India Moves To Scrap AW101 Contract Over Bribery Probe

 - February 15, 2013, 12:30 PM
An order for AW101 helicopters is now the subject of corruption investigations in both India and Italy.

The Indian government has begun the process to cancel its contract with AgustaWestland (AW) for 12 AW101 VIP transport helicopters. On Friday, the country’s defense ministry gave AW seven days to respond to its its formal “show cause notice” seeking contract cancellation. The move follows the February 12 arrest in Italy of Giuseppi Orsi, chairman and chief executive of its parent group Finmeccanica (and former AW chief executive). Late on February 13, 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 as vice chairman. On Friday afternoon Finmeccanica announced that Orsi has resigned as chairman and as a board member. As of press time, no announcement had been made about the future of AgustaWestland CEO Bruno Spagnolini, who was placed under house arrest on February 13.

Defense minister A.K. Antony told an Indian television channel that the deal is on hold until an inquiry by the country’s Central Bureau of Investigation has reported. The order was placed in February 2010, with a reported value of $750 million. Three AW101s have been delivered, and the other nine were due in India by the end of this year.

The arrests came near the end of a general election campaign in Italy, 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. Orsi has denied the allegations and has not been charged with any offense. Finmeccanica expressed support for him “with the hope that clarity is established quickly.”

Antony told a February 13 press conference in Delhi: “We have blacklisted six companies in the past…the contract signed with AgustaWestland includes specific provisions against bribery and the use of undue influence as well as an integrity pact…whoever is found guilty will have to pay the price. Nobody will be spared.”

Neelam Mathews contributed to this article.