India will punish guilty in Finmeccanica helicopter deal

PUBLISHED : Wednesday, 13 February, 2013, 6:06pm
UPDATED : Wednesday, 13 February, 2013, 6:06pm


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India will punish any official found guilty of taking bribes from Finmeccanica to steer a multimillion-dollar helicopter contract to the Italian defence firm, the defence minister said on Wednesday.

AK Antony told reporters the government would blacklist and take legal action against any company found to have paid a bribe in the 560 million euro (HK$5.8 billion) deal for 12 helicopters intended for ferrying Indian officials around the country.

“Nobody will be spared. If a company violates the conditions, they are liable for criminal action,” Antony said. “The company is liable to be blacklisted.”

India’s defence ministry has ordered a separate investigation into the defence agreement with Finmeccanica after the Italian company’s chief executive was arrested in Milan on Tuesday on charges he had paid bribes to snag the Indian contract.

Antony said he ordered the Central Bureau of Investigation, India’s equivalent of the FBI, to examine all aspects of the helicopter deal.

Meanwhile, former Indian air force chief Shashi Tyagi on Wednesday denied media reports that members of his family had received payments from the Italian group to facilitate the helicopter deal.

“I deny these allegations. Such a big contract is not determined by one person alone. Everything will become clear once the CBI probe is complete,” Tyagi told NDTV.

India signed the contract for the purchase of 12 helicopters in February 2010.

Giuseppe Orsi, the CEO of the Italian defence and aerospace giant Finmeccanica, was arrested by Italian investigators on Tuesday. Orsi and Bruno Spagnolini, the chief of Finmeccanica’s AgustaWestland helicopter division, are being investigated on charges that they paid bribes in India.

India’s defence ministry said the helicopter contract with AgustaWestland included an integrity clause against bribery or the use of undue influence.

The defence ministry has put on hold the delivery of nine helicopters from the company.

India is expected to spend US$80 billion over the next 10 years to upgrade its military.

The country has become the world’s top arms and defence equipment buyer in recent years due to its concerns about China’s growing power in the region and its traditional rivalry with neighbour Pakistan.

India accounted for nine per cent of all international arms imports from 2006 to 2010, and is expected to keep the top spot for the foreseeable future as it upgrades its air force, army and navy.

However, arms deals in India have often been mired in controversy with allegations that companies have paid millions of dollars in kickbacks to Indian officials to procure lucrative contracts.

In the 1980s, then-Prime Minister Rajiv Gandhi’s government collapsed over charges that the Swedish gun manufacturer Bofors AB paid bribes to supply Howitzer guns to the Indian army.

Following the Bofors scandal, India banned middlemen in all defence deals.