Agencies/New Delhi
The defence ministry yesterday said it would appeal against an Italian court order rejecting its request to recover some $387mn in bank guarantees over a scrapped helicopter deal.
India had cancelled the deal with the Italian-owned AgustaWestland in January to buy 12 luxury helicopters amid allegations that the company paid bribes to win the €556mn ($753mn) contract.
On Monday, a court in Milan ruled in favour of AgustaWestland, preventing India from encashing guarantees of more than €278mn ($387mn), a statement from Agustawestland’s parent company Finmeccanica said.
The Indian defence ministry responded by stating that it “will be filing an appeal against the order.”
“Simultaneously, the government will vigorously pursue all options for encashment of the bank guarantees,” a statement from the defence ministry said.
“The Milan court has confirmed the ruling made last January, prohibiting... the payment of collateral of more than €278mn deposited in relation to the contract,” Finmeccanica said in a statement.
The overall value of the guarantee scheme with Deutsche Bank SpA, Deutsche Bank AG, Intesa Sanpaolo and the State Bank of India was around €300mn.
India managed to cash in two bank guarantees worth Rs2.4bn ($39mn) earlier this year.
Finmeccanica said the Milan court declared it had no jurisdiction over a €28mn warranty bond, part of the overall scheme, which it said had already been paid out by the State Bank of India and Deutsche Bank.
The defence ministry had signed the contract for the helicopters for the Indian Air Force Communications Squadron that ferries dignitaries like the president, the vice president and the prime minister. Three helicopters have already been delivered.
India had suspended the contract in 2013 after Italian investigators began looking into accusations that AgustaWestland paid bribes to win the contract in 2010.
Italian prosecutors suspect kickbacks worth around 10% of the deal - $67.6mn (€50mn) - were paid to Indian officials to swing the deal in favour of AgustaWestland, according to Italian media reports.
The company denies any wrongdoing.
India’s defence ministry came under scrutiny after detectives raided the home of former air force chief S P Tyagi as part of the probe into the allegations of bribery.
The controversy was further embarrassment for the Congress-led government which has been buffeted by a string of corruption scandals in the lead up to a general elections starting next month.
The aborted deal has also come as a severe setback to Finmeccanica, whose chief executive Giuseppe Orsi resigned after being arrested last February.
Orsi denies any wrongdoing and his lawyer has called the allegations against him “inconsistent” and his arrest “unjustified.”
The deal is currently under arbitration in India.
India cancelled the order with AgustaWestland for 12 top-end helicopters in January, citing a breach of integrity relating to alleged corruption.
