INDIA’S defence ministry said yesterday that it has put a £483 million contract to purchase helicopters from Italian company Finmeccanica on hold amid allegations that bribes were paid to obtain it.
The ministry said a formal notice has been sent to Finmeccanica’s AgustaWestland helicopter division seeking cancellation of the contract. The company has a week to respond.
India signed the contract with AgustaWestland for the purchase of 12 helicopters in February 2010. Three were delivered in December.
India has launched its own investigation into the deal after the Italian defence and aerospace giant’s chief executive was arrested in Milan on Tuesday on charges of paying bribes to obtain the contract.
Giuseppe Orsi, the recently removed chief executive of Finmeccanica, and Bruno Spagnolini, chief of AgustaWestland, are being investigated on corruption charges involving business done in India.
Mr Orsi yesterday formally submitted his resignation as company chief. In his letter to the board, he denied wrongdoing, saying he always worked “for the exclusive interest of Finmeccanica and its subsidiaries”.
Indian defence ministry officials have said the contract includes an integrity clause against bribery or the use of undue influence. Under the terms of the clause, if any person or the company is found to have bribed officials or made any kind of payoff, the agreement can be scrapped and the firm blacklisted.
The defence ministry had already put on hold the delivery of the remaining nine helicopters.
India is expected to spend £50 billion over the next ten years to upgrade its military.