15 Oct 2013 By Dean Nelson, in New Delhi - telegraph.co.uk
Corruption allegations give India a way out of deal to buy 12 British-made helicopters
India’s Attorney-General has cleared the way for the country's government to cancel its £480m deal with AgustaWestland for 12 British-made helicopters after allegations of corruption.
The contract was suspended by the government in February this year following allegations that commissions were paid by the Italian-owned company to senior defence officials, including relatives of India’s former air chief SP Tyagi.
The allegations, which have been denied by the former air chief, emerged from investigation in Italy which led to an arrest warrant for Giuseppe Orsi, the chief executive of Agusta Westland’s parent company, Finmeccanica. Investigators allege he paid €30m (£25.4m) to a British man, Christian Michel, to act as a middleman between the company and members of the Tyagi family.
It is alleged the commissions were paid to influence the altitude specifications for the helicopter contract to allow AgustaWestland to tender for its AW-101 VVIP model.
India’s Ministry of Defence believes AgustaWestland is in breach of an "integrity act" included in the contract which bans the use of middlemen or the payment of commissions.
AgustaWestland has denied the allegations and announced last week it has triggered an arbitration clause in its contract in attempt to salvage the deal. It believes that the contract cannot be cancelled before arbitration has been completed.
Its India chief executive Jackie Callcut, today said the company had yet to receive any notification from the Indian government.
“The arbitration process is ongoing… the company has consistently stated that it has found no evidence of any wrong doing, and that to date no proof of wrong doing has been presented to the company. It is also clear that an attempt to cancel the contract will result in a further delay to the helicopters that India urgently needs and are ready for delivery. Meanwhile the quality of the aircraft themselves is not in question,” she said.
The formal cancellation of the contract is expected to lead to legal action by AgustaWestland to recover its losses.
It is understood the Indian government has paid 45pc of the contract price and taken delivery of three of the helicopters. Three more were completed before the contract was suspended earlier this year but have not been delivered, while the remaining six are close to completion at AgustaWestland’s Yeovil factory.