News / Asia

India Agrees to Arbitration on Scrapped Helicopter Deal

FILE - Finmeccanica Chairman and Chief Executive Officer Giuseppe Orsi poses in a helicopter during the opening ceremony of the new Terminal of Vertiporto dell'Urbe in Rome on January 19, 2009. FILE - Finmeccanica Chairman and Chief Executive Officer Giuseppe Orsi poses in a helicopter during the opening ceremony of the new Terminal of Vertiporto dell'Urbe in Rome on January 19, 2009.
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FILE - Finmeccanica Chairman and Chief Executive Officer Giuseppe Orsi poses in a helicopter during the opening ceremony of the new Terminal of Vertiporto dell'Urbe in Rome on January 19, 2009.
FILE - Finmeccanica Chairman and Chief Executive Officer Giuseppe Orsi poses in a helicopter during the opening ceremony of the new Terminal of Vertiporto dell'Urbe in Rome on January 19, 2009.
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Reuters
— India agreed to take its $770 million helicopter deal with Italian defense group Finmeccanica's AgustaWestland unit to arbitration while formally cancelling the agreement on Wednesday over what it termed a breach of integrity.

India's Defense Ministry appointed a former judge as its arbitrator on Wednesday but said in a statement it believed "integrity-related issues are not subject to arbitration''.

India froze payments for the 12 AW101 helicopters after Finmeccanica's then chief executive was arrested in February for allegedly paying bribes to secure the deal, embarrassing the New Delhi government before parliamentary elections due by May 2014.

India's defence minister, A.K. Anthony, has said he did not believe AgustaWestland's denial that it paid bribes to swing the deal. Anthony had a meeting with Indian Prime Minister Manmohan Singh hours before the latest decisions were announced.
      
Finmeccanica spokesman Roberto Alatri, commenting on India's decision, said the company would defend its position. It invoked the arbitration, which would be conducted in India under the Indian Arbitration and Conciliation Act of 1996.

"We've not received any official communication yet but we will do everything that would be necessary to defend the correctness of our position,'' Alatri said. "We're sure our behavior was ethically correct.''

India in October had issued a final "show cause'' notice to AgustaWestland seeking to terminate the contract. Sources told Reuters in November the deal would be scrapped.

"The Government of India has terminated with immediate effect the agreement that was signed with M/S. AugustaWestland International Ltd (AWIL) on 08 February, 2010 for the supply of 12 VVIP/VIP helicopters on grounds of breach of the Pre-contract Integrity Pact and the agreement by AWIL,'' the Defence Ministry said in its Wednesday statement.

Indian defense deals have been hit by a number of corruption allegations over the past two decades but a Defense Ministry spokesman said this was the first cancellation of a major deal.

Window for others

Paying or accepting bribes is prohibited by India's defence procurement rules. The government can cancel a contract if an integrity pact in the rules is violated, and the seller has to forfeit any security money it deposited as a bidder.

India's federal auditor said in August the ministry had initially stipulated that the helicopters should be able to fly to an altitude of 6,000 meters (19,685 feet), which meant that AgustaWestland could not compete since the AW101 was certified to fly only to 4,572 meters (15,000 feet).

India took delivery of three of the helicopters before the deal stalled but the Defense Ministry spokesman said the fate of those aircraft was "uncertain''.

United Technologies Corp's Sikorsky Aircraft, EADS'  Eurocopter and Lockheed Martin may now be in line to provide helicopters for the country's defense forces.

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Comment Sorting
Comments
     
by: Jonathan huang from: Canada
January 02, 2014 2:53 PM
Every time when I compare Democratic India with "dictatorship" China, I got only one conclusion.
Whenever during an Olympic game, or space mission, or super computers, bullet trains........


by: Brama from: India
January 02, 2014 10:08 AM
India is hopelessly dysfunctional - we have to acknowledge it. We also must acknowledge that the Brits have taken many liberties with our kind tolerance and raped, robbed and abused us into the bargain. we shall never forget the corrupt influence of the Brits on our system of Government.


by: Jethmalani from: India
January 01, 2014 2:40 PM
India has always been for sale... the Gandhis are the source of corruption and disease... here we have Sonia Gandhi... an Italian parlor maid... who married one of the more corrupt of the stained family of reprobates... and spawned a slew of diseased organisms that now infect every facet of our political system...


by: Sharma Dharma from: India
January 01, 2014 12:26 PM
a corrupt organization of Brits and Kunts... India is not for sale..!! maybe you should consider selling your crappy piss pots to Pakistan or better yet, to Iran...
How come the US or Israel are never involved in corruption schemes to sell their military hardware? only the British with their inferior crap - my God - has Britain fallen so low...

In Response

by: Stanley from: UK
January 01, 2014 2:20 PM
Nobody denies that the US/Israel have superior technological and military advantages. But for the needs of India this was a good deal.

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