Fate of the three delivered copters to be decided in next few days
A day after scrapping the VVIP helicopter deal with AgustaWestland, the Defence Ministry on Thursday initiated the process of encashing the bank guarantee of nearly 210 million Euros (Rs 1,700 crore) furnished by the Anglo-Italian company.
India and Agusta had signed a deal worth Rs 3,600crore for 12 AW-101 helicopters in February 2010 and the Defence Ministry has already paid 45 per cent of the contracted amount. The company had delivered three helicopters early last year and after allegations of bribe surfaced in Italy, the Government put the delivery of the remaining helicopters on hold. It subsequently handed over the case to the CBI in February last year.
Disclosing that the Ministry has started the process of en-cashing the bank guarantee, officials said here on Thursday the fate of the three helicopters will be decided in the next few days.
When asked if the helicopters will be returned to the company, officials said, “It is too early to decide on this issue as the Government has only taken the first step of terminating the contract.” The IAF needs critical parts for maintaining these helicopters and after the deal was put on hold, the supply of these parts came to a halt.
As regards the bank guarantee, officials said, “The Government will not be losing out anything.” The termination and en-cashing the guarantee is strictly as per the Defence Procurement Procedure(DPP), they asserted.
Agusta had signed the contract as per DPP including the integrity pact. India can also initiate the process of recovering the amount paid so far and press for damages.
On the question of blacklisting the company after the cancellation of the deal, officials refrained from giving a direct reply saying the Defence Ministry in consultation with the law Ministry will take the next step. They admitted that this the first time a contract of this magnitude was scrapped mid-way after allegations of bribe worth over Rs 360 crore to bag the deal surfaced.
Announcing the decision to scrap the deal, the Defence Ministry said on Wednesday, “The Government of India has terminated with immediate effect the agreement that was signed with M/s AgustaWestland International ltd. (AWIl) on February 8, 2010 for the supply of 12 VVIP helicopters on grounds of breach of the Pre-contract Integrity Pact (PCIP) and agreement by AWIl.”
The Ministry also said “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 arbitration.
However, AWIl has since pressed for arbitration and appointed an arbitrator from its side. In view of this, the Defence Ministry sought afresh the opinion of the Attorney General. With a view to safeguard the interests of the Government, the Defence Ministry has nominated Justice (retired) BP Jeevan Reddy as its arbitrator”.
Incidentally, Defence Minister AK Antony had ruled out arbitration in December last after Agusta invoked the arbitration clause and appointed former Supreme Court judge Justice(retired) BN Srikrishna. Antony maintained that violation of integrity pact is not covered by the arbitration clause of DPP.