Gandhis’ deadly deal with Mrs. Thatcher for Westland Helicopters
(Whenever I hear the word ‘Westland” my goes to the era when Rajeev Gandhi committed the blunder of acquiring Westland Helicopters. I wrote “Gandhis’ deadly deal with Mrs. Thatcher for Westland Helicopters”, an account of how governments in democratic countries yield to pressure, originally in June 2016. British Prime Minister Thatcher, known as ‘Iron Lady’, yielded to pressure of manufacturers of Westland helicopters and in turn pressurised first Prime Minister Mrs Indira Gandhi, India’s strong Prime Minister and after her death, Prime Minister Rajiv Gandhi (who was appointed Prime Minister in violation of constitutional propriety; read https://www.devendranarain.com/rajiv-gandhi-an-…inister-of-india/) to accept the defective helicopters and thereby save the manufacturers. Mrs Thatcher found herself in deep trouble when the scandal broke out in Britain. It was perhaps the single most important factor that led to her resignation and downfall. On the other hand, in India even after 10 deaths caused by crash of two of these helicopters, no one raised a finger.)
Deal to please Western friends at the cost of Indian lives
Sonia-controlled UPA government’s deal with AgustaWestland for the acquisition of choppers for the VVIPs signed after quite a few politicians, civil servants, high ranking officers of the Indian air force and others became richer and cancelled after the fact became public knowledge (the names of beneficiaries still remaining in the realm of speculation) has been added to its long list of scams. More than 30 years ago, when the Westland Helicopters had a separate identity, after over a year of flip flops and despite protests, Rajeev Gandhi government had signed a deadly deal with Britain to acquire 21 Westland helicopters. The helicopters were grounded after major crashes in which 10 precious lives were lost. Surprisingly, no stigma of scam was ever attached to the deal with Westland Helicopters though it was not above board.
I am one of those few persons alive who can recount how the decision to acquire Westland Helicopters was taken because I was the one who had made strongest protest and I was the one who was censored by Prime Minister Rajeev Gandhi for opposing the deal.
Here is a brief account.
Once a successful company, Westland Helicopters, the last manufacturer of helicopters in Britain, gradually became unprofitable. By 1984, it had inventory of 41 WG30 helicopters which no country was ready to touch because of serious technical snags. Worried about the consequences of the closure of the company – loss of employment and burden on the exchequer on account of social security schemes – the British Prime Minister Mrs Thatcher started using her political influence to find buyers. Her mission succeeded when Indian Prime Minister Mrs Gandhi agreed to buy 27 helicopters.
The advantage to India, Mrs Thatcher explained to Mrs. Gandhi, was that India did not have to spend its taxpayers’ money for the acquisition of the WG30 helicopters; a part of British aid (in form of outright grant) to India under poverty-alleviation programme would be diverted for the purpose; since it was British money, India should not have any objection.
Mrs Thatcher’s plan got a serious setback when after Mrs Gandhi’s assassination on October 31, 1984, her pilot son and successor openly opposed the deal. Perhaps Rajeev Gandhi was aware of the defects in WG30 helicopters but not of his mother’s commitment. In reply to a Parliament question, he had said that those helicopters were unsafe. But Mrs Thatcher, the Iron Lady, was not the one to accept defeat so easily. She continued to work on Rajeev Gandhi and ultimately he melted. One fine morning, he suddenly announced his decision to acquire 21 helicopters. (By this time the management of the company had been taken over by the global engineering conglomerate GKN.)
(It seems, our Congress leaders cannot see their foreign friends in trouble. Sonia-controlled controlled UPA government decided to buy AugustaWestland helicopters which were so costly that the USA had refused to buy for its President who flies in the costliest aircraft. Indira Gandhi had agreed and Rajeev Gandhi acquired Westland Helicopters which were considered so unsafe that there was no taker.)
Since it was the Prime Minister’s diktat, the process of getting clearances was put on a fast track. The Ministry of Civil Aviation circulated a Note for the Public Investment Board (PIB), a Committee of Secretaries to the Government of India, headed by Secretary of the Department of Expenditure, that considers major investment proposals (not exempted from its purview) and recommends sanction, with or without amendment, or rejection by the Cabinet. The materials before the PIB include the proposal of the Ministry/Department (in form of the Note for the PIB) and appraisal report prepared by the Planning Commission. (That was the procedure before the Planning Commission was replaced by Niti Aayog.)
At that time I was heading the Project Appraisal Division of the Planning Commission. It was my responsibility to present an objective appraisal to the PIB. According to the Note for the PIB, a new public sector undertaking known as Helicopter Corporation of India (HCI, later changed to Pawan Hans) to be financed jointly by the Government of India and the Oil & Natural Gas Commission (ONGC, the leading oil producer public sector undertaking) would purchase 21 WG30 helicopters from Westland and 21 Dauphin helicopters from France, for providing helicopter support services to the off-shore exploration operations and air-services to Jammu & Kashmir and the North-East. It was also stated that for meeting the cost of 21 Westland Helicopters, the British government was giving outright grant of £65 million. In other words, there was no capital cost to India for the acquisition of Westland Helicopters.
At this stage it would be relevant to throw some light on the economics of the British aid to the developing countries. During visiting fellowship at the Oxford University (1978-79) I had a brief attachment with the British Overseas Development Ministry which gave me an opportunity to study and understand the subject. All aids were tied; funds had to be utilised according to the British terms and conditions. Before committing any aid which was in form of outright grant, a cost-benefit analysis was carried out. Very often, aid was tied to acquisition of products of companies facing financial crisis. Cost-benefit analysis indicated whether the value of aid was more or less than the cost of social security in case the company closed down. If the cost was less, it made more economic and political sense to pass on the product to a developing country as aid. The face value of aid could be easily inflated to impress the recipient. The use of aid for the acquisition of Westland Helicopters very much fitted in the scheme of things.
The gist of my appraisal report was as follows.
- Need for the project: The Ministry of Civil Aviation had not established need for 42 helicopters. At the most, about 21 helicopters could be justified.
- Economic viability of the project from the point of view of the country: Even though 21 Westland Helicopters were coming free, their operation and maintenance cost was so high that the entire project would be economically unviable.
- Financial viability of the new company: Due to the high cost of operation and maintenance, the company would incur losses every year. The loss in the first year was estimated at Rs. 60 (sixty) cr. (As far as I remember, the company incurred that much loss in the first year.)
- Safety of helicopters: The Planning Commission had no expertise on the subject. However, according to a reply given by the Prime Minister himself on the floor of the Lok Sabha, the Westland Helicopters were unsafe.
My conclusions were: (a) there was absolutely no justification for Westland Helicopters and (b) HCI should acquire only Dauphin helicopters.
Before the matter came before the PIB, as was the practice, the Financial Advisor & Additional Secretary of the Ministry convened an inter-ministerial meeting to sort out the differences. It was an exercise in futility. After listening to my objections, he said that he would put up the minutes of the meeting to his Secretary who in turn would place it before the Minister who in turn would inform the Prime Minister. The message was loud and clear.
Around that time I found the Petroleum Secretary very tense. I had known him since the early 1970s when he was a Joint Secretary. During an informal chat he told me that being Secretary of the administrative ministry of the ONGC which was party to the proposal, he could not oppose it but wanted me to make a strong case against the Westland Helicopters.
In the PIB meeting held one evening to consider the proposal, three Secretaries including the Secretaries of the Planning Commission and the Department of Expenditure supported my stand and recommended acquisition of only 21 Dauphin helicopters. The Civil Aviation Secretary, the only other member of the PIB present that day, announced that the PIB decision was not acceptable to the Ministry and that the Ministry would seek the approval of the Cabinet. Shortly thereafter, the Cabinet approved the proposal for the acquisition of 42 helicopters.
My role as an advisor on the proposal was over and I got busy with appraisal of other projects. But something happened a couple of days after the Cabinet approval that keeps me haunting even now. At the next meeting of the PIB to consider some other proposals, I was the last to enter the meeting room which was packed to its capacity. Several Secretaries and other senior officers as well as heads of several public sector undertakings were present. I was about to occupy a chair in the last row when the Chairman of the PIB saw me and asked me to sit in the front row. After I had occupied the chair, he looked at me and said: ‘That evening you were making so much noise. Do you know what Prime Minister has written about you? He has virtually censored you. He has written that the appraiser failed to appreciate the fact that the Westland helicopters were outright gift to India.’
For a long time I have been debating within myself whether to share my reaction with the people I do not know. (Before writing today, I have shared it only with my family and close friends.) Ultimately I have decided to make it public. I think, at the fag-end of my life – I am 75+ – I should share not only my achievements and failures but also my stupidity.
What I was told was so sudden and so unexpected that I had no time to think how to react. On the spur of the moment, without realising the implications of what I was saying, some words came out of my mouth which I could not have uttered publicly had I time to think. Without losing a moment I gave my uncharitable reaction: ‘Sir, what can I say when Prime Minister has censored a small fry like me but I can tell you a joke. I wanted to buy a necktie but it was costing Rs. 100. I’m a poor man. I could not afford to pay Rs. 100. Taking pity on me, the shopkeeper offered me a pair of old shoes free of cost. I put those shoes around my neck. This is what the Prime Minister has done.’
I heard loud laughter which was followed by pin-drop drop silence. Then I heard the voice of the Chairman, PIB. In a very serious tone he said: ‘Your days are numbered.’ It was at this stage that I realised my stupidity. He was very fond of me and always stood by me whenever I was in trouble due to my free and frank advice but this time I had crossed all the limits. Perhaps he felt that if I faced any trouble because of what I had uttered, he would not be able to come to my rescue. Among those present there were a few who were sympathetic to me but most of them must have been happy that they would get rid of a trouble maker.
But I was lucky. Either the matter was not reported to the Prime Minister or, if reported, he did not take it seriously though sometime later a proposal came from the PMO to post an officer to supervise my work. It was scuttled by Secretary of the Planning Commission. I completed my tenure on December 30, 1987. Despite the best efforts of Secretary, Planning Commission for extension for one tear, I was allowed extension only for 13 days. Thereafter, under an arrangement with the Department of Revenue, my parent Department, I worked in the Planning commission for a few months during which salary was paid by the Department of Revenue. Later, I was denied the third term in the Commission. For some time I carried the impression that it was all due to my remarks against the Prime Minister. But I was wrong. The real reason was something else, a much bigger scam I had exposed shortly before the end of my tenure. (I will write about it at a later stage.)
Arrival from Britain as helicopters, return (partially) as scrap
The formal agreement for the acquisition of Westland Helicopters with £65 million of British grant was signed in March 1986. Incidentally, two more important agreements were signed that month: (a) $285 million contract for the acquisition of Bofors guns and (b) contract for the acquisition of the British aircraft carrier HMS HERMES of 1953 vintage which was commissioned in May 1987 as INS VIRAAT .
It seems, Rajeev Gandhi, the youngest Prime Minister in Indian history, the only one to be sworn in as Prime Minister even before the parliamentary party enjoying majority in the Lok Sabha had formally elected him as leader and overconfident due to unprecedented mandate in general election held after his appointment as Prime Minister, was in great hurry to win friends and get influenced by them. He paid the price only for the Bofors deal which had been finalised after payment of commission, but not for the Westland helicopter deal which was not above suspicion and which caused death of 10 persons in two crashes.
The 14-seater helicopters arrived in 1987. It was found that even its payload was severely constrained by its rotor capacity and its engine required servicing after every 70 hours of flight making it costlier that what had been estimated earlier. The first crash took place in 1988 and the second crash took place in 1989, both due to design flaws. The entire fleet had to be grounded and it was decided to dismantle and sell the remaining 19 helicopter as scrap. After nine years of efforts AES Aerospace of Britain agreed, reportedly at Westland’s request, to buy the entire scrap for £900,000, much less than the reserve price of £1.9 million. However, after acquiring scraps of six helicopters, the buyer discovered that the cost of shipping was very high and there were no buyers of the spare parts. The deal was cancelled. Perhaps 13 dismantled helicopters are still lying in crates somewhere in Mumbai’s dockyard. The remains of WG30 could be seen in the Helicopter Museum in Somerset, England.
Rajeev Gandhi who acquired Westland helicopters knowing very well the defects and who was therefore squarely responsible for the death of 10 persons in two crashes, was (posthumously) awarded Bharat Ratna and is still worshipped by the Congress.
Consequences faced by Mrs. Thatcher
Mrs. Thatcher’s jubilation over the success of her plan proved short lived. The misuse of foreign aid meant for poverty alleviation programme in India was not sufficient to save the financially ailing company. The British government started scouting for a saviour for its last helicopter manufacturer. The process led to serious differences between Mrs. Thatcher who wanted the Westland Helicopters to merge with an American company, Sikrosky and her Defence Secretary Michael Heseltine who insisted on merger of Westland as well as British Aerospace with the Italian company Agusta and French companies. The relationship between the two became so sour that the Defence Secretary resigned in January 1986. It seriously damaged Mrs. Thatcher’s reputation and political stature.
After resignation, Heseltine returned to the backbenches from where he continued to create problem for Mrs. Thatcher. He strongly opposed her when she needed support for her extremely unpopular Community Charge (also known as the poll tax) in 1988-89. He challenged her leadership of the Conservative party in late 1989 and in the first round of voting secured enough number of votes to force second round. Fearing defeat Mrs. Thatcher resigned but it was more popular John Major who replaced her.
Westland continued to haunt Mrs. Thatcher for years even after her resignation and retirement from politics. In 1997, Clare Short, UK’s International Development Minister, ordered an enquiry into the deal with India. She described linking aid to domestic political and financial considerations by Mrs. Thatcher as “outrageous” and called for delinking aid from political considerations. Later, investigations carried out by the UK’s National Audit Office revealed that the Thatcher government lost ‘over 105 million pounds on the Westland-30 programme including money spent on its research and development.’
At the end, everyone was loser. It was ‘catastrophic waste of money”, for Britain, as some British officials described it. India wasted huge amount of money on operation and maintenance of those faulty flying machines and 10 Indian lives were lost in two crashes.
End of Westland Helicopters as a separate entity
Despite Mrs. Thatcher’s opposition, Westland Helicopters ultimately merged with the Italian company Agusta. Its management had already been taken over by the global engineering conglomerate GKN when Rajeev Gandhi was being pressurised by Mrs. Thatcher. Later in 1988, GKN acquired the shares held by another British company, Hanson plc. Six years later it became a wholly owned subsidiary of GKN. In 2000 GKN and Italian company Finmeccanica merged their respective helicopter subsidiaries. In 2001 the merged entity came to be known as AgustaWestland. Later, in 2004,Finmeccanica acquired GKN’s too. The latest development (January 2016) is merger of AgustaWestland and Leonardo – Finmeccanica’s Helicopter Sector.
Westland’s revisit to India in the company of Agusta of Italy
Even after losing its separate existence, Westland continues to trouble India. When the people had almost forgotten the havoc caused by Westland Helicopters in the 1980s, tagging behind Agusta of Italy it made a fresh attempt to enter India . This time the strategy was different because no aid money was available as bait. AgustaWestland tried to get orders by following the international practice of ‘buying’ supporters, much more aggressively than what Bofors and others had done in the past. Unfortunately, premature leakage of payments of huge amounts of bribes to those who could influence the decision, those who had to take the decision and those who had resources to influence public opinion spoiled the game, leaving the company as net loser. By the time the deal was cancelled, the company had paid millions of dollars as bribe. After cancellation India recovered Rs. 2068 crore – Rs. 200 cr. by encasing bank guarantee and the rest on order of the appellate court of Milan – as against Rs. 1620 crore it had paid to AgustaWestland.
Helicopters India did not need
The most important fact that emerges from the Westland and AgustaWestland sagas has been overlooked. In 1980s the Government of India imported 21 defective Westland helicopters which were not needed. In the latest scandal the Government decided to buy 12 very costly AgustaWestland helicopters which were unnecessary. The demand for VVIP choppers was artificially created more than a decade ago. Till date absence of such choppers has not been felt. We never heard that a Prime Minister or a Defence Minister could not visit a place for want of an AgustaWestland type chopper.
Demystifying a mystery
A mystery remains: what made Rajeev Gandhi change his mind on Westland helicopters? My research has revealed two explanations.
(1) According to the declassified British government documents, Mrs. Thatcher twisted Rajeev Gandhi’s arms. He yielded to her threat that that refusal to accept her proposal could prove ‘problematic’ for further economic aid.
(2) According to an Indian author Jayanta Kumar Ray(India’s Foreign Relations, 1947–2007), “The decision was inexplicable, unless one referred to an important event in the life of Westland towards the end of 1985. At that time, an American-Italian consortium, with an in-law of the Indian Prime Minister in a dominant position, took over the Westland helicopter company.”
If the above claims are true, Rajeev Gandhi’s heart melted under pressure of two western women.
The bottom line is that to the old wisdom that ‘there is always a woman behind every man’s success’ should be added another worldly wisdom: ‘it is equally true that very often there is a woman behind a man’s foolishness.’
A former head of the Project Appraisal Division of the Planning Commission
May 6, 2016
Very dood and well written article.