AgustaWestland Denies Impropriety Over Indian AW101 Sale

 - March 1, 2013, 1:55 AM

AgustaWestland has said it expects to be cleared of bribery allegations relating to an Indian government order for 12 AW101 VIP helicopters. At press time, the Italian-UK joint venture was responding to questions from the Indian defense ministry in relation to a “show cause notice” that could result in the cancellation of the $750 million contract. It had until February 22 to answer these questions. In the meantime, the Indian government has suspended further payments and aircraft deliveries.

In a February 16 statement issued four days after Italian police placed AgustaWestland CEO Bruno Spagnolini under house arrest and arrested Giuseppe Orsi, chairman and CEO of parent company Finmeccanica, the company commented: “Regarding recent investigations by an Italian prosecutor into alleged improprieties concerning the contract for VVIP helicopters for the government of India, AgustaWestland is confident that the full compliance with the relevant laws as well as the good conduct of its past and present senior executives and managers will be demonstrated as soon as practicable.” As of press time, Spagnolini still held his position at the helm of AgustaWestland.

On February 21, Finmeccanica’s board of directors nominated Daniele Romiti as CEO of AgustaWestland in place of Bruno Spagnolini. This change was expected to be accepted by AgustaWestland’s own board within a few days.

Within a few hours of Orsi’s arrest, a Finmeccanica statement expressed “support for [the company’s] chairman and CEO, with the hope that clarity is established quickly, while reaffirming its [the company’s] confidence in the judges.” After meeting later on February 12, the Finmeccanica board appointed the group’s COO and CFO, Alessandro Pansa, to serve as chief executive and has named senior board member Admiral Guido Venturoni vice chairman. On February 15, Orsi resigned his position as chairman and vacated his seat on the board of directors. He has denied the allegations and, as of press time, had yet to be charged with any offenses.

The arrests took place ahead of Italy’s general elections on February 24 and 25, toward the end of a campaign during which alleged corporate corruption has been a big issue, and nearly a year after Italian authorities began probing allegations of illegal payments to Indian officials over the AW101 sale in 2010. Three AW101s have been delivered, and the other nine were due in India by the end of this year.

On February 19, Finmeccanica issued a further statement insisting that AgustaWestland “has acted correctly throughout the 40 years it has operated in India.” The parent company stated that its subsidiaries have operated “with managerial and operational autonomy, complying fully with Indian law and the ethics principles of the group.” Finmeccanica said it is “ready to cooperate with the Indian authorities in order to clarify the matter.” At a February 19 press conference in New Delhi, visiting British Prime Minister David Cameron promised the UK will assist India’s investigation into the corruption allegations, while seeking to deflect the focus of the case onto Finmeccanica, which he stressed is an “Italian company.” The AW101s are assembled at AgustaWestland’s UK factory at Yeovil. Indian Prime Minister Manmohan Singh told Cameron he has “serious concerns” about the case.

Finmeccanica is 32 percent owned by the Italian government and Orsi had been leading a politically unpopular campaign to divest the company of its unprofitable non-core assets, including energy and rail-car manufacturing. Orsi has known of the investigation for some time, and has long maintained his innocence and offered to resign last year if outgoing Prime Minister Mario Monti requested it.