Govt moves to cancel Italian chopper deal

AFP/New Delhi The government yesterday said it had taken steps to cancel a $748mn contract for 12 Italian helicopters amid allegations that the deal was won through kickbacks. The ministry of defence said in a statement it had “initiated action for cancellation” of the contract for 12 helicopters from AgustaWestland, a unit of Italian aerospace group Finmeccanica, intended for use by top politicians. The ministry issued a “show-cause” notice to Finmeccanica - a legal step asking the company to justify why the contract should not be cancelled. India, which has already put payments to the company on hold, asked the Italian firm to “reply within seven days” if any terms of the contract and an “integrity pact” it signed in 2010 had been violated. The decision is a severe blow to Finmeccanica, whose chief executive was arrested earlier this week in Milan as part of a probe by Italian prosecutors. The purchase came under scrutiny from Italian investigators probing allegations the group had broken the law by paying bribes to foreign officials, leading to the arrest of Finmeccanica’s boss Giuseppe Orsi on Tuesday. Italian prosecutors suspect that kickbacks worth around 10% of the deal, or 50mn euros ($68mn), were paid to Indian officials to ensure AgustaWestland won the contract, press reports say. Cash was allegedly handed to a cousin of former Indian air force chief S P Tyagi, who denies wrongdoing, with more money funnelled via a web of middlemen and companies in London, Switzerland, Tunisia and Mauritius. Orsi denies any wrongdoing and his lawyer has called the allegations against him “inconsistent” and his arrest “unjustified”. The latest move by the defence ministry is seen as an attempt by the government to contain the fallout from the corruption scandal ahead of elections in the first half of next year. Defence Minister A K Antony on Tuesday ordered a police investigation. The Indian unit of Transparency International, a global anti-corruption watchdog, welcomed New Delhi’s move to invoke clauses in the “integrity pact” which it said could lead to cancellation of the deal as well as blacklisting of the Italian firm.