The Government has initiated steps to cancel the controversial `3,600 crore VVIP helicopter deal with AgustaWestland. It is likely to issue a showcause notice to the Italian company after the Attorney General gave his opinion that it breached the integrity pact.
The notice comes in the backdrop of allegations surfacing in Italy that a bribe of `360 crore was paid by the company to bag the contract for 12 helicopters. The Italian Government and CBI are probing into the allegations separately.
In his opinion the AG has told the Defence Ministry that the Anglo-Italian firm had committed breach of contractual obligations and integrity pact. The integrity pact bars hiring middlemen and paying commissions and kickbacks.
AgustaWestland had invoked arbitration proceedings against the Defence Ministry 10 days back for “unilaterally” freezing the deal. The Defence Ministry had put the contract on hold in February after the scam broke out. At present, the IAF has three AgustaWestland helicopters and the remaining nine helicopters are yet to be delivered due to the ban.
The law Ministry has told the Defence Ministry that the arbitration proceedings initiated by AgustaWestland are not binding on the Government. However, the Government was preparing to issue the showcause notice for cancellation much before AgustaWestland opted for arbitration.
Incidentally, this will the second showcause notice issued by the Defence Ministry with the first one served to the company on February 15. The Government had then asked the company to reply within seven days as to why the contract, inked in 2010, should not be cancelled after the integrity pact was violated.
AgustaWestland, however, has all along denied any wrongdoing and maintains that it went strictly as per the Defence Procurement Procedure (DPP) and Indian rules and regulations.
Former IAF chief SP Tyagi is among those under cloud in connection with the kickback charges. The CAG also recently highlighted loopholes in the deal. The contract was suspended soon after the arrest of the firm’s former CEO, Guiseppe Orsi, in Italy in connection with the case.
The AgustaWestland helicopters were bought to replace the ageing Russian made MI-8 helicopters which are in the last leg of their operational life and due to be phased out by the end of next year. The IAF chief NAK Browne last week had expressed concern as it will have to soon find a way out to replace MI-8s as the AgustaWestland deal stands frozen.