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Rs 3600 crore chopper deal with Agusta scrapped

Thursday, 2 January 2014

New Delhi: Taking a tough stand, India scrapped the scam-tainted Rs 3,600 crore VVIP helicopter deal with Anglo-Italian firm AgustaWestland, nearly a year after allegations surfaced that kickbacks to the tune of Rs 360 crore were paid to bag the contract.

Controversy over the 2010 deal for supply of 12 helicopters for Indian VVIPs erupted in February last year with the arrest of two top officials of the firm, triggering a political storm here. Former IAF chief S P Tyagi is one of the accused in the case which is being probed by the CBI.

India is also expected to levy damages of more than 500 million Euros (around Rs 4000 crore rupees) on the Anglo-Italian firm while invoking the clauses under the Integrity pact of the deal, sources said.

A bank guaranteee of 200 million euros (about Rs 1700 crore rupees) furnished by the company may also be seized by the government, the sources said.

"The Government of India has terminated with immediate effect the Agreement that was signed with AgustaWestLand International Ltd (AWIL) on 08 February, 2010 for the supply of 12 VVIP helicopters on grounds of breach of the Pre-contract Integrity Pact (PCIP) and the Agreement by AWIL," a Defence Ministry release said.

Immediately after the controversy erupted, the Defence Ministry had frozen the deal under which three of the 12 AW-101 helicopters had already been delivered by the company.

India had made 30 per cent payment.

After scrapping the deal, India has now decided to go in for arbitration and has appointed former Justice Jeevan Reddy on its behalf.

The cancellation came after a meeting between Defence Minister A K Antony with Prime Minister Manmohan Singh here earlier in the day, Defence Ministry sources told PTI.

"AWIL has since pressed for arbitration and appointed an arbitrator from its side. In view of this, MoD sought afresh the opinion of the Attorney General. With a view to safeguard the interests of the Government, Defence Ministry has nominated Justice BP Jeevan Reddy as its arbitrator," it said.

The final cancellation process was initiated in November after the Ministry received an opinion from the Attorney General's office that the pre-contract integrity pact had been violated by the Anglo-Italian firm along with other contractual provisions.



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