NEW DELHI // India could cancel a multimillion-dollar defence contract and take legal action if an investigation finds the Italian company Finmeccanica paid bribes to win a helicopter contract, the defence minister said yesterday.
AK Antony said the government was awaiting the outcome of an investigation into the €560m (Dh2.77bn) contract before taking action against any company found to have used bribery to clinch the deal.
The defence ministry has ordered a separate investigation into the agreement with Finmeccanica after the defence and aerospace giant's chief executive was arrested in Milan on Tuesday over allegations that he had paid bribes to snag the Indian contract.
Antony said he had ordered the Central Bureau of Investigation to examine all aspects of the deal for the supply of 12 helicopters, to be used for ferrying Indian officials around the country.
"I can assure you, the moment we get a report from the CBI, we will take the strongest action provided in the integrity pact, that includes cancellation of the contract, blacklisting the companies and criminal action," said Mr Antony.
India signed the contract with Finmeccanica's AgustaWestland helicopter division in February 2010. Three of the helicopters were delivered in December.
Giuseppe Orsi, Finmeccanica's chief executive, was arrested on Tuesday. Bruno Spagnolini, the boss of AgustaWestland, was also being investigated on charges of paying bribes in India.
Defence ministry officials said the helicopter contract included an integrity clause to guard against bribery or the use of undue influence. Under its terms, if any person or the company was found to have bribed officials or made any kind of payoff, the agreement could be scrapped and the firm blacklisted.
The defence ministry has put on hold the delivery of the remaining nine helicopters.
Meanwhile, Shashi Tyagi, the former Indian air force chief, yesterday denied allegations that members of his family had received payments from the Italian group.
"I am innocent," he said. "Such a big contract is not determined by one person alone. Everything will become clear once the CBI probe is complete."