‘Contract followed comprehensive evaluation’

AgustaWestland — the wholly-owned subsidiary of Italian defence and aerospace giant Finmeccanica which is at the centre of bribery charges in the Rs. 3,546-crore deal for the supply of 12 VVIP helicopters — has, in its reply to the Defence Ministry, denied allegations that it made payoffs to bag the deal from India in February 2010.

The firm on Friday sent its reply to the Ministry’s show cause asking it why the deal should not be cancelled as it allegedly violated the provision of the “integrity pact” that prohibits the use of influence or middlemen while negotiating and finalising the deal with India.

In the absence of authenticated documents from the Italian court, the Ministry is banking upon the reports of its joint secretary Arun Kumar Bal, who has returned from Italy, and the Central Bureau of Investigation team that had gone to Rome and Milan to gather evidence and understand the working of the judicial system in Italy.

Sources in the Ministry said they would study AgustaWestland’s reply, which was on expected lines, and seek further clarifications from the company. The Air Force has already received three of the 12 AW-101 VVIP choppers but after the bribery scandal broke out and Finmeccanica’s CEO was arrested in Italy, the Defence Ministry has put on hold further payments and deliveries of the chopper. The Ministry has already paid around 45 per cent of the total contract value.

In its reply, AgustaWestland denied having hired any middlemen or paying them €51 million to bag the €-556-million deal. It maintained that its conduct has been fully compliant with the rules, which regulate a contract signed with India. The company has said the contract “was awarded to it following a comprehensive technical and flight evaluation of competing types performed by the IAF in accordance” with the Indian Defence Procurement Procedure. It said the firm had not indulged in any wrong practice.

However, the preliminary report filed before an Italian tribunal has alleged that the bribe money was routed through alleged middlemen, Guido Haschke, Carlo Gerosa and Christian Michel, to certain persons in India.

In another development relating to the global arms market, the Stockholm International Peace Research Institute (Sipri) has said that global arms sales from the top 100 companies went down for the first time in 2011 since the mid 1990s.

The total arms sales in 2011 amounted to $410 billion, five per cent less than that of 2010, Sipri said. “Arms sales went down for the first time since the mid 1990s, there was a five-per-cent decrease in constant dollar amounts. These decreases come from drawdowns in Iraq, sanctions against Libya, decrease in U.S. participation in conflict as well as austerity measures and decrease in military spending in North America and Western Europe,” it said.

Sipri said sales by the 44 U.S.-based arms producers amounted to 60 per cent of the total arms sales of the Top 100 companies (excluding China-based companies). The 30 companies based in Western Europe made up another 29 per cent of the total. A new trend in the arms market is the increase of cybersecurity market, it said.

Among India’s mega defence deals which are still in the pipeline are French Dassault’s 126 Rafale fighter jets worth nearly $20 billion, 197 light combat helicopters for the Army worth nearly Rs. 3,000 crore and other proposals for procuring rifles and submarines.