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Helicopter deal on chopping block

The Ministry of Defence is all set to scrap the deal over charges of pay-offs, even as a CBI team is preparing to leave for Italy to pursue leads.

Published: 16th February 2013 08:24 AM  |   Last Updated: 16th February 2013 12:25 PM   |  A+A-

It is endgame for Italian defence major AgustaWestland in the Rs 3,546-crore contract to supply 12 VVIP helicopters to the Indian Air Force. The Ministry of Defence is all set to scrap the deal over charges of pay-offs, even as a CBI team is preparing to leave for Italy to pursue leads.

Executing the threat he has been issuing since Tuesday, Defence Minister A K Antony on Friday initiated the process for cancelling the contract awarded in 2010 by issuing a seven-day show- cause notice to AgustaWestland, the United Kingdom-based subsidiary of Italian arms major Finmeccanica,  which is under an anti-corruption probe in Milan.

“The Ministry of Defence has initiated action for cancellation of contract for procurement of 12 AW-101 helicopters for the use of VVIPs,” Defence Ministry spokesperson Sitanshu Kar said here in an official statement.

“The MoD on Friday issued a formal show-cause notice to AgustaWestland of UK seeking cancellation of the contract and taking other actions as per the terms of the contract and the integrity pact,” Kar said.

Only on Thursday, the Defence Ministry had threatened to invoke the provisions of the contract and the integrity pact, in case wrongdoing emerged out of the CBI probe that was ordered by Antony on Tuesday.

However, Defence Ministry sources told Express that the top brass had on Friday received some key legal documents from Italy on its anti-corruption investigation on Finmeccanica. The documents seemed to indicate that the AgustaWestland contract had been vitiated by the use of middlemen and payment of bribes.

“The latest documents received by the Defence Ministry on the helicopters deal has convinced the Defence Minister and the Defence Secretary that the contract is vitiated and hence, the cancellation process has been initiated,” a source said.

The MoD had on Wednesday put on hold further payments to the company for the delivery of the 12 choppers.

“With today’s show-cause notice, the operation of the contract has been put on hold. The company has been asked to reply to the notice in seven days,” the MoD spokesperson stated.

India has already paid around 50 per cent of the contract amount to the company and it was scheduled to release the next tranche of payments this month.

The MoD had also written to AgustaWestland on Thursday asking it directly if it had paid any bribes to Indian officials to influence the contract. AgustaWestland has already delivered three AW101 helicopters to the IAF in December 2012 as part of the contract. The fate of the three helicopters, which the IAF pilots are already flying for training sorties, is yet to be decided. 

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