India Scraps Large Italian Helicopter Deal

New Delhi - India cancelled a helicopter purchase with Italian defence group Finmeccanica SpA on Wednesday after allegations that the firm had bribed officials and politicians to secure the contract.

The decision was taken after a meeting between India's Premier Manmohan Singh and Defence Minister AK Antony on Wednesday morning, a defence official confirmed.

"We've just learned that the deal is scrapped, the deal is off," the official said on condition of anonymity.

The Indian Air Force was to buy 12 executive helicopters from Finmeccanica SpA's Britain-based subsidiary AgustaWestland in a deal valued at more than 750 million dollars.

The 2010 deal was cancelled because of "violation of the pre-contract integrity pact," NDTV reported. All defence equipment contracts of the Indian government have a clause barring the involvement of middlemen.

The decision was not officially announced yet.

Senior officials of Finmeccanica including chief executive Giuseppe Orsi are facing trial in Italy for alleged corruption. Orsi, chief of AgustaWestland at the time, is accused of having allegedly paid bribes to secure the deal.

A preliminary report filed by Italian prosecutors said about 68 million dollars were paid in kickbacks to middlemen, Italian politicians and Indian officials.

Italian investigators also named former Indian air force chief SP Tyagi in a preliminary inquiry submitted to an Italian court. Orsi and Tyagi have denied any wrongdoing.

India's action came after the company replied in November to the Defence Ministry's "formal show cause notice" seeking to cancel the 2010 contract.

The case may turn into a legal tangle because three of the helicopters have already been delivered and New Delhi has paid more than one-third of the contract payments.

Other media reports suggested the Defence Ministry, which had consulted the Law Ministry, had decided to seek arbitration.

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India Italy Helicopters Government Procurement
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