India said yesterday it has suspended payments to an Italian company pending the outcome of an inquiry into whether a $748mn helicopter contract was won through kickbacks.
The government has “put on hold all further payments” to Finmeccanica’s AgustaWestland helicopter unit until the inquiry by the Central Bureau of Investigation (CBI) is completed, a defence ministry statement said.
The CBI investigation into alleged bribery of Indian government officials by Finmeccanica was announced on Tuesday after the head of the Italian aerospace giant was arrested in Rome.
Italian media reports said the company’s chairman and chief executive Giuseppe Orsi has been detained as part of an investigation into alleged bribes paid to Indian government officials.
Italian prosecutors suspect that kickbacks worth around 10% of the Italian deal were paid to Indian officials to ensure AgustaWestland helicopter won the contract.
India also said it had asked AgustaWestland to indicate “specifically if any financial transaction has taken place with any Indian individual or entity” which would violate an “integrity pact” it signed with the firm.
The government said it would take strict action including “the cancellation of the contract, recovery of payment, blacklisting and penal action” if the probe finds that any clause in the integrity pact with AgustaWestland was broken.
Under the terms of the 2010 agreement, 12 helicopters were to be delivered to India by 2014. India has already received three of these for use by its top politicians.
The Congress-led government, which has been lambasted by the opposition for not acting sooner over the allegations, yesterday put out a 35-point statement rejecting allegations it had been lax.
“The government is determined to take all possible legal and administrative action against the guilty parties and accordingly has ordered a thorough probe by CBI,” it said in the statement.
In the 1980s, a previous Congress government, led by then-prime minister Rajiv Gandhi, collapsed over charges of kickbacks paid to Indian officials by the Swedish group Bofors to clinch a $1.3bn artillery deal.
The chopper deal was cleared by Prime Minister Manmohan Singh, whose government has been buffeted by a series of corruption scandals that analysts say could affect the party’s electoral chances in 2014 polls.
Meanwhile, opposition Bharatiya Janata Party leader Jaswant Singh came out in support of former Indian Air Force (IAF) chief S P Tyagi, who has been linked to the chopper deal.
“We should not make wild allegations against a former air chief. It is not in the interest of both the air force and the country. The probe is on. As Tyagi himself is saying, the probe should be held early,” said Singh, a former defence minister.
The BJP is targeting the government on the chopper deal and comparing the scandal to the Bofors scam.
“The accused in this is an Italian company. It seems that we have forgotten them. What we are focusing on is only on what the (IAF) chief did. The Air Chief Marshal is a distinguished retired officer. We should not casually denigrate these higher officers of the armed forces,” he said.
Singh, however, accused the defence ministry of sitting over the matter, after the Italian investigators had indicated corruption in the deal.
“I find the government’s response tardy and unsatisfactory... certainly not answering the need of the hour,” he said.
“We need an expeditious and fair probe. Don’t rush to conclusions and denigrate the former air force chief. A thorough probe must be conducted into the entire matter so that all hidden facts are cleared and the truth comes out,” Sigh added.