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India To Appeal Italian Court's Decision on Bank Guarantees Over Canceled Helo Contract

Mar. 18, 2014 - 10:15AM   |  
Former Finmeccanica CEO Giuseppe Orsi is accused of being involved in a bribery scheme to sell 12 AW101 helicopters to India. Here, Orsi stands at Finmeccanica's exhibition at the 2012 Farnborough International Airshow. (ADRIAN DENNIS / AFP/Getty Images)
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ROME AND NEW DELHI — An Italian court has rejected a bid by the Indian government to obtain €278 million (US $386 million) held as bank guarantees for Finmeccanica’s canceled sale of AW101 helicopters to India. India plans to appeal the ruling.

India canceled the contract in January after Italy put Finmeccanica’s former CEO on trial. Giuseppe Orsi is accused of taking part in a bid to offer bribes to Indian officials to win the contract for 12 AgustaWestland helicopters, worth €560 million. He was CEO of AgustaWestland at the time of the alleged wrongdoing, and has denied the charges.

India then sought to obtain the €306 million payment that Finmeccanica made to a group of banks at the outset of the contract, as a form of returnable guarantee to the Indian government.

In January, the Indian government was able to obtain a portion of the money — €27 million euros — which was held by an Indian bank.

But an Italian court initially blocked India from obtaining the rest of the money, which is held by European banks, and upheld that decision on Monday, Finmeccanica said in a statement.

“The Milan court has confirmed the ruling made last January, prohibiting ... the payment of collateral of more than €278 million deposited in relation to the contract,” Finmeccanica said in a statement.

On Tuesday, India’s Defence Ministry issued a statement saying it plans to appeal. “Simultaneously, the government will vigorously pursue all options for encashment of the bank guarantees,” it said.

An MoD official said even diplomatic pressure can be used to recover the money held in bank guarantees.

India is also carrying out its own criminal probe into the matter. India’s anti-fraud agency, Central Bureau of Investigation (CBI), is probing charges of corruption on grounds of breach of the Pre-contract Integrity Pact. Finmeccanica has sought arbitration in India.


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