Finmeccanica is Italy’s largest, partially state-owned engineering conglomerate, turning over €19 billion (Rs. 15,34,82,87,97,000) a year. Its culture of corruption is reportedly well known; only a few of its executives have managed to avoid being tainted.
With the economic downturn of 2008, the Italian economy nose-dived into a severe recession. Italy’s economy was one of the economies that was threatening to bring down the European community. One of the reasons cited by the European Parliament for Italy’s severe conditions was a populist government and corruption.
The European Parliament and the Central Bank not only imposed austerity on Italy but also imposed a non-elected technocrat government in the form of the Mario Monti government as part of the condition to avoid the economic meltdown of Italy. Monti’s mandate was fiscal discipline and a relentless bid to stamp out corruption.
This spelled trouble for the Finmeccanica oligarchy. They had been running Finmeccanica as their own private fiefdom for decades and as Haschke had explained to Michel already in 2009, Guarguaglini may in time have to step down due to all the investigations against him and his wife, but that would not present a problem as Zampini would take over as Guarguaglini’s anointed successor to keep the status quo.
Besides, Guarguaglini had many other lieutenants he could choose from. At the time, Michel had not understood the relevance of this conversation or the implied threat. Monti did exactly as he was supposed to do. He set about orchestrating the removal of Guarguaglini and preventing him from simply appointing one of his henchmen to maintain the fiefdom. According to Zampini’s statement to the prosecutor, Guarguaglini was completely shocked when in April 2011, Orsi
was appointed as joint CEO with Guarguaglini and not merely Zampini as Guarguaglini had been proposing.
Monti was fully aware that appointing Orsi as joint CEO, knowing that Orsi would immediately commence cleaning up Finmeccanica, would not last long. Friction would develop between the two men and the opportunity to remove Guarguaglini would arise. Guarguaglini fully realized
that his time in Finmeccanica was limited as Orsi set about investigating all Guarguaglini’s loyalists, starting with Borgogni and including Guarguaglini’s wife.
The Finmeccanica oligarchy knew something had to be done as the investigation could bring them all down. A conspiracy was hatched soon after by them to remove Orsi. The plan was very simple; one of their members, Borgogni, was in deep trouble and facing investigation by a high-profile Naples prosecutor who had a reputation for investigating political corruption. It was agreed that Borgogni should negotiate with the prosecutor by agreeing to a plea bargain whereby he would give evidence involving kickbacks to Italian political parties arranged by the now CEO of Finmeccanica.
Because of Borgogni’s credibility as a man handling political relations on behalf of Finmeccanica, he would be a very credible informant and they felt the revelation of names of political parties would be irresistible to the prosecutor.
If an investigation was commenced by the prosecutor involving Finmeccanica, its CEO and Italian political parties, the investigation would then be leaked to the press and Orsi, as he was brought in on a non-corruption ticket, would have to resign. Either Zampini or Pansa would take over, thus restoring the status quo.
As Orsi was heavily supported by a North Italian political party, they were chosen to be the recipients of political kickbacks along with the CL (Comunione e Liberazione) – an Italian Catholic movement aimed at presenting the Christian event in tune with contemporary culture.
The deal chosen to be the scapegoat for supplying the corrupt funds was obviously going to be Orsi’s last major success when he was chairman of AgustaWestland, namely, the
VVIP deal to India – the general assumption being that India is a third world corrupt country, and hence bribes must have been paid.
The conduit for paying the political funds was decided to be Michel. The reason for choosing Michel for this role was obvious. He was historically involved with Westland for 30 years in India, and was known to be a close supporter of Orsi, besides having refused to participate in their ventures of the oligarchy. Haschke’s name was mentioned purely to give credibility to Borgogni’s very weak claims.
It was believed that the Indian press was highly aggressive and that the Indian government, and in particular, the then defence minister (A.K. Antony), was likely to overreact. The
only chink in this argument was that Borgogni had no evidence whatsoever to support what he was saying. Nevertheless, the oligarchy, after months of plotting, decided in November to go
ahead with the plan. On November 15, 2011, Borgogni went to a Milan prosecutor in his attempt to make this deal. The weakness of his story was clear from his question and answer session
with the prosecutor, wherein he stated he only heard rumours he had not investigated. He believed the amount to be such andsuch, and named Michel as having been the one responsible for donating the €10 million (Rs. 80,78,04,630) to the political parties in return for Orsi’s appointment of Finmeccanica.
Post the denunciation, the plan was for Guarguaglini to call a Finmeccanica board meeting in which he would insist on a regularization of his position, enabling Guarguaglini to
take back control of Finmeccanica and, maybe further down the road, replace Orsi with Zampini or Pansa.
Guarguaglini felt sure that his threat of resignation would not be accepted as Orsi was now under investigation for bribing Italian parties to gain his position, thus weakening Orsi’s position with the board.
This was supposed to be a quiet small Italian affair involving a small internal investigation in Italy. The plan was – Orsi resigns whilst working to clear his name, Guarguaglini continues as chairman working to close all investigations against him.
Haschke, obviously concerned that he would be dragged into the prosecutor’s office in Naples, was assured that once Orsi resigned and the oligarchy regained control, the Naples prosecutor would drop the case and the status quo would be restored. This was confirmed by Haschke in a phone tap exhibited in the criminal court of Busto Arsizio, page 133, where Haschke expressed his concern about the Naples prosecutor, Woodcock, calling him a “dickhead” stating that he had been asked by Zampini to help “rock Orsi’s chair” and in this phone tap Haschke stated to Gerosa, his partner, “you understand that once Orsi is out, these here in Naples will also calm down, won’t they?”
Gerosa’s response was, “why, have they got it in for Orsi?”
Haschke’s rejoinder was a confident, “of course.”
Of course, as we no know, it all went wrong.
Guarguaglini called the board meeting for December 1, 2011. He laid down his ultimatum to the board, demanding their acceptance or he would resign. The board was not at all concerned by Borgogni’s denouncement of Orsi as he had given no evidence whatsoever. Therefore, the board accepted Guarguaglini’s resignation and Guarguaglini was out.
Orsi refused to resign and decided to fight it out in court. Orsi’s immediate action was to intensify all investigations and commence a cleanup of Finmeccanica, unfettered by
Guarguaglini or any members of the oligarchy who felt they had some control over Naples, having done huge business there, and allegedly paying a great deal of money to influential
people in that city. Unfortunately for them, Orsi requested that the investigation be run from Milan and the court accepted this request taking the investigation out of what was to be a safer
city.
The Milan prosecutor proved to be extremely aggressive and started investigating not just Orsi and his team, but also members of the Finmeccanica oligarchy. The powerful anti-Orsi lobby in Finmeccanica had organized the media in India to leak a huge amount of unsubstantiated accusations against Michel with the intention and expectation that he would split from assisting the company in any investigation and disappear and hide. But Michel proved to be more than cooperative. “I knew exactly what was going on. With nothing to hide, I fully participated in all requests for audits.”
Realizing that they had completely lost control of the situation now, “The oligarchs,” said Michel, “decided to bring in their plan – total war!”
All through 2012, Orsi was preoccupied with defending himself against the denunciation by Borgogni. In the meantime, the oligarchy were doing everything in their power to undermine his endeavours with the intention of having him removed and replaced by someone they could consider as one of their own and more pliable. This meant they had given up the notion of controlling the amount of damage their actions would cause to Finmeccanica and Italy’s reputation. Their only interest was to stop Orsi’s investigations in relation to them
and save themselves.
To this end they played the “India card.” Early in 2012, articles started coming out in Italy and India, quoting confidential court documents, citing unsubstantiated allegations against Orsi and AgustaWestland. These leaks were being managed by the oligarchy with the intention
of destabilizing the company and Orsi’s defence. They had correctly judged the reaction to these articles in that the AgustaWestland accounts of 2011 had a note under contingent
liabilities and other commitments due to the auditors’ concerns over negative press. The new auditors of AgustaWestland and Finmeccanica, KPMG, required full clearance of the internal
investigations prior to finalization of the 2012 AgustaWestland
group accounts.
Not being able to sign off the accounts for Italy’s largest public quoted companies was a seriously damaging matter for Orsi and for the company. To counter this, the chairman of AgustaWestland UK, Graham Cole, in a letter dated September 12, 2012, asked Michel if he would submit his companies and himself to a forensic audit. With certain confidentiality agreements in place, Michel accepted, knowing that none of the allegations against him were true and that this appeared to be an opportunity to demonstrate his innocence.
After external auditors and the external law firm’s thorough investigation, their lead lawyer, in a report dated October 30, 2012 stated:
“Nothing that I have seen in the report leads me to conclude that any funds paid out of the GSF bank accounts were used for purposes of corruption in India in connection with the AW101 contract or indeed any other AW group contract in India.”