This Article is From Feb 25, 2013

VVIP chopper scandal: In letter, AgustaWestland lists why deal can't be cancelled

VVIP chopper scandal: In letter, AgustaWestland lists why deal can't be cancelled
New Delhi: India is preparing to cancel a deal for 12 Italian helicopters following allegations raised in Rome about nearly 350 crores paid as kickbacks to Indian officials including a former Air Force chief. NDTV has accessed the reply sent by the helicopter manufacturer, AgustaWestland, to India, which elucidates its objections to the deal being revoked.

The letter, signed by Raymond Edwards, Managing Director of AgustaWestland, states that the allegations of bribery are based on unsubstantiated news and other media reports, and that Italian investigations are at a "pre-trial phase" which means that charges have not been "tested in court."

India commissioned a CBI inquiry to determine if bribes were paid after the CEO of AgustaWestland's parent company, Finmeccanica, was arrested in Italy.  In a preliminary enquiry report, Italian prosecutors said a matrix of middlemen and companies had been used to route pay-offs to India, some of which were eventually transferred to former Air Force Chief SP Tyagi, who has denied any malfeasance.

The alleged scam has left the government exposed to more allegations of deeply-entrenched graft in the crucial months ahead of next year's general election, when the ruling Congress will ask voters for a third consecutive term in office.

Defence Minister AK Antony has reassured that India can claim a refund with interest and penalties by invoking 'the integrity clause' of the contract, which warns that the deal can be called off based on evidence that middlemen were used or that AgustaWestland exerted undue influence on officials here.

AgustaWestland in its letter to Ministry of Defence stresses that the deal for the helicopters, meant to be used by VVIPs like the Prime Minister, was finalized after a "meticulous" procedure by the Air Force and the government.  The contract was signed in 2010 with the approval of the Cabinet Committee of Security which is headed by the Prime Minister. AgustaWestland has also written that Ministry of Defence has itself claimed that "procurement process was in accordance with established procurement process in a transparent manner." It has also said that charges of bribery were at a "pre-trial stage" and the charges haven't been "tested in court." The suspension of the contract and payment is "not justified".

AK Antony, last week had said that he was "saddened" by the allegations of bribery surfacing despite trying to ensure that all purchases are transparent and free of kickback, and is determined to cancel the contract and those involved sent to jail. Sources told NDTV that the ministry is waiting for a report from the CBI before cancelling the contract.