Defence minister AK Antony on Wednesday said the government could not allow corruption in military deals, adding “strongest action” would be taken if bribery is found in the $750-million deal for 12 VVIP AgustaWestland helicopters for the Indian Air Force (IAF).
“We have requested the CBI to make an early inquiry. I can assure you the moment we get a report, we will take the strongest action provided in the integrity pact — that includes cancellation of the contract and blacklisting the companies. But before the CBI report, I don't want to jump to any conclusion,” the minister said on the sidelines of a conference here.
The defence ministry has also put on hold purchase of the remaining nine of the 12 helicopters for which the R3,600-crore deal was struck in 2010. On the payments made so far, Antony said:
“If the Indian government paid any amount, as per the provisions of the integrity pact, we can get back the whole money we paid to the vendor.”
“As per the defence procurement procedure, before finalising the contract for any contract beyond R300 crore, the vendor must sign an integrity pact with the government of India, agreeing to our conditions. If they violate its conditions, they are liable to criminal action,” he said.
Antony referred to the actions taken by the government in such cases, where six foreign defence firms were blacklisted. “When we saw media reports of arrests and investigation in Italy, we wrote to our ambassador there to get details from the Italian government and contacted the prosecutor who is conducting the inquiry,” he said.
“The second step (was) through the ministry of external affairs,” he said.
“Our government contacted the government of Italy and the government of the UK because AugustaWestland is a British company and the main shareholder is British. MEA wrote to both countries again,” he said. Asked if the scam would affect other deals under consideration with AugustaWestland and Finmeccanica, Antony said that would depend on the CBI report.
Antony sought to downplay a report on the alleged involvement of former Indian Air Force chief SP Tyagi, during whose tenure the AugustaWestland deal was negotiated. He also denied the suggestion that the IAF's original requirements were modified to suit the Italian firm.
Asked if other deals with Finmeccanica including a Rs-500 crore deal for radars for the Indian Navy, would be affected, he said this would also depend on the CBI report.
External affairs minister Salman Khurshid told reporters that India was in touch with authorities in Italy over the case and suggested that Italy was a better place to probe since the firm that produces helicopters operates out of that country.
“The government would do whatever was lawfully required in the AgustaWestland VVIP chopper deal and provide the CBI any kind of assistance it needed,” Khurshid said.
The contract for helicopters was signed in February 2010. The IAF sought the choppers as a replacement for its Mi-17 cargo helicopters that have been modified for VVIP deployment. The Comptroller and Auditor General had made an adverse comment, saying it was a waste of resources.
Meanwhile, the ministry's Defence Acquisition Council has deferred the $1.5-billion purchase of 197 light utility helicopters for the air force and the army. Sources said the decision was prompted by deviations in the deal, besides bribery allegations in the AgustaWestland transaction. Sources claimed a final decision on the deal – delayed since 2008 due to red tape – would be taken later, but industry watchers told FE that the Request for Proposal (RFP) for these helicopters may even be scrapped.
Eurocopter's Fennec and Kamov Ka-226T are vying to replace the 1970s helicopter fleet of Cheetahs and Chetaks. AgustaWestland too was originally a contender, but was eliminated on technical grounds.
Sources confirmed an earlier FE report that neither Eurocopter Fennec nor rival Russian Kamov Ka-226T have fully met specifications. However, a technical panel has studied the deviations and made certain recommendations to the MoD. The Defence Acquisition Council did not accept this, sources said.
The Indian Army has been trying to replace its Cheetah/Chetak fleet for nearly a decade. By 2007, Fennec had emerged as the winner in a tender floated in 2003. In the fresh tender issued in July 2008, two machines were shortlisted for flight evaluation, the single engine Eurocopter AS550 C3 Fennec and the twin engine Russian Kamov-226 Sergei.