The Italian investigation into the activities of military hardware manufacturer Finmecannica is a vast operation that scrutinises the company’s dealings over several years in different countries, of which the Indian chapter is only a part.
The investigation initially started in Naples when magistrates looking for connections between the mafia, large Italian companies and the Italian government, recorded the conversations of Lorenzo Borgogni, who at the time was responsible for “Institutional Relations” (read contacts with government officials and politicians) for Finmeccanica.
Emiliano Fittipaldi, an investigative journalist in the Italian newsmagazine l’Espresso, which was one of the first ones to break the story, told The Hindu: “It was not surprising that the Naples investigators were digging into Lorenzo Borgogni.
As the person who dealt with “institutional relations,” he was a man who knew many secrets. Mr. Borgogni was arrested and decided to become what in Italian is known as a “pentito” – someone who repents and cooperates with the investigation in order to get a lesser sentence. He decided to tell all on the secret deals with India over the sale of 12 Westland helicopters. The Finmeccanica story has been going on for over a year and the press has revealed many details of the extent of the corruption. It was not just India but other countries as well.”
Because the Finmeccanica headquarters is located just outside Milan, the case was moved from Naples to the court of Busto Arsizio on the outskirts of the city for purely territorial reasons.
The 64-page indictment includes a transcript of a conversation between Lorenzo Borgogni and the Naples prosecutors.
In that conversation Mr. Borgogni clearly tells the examining magistrate that Giuseppe Orsi, CEO of Finmecannica, had paid two intermediaries to obtain the contract for AgustaWestland helicopters in India, something which is clearly illegal.
Borgogni: “I do not know if you are aware that in India you cannot use intermediaries.” (in bold letters in transcript).
Magistrate: “In India?”
Borgogni: In India.
Borgogni: A supply contract.
Magistrate : A contract to supply helicopters?
Magistrate: How many did you buy?
Borgogni: We won the race… he he he.
Magistrate: So it was India that was buying, in short.
Borgogni: India bought 12 helicopters.
Magistrate: According to Indian legislation there cannot be …
Borgogni: And Augusta has signed.
Magistrate: So there were intermediaries.
Borgogni: Two contracts, one with a certain Christian Michel and another with a certain Haschke, Guido Haschke.
Magistrate: Are these actual persons? These contracts are with companies or with physical persons?
And a little later Mr. Borgogni adds – Christian Michel is a personal friend of Orsi.
Page 2 of the by now famous charge sheet indicting Mr. Orsi and three others of bribing the family of the former Air Chief Marshal, S.P. Tyagi clearly, states that “the sum of 100,000 euros was given in cash to the “Tyagi brothers” (JulieTyagi, Docsa Tyagi and Sandeep Tyagi) in order to obtain the contract for 12 AgustaWestland helicopters.
“Orsi and Spagnolini initially corresponded with Haschke and Gerosa through a consultancy contract signed between AgustaWestland and Gordian Services (a company belonging to Haschke) for the sum of 400,000 euros, of which 100,000 was paid in cash to the Tyagi brothers. Then followed an engineering contract between IDS India and IDS Tunisia to furnish a cover for payments of sums of money to remunerate Indian public officials as well as the intermediaries Haschke and GEROSA.”
The charge sheet compiled by the prosecutor’s office in Busto Arsizio, a massive 64-page document that contains transcripts of conversations, details of allegedly “fictitious” bills submitted in order to inflate prices and siphon off bribes, etc., bears the number 38/13 and is dated 11, February 2013. In the indictment, Judge Luca Labianca orders the preventive detention (custodia cautelare in carcere) and the house arrest (arrresti domiciliary) of the following persons: Guiseppe Orsi, the Bruno Spagnioloni, (placed under house arrest), Guido Ralph Haschke and Carlo Gerosa.
The charge sheet also gives details of “fictitious” bills emitted by IDS India from 2007 to 2011 for a total of 21,425,647.00 Euros. For instance in 2008, the list of bills and their reference numbers mention the sums of 900,000 Euros (6.11.2008), listed as “advance payment according to article 7.3 of the “agreement”, 170,000 Euros (12.2008) as “first monthly payment according to article 2 of the “agreement” and 255,000 Euros (31.12.2008) listed as “second monthly payment according to article 2 of the “agreement”. The payments continue according to “the agreement” until 2011.
When questioned on television on the arrest of Mr. Orsi and his accomplices, the former Italian Prime Minister, Silvio Berlusconi, who is hoping to win another election later this month, said “bribes are an essential part of doing business internationally.”
In an interview with the state-owned TV channel RAI 3, Mr. Berlusconi said giving bribes in order to secure international contracts could not be “considered a criminal act.” Mr. Berlusconi, whose aversion to Italy’s magistrates who have been exceedingly tough on the mafia and have relentlessly investigated Mr. Berlusconi’s own financial misdeeds is well known, said magistrates were forcing Italian companies to “commit economic suicide.”
He said: “The danger of magistrates intervening in the Finmeccanica case is going to weaken the prospects of other Italian businesses.” Mr. Berlusconi described the arrests as “pure masochism.”