Citing legal implications, the Indian Government has developed cold feet on cancelling the VVIP helicopter deal with AgustaWestland or blacklisting the Italian firm and its parent company Finmeccanica.
This comes even as Defence Minister AK Antony admitted in Parliament last month that something may have gone wrong while finalising the contract and the CBI stated that prima facie there was a case of corruption in the deal.
Italian prosecutors probing allegations of corruption have indicated that bribes to the tune of `360 crore were paid allegedly by Finmeccanica to bag the `3,700 crore contract for 12 VVIP helicopters for the IAF. The contract was inked in 2010.
Asked about the delay in acting against AgustaWestland and why the contract should not be cancelled, the Defence Ministry on Sunday said any action at this stage cannot be “impulsive or intuitive.”
Stating this, Defence Ministry spokesman Sitanshu Kar said: “As we look at it, the next step will be the final one and we are aware that it will have legal implications. We are proceeding with the case in a systematic manner, as per law.
“The Government will take all actions expected of it under the terms of the contract when credible evidence is gathered. This is crucial because the actions of the Government have to stand the scrutiny of courts. Actions at this stage cannot be impulsive or intuitive. And we are seriously pursuing that objective of gathering evidence.”
The Defence Ministry’s helplessness in acting tough against the Italian company became glaringly apparent because of Antony’s recent statement in Parliament where he said that he did not “believe” in the AgustaWestland plea of innocence. In reply to a show cause notice, the Italian company said it had done no wrong in clinching the deal.
The Defence Ministry had issued a show cause notice just days after a CBI probe was ordered in the wake of the arrest of Finmeccanica chief Giuseppe Orsi in Italy on February 12 and Bruno Spagnolini, head of the AgustaWestland helicopter division.
Sources said the show cause notice was issued to AgustaWestland as the Defence Ministry had evidence that allegations of corruption had substance. At the time of serving the show cause, the Defence Ministry described it as a “terminal” process towards cancelling the deal. In that backdrop, it is obvious that the Government has now gone soft in dealing with the Italian companies.
In reply to the first notice, AgustaWestland maintained that it did not violate the Integrity Pact. It reiterated the same when the Defence Ministry issued a second notice ten days ago seeking an explanation from the company about its alleged links with middlemen and two Indian companies.
At present, two critical inquiries are going on, one by Italian prosecution agencies, and the other by the CBI. The Indian Government is awaiting the outcome of these probes before moving further. Defending the cautious approach, Kar said: “The Integrity Pact signed between AgustaWestland and the Defence Ministry is an insurance against any corrupt practices as we have shown in the past.”
The Integrity Pact bars the vendor from hiring a middleman or paying commissions or bribes and the Defence Ministry reserves the right to cancel or blacklist the company at any stage of the contract if the Pact is violated.