This Article is From Jan 02, 2014

VVIP chopper scam: India scraps Rs 3600-crore deal with AgustaWestland

New Delhi: India has finally cancelled the controversial Rs 3,600-crore contract for 12 helicopters meant for VVIPs with UK-based AgustaWestland amid allegations that deal was riddled with kickbacks.

The announcement came after a meeting between Defence Minister AK Antony and Prime Minister Manmohan Singh on Wednesday. The defence ministry has said that the "violation of a pre-contract integrity pact" led to the decision. 

AgustaWestland, in a statement, has said it has not received any communication from the Ministry of Defence yet. "The company is therefore unable to comment beyond reiterating the denial of allegations of wrong doing and the continued intention to robustly defend the company's reputation," the statement said.

The contract for 12 AW-101 helicopters was signed in February 2010. Three helicopters were delivered in 2011 and 2012, and about 30 per cent of the money was paid, a detail that might lead to a long legal battle.

In February 2013, reports surfaced alleging that two top officials of AgustaWestland's Italian parent, defence manufacturer Finmeccanica, had paid bribes to bag the Indian contract. An Italian inquiry into the deal forced India to investigate it too.

The Central Bureau of Investigation or CBI which is probing the case has alleged that former Air Force Chief SP Tyagi was among those who accepted bribes from Finmeccanica, which allegedly used a maze of companies in countries like Mauritius to route payments to officers .

AgustaWestland has denied any wrongdoing. Air Chief Marshall Tyagi too has rejected the allegations against him.

The final cancellation process began in November last year after the defence ministry received the opinion of the law ministry and the attorney general that there was "a clear violation" of a pre-contract integrity clause and of contractual obligations by AgustaWestland

For the Indian Air Force, this is bad news. It will now be forced to further extend the life span of its existing helicopter fleet meant for VVIPs, the Mi-8, which was slated to be phased out this year.

There is also no clarity on what would happen to the three AugustWestland choppers already delivered to India.