Indian agency files criminal case against air force ex-chief over bribes in helicopter deal

NEW DELHI – India’s top investigative agency filed a criminal case on Wednesday against a former air force chief and 11 other people on charges of cheating and conspiracy in a $750 million helicopter deal marred by bribery.

The Central Bureau of Investigation filed the charges under India’s corruption prevention laws against Shashi Tyagi, three of his cousins and officials of four defence companies after an investigation revealed that huge bribes were paid to steer the contract to Italian defence group Finmeccanica’s helicopter division, AgustaWestland.

The CBI is India’s equivalent of the FBI.

The agency searched the homes and offices of Tyagi and his cousins, who it suspects were among those who received bribes to clinch the purchase of 12 helicopters two years ago. The helicopters were to be used by the air force to ferry top political leaders.

India’s defence ministry received three of the helicopters in December but has placed the rest of the contract on hold.

Among the 12 people involved in the case is Satish Bagrodia, the brother of former federal minister Santosh Bagrodia, who belongs to India’s ruling Congress party.

The CBI said it filed the criminal charges based on evidence it had gathered from the men and from documents it obtained from Italy and India’s defence ministry that indicated that alterations were made in the helicopter specifications to favour AgustaWestland.

The inquiry into the helicopter contract began last month after Italian authorities arrested Giuseppe Orsi, the CEO of Finmeccanica, in Italy on charges that the company paid bribes in India. Orsi, who has been jailed, denies wrongdoing.

Italian authorities also placed AgustaWestland chief Bruno Spagnolini under house arrest.

Tyagi has also denied any wrongdoing in the case and said decisions on the helicopter deal were made before he assumed the top job in the air force. Tyagi was India’s air force chief from 2004 to 2007.

The agency said Finmeccanica paid a commission to three middlemen who channeled the illegal payments through Tunisia and Mauritius to two India-based companies as payments for an engineering contract. Those companies and two Indian men associated with them were among those named as accessories in the case.

India has become the world’s biggest arms and defence equipment buyer in recent years and is expected to spend $80 billion over the next 10 years to upgrade its military.

However, arms deals in India have often been mired in controversy, with allegations that companies have paid millions of dollars in kickbacks to Indian officials.

In the 1980s, then-Prime Minister Rajiv Gandhi’s government collapsed over charges that Swedish gun manufacturer Bofors AB paid bribes to supply Howitzer field guns to the Indian army.

Following the Bofors scandal, India banned middlemen in all defence deals.

The developments in the Finmeccanica case come at a time when New Delhi and Rome are entangled in a diplomatic row after Italy’s refusal this week to return two Italian marines facing trial in India for the killing of two fishermen off the southwest Indian coast last year.

The case is also a major embarrassment for Prime Minister Manmohan Singh’s government, which has been buffeted over the past year by a string of corruption scandals ahead of national elections scheduled in the first half of next year.