Helicopter maker plunged into series of bribery investigations into overseas contracts
By David Pallister | 18 September 2015
Hoon, managing director for AgustaWestland’s international business since 2011, will be responsible for helping the company to defend itself from a series of criminal investigations abroad.
Following 41 co-ordinated raids across Italy as part of an investigation into a contract to supply helicopters to Algeria, the company stressed that the deal was agreed under previous management. “The company, as a potential injured party, is at the complete disposal of the authorities,” it said in a statement.
AgustaWestland also faces corruption claims over deals with South Korea for AW159 Lynx Wildcats and with Sweden for AW139 search-and-rescue (SAR) helicopters. Hoon was in post when those contracts were agreed.
Hoon, who was caught out in a cash-for-lobbying sting in 2010, has been able to trade on the contacts that he built up as Britain’s defence secretary between 1999 and 2005. Hoon was secretly recorded by an undercover journalist who was posing as a lobbyist as he said that he was “really looking forward” to translating his “knowledge and contacts” into “something that, bluntly, makes money.”
He is pictured (right) in 2003 with Donald Rumsfeld, then America’s defence secretary, in Washington at the Pentagon.
Hoon did not respond to an e-mailed request for comment.
Exaro has revealed over more than two years how AgustaWestland has faced bruising – and still unresolved – bribery allegations over its deal with India in 2010.
The UK’s only helicopter manufacturer and its Italian parent company, Finmeccanica, were subject to investigations in Italy and India over the €560 million deal for the supply of 12 AW101 helicopters to the Indian Air Force, including eight for transporting VIPs.
The deal hit trouble in February 2013 when Italian police, as part of an investigation into alleged corruption in the contract, arrested two former AgustaWestland executives. They were Giuseppe Orsi, who was chief executive of AgustaWestland, then chief executive and chairman of Finmeccanica, and Bruno Spagnolini, who succeeded Orsi as AgustaWestland’s chief executive.
Exaro revealed last year that Hoon faced being called as a witness in their trial in Italy in the industrial city of Busto Arsizio, near Milan.
He duly appeared at the trial in Milan as a witness, and was questioned about procurement procedures in India.
He was also asked about why AgustaWestland bought back scrap W30 helicopters – the model known as the “Wobbly 30” – that India had bought in 1986 and then grounded because of mechanical problems. He was asked whether the company had paid excessively to help win the order for the AW101 helicopters.
Hoon denied the claim, saying said that AgustaWestland bought them back to prevent damage to the company’s reputation.
Orsi and Spagnolini were last year found not guilty of corruption, but were given suspended prison sentences of two years for false accounting.
Finmeccanica and AgustaWestland denied wrongdoing.
The parent company said in a statement last year: “Since 2003, Finmeccanica has implemented an organizational, management and audit model, sufficient to prevent unlawful conduct, whilst ensuring that attention is given to compliance processes in order to uphold the adequate standards of ethics and appropriate conduct.”
India cancelled the AW101 deal after the delivery of just three of the helicopters. And India has severely restricted AgustaWestland’s prospects of winning new business from the country’s armed forces.
Hoon wrote to India’s government to complain that the country’s Ministry of Defence was withholding payments due under the AW101 contract, as well as to say that it had no right to pull out of the contract.
The Indian authorities, meanwhile, continue their criminal investigations into the deal.
India’s Central Bureau of Investigation will later this month ask a court in New Delhi to issue an “open-ended, non-bailable” arrest warrant against a British businessman, named as Christian Michel, who is accused of acting as a middleman in the contract.
But since the verdict in Italy on Orsi and Spagnolini, AgustaWestland has been hit by more corruption investigations into overseas contracts.
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