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India’s $1B Deal for Light Helos Faces Cancellation

Nov. 6, 2012 - 07:44AM   |  
The AW101 helicopter was chosen by India in 2009 in a 12-helicopter buy to transport top officials.
The AW101 helicopter was chosen by India in 2009 in a 12-helicopter buy to transport top officials. (AgustaWestland)
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NEW DELHI — India’s $1 billion tender to buy 197 light utility helicopters (LUHs) could be canceled for the second time in five years, while Italy’s AgustaWestland may face blacklisting in India if allegations about use of a middleman in the competition are confirmed, according to Indian Defence Ministry officials.

The ministry has delayed making a selection in the competition between Russia’s Kamov and Eurocopter following reports that Italian investigators were probing a 2009 award by the Indian Air Force to Finmeccanica subsidiary AgustaWestland for 12 very very important person (VVIP) helicopters. In the course of this investigation, evidence may have been uncovered that an Indian Air Force brigadier general had sought money from AgustaWestland to revise the technical requirements for the LUH competition.

The Defence Acquisition Council, India’s top procurement body and under the chairmanship of the defense minister, deliberated on the LUH tender at its meetings the week ending Oct. 27, though no details are known.

According to media reports here, documents filed in an Italian court said an Indian Army officer sought money to revise the LUH tender, issued in 2009, to favor AgustaWestland during the initial stages of its evaluation in 2010. The Italian company was dropped for not meeting technical requirements and did not make it to the flight trial stage.

Kamov’s Ka-226T is pitted against Eurocopter AS 550 C3 Fennec.

Calls to AgustaWestland offices were not answered. But the company issued a statement Nov. 1, which it said was in response to Indian press reports on the helicopter sales, that it never tried to “influence the selection or evaluation process” during the VVIP helicopter bid. The company said its relations with the Indian authorities were strictly “institutional.”

The Indian Defence Ministry, through the Foreign Ministry, has asked the Italian authorities to make available to it documents relating to the probe into Finmeccanica. The documents include the name of a serving Indian officer relating to the LUH tender.

“The Ministry of Defence has asked the Italian government and concerned agencies there through MEA [Ministry of External Affairs] to provide the name and relevant documents relating to the alleged involvement of a brigadier in the ongoing process for the acquisition of 197 light utility helicopters for the Indian Army,” the official Defence Ministry release said.

AgustaWestland could be blacklisted by the Indian government if it is found that the Italian company had used a middleman in the defense deals. According to Indian defense procurement law, overseas companies have to sign a statement that there are no middlemen or agents in the program.

“MoD will take strong action against the offenders detected through this probe,” the official release said.

New Delhi has also asked Italy to provide details of the probe it is carrying out into the sale of 12 VVIP helicopters by AgustaWestland after Sikorsky was ejected in the race.

The probe into the India helicopter deal stems from claims of corruption made by Lorenzo Borgogni, a former external relations manager at Finmeccanica who was fired in 2011 after Giuseppe Orsi became CEO and chairman of the company. Borgogni admitted receiving payments worth 5.6 million euros ($7.2 million) from Finmeccanica supplier firms, which was deemed a violation of company ethics.

AgustaWestland had won the $400 million contract to sell 12 helicopters for use by the Indian Air Force to transport top officials, including the president and the prime minister. While the fate of the $400 million deal contracted in 2009 appears to be safe, and first deliveries are expected to take place this year, the Defence Ministry wants to put the LUH program on hold pending the probe into the matter, the ministry source said.

The Indian Air Force and Army need the light utility helicopters to replace aging Cheetah and Chetak helos, which ferry troops and rations to higher reaches of battle areas in the Himalayas, an IAF official said. The procurement of light utility helicopters is behind schedule by more than seven years, and any further delays will affect the ability of Indian defense forces to meet logistic requirements in the higher reaches, the official added.

Tom Kington in Rome contributed to this report.

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