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Indian helicopter defense deal unresolved
by Staff Writers
New Delhi (UPI) Feb 14, 2013

India halts payments to Finmeccanica in chopper scandal
New Delhi (AFP) Feb 14, 2013 - India said Thursday it has suspended payments to an Italian company pending the outcome of an inquiry into whether a $748 million 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 percent 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, on Thursday 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 $1.3-billion artillery deal.

The chopper deal was cleared by Indian 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.

The Indian Ministry of Defense is pondering a $1.5 billion deal for 197 light utility helicopters.

The hotly contested Indian contract for the helicopters is facing cancellation for the second time as the decision has been deferred by the Ministry of Defense's Defense Acquisition Council.

The Indian air force is looking to replace its Cheetah and Chetak helicopters, which were bought nearly four decades ago. Battling for the contract are France's Eurocopter's Fennec and the Russian Federation's Kamov Ka-226T, The Indian Express reported.

The helicopters that the air force is seeking to replace, France's Aerospatiale SA 315B Lama Cheetah and Chetak, are single-engined aircraft specifically developed to meet Indian air force operational requirements. They were built under a joint venture license between India's Hindustan Aeronautics Ltd. and Aerospatiale.

The Chetak was designed specifically for high-altitude performance and was tested in the Himalayas.

The helicopter was ordered by the Indian military and a license to produce the SA315B in Bangalore was granted to HAL in 1971. The first Indian-built SA315B flew October 1972 with deliveries beginning three months later.

Indian Defense Ministry sources, speaking on condition of anonymity, told the Express that "both the Eurocopter's Fennec and its competitor, the Russian Kamov Ka-226T, have not completely met the specification."

A technical panel has studied the issue and made recommendations to the ministry.

For nearly 10 years, the Indian army has been trying to replace its Cheetah and Chetak helicopters.

In 2007, an Indian Defense Ministry tender for 197 helicopters had progressed sufficiently where the Eurocopter AS 550 Fennec had emerged as the winner. In the fresh tender issued in July 2008, however, two helicopters were subsequently short-listed for flight evaluation, the single-engine Eurocopter AS550 C3 Fennec and the twin engine Russian Federation-built Kamov-226 Sergei.

Further complicating India's helicopter acquisition policies, Italian firm Finmeccanica, which has become embroiled in a controversy over alleged kickbacks in a helicopter deal for government use, has at least six companies registered in India. Up to now, none of Finmeccanica six firms involved in the helicopter contract have been charged by the Corporate Affairs Ministry with violating the Companies Act.

The Finmeccanica entities are AgustaWestland India Private Ltd., WIN Bluewater Services Private Ltd., Fata Hunter India Private Ltd., Asia Power Projects Private Ltd., Ansaldo STS Transportation Systems Private Ltd. and Selex Galileo India Private Ltd., a 2012 Finmeccanica Interim Financial Report stated.

Sources in the Corporate Affairs Ministry, speaking on condition of anonymity said: "We cannot chase companies just like that ... We will look into the (affairs) of registered companies only if there is a substantial case of violations of Companies Act. It is too premature to say whether (those) companies have violated the Companies Act."

Indian Defense Minister AK Antony on the issue of possible bribes noted: "The moment we get a report from the Central Bureau of Investigation, whoever is found guilty, Indian or foreigner, we will take the strongest action against them. They have to pay the price for the lapses. Nobody will be spared."


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