In a significant turn of events, the Indian government has allowed the Italian defense giant Leonardo, earlier known as the Finmeccanica to be back in business in the country.
The Aerospace and Defence firm Leonardo was banned by the Indian government in connection with the AgustaWestland chopper scam which cost the state exchequer a loss of approximately 500 million dollars or 3600 crore rupees in 2013.
Even as Leonardo is allowed to begin its financial dealing in India again, it will have to start afresh as a company with no previous transactions to be cited or claims and civil suits to be imposed on the Government of India.
The proceedings against it by the Central Bureau of Investigation and the Enforcement Directorate will proceed as usual with no amnesty by the government or by the investigating agencies.
Leonardo – The European Defense Giant
Leonardo S.p.A is one of the largest multinational companies in Europe specializing in Defence, Security, Aerospace and other equipment. Headquartered in the Italian capital Rome, It is partially owned by the Italian government which holds about 30.2% of its total shares and remains the largest stakeholder in the company.
Based on 2018 revenues, it is the 8th largest defense contractor in the world and recorded a turnover of about 15.5 billion USD last year. There are about 5 divisions or verticals within Leonardo S.p.A- Aircrafts, Helicopters, Aerostructures, Electronics and Cyber Security.
The company earlier spread across its various subsidiaries and sectors was integrated into one industrial complex and launched as a brand new unit working in the same old realm of Defence and Aerospace in 2016-17.
It has, to its credit, the manufacture of Europe’s most formidable fighter aircraft including Eurofighter Typhoons.
Carrying the legacy from Finemaccanica, it manufactures VIP helicopters under the name Agusta and heliports under the name Casa Agusta. It is also deeply engaged in the production of defense infrastructure across countries and communication and information equipment.
Thus, it’s a one-stop manufacturing industry with a very wide array of Defence and Security needs.
Ban On Finmeccanica aka Leonardo
The Indian government imposed a blanket ban on Finmeccanica, the predecessor of Leonardo in 2013-14 after the AgustaWestland VVIP chopper scam came to light in which the firm had paid bribes to Indian politicians, bureaucrats as well as servicemen to tweak the deal in its favor.
Even though the scam was committed only by the subsidiary AgustaWestland, the ban was imposed on the entire holding after the European agencies started to arrest the accused in the case.
The scam left the Indian Government with a red face since questions were raised about corruption within the government as well as the armed forces. It was also seen as a threat to National Security since the specifications of the helicopter meant for flying the President, the Prime Minister and other VVIPs were compromised making the choppers untenable.
Subsequently, it led to the arrest of the former Air Chief SP Tyagi in 2016 and other accused such as Gautam Khaitan and the three middlemen including Christian Michel who was extradited from UAE in 2018.
Leonardo Ban Finally Lifted
The lifting of the ban comes a few days after the Indian Prime Minister visited the Italian capital, Rome for the 16th G20 summit. In consonance with the Indian policy of rebalancing global ties in the backdrop of the pandemic, a bilateral virtual summit took place between the head of the two states last year.
Several agreements on Trade, Investment and Defence manufacturing under the ‘Make in India’ initiative were also signed. Reading these developments along with the transfer of G20 leadership to Italy slated for the end of this year, the lifting of the ban on Leonardo could be an attempt at boosting ties while also keeping the investigations uncompromised in order to claim the status of a respectful partner.
The lifting of the ban could also be seen as Indian benevolence coming months after the curtain was drawn on the nine-year-old Italian Marines case which kept the tensions high between the two countries for a decade.
India finally accepted the International Arbitral Award in favor of the Italian government that promised to proceed against the two marines accused of killing Indian fishermen off the Kerala coast.
A compromise was also reached where the marines were ordered to pay a 100 million USD or 10 crore rupee compensation to the kin of both dead fishermen.
Thus, Leonardo’s entry into the Indian market could be seen as a harbinger of better ties between the two states after a rocky decade marred with high tensions. It could also arm India with Modern Military equipment and diversify the bidders available to it in the face of numerous security challenges and an archaic inventory of Military hardware.
“The lifting of ban does not entail a major difference as far as Defence procurement of India is concerned. We’re most likely to buy from partners like USA or Russia via the FMS route and with 209 items on the negative import list, the options become very limited.
The “buy global” option in the DAP 2020 has now been pushed to the bottom to encourage Make in India. However, it could prove beneficial if a global tender is floated in the future or for the Indian government to build closer contacts with Italian counterparts,” a senior Indian Air Force personnel said on the condition of anonymity.
Political Uproar Over Leonardo’s Re-Entry
The main opposition party of India, the Indian National Congress has reacted sharply against the decision to lift the ban on Leonardo which was banned as Finmeccanica by its UPA government following the AgustaWestland scam.
The UPA-II government was forced to ban the entire firm after allegations of kickbacks received by Indian officeholders and middlemen as also tweaking of specifications of the 12 AW-101 VVIP choppers had come to light. The current ruling party had then accused the UPA government of widespread corruption and used the issue as an election plank.
The Congress has alleged that the ruling party is now trying to push the corruption issue under the carpet by welcoming the banned industry back in the country. It has also demanded that the Prime Minister answer what deal has been struck between his government and the chief of AgustaWestland.
The “friends of the media” spent thousands of hours of air time showing leaked documents by the center and building a “false narrative” against the UPA-Congress in the run-up to 2014 parliamentary elections.
“Will they now dare to question the Modi Government on the ‘secret deal’ with Augusta,” asked Randeep Surjewala, Congress Chief Spokesperson. “Agusta was corrupt earlier but now it’s been cleaned in the BJP laundry”, tweeted former Congress chief Rahul Gandhi in Hindi.