Head of the business group, which had signed MoU with Agusta to provide offset services, did not make it public. But the MoU was shared, allegedly, with then Defence Minister A.K. Antony.
New Delhi: AgustaWestland’s key middleman, Christian Michel’s interrogation by the Enforcement Directorate has thrown light on a “secret” offset angle in the helicopter deal, involving a major Indian industrial house. This is going to force Congress on the back foot at a time it has been accusing the Narendra Modi government of “cronyism and corruption” in the Rafale offset deal involving Anil Ambani. The Sunday Guardian has accessed documents relating to Christian Michel’s interrogation by the Enforcement Directorate. During the interrogation he was confronted with his dispatches sent to AgustaWestland officials between 2007 and 2009. The dispatches were sent while he was staying in Delhi to lobby for the deal on behalf of the company.
Michel’s dispatches and his own admissions have placed Congress stalwarts in an awkward position. In the dispatches Michel had referred to top Congress leaders including former President Pranab Mukherjee, former Prime Minister Manmohan Singh, Ahmed Patel, M. Veerappa Moily, Oscar Fernandes and even bureaucrats like M.K. Narayanan and Vinay Singh. In the dispatches these persons have been referred to as key influential advisers in the UPA government.
A dispatch dated 9 January 2007 says that the AgustaWestland helicopter’s operational performance advantages over its rivals will not be sufficient to win the contract and it will be necessary to enhance the offer with an attractive offset proposal and by using good political influence. It is in this context that the ED is probing suspected money laundering and transfer of proceeds of crime in the form of money kickbacks to politicians and bureaucrats.
According to sources, when Michel was questioned about the offset angle to the AgustaWestland deal, he revealed that one of India’s biggest business houses had signed an offset deal with the company. He said that the head of the business house had signed a Memorandum of Understanding with AgustaWestland to provide offset services, just like Anil Ambani did for the Rafale deal. However, the head of the business group did not make the offset agreement public. The MoU was allegedly shared with then Defence Minister A.K. Antony.
Significantly, as per Michel, when the head of the business group was summoned for probe by the Italian authorities, he, for reasons not known, did not reveal to them that he had signed the MoU with AgustaWestland.
According to the ED probe, one “Mr Gupta”, the principal secretary of the head of the business house booked a room for one Gianni Maggioli on 16 February 2010. When Michel was asked to comment on this he said it could have been the first serious meeting in terms of taking action on the offset plan.
In a dispatch dated 29 July 2009, Michel said that the Home Ministry, Finance Ministry, Defence Ministry, PM and “party leader” had no objection to the deal procurement paper. However the then Finance Minister Pranab Mukherjee was not satisfied. His office was asking why government could not go for a cheaper option. He asked his office to hold the file.
The dispatch says that Mukherjee felt he had been ignored in the decision making process and was being harassed into signing the deal. The dispatch said that he was an old friend and perhaps he was not treated with enough respect; the “party leader” would speak to him and would calm him down.
The dispatches also suggested that there was a difference of opinion within the UPA government regarding the AgustaWestland deal, however it sailed through, only to be scrapped after the uproar following blowing of the lid of corruption scandal in Italy.
The secret communications also suggest that Michel and his associates made several high-level efforts to influence top UPA leaders, bureaucrats, and officers of the Research & Analysis Wing and Special Protection Group. But there is no evidence on record to suggest that the persons referred to in the dispatches were actually influenced by Michel and his associates in any way.
However, the timing of the filing of yet another charge sheet in the AgustaWestland matter has given enough ammunition to BJP to take on Congress leaders for alleged corruption. Smriti Irani launched an attack on Rahul Gandhi in Amethi, since there are references to an Italian lady’s son in the dispatches.
Enforcement Directorate documents accessed by this newspaper show that Michel has very cleverly stated that the references he had made to Indian politicians have been blown out of context.
In his clarification to ED, Michel diverted the attention towards a former UK Prime Minister and former UK Defence Minister for reportedly influencing the deal. He stated they were duty bound to lobby for the company.
To arrive to any conclusion, ED must first crack the money trail. The agency is working on it and has also confronted Michel with some new names including that of Sandeep Kalhan and Anil Kumar Arora.
The fact that a number of shell companies were set up to route the kickbacks for the deal has now been established. But the key to whether the kickbacks were routed to top politicians or bureaucrats lies with Michel. He is a UK citizen and has been extradited from UAE.
When asked about the suspicious remittances from his doubtful bank accounts in UAE, he remains evasive and says he has asked his lawyers to furnish bank account details. However, they believe he is under duress of the investigating agencies and therefore they are not forthcoming with the required information.
SOME DISPATCHES
* 9TH JANUARY 2007
The EH101’s size and operational performance over the S92 will not be sufficient to win the contract and it will be necessary to enhance the offer with an attractive offset proposal and good political influence.
The prospects for EH101 in India are dependent upon establishment of the right political and strategic connections.
MICHEL’S REPLY TO ENFORCEMENT DIRECTORATE:
The dispatches have been taken out of context and I do not accept that I have been in touch with political persons. I shall go through each dispatch and put it in the correct context or explain its origin.
Document dated 09.01.2007 is not my document.
* 15th MARCH 2008
As Mrs. Gandhi is the driving force behind the VIP, she will not fly any more in the Mi-8. Mrs Gandhi and her closest advisers are the people the High Commissioner should target.
Our necessary political initiative will soon be in place along with the meeting. This will help to push the cabinet decision
MICHEL:
The dispatch names well known political figures that members of the general public would know. The dispatches clearly ask Peter Hulet to push the High Commission to support our bid. It states Mrs Gandhi and her closest advisers are the people the High Commission should target, then names them. Contrary to the question statement that my claim of using the High Commission is not based on any evidence except my claim is clearly not true. Here is a note engaging their active support.
* 22nd MAY 2008
Our necessary political initiative will soon be in place along with the meeting. This will help to push the cabinet decision.
MICHEL:
I think this is referring to a phone call that was being prepared between the UK & India Prime Ministers. Along with an expected visit from one of the trade bodies.
* 26th JUNE 2008
For the past 10 days, we have been working on political support. We have had now 5 sets meeting over the past 10 days at the appropriate level. Our time to negotiate is way too short and this weakens our position. This has been our weakness all along. The result is that we are having to compromise good deal making for timely deal making. If we succeed we then will have to handle all sorts of problems we have picked up on the way (discuss).
MICHEL:
This refers to our team at work. It is quite clear that the British High Commissioner was mandated to support British industry as does the attache. However I think this refers to Jef Hoon Ex UK Defence Minister who made many trips to India on AW behalf as his expense claims to AW will demonstrate.
* 18th DECEMBER 2008
I have discussed this with the political people who will receive the CNC recommendation after our meeting on Friday. The minister states if we refuse to drop escalation he will not allow the CNC to simply write to AW rejecting AW and calling a new tender. The minister will call a meeting on the 6th of January to review the position.
With the minister becoming involved now, the GOI can take a political decision and we could have a fighting chance. However, this deal will not be signed in the lifetime of this Government. Political interference will take at least one month which we don’t have.
MICHEL:
I do not remember in the negotiating team or our military attache received the message, but the message is clear. We had to drop escalation which was a huge loss or we would be out. This is not the kind of message a powerful company would receive. It flies in the face of the claim of political contacts.
* 29th JULY 2009
The procurement paper has been sent to all 5 cabinet members—home ministry, finance ministry, foreign ministry, defence ministry, PM and the party leader. None of them have had any problems but for finance minister Pranab Mukherjee. For the last month his ministry has been sending back silly questions. On Thursday last week his office asked why we could not find a cheaper option. The question was a message to us of dissatisfaction by the finance minister.
We have sent a mutual friend to see the FM. The FM explained that he felt that he has been ignored in this decision making process and is being harassed into signing. He is an old friend and may be we did not treat him with enough respect. The party leader will speak to him and we expect, to calm him down. He has not yet caused any delay.
MICHEL:
We asked Jef Hoon if he could help with the Finance Minister as they were both ex defence ministers. It seemed like an appropriate request, which he said he would try, we also asked if he could in some way smooth things.
* 10th AUGUST 2009
We have had to initiate very high level intervention to achieve this. This can cause a few days delay if the minister is not available at the beginning of this week. This we cannot control. Fortunately we briefed the finance minister last week and now we need his help.
MICHEL:
This is the work of Jef Hoon and the High Commissioner through official channels.
* 12th AUGUST 2009
The article that came out in a newspaper today is the next obvious step to try and stop the deal. We have been in touch with the reporter who is planning a second article this week which if we cannot stop at least we will influence it.
When the move against us started last week, it was decided to immediately involve the minister. The minister instructed the CNC committee to write for him a comprehensive reply to all the questions raised by the finance ministry. This note the defence minister will take to the finance minister personally to solve the problem. The new defence secretary is coordinating this action.
The CNC finished the note today and have passed it to the defence secretary. Joint secretary Ghosh is very confident about his justifications, he and we stuck to the DPP rigidly.
Other actions
The National Security Adviser to the PM has received a briefing from RAW about the threat environment
On top of this all our contacts are working at the problem. Even the Special Protection Group has written to the Cabinet Secretary and NSA
This problem will be sorted out. We think on such a high profile deal there was bound to be one last attack. The problem is this will cost us this week.
It may be a good idea if Peter writes to J.S. Ghosh stating that he is aware that there are some issues not problems, but that he is very worried by the delay and the risk of escalation (not threatening, just warning).
What has happened is that the Russians have suddenly woken up to the fact that they have no VIP aircraft flying in India and are about to lose their fleet of helicopters and all the political clout that goes with it. They consider this is a must stop deal. Our solutions are on track. Two ministers will meet this week, which will free the file to go for CCS next week. Nothing in this article should have been a surprise to AW. The deal is highly politically charged due to the influence it will give to the winner.
MICHEL:
The joint secretary having stuck rigidly to the DPP was well known to all the negotiating team as it was cont being checked and referred to.
At this stage all stakeholders were becoming involved due to urgency. That environment of the mi-8 and AW problems with escalation and further delay. All of this was articulated by military attache and negotiating team led by Alaster Gibson. That fact that the deal is highly political is demonstrated by Hillary Clinton coming to India and taking about the deal.
* 28th AUGUST 2009
The intelligence service has written about the threat environment. We have met with finance with the Boss. We have apologised for not keeping him informed and we have pressurised the PM through his party elite.
MICHEL:
This was a request we put in to Jef Hoon who we call the Boss in dispatches and the High Commissioner to where ever possible lobby those they can reach.
* 1st OCTOBER 2009
Meeting at the beginning of this week with regards to the Italian lady’s son. The gentleman I met knew our activity and felt we were well placed. I explained that this was well known, but that we could not wait any longer.
The gentleman confirmed that the son will be the next Prime Minister and his power in the party is growing day by day. Hence, the finance minister’s extreme anxiety at the son’s phenomenal rise.
The son will be asked this weekend to raise this matter with his mother as the mother is certainly not aware of all the facts.
My friend will report back to us next week and may be willing to come and visit us if the news is significant. We feel this is a low-risk, but sensible initiate. These people fully understand the issue and will not cause our project any harm. If there is a need for a meeting, would you be available to meet at the end of next week in Milan or London?
MICHEL:
This note is not mine. I had no meetings there were no such follow on meetings. There was no follow on meeting in Milan or London. That has been mentioned anywhere. If this note was a dispatch why has it not been found in Hashke’s bag or anywhere else for that matter. It is not mine.