AgustaWestland: Italian prosecutors name British ‘middleman’ in UK-India defence deal
By David Pallister | 11 June 2013
The taped conversations, coupled with whistleblower testimony to Italian prosecutors, shed light on the role of a British businessman, Christian Michel, as a middleman in the allegedly corrupt contract in which the Indian Air Force bought 12 AW101 helicopters from AgustaWestland in 2010 for €556 million.
Exaro has also established that Michel has had a long-standing relationship with AgustaWestland, and has played an active role in the defence industry in India for nearly 20 years.
Last month, Exaro revealed how the UK government was failing to help India investigate alleged bribery in the contract – despite promises by the prime minister, David Cameron.
Bribes from a €51 million slush fund allegedly went to the former head of the Indian Air Force, SP Tyagi.
He denies it, saying that he retired three years before the deal was agreed.
Money from the slush fund is also alleged to have gone to politicians in the Northern League, which was then part of Silvio Berlusconi’s coalition government.
AgustaWestland, the Farnborough-based subsidiary of Finmeccanica, the Italian defence contractor, became embroiled in the bribery claims after Lorenzo Borgogni, a former external affairs spokesman for the parent company, turned whistleblower.
An examining magistrate interviewed Borgogni in Naples in 2011, and the transcript was filed in February together with the arrest warrant for Giuseppe Orsi, Finmeccanica’s former chief executive and chairman, and Bruno Spagnolini, who was AgustaWestland’s chief executive.
Their arrest warrant names Michel as a co-conspirator who received “€30 million, partly destined to support the corrupt activity meant to win the order and partly to implement the contract.”
Borgogni told the examining magistrate that the use of intermediaries was illegal in India. But he said that there were intermediaries in the AgustaWestland deal, and specifically named Michel.
Following Borgogni’s testimony, Italian police launched a surveillance operation, which formed the basis of a 568-page preliminary report filed to the Naples court.
The report says that the Anglo-Italian company’s auditors, PricewaterhouseCoopers (PwC), “noticed irregularities in AgustaWestland’s contracts, and wanted an in-depth investigation to be carried out by external experts.” The auditors were especially concerned about “collateral contracts” with Michel.
In one taped conversation, AgustaWestland’s chief financial officer, Sergio Biganzoli, is horrified at the prospect, telling Spagnolini: “If you re-open the balance sheets, that means admitting that we are guilty.”
But AgustaWestland’s chairman, Graham Cole, followed PwC’s request, calling in Eoin O’Shea, a leading anti-corruption barrister and solicitor, and partner in the City law firm of Lawrence Graham. But O’Shea was unexpectedly removed from the job.
The Italian report said: “It is obvious that lawyer O’Shea, in his report, most likely took a stand that differed from the one that the management hoped for, and he was replaced.”
The replacement was Michael Nathanson, an Italian specialist at Thrings, a London-based law firm.
In a taped conversation, Biganzoli says of Nathanson: “If this one starts doing what the first did, we’re in trouble.”
Both lawyers told Exaro that they were unable to comment because of legal professional privilege. There is no suggestion of wrongdoing by either.
Dubai-based Michel has declined to comment.
The bugged conversations show that Biganzoli was anxious that the lawyers did not discover that AgustaWestland’s internal audit head, Giorgio Casana, had decided against traveling to Dubai to investigate Michel’s role in the contract.
Casana explained his concerns to Cole the day before the chairman was due to meet Nathanson.
Biganzoli is agitated. He is taped telling another executive: “So, the thing is, I tell you just one thing. Graham [Cole] cannot know what’s happening otherwise it’s a mess.”
“So, listen, he is pissed [off] because he found out yesterday that Casana is not going to Dubai any more, and Casana told him in front of the internal lawyer that he’s not going because, had he found out something, he then has to tell the Italian magistrate.”
Casana did not respond to questions from Exaro by the time of publication.
AgustaWestland and Finmeccanica deny any wrongdoing. An AgustaWestland spokesman said that the company is co-operating with the investigations. He said of Michel: “He was not engaged for the purposes of this contract.”