India to cancel Finmeccanica chopper deal, if charges proven, says defence minister

STORY: India will blacklist Finmeccanica SpA and cancel its deal to buy 12 helicopters from the Italian defence group if allegations of bribery are proven against the company, Defence Minister Arackaparambil Kurien Antony said on Wednesday (February 13).

Italian police arrested Finmeccanica’s chief executive Giuseppe Orsi on Tuesday for alleged bribes paid to secure the sale of 12 AgustaWestland executive helicopters to the Indian Air Force, when he was head of the Finmeccanica helicopter unit.

Speaking to reporters in New Delhi, Antony said that India’s federal police, the Central Bureau of Investigation (CBI), had been ordered to investigate the matter and if the allegations were proven, those involved would “pay for their lapses. Nobody will be spared.”

“I have ordered a CBI inquiry and we are conveying to CBI a request to have an early inquiry, I can assure you the moment we get a report from CBI, we will take earliest and strongest action provided in the integrity pact. That includes cancellation of the contract, blacklisting the companies and criminal action will follow,” said Antony.

The defence minister also said that so far internal enquiries by the ministry have found no evidence against Finmeccanica in the $754 million helicopter deal. He refused to answer specific questions about the Italian allegations and said the CBI investigation would find the truth.

When asked why India did not order a probe earlier in this case, when they were aware of Italy making an intervention, foreign minister, Salman Khurshid said that they were constantly in contact with the Italian authorities.

“If someone is probing it then you let them probe it. I mean, should you have your own probe, when someone else is probing, who is probably better placed to probe because that’s where the production place, that’s where the offices are and we have obviously remained in touch with them and expected that they would keep us posted and informed, so that at an appropriate stage, when they give us the information that would be useful to use in this country, we will use it. What is the problem?” said Khurshid in New Delhi.

Italian prosecutors said in the warrant reviewed by Reuters on Tuesday that two managers at AgustaWestland, a unit of defence group Finmeccanica (SIFI.MI), paid go-betweens to help it win the 2010 contract to supply 12 helicopters to India.

Part of these payments ended up with the three Indian brothers, Juli, Docsa and Sandeep Tyagi, whose cousin Sashi Tyagi was former Indian air force chief. None of the Tyagis has been accused of wrongdoing by officials in India.

Former chief of the air staff, Shashindra Pal Tyagi, whose name has also been dragged in the kickback, said that he was shocked by these new revelations but also supported the CBI probe.

“My initial reaction was of shock but this story has not been raised for the first time now. Names of relatives and my own name were dragged into this issue before too. I was shocked but I am also confident that there are no irregularities that happened here, as far as I know. So, I also feel that an inquiry should happen, so that the matter is cleared,” Tyagi told reporters in Gurgaon, on the outskirts of New Delhi.

India, the world’s largest weapons importer, has a long history of corruption in defence deals. A multi-million dollar scandal in the 1980s over the purchase of Swedish Bofors artillery guns contributed to an electoral defeat for then Prime Minister Rajiv Gandhi, of the Congress party.

The current Congress party-led government has been buffeted by a series of corruption scandals that opposition parties plan to exploit ahead of general elections due in 2014.