India scraps AgustaWestland helicopter deal, agrees to arbitration

[shree835]

(Reuters) - India cancelled its $770 million helicopter deal with Italian defence group Finmeccanica's (SIFI.MI) AgustaWestland unit on Wednesday over what it termed a breach of integrity, but agreed to take part in an arbitration process.

India froze payments for the 12 AW101 helicopters after Finmeccanica's then chief executive was arrested in February for allegedly paying bribes to secure the deal, embarrassing the New Delhi government before parliamentary elections due by May 2014.

The scrapping of the deal, which will now go through a probably lengthy legal process, would be a fresh setback for Finmeccanica. Delays in selling some of its money-losing assets have prompted credit rating agencies to downgrade the company to junk.

But it would offer an opportunity for rivals such as United Technologies Corp's (UTX.N) Sikorsky Aircraft, EADS EAD.PA unit Eurocopter and Lockheed Martin (LMT.N) to get a share of India's burgeoning defence market.

Defence minister, A.K. Anthony, has said he did not believe AgustaWestland's denial that it paid bribes to swing the deal. Anthony had a meeting with Prime Minister Manmohan Singh hours before the latest decisions were announced.

"The Government of India has terminated with immediate effect the agreement that was signed with M/S. AugustaWestland

International Ltd (AWIL) on 08 February, 2010 for the supply of 12 VVIP/VIP helicopters on grounds of breach of the Pre-contract Integrity Pact and the agreement by AWIL," the Defence Ministry said in a statement on Wednesday.

Finmeccanica spokesman Roberto Alatri, commenting on India's decision, said the company would defend its position. It invoked the arbitration, which would be conducted in India under the Indian Arbitration and Conciliation Act of 1996.

"We'll do everything that would be necessary to defend the correctness of our position," Alatri told Reuters. "We're sure our behaviour was ethically correct."

He said India's agreement to arbitration was a positive step.

India's Defence Ministry said it believed "integrity-related issues are not subject to arbitration" but nominated an arbitrator, it said, to safeguard its interests.

Uday Bhaskar, a defence analyst at the Society for Policy Studies in New Delhi, said India's participation in the arbitration did not represent a climb-down.

"Cancelling deals and saying that we will not acquire critically-needed equipment, to my mind, is not the answer," Bhaskar said.

"But there's no climb-down on this arbitration and as a matter of fact it might be the most viable via media (middle road)."

India in October had issued a final "show cause" notice to AgustaWestland seeking to terminate the contract. Sources told Reuters in November the deal would be scrapped.

ALLEGATIONS

Indian defence deals have been hit by a number of corruption allegations over the past two decades but a Defence Ministry spokesman said this was the first cancellation of a major deal.

Paying or accepting bribes is prohibited by India's defence procurement rules. The government can cancel a contract if an integrity pact in the rules is violated, and the seller has to forfeit any security money it deposited as a bidder.

The Comptroller and Auditor General said in August the ministry had initially stipulated that the helicopters should be able to fly to an altitude of 6,000 metres (19,685 feet), which meant that AgustaWestland could not compete since the AW101 was certified to fly only to 4,572 metres (15,000 feet).

India took delivery of three of the helicopters before the deal stalled but the Defence Ministry spokesman said the fate of those aircraft was "uncertain". (Additional reporting by Sankalp Phartiyal in Delhi and Steve Scherer in Rome; Editing by Louise Ireland and Anthony Barker)


India scraps AgustaWestland helicopter deal, agrees to arbitration| Reuters

India cancels Rs 3,546 crore AgustaWestland VVIP chopper deal - The Times of India

 

[ejaz007]

New Delhi cancels chopper deal with AgustaWestland

NEW DELHI: India has cancelled a 556-million-euro ($753 million) contract with Anglo-Italian firm Agusta Westland to buy luxury helicopters for VIPs following a corruption scandal, the Press Trust of India reported Wednesday.
The deal was scrapped after Defence Minister A. K. Antony held a meeting with Prime Minister Manmohan Singh, the national news agency said, quoting what it described as official defence ministry sources.
India had suspended the deal in 2013 after Italian investigators began looking into allegations that AgustaWestland paid bribes to win the contract.
The Italian boss of AgustaWestland’s parent company Finmeccanica was arrested last February over the case — touching off a firestorm in India, where the Congress-led government has been battling a string of graft scandals before elections this year.
India signed the deal in 2010 for 12 helicopters from AgustaWestland after the company beat competition from American and Russian rivals.
In November last year the helicopter maker had sought arbitration to try to salvage the contract.
Italian prosecutors suspect kickbacks worth around 10 percent of the deal — $67.6 million (50 million euros) — were paid to Indian officials to swing the deal in favour of AgustaWestland, according to Italian media reports.
India has already received three of the helicopters, intended to be used by such dignitaries as the prime minister and the president, but Antony halted deliveries of the remaining nine.
India’s auditor general said in a report last year that the defence ministry “deviated from procurement procedure and tender on several instances in the deal” including altitude requirements.
Indian detectives raided the home of former air force chief S.P. Tyagi as part of the probe into the allegations of bribery. Tyagi has denied any wrongdoing.
Cash was allegedly handed to Tyagi’s cousin, with more money funnelled via a web of middlemen and companies in London, Switzerland, Tunisia and Mauritius.
The purchase also came under scrutiny from Italian investigators probing allegations the Italian group had broken the law by bribing foreign officials.
The company denies any wrongdoing.
A spokesman for the company in India was not immediately available to comment on the PTI report. The cancellation is expected to be a big blow to AgustaWestland, which has a factory in southwest England.
The decision will also be a severe blow to Finmeccanica, whose chief executive Giuseppe Orsi resigned from behind prison bars in February last year. Orsi denies any wrongdoing and his lawyer has called the allegations against him “inconsistent” and his arrest “unjustified”.
The latest move by the Indian defence ministry is seen as a government attempt to contain the fallout from the corruption scandal before elections due in the first half of this year. The helicopter deal was cleared by Singh, whose Congress-led government has been buffeted by a series of corruption scandals that analysts say could affect the party’s electoral chances in 2014 polls.

http://dailytimes.com.pk/region/02-Jan-2014/new-delhi-cancels-chopper-deal-with-agustawestland

 

[Abingdonboy]

The bloody joker "Saint" Antony does it again!! Can he make a right decision?



+ these fools in the GoI deserve all they get, they're about to get their backsides handed to them in arbitration- incidentally something the MoD and GoI had categorically ruled out only a few weeks back- and I wonder what the CAG will have to say about that?! The Indian exchequer will be out 10s, if not 100s, of millions- but what does that matter, eh? And when/if one of the aged Mi-8s of the IAF's communication SQD crashes what will these idiots say then? I guess no one in the MoD/GoI cares anymore as it's unlikely they'll be around to face the music post 2014.

The saddest part of all this is the AW-101 was the IDEAL bird for the job and THREE of these lovely birds where delivered to the India and where in IAF hands.



Hopefully someone makes a good call (unlikely) and takes Sikorsky up on their offer to deliver S-92s on a fast-track basis but then that'd make for a single-vender purchase and the MoD avoids them like the plague.


What a mess.

 

[ejaz007]

India Opts Not to Blacklist AgustaWestland

NEW DELHI — The Indian Defence Ministry will not blacklist AgustaWestland or parent company Finmeccanica, restricting its action only to canceling the €556 million (US $766 million) contract for 12 VVIP helicopters to India, MoD sources said.

The decision not to blacklist AgustaWestland allows it to remain in two Indian competitions, added one of the sources.

AgustaWestland is competing to supply 56 naval utility helicopters to the Indian Navy and 14 twin-engine helicopters to the Indian Coast Guard.

In the Navy competition, AgustaWestland is competing with Eurocopter. The Indian Navy is planning to procure twin-engine light helicopters to replace its aging Cheetah and Chetak machines.

In the Indian Coast Guard tender, two other companies, including Sikorsky and Eurocopter, have also submitted their bids.

On Jan. 1, the MoD canceled its 2010 contract with AgustaWestland for the 12 VVIP helicopters, citing a breach of the Integrity Pact signed by the company.

MoD sources said the decision to cancel the contract but not blacklist the company was taken after Indian Defence Minister A.K. Antony met Prime Minister Manmohan Singh on Jan. 1. No details of the meeting have been divulged.

Nitin Mehta, a New Delhi-based defense analyst, said the MoD is trying “to send a message ahead of the general elections for early 2014 that the ruling government is taking action against corruption.”

India’s previous blacklisting of companies have adversely affected several weapons projects, including the artillery purchase program and a deal to address shortages in ammunition. The blacklisted companies include Denel of South Africa, Singapore Technologies, Israel Military Industries and Rheinmetall Air Defence.

An AgustaWestland executive said the company has not formally received MoD’s announcement of the helicopter contract cancellation and as such will not comment on the matter.

The executive, however, added that the company will proceed for arbitration on MoD’s decision.

India’s Central Bureau of Investigation (CBI) has filed no charge sheets against any individual or company in connection with the canceled contract.

AgustaWestland is accused of using corrupt practices to win the helicopter contract. The Indian government halted the contract last year after Giuseppe Orsi, then-CEO of Finmeccanica, was arrested in Italy and charged with paying bribes to secure the Indian deal while he was CEO of AgustaWestland. New Delhi stopped payments on the contract and referred the matter to the CBI.

Meanwhile, Indian defense planners have said that blacklisting Finmeccanica or even AgustaWestland could impede several defense projects.

Wass, a subsidiary of Finmeccanica, is upgrading India’s A244 lightweight torpedoes and has offered its Black Shark torpedoes.

The torpedoes marked A244-S are being upgraded to extend the life of the torpedoes by another 20 years. Wass is fitting the torpedoes with a new fire control system and is enhancing their range, speed, target acquisition and counter measures.

Finmeccanica has also offered to participate in the joint development of ongoing torpedo programs under the Defence Research and Development Organisation.

Selex of Italy, another subsidiary of Finmeccanica, has been awarded a contract to supply an advanced 3D Band Air Surveillance Radar for the Navy’s home-grown aircraft carrier being built at Cochin Shipyard. The blacklisting of Finmeccanica would adversely affect India’s aircraft carrier program, which is already delayed by over four years.

India Opts Not to Blacklist AgustaWestland | Defense News | defensenews.com

 

[kurup]

Chopper deal: India has to recover bank guarantee of Rs 2134 crores

India has to recover bank guarantee worth Rs 2,134 crore deposited in Italian banks after scrapping AgustaWestland VVIP chopper deal in which allegations of corruption against then IAF Chief SP Tyagi and others are being probed by CBI.

In an RTI reply, Indian Air Force said 83,439,303 Euros (15 per cent of the contract value) and Euro 166,878,607 as (30 per cent of contract value) totalling to about Rs 2,134 crore (as per present exchange rates) were deposited as bank guarantee by the company in Deutsche Bank, Milano, Italy.
The reply said Rs three crore were deposited in State Bank of India, Parliament Street Branch as Integrity Pact Bank Guarantee.

“The total contract price for the 12 helicopters along with the associated equipment is Euro 556,262,026. 15 per cent of total contract price was paid as advance payment in February 2010 and 30 per cent of the total contract price was paid on completion of Critical Design Review in March 2011,” the reply to Subhash Agrawal said.

The advance payment made to AgustaWestland comes to about Rs 1,493 crore (as per present exchange rates) of the total Rs 3600-crore deal.

The Defence Ministry has received the money which was deposited in the State Bank of India here in the form of a guarantee in connection with Rs 3600-crore helicopter deal which has since been scrapped because of bribery charges.

The recovery took place even as an Italian court had stayed India’s move to encash bank guarantee of around Rs 2000 crore.

“Subsequent to the termination of the contract, two bank guarantees amounting to Rs 240 crores approximately have been encashed. Advance amount is adjusted against the payments for deliveries under the contract and is secured by advance bank guarantees provided by the seller on Deutsche Bank, Milan.

“Demand was made on Deutsche Bank, Milan for encashment of advance bank guarantees. However, the seller has obtained ad interim stay from the Ordinary Tribunal of Milan, Italy against this. Steps are underway to get the stay vacated,” Antony had said in a statement in Rajya Sabha.

Chopper deal: India has to recover bank guarantee of Rs 2134 crores | idrw.org

 

[oFFbEAT]

The bribe giver got arrested(thanks to a foreign country), the deal got cancelled.....everything is happening as it should except one.....the bribe takers in India are sitting unharmed.....no one would be able to do anything against those corrupt officials and politicians, they'll again indulge into corruption in another deal......this is how things work in India....
Had it not been for Italy, this case wouldn't have come to the forefront....just imagine, a foreign country pointing out our corruption....still some Indians say that these foreign deals are corruption-free......how can we be soooooo shameless????