Home INDIA & BEYOND India scraps $770 mn AgustaWestland chopper deal

India scraps $770 mn AgustaWestland chopper deal


New Delhi, Jan 1:

India Wednesday terminated the Rs.3,600 crore (about $770 million) deal with AgustaWestland for the purchase of 12 VVIP choppers over allegations of kickbacks having been paid to fix the deal.Augustawestland

In a statement, the defence ministry said: “The government of India has terminated with immediate effect the agreement that was signed with Messrs AgustaWestland International Ltd. (AWIL) on Feb 8, 2010, for supply of 12 VVIP/VIP helicopters on grounds of breach of pre-contract integrity pact and the agreement by AWIL.”

“Based on the opinion received earlier from the Attorney General of India, it has been the view of the government that integrity related issues are not subject to arbitrations. However, AWIL has since pressed for arbitration and appointed an arbiter from its side.”

“In view of this, the MOD (ministry of defence) sought afresh the opinion of the Attorney General. With a view to safeguard the interest of the government, MOD has nominated Justice B.P. Jeevan Reddy as its arbitrator.”

Scrapping of the deal with AgustaWestland – the British subsidiary of Italian firm Finmeccanica – comes more than a year after reports that two top officials of the company allegedly paid bribes to bag the contract for the chopper maker.

AgustaWestland has already delivered three of the choppers.

The cancellation came after Defence Minister A.K. Antony met Prime Minister Manmohan Singh earlier in the day, defence ministry sources said.

India froze payments for the VVIP choppers after Finmeccanica’s then chief executive was arrested in Italy in February for allegedly paying bribes of Rs.360 crore to secure the deal.

On Oct 21, the defence ministry issued a show cause notice to the Anglo-Italian firm for cancellation of the deal and was given time till Nov 26 to reply.

AgustaWestland then sought a meeting with the ministry and was been given 15 days’ more to reply to the notice.

Faced with cancellation of the deal, the firm earlier this month sent a notice to the defence ministry, asking it to get involved in the arbitration process.

The deal was inked in February 2010 for supply of 12 VVIP helicopters to IAF. India had paid around 45 percent of the total contract value for the choppers which were meant to ferry the president, the prime minister and other VVIPs.

Former Indian Air Force chief S.P. Tyagi had come under the scanner in connection with the kickback allegations.


August 1999 – The Indian Air Force (IAF), which is responsible for carrying out VVIP communication duties, proposes replacement of Mi-8 helicopters due to operational constraints.

March 2002 – A global request for proposals issued.

January 2010 – The Cabinet Committee on Security clears proposal to acquire 12 helicopters for use of VVIPs after a long process that involved change in some parameters, evaluations and and negotiations.

Feb 8, 2010 – Ministry of defence (MoD) concludes contract for supply of 12 AW-101 VVIP helicopters with Britain’s AgustaWestland.

February 2012 – Media reports about allegations of unethical dealings in helicopter procurement appear. MOD seeks factual report from Indian embassy in Rome.

Feb 12, 2013 – Italian Police arrest Giuseppe Orsi, CEO of Finmeccanica, parent company of AgustaWestland, as part of bribery investigations into the chopper deal.

Feb 15, 2013 – MOD initiates action for cancellation of contract and puts on hold payments to company. Issues a formal show cause notice to AgustaWestland seeking cancellation of contract and taking other actions as per the terms of the contract and the integrity pact. Investigation handed over to Central Bureau of Investigation (CBI).

Feb 25, 2013 – CBI registers a preliminary enquiry (PE) against 11 people, including former IAF chief S.P. Tyagi, and four companies.

March 13, 2013 – CBI registers a first information report (FIR) against Tyagi and 12 others for alleged criminal conspiracy and cheating in the chopper deal.

November 2013 – AgustaWestland officials meet MoD officials to present their case. The company nominates Justice B.N. Srikrishna for arbitration. It submits its reply to the final show cause notice before Nov 26 deadline.

Jan 1, 2014 – The Indian government terminates the agreement on grounds of breach of the Pre-contract Integrity Pact (PCIP) and agreement by AgustaWestland.