Corruption has cost AgustaWestland, the helicopter division of Italian defense contractor Finmeccanica, a $ 750 million deal passed with India for the purchase of 12 helicopters that were to be used by Indian VIP politicians.
India, which had ordered 12 luxury helicopters in 2010, announced on Wednesday that it had cancelled the transaction because of a corruption scandal.
The Indian government has terminated with immediate effect the agreement on the purchase of 12 AW101/VIP helicopters because of infringement of the pre-contract integrity pact, said the Indian Ministry of Defense in a statement.
India which had already received three helicopters stopped the delivery of the remaining nine and suspended payment of the amounts due in February after the bribery allegations were revealed. The revelations led to the resignation and arrest of Finmeccanica boss, Giuseppe Orsi, on corruption charges.
Indian and Italian authorities are separately investigating the allegations.
At the request last November of AgustaWestland, the Anglo-Italian subsidiary of the Italian defense giant Finmeccanica, New Delhi has set up an arbitration committee to settle the dispute on this contract.
India’s defense ministry also said Wednesday that it has agreed to arbitration with the helicopter maker. AgustaWestland in October sought arbitration proceedings with the Indian government over the deal.
The Italian justice suspects the managers of AgustaWestland of having paid a $ 67 million bribe to senior Indian officials to win the contract. Finmeccanica has flatly denied the accusations, but the Indian Defense Minister A.K. Anthony rejected the denial as lacking sincerity.
The case caused a stir among the Indian political class and made the headlines of most Indian media which denounced the corruption of the Congress party-led government. The case is all the more embarrassing for the government as it was divulged while new elections are to be held later this year in India.
The cancellation of the deal has probably been welcomed by other firms eying the Indian deal, such as “Sikorsky Aircraft Corporation,” a subsidiary of the U.S. United Technologies, “Eurocopter” of the EADS group, or the other U.S. advanced technology company “Lockheed Martin.”
