Baseless Allegations Of Bribery In Chopper Deal Fails Scrutiny

Antony 0 0 1 Wed, 05 Oct 2016

Baseless Allegations Of Bribery In Chopper Deal Fails Scrutiny

Shri  a.k. antony: Sir, Defence procurement, has all along created a lot of controversies from the beginning. But you may not agree because it is obvious that you may not appreciate the previous Government. That will create problem for you. But i can tell you sincerely that our Government, from day one onwards, was very clear that in the area of Defence, there should not be any compromise on corruption. There should be zero corruption in Defence because our Jawans are shedding their blood to protect the borders, lands, sea and air. They are sacrificing their lives. 

You must not allow this corruption in Defence area. So, in UPA-1 onwards — I don’t claim that we were hundred per cent successful — with a conscious effort we were trying to prevent and ultimately eliminate corruption from Defence procurement. So, first we started revising the Defence procurement policy. It was the first time that the Government of India during the time of UPA-1, introduced DPP (Defence Procurement Procedure) giving a lot of safeguards to prevent corruption. Afterwards, there was a second addition and we introduced a new concept of Integrity Pacts, Pre-contract Integrity Pacts in which there is a provision that any company which violates Integrity Pacts, can be debarred for five years or ten years, criminal actions, or the money can be taken back or so many repercussions. After that, by action we had shown to the country, shown to the world, mighty world, that we mean what we say. I am quoting only official records, that is, public records. I am on oath. These are public records. I know secret records, but I will not reveal because I am on oath. 

This is the Report of the Press Information Bureau, Government of India, dated 11th March, 2013. It says, “The Government has blacklisted following six firms for a period of ten years by the Ministry of Defence I.D. No.310, April, 2012: Singapore Technologies, Israeli Military Industries Limited, Rheinmetall Air Defence (RAD), Zurich, M/s Corporation Defence, Russia, etc.” These are all powerful multinational 

companies, and these include two Indian companies as well. We didn’t show mercy. When corruption was proved and the CBI recommended that we should take action and blacklist them, we blacklisted six companies. This happened for the first time that six companies, at a stretch, were blacklisted. Otherwise, some years back, one company was blacklisted. So, not sitting on procedures, we also took action and sent a message to the world, sent a message to the arms dealers, that India would not tolerate corruption. We proved that merciless strong action would be taken. That was our message at that time. 

 Sir, this is as far as the background is concerned. Coming to this particular thing, so many friends quoted so many things including CAG Reports and newspaper reports. In the last few weeks, many people were trying to make clouds. I would like to present a few facts after which I will also table them in the House. This is also the official release of the Press Information Bureau relating to the Ministry of Defence, titled, ‘Acquisition of AW-101 Choppers for IAF: The Facts’. This is dated 14th February, 2013. Everything is stated here. I don’t want to read everything, but I will place it also. I would first quote one part to reply to what has been raised here. As many of you mentioned here, this process started in 1999 when the NDA was in power. I don’t want to blame anybody. I don’t want to point a single finger at anybody. 

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 ak antony

baseless allegaTions of bribery in chopper deal fails scruTiny Short Duration Discussion on Allegation of Bribery and Corruption in Augustawestland Chopper Deal

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 BJP 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. The major decision was taken at that time in 2003 by your Government. This is not a Press statement. This is an official .

release, official document of the Ministry of Defence on February 14, 2013. I am quoting a decision of 2013 of para 3. On November 19, 2003 a meeting was taken by the then Principal Secretary and in that meeting it was decided, the height of 6000 to 4500 and cabin height of 1.8 metres. It was by your Government. Don’t accuse us. I don’t blame you also. I am not saying that they have done this or that, but the decision was taken by you. Don’t put the blame on us. Also, the meeting was followed by a letter, dated 22nd December, 2003, from the Principal Secretary to the PM to the Air Chief stating that it was unfortunate that neither the PMO nor SPG was consulted while framing these mandatory requirements. He suggested that CAS and Defence Secretary may jointly review the matter to draw up realistic mandatory requirements satisfying operational security and convenience requirements of VVIPs.

 In pursuance of the above directions they changed these things. As a follow-up action of this in 2005 is, the required numbers of helicopters for the entourage of VVIPs was further deliberated between Air headquarters, MoD and  SPG. The quantity of helicopters proposed for procurement was revised from 8 to 12 by adding four helicopters in nonVIP configuration for security reasons. It is eight for VIPs and four for non-VIPs. Don’t twist the facts. The Field Evaluation Trial of M/s AgustaWestland was carried out in UK and trials of M/s Sikorsky were carried out in the USA from 16th January 2008 to February 2008. Here Yadavji pointed out, ‘Why outside?’ This is allowed in the rule. But, it is not a normal practice. When the file came to me first, in the very CAG report it is written, ‘The Defence Minister objected it first’. The same Report released and this part you conveniently ignored. 

Let me say, the file is now with the present Defence Minister, not with me. Leave it to him. If I am wrong, he can produce the file here. At the first instance, I opposed it. I wrote there. I raised many objections. It is in the CAG Report also. Since you read the CAG Report, fairness demands you could have read that also. But you did not do. I did not expect it from a gentleman like you. So, then, again Air Force Chief wrote to the Defence Secretary. The file is with you. Then, I wrote to the Defence Secretary that we couldn’t delay it. Then, the whole department, from the lower level onwards, i.e., Joint Secretary, Additional Secretary, DG (Acquisitions), Defence Secretary and everybody has gone through it. They, then, finally, endorsed the view of the Air Force Chief, with reasons. Then, it came to me, second time, and I agreed. This is the fact; not the first time. First time I also put a query. Why? I did not agree. During the Field Evaluation Trials, all the security agencies were present. All of them were there — Air Force, SPG, MoD and all concerned, including the Finance Ministry. After that, Staff Evaluation Report was concluded. All agencies were present. Technical Oversight Committee concluded. All the agencies were there. But, at the Contract Negotiation Committee stage something had happened. The Air Headquarters recommended inclusion of Traffic Collusion Avoidance System and Enhanced Ground Proximity Warning System for all 12 helicopters. And, SPG recommended inclusion of Medevac System for 8 VVIP helicopters. The additional equipment was considered to be essential for safe and effective operation of helicopters. So, this also added at an additional cost. So, the procurement case was, thus, progressed in accordance with the established procurement procedure in a transparent manner with all stage of procurement being followed meticulously. Security aspects were also considered. These are all Defence Ministry’s releases after examining the file. The contract signed with M/s AgustaWestland includes specific contractual provisions against bribery and the use of undue influence. In addition to the above contractual provisions, M/s AgustaWestland has signed an Integrated Pact with the Government. The validity of this Integrated Pact is from the date of its signing and extends up to five years or the complete execution of the contract, whichever is later. Then, allegation started coming in. As regards allegations, unethical dealings in helicopter procurement case, including involvement of middlemen and payment of bribes, etc., were reported. 

The first report in the media appeared in February, 2012. It was the first media report. Immediately, the very next day of the media report, after news appeared in the papers, DG (Acquisition), MoD, sought a factual report in the matter from our Embassy in Rome. Sir, we had acted the very next day; not after one or two years. The next day we had acted. Then, MoD was contacting through MEA, Embassy in Rome, Government of Italy, the Government of UK and, ultimately, when all attempts failed, we became a party in the case in Italy. It is unusual in the Government. This shows our willpower, determination to find out the truth. We became a party. We fought with the company. That is why this verdict. Since we have also become a party, in every hearing, we sent our team during our time. I don’t know what happened after we left. During our time, in every hearing, we sent a team consisting officials of the Ministry of Defence, officers from the CBI and that of the MEA. So, we fought the case in Italy by engaging an Italian lawyer. Sir, right from day one, when news broke out in the media, we pursued it. And, also we got a letter received from one Mr. Edmond Allen, USA. MoD had written about the involvement of one Abhishek Verma. MoD had written on 19/4/12 to CBI 

and Enforcement Directorate for the necessary action as Abhishek Verma and others were also being named in various media reports in connection with several Defence deals. That also we have written to them. In short, throughout the process of this case, MoD has been prone to taking action on newspaper reports. MoD was under us at that time. We were very prompt in taking action and in pursuing the case. Finally, as soon as, information was available of one concrete step having been taken by the concerned foreign investigating authorities, namely, the arrest of Mr. Giuseppe Orsi, CEO, Finmeccanica on February 12, 2013, MoD handed over the case immediately, after knowing the news of arrest of the CEO of this company, to CBI for investigation and put on hold all further payments to AgustaWestland. Besides this the Indian Embassy has been requested to provide the factual position and any other relevant information. So, the moment we got information from the courts, immediately, we handed over the case to CBI. That is one part. This is all in the First Information Report. I will submit it afterwards. We are authenticating this. Then, what happened after that? I made a statement at that time. I think hon. Shri Prakash Javadekar raised the question. That day, I not only made the statement but, after that, on our own, we made a commitment that we are ready for a JPC.

Normally, JPC is always constituted after the Opposition demands for it. But, the then Government on their own said let us have a JPC. For days together, weeks together, we can discuss everything. We can call the witnesses. We can call everybody. But, the then, Leader of Opposition said, “No it is a useless thing”. So, we were willing to have a JPC. JPC can invite all the people as witnesses and summon them. But, you opposed that opportunity. Then in that statement, I said, and I can read, “The Ministry of Defence, Govt. of India joined the case as an affected civil party in the court of Milan. Representing the Ministry of Defence, CBI have been attending to it.” During the hearing, in Italian court, one unsaid paper was circulated. Prosecutor asks Mr. Haschke, “What do you mean by ‘family’?”, “He said, family means Tyagi brothers.” I have to consult you. All reports of the hearings of the court are with you. “Family means, Tyagi family. Regarding AP, I don’t know what it means.” This is what he said. Then, you are saying about blacklisting. 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.” So, we waited. Then elections came. We lost the power. You are there. But, I am not going into the details. Now you are there. I would like to ask you only two things. Now, it is proved beyond doubt that there is corruption in this deal. There is the Italian court judgment. All legal hurdles are over. You have to act now. Firstly, you have to speed up the arbitration proceedings. We have appointed one on our side, Justice Jeevan Reddy. They also have appointed one from their side. They have demanded heavy compensation. Conduct the case successfully and get the money for us, more money for us as compensation. It is your duty because now the corruption is proved. Since the corruption is proved, we can win the arbitration case. You can get thousands of crores of rupees as compensation. Get the money. That is one thing. Secondly, since the corruption is proved, take action against the company who gave the money. And then, take action against the takers, whoever it may be. Take action against them also. It is your duty, not my duty, not our duty. Thirdly, since all legal hurdles are over, immediately, without delay, blacklist the company for ten years. Do it immediately. This time, you have done it for six companies, so do it immediately. The next day you do it or as quickly as possible. Finally, since everything is proved, since this company is a corrupt company as it is declared by the Italian court, please do not involve them in any of the ‘Make in India’ projects? If at all they are there, remove them. We don’t want any cover-up. We don’t want to save anybody. But don’t try to create clouds. You will not be able to succeed. Don’t politicize the issue. You will repent. You will not be able to pinpoint us. You complete the cases. Firstly, you take action against the company and blacklist the company. Remove it from the ‘Make in India’ project. Speed up the arbitration process and complete the investigation and take strongest action against takers of money, whoever it may be. Don’t try to blackmail the people. Don’t threaten the people. My dear Subramanian Swamyji, don’t threaten us. If you have all the evidence, take action and prosecute, but don’t threaten and blackmail. This is what I wanted to say.  

Some relevant Facts (a). concrete action taken by UPa in agusta Westland case 1. UPa government ensured complete transparency, accountability and integrity of the process of global tendering leading to award of contract for 12 aW-101 VViP helicopters to agusta Westland. contract with agusta Westland categorically envisaged as follows:(i) It included specific contractual provisions against ‘bribery’ and use of ‘undue influence’. Article 22 of the Contract dealt with penalty for use of ‘undue influence’. Article 23 of the Contract contained a complete prohibition on the seller regarding dealings through and agent or payment of any agency commission to any individual or him. (ii) In addition to the above provision, Agusta Westland had also signed ‘integrity Pact’ with the Government of India. Under the ‘Integrity Pact’, bidder committed itself to take all measures necessary to prevent corrupt practices, unfair means and illegal activities during any stage of the bid or during any pre or post contract stage. Any breach thereof would result in forfeiture of earnest money, performance bond, cancellation of contract etc. 2. UPa government asked for an investigation into allegations of corruption by cBi, enforcement Directorate (eD) and income tax. UPa government also made a request to naples (italy) Prosecutor’s office for information and documents into the allegations against officials of agusta Westland. on 19.04.2012, Ministry of Defence wrote to cBi and enforcement Directorate (eD) for examining the allegations of corruption. in July 2012, Enforcement Directorate (ED) informed Ministry of Defence that it was enquiring into the allegations. in January 2013, Ministry of Defence also conveyed the facts of the case to the then Director, Income Tax (Investigation). on 16.07.2012, Indian Embassy in Italy made a formal request to naples (italy) Prosecutor’s office for information on unethical dealings in Agusta Westland sale or helicopters to Indian Air Force. 3. UPa directed registration of cBi case. As news came with regard to arrest of Mr. G. Orsi, CEO of Finmecanica/Agusta Westland; Defence Ministry asked CBI to register a case on 12.02.2013 against six companies. On 25.02.2013, CBI registered a preliminary enquiry. (Please refer to reply dated 06.03.2013 to Parliament Question no. 961 as also reply dated 11.12.2013 to Parliament Question no. 669. 4. UPa government issued a Show cause notice dated 15.02.2013 and cancelled the contract with agusta Westland on 01.01.2014. Please refer to Show Cause Notice dated 15.02.2013 and order terminating the contract dated 01.01.2014. in March 2013 itself, UPa also decided that no contract negotiation was to be held with agusta Westland in any capital procurement case. 5. UPa government sent ‘Letter rogatory’ to various countries including Mauritius, tunisia and italy in July, 2013 and December, 2013 after receipt of the set of papers from italy in May, 2013. 

6. UPa government had even proposed to set up a JPc to examine agusta Westland case by moving a motion in rajya Sabha on 27.02.2013. BJP refused the offer by demanding a Supreme court  monitored investigation. 7. UPa government enchased the two indian bank guarantees amounting to rs. 240 crore approximately at the time of termination of contract. UPa government also demanded encashment of bank guarantee from Deutsche Bank, Milan, italy and finally won the appeal in italian court on 23.05.2014 for encashment of bank guarantee worth euro 2,28,00,00,00 (228 million).  UPa government, thus, recovered nearly rs. 2,068 crore from agusta Westland (rs. 240 crore bank guarantee with indian + euro 228 million from Deutsche Bank, Milan, italy), besides confiscating three helicopters as against a payment of rs. 1,586.66 crore made to agusta Westland. hence UPa government recovered more money and not a rupee of loss was caused to public exchequer. 8. UPa government issued the order dated 12.05.2014 banning agusta Westland, its parent company finmechanica and all other group companies. In fact, after coming to power on 26.05.2014, BJP government desisted from issuing this banning order upto 02.07.2014 for unexplainable reasons. This order was finally issued only on 03.07.2014 by BJP government. Strangely, the order was effectively reversed within 40 day i.e. on 22.08.2014. (B) Did UPa government change the operational requirements (ors) for helicopters by reducing it to 4,500 meters from the original 6,000 meters? 1. Please see para-1 (i) to (v) of Statement facts. 2. On 19.11.2003, Principal Secretary to the then Prime Minister, Shri Atal Behari Vajpayee took a meeting. In the meeting, it was decided to reduce the operational requirements (ors) to an altitude of 4,500 metres from the original 6,000 metres. It was also decided to keep the cabin height at 1.8 metres as desirable operational requirement. Principal Secretary to the then Prime Minister  Shri Atal Behari Vajpayee also wrote a letter dated 22.12.2003 to the Air Chief pointing out that PMO and SPG should have been consulted while framing ‘operational requirements’ (ors) besides suggesting that Chief of Air Staff and Defence Secretary should review and draw up realistic mandatory requirements. Between March, 2015 and September, 2016; ‘operational  requirements’ (ors) for VVIP helicopters were deliberated at length between IAF, NSA, SPG, PMO and Ministry of Defence. Consequently, an operational altitude ceiling of 4,500 metres and other configurations including cabin height of 1.8 metres were arrive at, as earlier decided. (c) Why were ‘Field evaluation trials’ (Fet) of helicopters held abroad? Did it violate the ‘Defence Procurement Procedure’ (DPP)? 1. Field trials for Agusta Westland helicopters were held in UK and for Sikorsky helicopters were held in USA. 2. During last nDa government (1999-2004), ‘Defence Procurement Procedure  2002’ envisaged field evaluation trails ‘abroad’. ‘Defence Procurement Procedure, 2006, applicable to Agusta Westland contract also envisaged trials to be conducted ‘abroad’ in vendor’s premises. Even during the current Modi government, ‘Defence Procurement Procedure, 2016’ envisages conduct of field evaluation trails ‘abroad’ in vendor’s premises. It is, thus, clear that there is no bar to conduct field evaluation trails ‘abroad’ either in the previous NDA government or the Congress government or the current Modi government. How did Modi government protect Agusta Westland? 1. investigation by cBi/eD/income tax has not been concluded in two years of Modi government establishing laxity and an intent to help agusta Westland surreptitiously. In fact, conclusion of CBI investigation appears to be nowhere close. This is clear from a recent Parliament reply dated 04.03.2016 to Question No. 1359 given by Defence Minister, Shri Manohar Parrikar, wherein he has clearly admitted that, “Finalization of investigation by CBI is dependent upon execution report of the pending letter rogatory from eight different countries”. 2. Modi government undid the process of banning agusta Westland within a short span of 48 days for completely unexplainable reasons. on 10.02.2014, UPA government initiated the process for banning/blacklisting Agusta Westland. on 03.07.2014, process got completed and Modi government proceeded to ban Agusta Westland, its parent company  Finmecanica and other group companies. Immediately thereafter, Modi government took opinion of Attorney General of India. on 22.08.2014, Modi government proceeded to undo its own order by permitting Finmecanica/Agusta Westland and their group companies to participate in defence contracts as (a) sub

contractor; and (b) supplier to the contracting party. 3. Modi government has not blacklisted agusta Westland or its group companies. order dated 03.07.2014 only imposes a ban on agusta Westalnd and group companies during the pendency of ongoing cBi investigation dated 25.02.2013. This is apparent from Parliament reply dated 18.07.2014 to Question No. 1417 given by the then Minister for Defence, Shri Arun Jaitley.  What is important to note is that Parliament reply dated 18.07.2014 clearly establishes that neither is Agusta Westland or its group companies debarred nor have they been suspended indefinitely. in fact, Defence Minister, Shri Manohar Parrikar admitted in rajya Sabha and Lok Sabha that process of blacklisting agusta Westland and its group companies would be now initiated by BJP government. What the BJP government was doing for two years? Why has it not proceeded to blacklist Agusta Westland so far? These are the questions for which the BJP government does not have answers. 4. BJP president, Shri amit Shah described agusta Westland a ‘bogus company’. Modi government granted Foreign investment Promotion Board (FiPB) approval on 08.10.2015 to the same company i.e agusta Westland. What is the reason for granting FIPB approval for joint venture to a tainted company like Agusta Westalnd, which is under CBI scanner on charges of bribery? This fact has not been explained till today. 5. Modi government has also permitted agusta Westland to be part of ‘Make in india’ programme and participate in ‘aero india exhibition’. Modi government needs to explain the reasons for its benevolence towards agusta Westland and acting as its benefactor. 6. Modi government did not cooperate and provide documents in the criminal court proceedings at Milan, Italy. This fact has been admitted by Defence Minister, Shri Manohar Parrikar on the floor of rajya Sabha on 04.05.2016, when he stated that documents could not be given by Defence Ministry in the criminal court proceedings at Milan, italy as the same were in custody of cBi and not of Ministry of Defence. Does it mean that CBI and Ministry of Defence in Modi government were working at cross purposes or was someone in Modi government trying to protect Agusta Westland?