India KO’s multimillion AgustaWestland deal

Posted on 1 Jan 2014 by The Manufacturer

The Indian government has pulled the plug on the £466m contract to buy 12 British-manufactured AgustaWestland helicopters following allegations that bribes were made to win the deal.

India’s Ministry of Defence today announced the termination of the contract – agreed in 2010 – “with immediate effect” and said it was done on the grounds of the Yeovil manufacturer breaching a “pre-contract integrity pact.”

It follows India curtailing the AW101 helicopters after Prime Minister Manmohan Singh raised concerns about the case to UK counterpart David Cameron during a trade visit to India last February.

New Delhi has been threatening to cancel the contract ever since allegations the company paid bribes to senior defence officials, including relatives of India’s former air chief S.P. Tyagi – who denies any wrongdoing – first surfaced in February.

A.K. Anthony, India’s defence minister, said at the time he did not believe AgustaWestland’s denial of any wrongdoing and suspended the contract.

The claims emerged followed the arrest and subsequent investigation into Giuseppe Orsi, the former boss of AgustaWestland’s parent company, Finmeccanica, who is standing trial in Italy for fraud and corruption charges related to the contract.

Investigators allege he paid £25.4m to Brit Christian Michel, to act as a middleman between the company and members of the Tyagi family.

It is believed the cancellation of the deal could now open the door to rival companies United Technologies Corp’s Sikorsky Aircraft, EADS’ Eurocopter and Lockheed Martin to provide aircraft for India’s armed forces.

Having become the world’s biggest arms and defence equipment buyer, India is expected to spend an estimated £48bn over the next decade on military upgrades.