India’s defence ministry said that payments to Italian aerospace and defence company Finmeccanica for a deal to supply helicopters are being frozen amid allegations that the company paid bribes to secure the €560m contract.
Defence minister AK Antony said that he had ordered the Central Bureau of Investigation (CBI), the Indian agency responsible for investigating corruption cases, to review the contract for Finmeccanica to supply 12 helicopters to the Indian military. He added that the government would consider cancelling the contract, blacklisting the company and criminal charges if the accusations of bribery were proven, although it would await the outcome of the investigation before taking action.
India signed the contract with Finmeccanica’s AgustaWestland helicopter division in February 2010 and three of the helicopters were delivered last December. Delivery of the remaining nine, originally scheduled for 2014, has now been put on hold.
The investigation follows the arrest of Finmeccanica’s chief executive officer (CEO), Giuseppe Orsi, by Italian prosecutors in Milan on 12 February. The Italian government holds a 30% stake in the group. Orsi has been under investigation by the authorities for several months for possible bribery and embezzlement. Bruno Spagnolini, head of AgustaWestland was also placed under house arrest while the AgustaWestland offices were raided.
Former Indian Air Force chief SP Tyagi has denied allegations that he or his relatives were paid bribes to secure the deal. Italian investigators have named Tyagi in a preliminary inquiry submitted to an Italian court.
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