In an indication that the year long probe into corruption allegations in a Rs 3,546 crore deal to sell VVIP helicopters to India is coming to a close, the CEO of the Finmeccanica group was arrested in Italy on Monday, along with the two alleged middlemen who routed money to India.
Giuseppe Orsi, who was heading AgustaWestland when the deal was signed in 2010 and is currently the CEO of the main Finmeccanica group has been placed under house arrest for his role in the alleged EURO 51 million pay off to swing the deal for 12 AW 101 choppers.
The Indian Express had carried a series of stories detailing the nexus between middlemen, executives and officials that has come under probe.
The arrest is a major blow for Finmeccanica that has been making repeated statements denying that any payments were made. Hours after the arrest, the company said that its “operating activities and ongoing projects will continue as usual”.
“In addition, Finmeccanica expresses support for its Chairman and CEO, with the hope that clarity is established quickly, whilst reaffirming its confidence in the Judges,” the company statement read.
While there has not yet been any reaction from the Indian defence ministry, sources said the arrest will mount pressure for a formal probe. India's position till now has been that a formal probe cannot be started unless Italy shares official documents related to the corruption allegations.
IAF officials said that out of the 12 VVIP choppers, three have already arrived in India and are undergoing flight tests. Three more are expected by the middle of this year, followed by the remaining six.
Three other people have been placed under house arrest as part of the probe, including the Chief Executive of Finmeccanica helicopter unit AgustaWestland, Bruno Spagnolini.
Orsi has always denied wrongdoing over a corruption probe looking at a 560 million euro ($749.2 million) Indian helicopter contract.
"Giuseppe Orsi, the head of Italian defence and aerospace giant Finmeccanica, was arrested on Monday in relation to a probe into international corruption. He is suspected of involvement in the payment of bribes regarding the sale to the Indian government of 12 helicopters produced by Finmeccanica's subsidiary AgustaWestland," Italian news agency Ansa said.
Prosecutors suspect that around 50 million euros (Rs 362 crore approximately), about 10 per cent of the deal were ploughed back into kickbacks to ensure AgustaWestland won the contract, the agency reported.
State-controlled Finmeccanica has previously said it has