Indian Defense Commissions Keep Up With Inflation

Even bribery and money laundering don’t seem to have escaped the woes of inflation and rising prices around the world. The bribery scandal involving AgustaWestland and India is a fine example of how kickbacks have been affected by global economic downturn.

Giuseppe Orsi, CEO of Finmeccanica, is alleged to have paid $68 million in bribes, to Indian officials to ensure that AgustaWestland secured the VVIP helicopter deal, about 8 per cent of the total price ($750 million).  

This is in stark contrast when compared with the Bofors scandal from two decades ago. In 2011, India's income tax department ruled that over $11 million in kickbacks were paid to Ottavio Quattrocchi and (now deceased) Win Chadha.

In 1986, the Indian Government and Swedish arms-maker Bofors signed a contract worth $285 million for 410 155mm Howitzer field guns meaning that the kickbacks were about 3.85 percent of the total price.

The growth in bribery-inflation is clear and however, not isolated. While the bribery in the Bofors and AgustaWestland deals is allegedly between 8 and 10 percent, EADS may have gotten lucky because the already rich Saudis may not have made too many demands. As the rumored bribery amount is just a mere $18million.

The charges were brought to light after a former EADS employee accused the company’s UK unit of hiring middlemen to bride Saudi Arabian officials with luxury cars, jewelry and briefcases of cash in an effort to win a $3.3bn communications contract five years ago.

The Financial Times reported that unaccounted payments totaling £11.5m (US$18m) to the Cayman Islands bank accounts of Simec International and Duranton International as well as the gift of four cars to members of Saudi Arabia’s royal family and military and a £278,000 payment for the rental of a villa owned by a Saudi National Guard general.

AgustaWestland is no stranger to paying kickbacks, though. The company is currently under investigation in Indonesia for allegedly paying bribes to win large defense contracts. According to reports, former Italian President Silvio Berlusconi and his aides allegedly paid kickbacks to politicians and dealers to clinch contracts while concealing an 11% return.

Rheinmetall was recently identified by India’s Central Bureau of Investigation for allegedly paying a middleman to bribe an official with India's Ordnance Factory Board.