AgustaWestland breached ‘pre-contract integrity pact’

India on Wednesday terminated the Rs. 3,726-crore, scam-ridden VVIP chopper deal with AgustaWestland International Limited (AWIL) on the grounds of breach of pre-contract integrity pact (PCIP). The deal for supply of 12 choppers, of which three have already been delivered, came under the scanner following allegations of kickbacks to senior Indian Air Force officers and others to the tune of nearly Rs. 360 crore.

While reports about the government scrapping the deal surfaced soon after Defence Minister A.K. Antony met Prime Minister Manmohan Singh in the morning, the Defence Ministry confirmed the cancellation only around 5.30 p.m; it added that the arbitration route would be taken. Justice B.P. Jeevan Reddy will be the arbitrator for the Ministry.

Earlier, the government had maintained ,on the basis of the opinion of the Attorney-General, that “integrity-related issues are not subject to arbitration”. However, with AWIL pressing for arbitration, the Defence Ministry followed suit after getting a fresh opinion from the AG.

In December, Mr. Antony told the Rajya Sabha that the Central Bureau of Investigation was probing the scam and that it had registered a case against six firms — Finmeccanica, Italy; AgustaWestland, U.K.; IDS Tunisia; Infotech Design System (IDS Mauritius); IDS infotech Ltd., Chandigarh; and AeromatrixInfotech Solution, India. The CBI, he said, had not filed a charge sheet.

A senior CBI official said investigations into the payoff allegations were still under way. Soon after the arrest of Finmeccanica chief Giuseppe Orsi — accused in the VVIP chopper scam — by the Italian police in February 2013, the agency instituted a preliminary enquiry. Within a fortnight, a regular case was registered against the former IAF chief, S.P. Tyagi, and 12 others, including his three cousins.“We have examined all the India-based suspects. The probe is still under way,” said the official.

In February 2013, the Ministry of Defence decided to scrap the contract for supply of 12 AW101 three-engine helicopters for VVIP use and freeze all payments.

An attempt to constitute a JPC to probe the chopper scam was aborted as a resolution adopted in the Rajya Sabha, after the BJP walked out, was not pursued in the Lok Sabha.

The government passed the motion in the Rajya Sabha in February to constitute a 30-member JPC to show that it was keen on a parallel probe into the chopper scam and wanted to assure the House, Mr. Antony said, that there was “no cover-up”.

(With inputs from Devesh K. Pandey)

Corrections and Clarifications

In the graphic titled “Copter Deal Grounded” that went as an inset into the report, “India scraps VVIP chopper deal with AgustaWestland”, the date of arrest of Finmeccanica chief was wrongly given as Feb. 12, 2003. It should have been 2013.

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