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AgustaWestland story 1987: Rajiv Gandhi flip-flop

Why is the AgustaWestland helicopter purchase, way back in 1987, important now? An exclusive book extract…

Statesman News Service | New Delhi | Updated :

Book: The Untold Story of Christian Michel and AgustaWestland
Author: Raju Santhanam 
Publication: Roli Books
Price: Rs 350

Excerpts from Chapter two

Technically, it was a civilian purchase, so, it does not evoke headlines. It did not then when I wrote about it in the Statesman in 1987 and it is not talked about now. The reason for the media interest and the spate of headlines was the fact that it was Christian Michel’s father Wolfgang who was linked to the purchase. It was not just Wolfgang’s colourful past, but the fact that he reportedly made a lot of money from the deal was what had aroused that interest. Documented evidence quoted in the the Guardian, says, Entera Corporation, a company floated by Michel’s father earned 1.1 million pounds from it (equivalent to Rs.11,00,000).

The other connection is that Christian Michel has been linked to the scandal of the purchase of the AgustaWestland helicopters. But all the documents I have so far perused, which are available in the public domain, do not suggest any role of Michel Sr. (Wolfgang) in the AgustaWestland scam…..

(Excerpts continue)

The backdrop of the Westland deal is Mrs. Indira Gandhi’s assassination, who only a few months before her death, had cleared the deal. However, after her son, Rajiv Gandhi succeeded her, he publicly opposed the deal. It was a period of transition when old bureaucrats loyal to Mrs. Gandhi were getting used to the new power equations. It was also the time Rajiv Gandhi, in a famous speech, had attacked power brokers in the party. While the old guard was clearly in favour of the deal, the new guard seemed opposed to the same. (Coteries and the old guard have been dealt with Chapter 1.) What happened at that time and how all norms of procedures were thrown to the winds, have been dealt with in this chapter. There was no Integrity Pact then. The Bofors deal was also looming large. There was no requirement for agents to be registered. In any case, Westland was part of a civilian contract although files show that every senior bureaucrat, including the then defence secretary S.K. Bhatnagar, were involved in the negotiations.

“Sold a pup instead of a helicopter” was the headline (in The Statesman) on February 18, 1987.

Every Indian agency that examined the proposal to buy the helicopter turned it down. The most forthright objection to the proposal came from Mr. Rajiv Gandhi who categorically told Parliament that “though British aid would enable us to pay for it, the helicopter was unsuitable.”But surprisingly, guess who cleared it? The Rajiv Gandhi cabinet itself!

Less than a year later, he presided over a cabinet meeting that approved the proposal overruling vociferous opposition from the then Finance Minister, V.P. Singh. Today (February 18, 1987, when the story was published), nearly all the doubts voiced before the purchase are proving true. The Westland helicopters have malfunctioned more than once. And in spite of the handsome subsidies offered by the Centre, nobody wants to use it.

Wing Commander K.K. Saini, then the chairman of the Corporation, admitted to The Statesman that there were some problems with the Westland helicopters. He claimed they were teething problems relating to engine snags and hydraulic failure. He admitted that no modifications were carried out, “as promised by the then Civil Aviation Minister, Jagdish Tytler” and said, “only the technique for taking off was changed and the machine made to dip before take off.

This deal was cleared on March 14, 1986. The cabinet, which cleared it, was presided over by Mr. Rajiv Gandhi. All objections were overruled. Mr. Gandhi also overruled himself.

Mr. Gandhi’s clearance of the deal was strange given the fact that he himself told the Rajya Sabha on May 2, 1985 that:

The Westland is a losing proposition even with aid. And we have tried to ask them to give us aid for other purchases. But they (the British government) are not willing to change the aid. For example, we are buying Harriers from them. We wanted them to divert this into things like Harriers. They are not willing to do it. One thing we must bear in mind. Many times when aid is given, there is a motive behind it. Why can’t they give aid for things like the Harriers and why will they give aid for Westland?

There is an interesting difference between the 2010 AgustaWestland deal and the 1986 Westland contract. If one compares the file movements of the Westland deal in 1987 and the AgustaWestland deal signed in February 2010, there is an interesting takeaway. In the 2010 deal, the file movements suggest that there was a steady movement where everyone’s view of it was taken into account. The Westland chopper deal of 2010 was initiated by the BJP NDA government in 2003, and the file for buying VIP choppers with the new specifications was firmed only in 2006. It was signed in February 2010. It took seven long years. There were also new DPP norms that compelled companies to sign precontract
integrity clauses.

Follow up of the 1987 story – new facts emerge

Records from my own story first published in the Statesman in 1987, and confidential records of the National Archives from the British Prime Minister’s office (Source: the Thatcher Foundation and the National Archives), reveal a great amount of information about how Margaret Thatcher, desperate for a bailout for the ailing company, used every trick in the book to get the choppers sold to India.

Chronological sequence of events based on secret and restricted files from the British Archives (March 13, 1985)

Margaret Thatcher had a separate one-on-one meeting with Rajiv Gandhi. Mrs.Thatcher said that she was glad to hear that visits by her ministerial colleagues were going ahead.She understood however there were still problems over Westland helicopters.Mr.Gandhi said the “technical chaps” were giving problems.They preferred a French helicopter. The Westland one was too big and consumed more fuel though it was cheaper to operate per seat.The real trouble was that it did not quite meet the particular needs and was an untried model.But the matter was not settled yet.

April 18, 1985

The Prime Minister [Mrs. Thatcher], in an account of her short visit to New Delhi,said that it had become clear from her discussion with the Indian Prime Minister, Mr. Rajiv Gandhi, that he had virtually decided not to proceed with the Indian Government’s purchase of Westland WG30s helicopters.

May 2, 1985

In the Rajya Sabha, Mr. Gandhi continued to insist that the Westland contract was not worth it even if given for free.

The April 25th note (in the UK archives) also mentioned about the changes in the bureaucracy after Mr. Gandhi had taken over.

What does the internal British Cabinet Note that refers to “change in the bureaucracy” as a possible reason for not clearing Westland, actually mean? In effect, it refers to the changes after the two regime changes without actually spelling it out. There was a coterie supporting Mrs. Gandhi that consisted of Lord Swraj Paul, Yashpal Kapoor and R.K. Dhawan. It was replaced by Arun Nehru and Arun Singh after Rajiv Gandhi took over. How could the deal go through without passing through this edifice? Since nothing material had changed in the trials and no modifications had been made to the Westland helicopters, the only change that had happened was that the new coterie had taken over.

May 16, 1985

As per confidential UK documents accessed by me, at this stage there was an offer of help from a prominent Indian. His name, incidentally, has been removed from the documents. An internal Cabinet Note quoting the Secretary of State for Wales said the following:

He had seen the name of …[name blanked out], a leading Indian industrialist with interest in Wales. [Name blanked out] had spoken of the effect on Anglo-Indian relations of the unhappy story concerning the sale of Westland helicopters to India. He would be in contact with colleagues, with a view to giving [name blanked out] a full account of the story.A prominent industrialist who claimed to be close to the Gandhi family had an interest in Wales.

Obviously, something happened between May and July, as the cabinet note reveals. The change was palpable. The Westland officials got an audience with the Defence Secretary. There was clearly an air of optimism. Who organized the meeting when it was clear, at least on record, that the Prime Minister was against a contract with Westland? Had he sent word out that Westland had to be cleared?

July 1985

The first signs that the Rajiv Gandhi government was actually reversing Mr. Gandhi’s stated position is described in a “restricted” telegram sent by the British High Commission to Whitehall. This was two months after the meeting with the Overseas Minister. The note says that Sir John Treacher (Deputy Managing Director of Westland) met Defence Secretary Bhatnagar (S.K. Bhatnagar) and the meeting was positive. Bhatnagar asked him to meet the GOI finance people on July 16. Bhatnagar further told Treacher that the demand was for 27 and not 21. (Suddenly, Indians wanted to buy more choppers!). The British official was surprised and had to explain that the aid was only for 21 choppers.

The High Commission in the restricted telegram pointed out that “three different sources had told them that the Indian deal would go through in due course.” The request to get flight trials was “probably to get the Prime Minister off the hook for his statement in the Rajya Sabha… Everything is fairly satisfactory but the Indians will probably produce more hurdles before we reach the stage of discussing the contract again.”

October 1985

This note is subsequent to Rajiv Gandhi’s visit for CHOGM in Britain, where he met Mrs. Thatcher and others.

The note marked “Secret” from the cabinet office says,
Mr. Brittan (Trade and Industry secretary) and Mr . Heseltine (Defence Secretary) have met. There was a general agreement that an order for 21 WG-30s was likely,on the basis of discussion during Mr. Gandhi’s visit.

November 1985

During an informal conversation at the British High Commission on November 6, says a confidential telegram from the British envoy, Mr. S.S. Sidhu, Secretary, Civil Aviation, points out that the WG-30s would have to go through “final trials” before being considered by the Public Investment Board and the Cabinet Committee for Political Affairs. What the cable says further is significant considering that Mr. Gandhi had put a question mark on safety of the WG30s. The cable quoting Sidhu says, “The trials would take only one week and were politically necessary.” Obviously, the trials were more political than technical!

December 1985

The British cabinet officials were anxious; an excerpt from a confidential note has this to say: “The immediate problem is what to say to Mr. Gandhi? There is no chance of a reconstruction package before he comes. You will therefore be in a difficult position if he seeks assurances about the Company’s viability as a pre-condition for taking 21 helicopters. If you are noncommittal, he may finally be justified in withdrawing from the sale.” The note also wondered about the “possible line” to be taken with Mr. Gandhi when he came in October.

Luckily for the UK and unfortunately for India, Mr. Gandhi did not appear to be bothered about financial viability. From October onwards, after the Rajiv-Thatcher meeting in 1985, the indications were that the contract was on.

Mrs. Thatcher was facing the Heseltine onslaught and was under fire in Parliament over her handling of the affair; auditors of Westland wanted to know whether they should assume that the Indian deal would go through so that they could put it in the books. They were also worried about possible media criticism and wondering whether any inconvenient questions would be asked.

Clearly, Rajiv Gandhi was doing Margaret Thatcher a favour. When Chinmaya Gharekhan (Secretary to Prime Minister Rajiv Gandhi) informed the British Prime Minister’s office that the deal was done, a significant line was also added – this was being done “for her sake!” This is what the cable dated March 6, 1986 to the Foreign Office had to say:

Minister was asked to call at short notice by Prime Minister’s private secretary. Gharekhan said the Prime Minister had personally instructed him to inform us that the Government of India had this morning cleared the Westland contract. The Prime Minister asked that this information be conveyed to the Prime Minister, Mrs Margaret Thatcher. He wished her to know that this was done “for her sake”.