The decision to annul the 2010 deal, being probed by CBI for irregularities, came after a meeting between PM Dr Mnamohan Singh and Defence Minister AK Antony in New Delhi on Jan 01,2014 Wednesday morning
The Ministry of Defence (MoD) has unilaterally terminated a euro 556-million (Rs 4,730 crore at Wednesday’s exchange rate) contract with Anglo-Italian helicopter company, AgustaWestland, for 12 high-end AW-101 helicopters to ferry top leaders and high officials in safety and comfort.
MoD announced on the evening of January 1, 2014 -
“The GOI has terminated with immediate effect the Agreement that was signed with M/s. AgustaWestLand 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 (PCIP) and the Agreement by AWIL.”
MoD procurement policy requires every foreign defence vendor to sign an “Integrity Clause”, strictly prohibiting the bribing of Indian officials to win a deal.
The decision comes almost 11 months after Italian prosecutors in Milan arrested Giuseppe Orsi, the boss of giant Italian defence corporation, Finmeccanica, on February 12, 2013, for allegedly bribing Indian officials to win the deal. Orsi had headed AgustaWestland in 2010, when the IAF contract was signed.
MoD responded immediately by freezing the contract, suspending payments to AgustaWestland, and initiating a Central Bureau of Investigation (CBI) enquiry. A senior MoD official was despatched to Italy to obtain evidence of wrongdoing that could have influenced the award of the contract.
India Recover Rs 1818 Crore from Agusta Westland
India has recovered the entire Rs.1,818 crore it paid to Anglo-Italian company AgustaWestland by invoking bank guarantees after it junked a Rs.3,600 contract for purchasing 12 AW 101 helicopters meant for use by VVIPs.
Following an Italian court's order last month that cleared the final stumbling block in the way of recovering the money, the Defence Ministry encashed the guarantee deposited by the company in Italian banks.
The Defence Ministry had earlier recovered Rs.250 crore deposited in an Indian bank by the company.
India had paid 45 per cent of the value of the contract to the company, which had delivered three helicopters.
The IAF has mothballed these helicopters as they cannot be used.
With the recovery of money, a chapter in the tainted contract has been closed.
The Defence Ministry is now awaiting the outcome of an investigation in Italy and at home to take further action.
The CBI is yet to conclude its probe into allegations of kickbacks being paid for the contract.
Timeline of the Deal
TALE OF THE DEAL
- Aug 1999: IAF proposes purchase of 8 VVIP helicopters, to replace the outdated Mi-8 choppers
- Mar 2002: Global tender floated, requiring helicopters to fly up to 6,000 m. Only Eurocopter EC-225 qualified in trials
- Nov 2003: Brajesh Mishra, principal secretary to PM Atal Bihari Vajpayee, convenes a meeting to suggest that the helicopter’s operational ceiling be lowered from 6,000 m to 4,500 m to make more choppers eligible.
- Nov 2003-Sept 2006: This issue and others like raising cabin height discussed between IAF, NSA, PMO, SPG and MoD. Helicopter numbers also increased from 8 to 12.
- Sept 27, 2006: Fresh Request for Proposals (RfP) issued to six vendors. Three respond — Sikorsky (S-92 helicopter); AgustaWestland (AW-101) and Rosoboronexport (Mi-172).
- April 2008: After field trials, AW-101 recommended for purchase.
- Feb 2010: Contract concluded with AgustaWestland for 12 AW-101, including “Integrity Clause” banning use of undue influence, and middlemen.
- Feb 12, 2012 : Media reports appear on Italian investigation into bribery in AW-101 contract with India. MoD freezes the contract, with three choppers delivered.
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