful activity opened up because of the MoD recently amounted towards the matter of an present lead to observe to AgustaWestland “seeking cancellation regarding commitment in addition to getting different actions as per your words with the commitment and the Strength Pact. ” The actual Anglo-Italian corporation has been presented a week to respond.

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