India will consider canceling a multimillion-dollar military contract and taking criminal action if an investigation finds that bribes were paid by the Italian company Finmeccanica to steer a helicopter contract its way, the Indian defense minister said Wednesday.
A.K. Antony, the minister, said he had ordered the Central Bureau of Investigation, the Indian agency responsible for investigating corruption cases, to examine all aspects of the €560 million, or $753 million, contract with Finmeccanica to supply 12 helicopters to the Indian military. He said the government would wait for the result of that investigation before taking action.
The Indian Defense Ministry has ordered a separate investigation into the Finmeccanica agreement after Italian prosecutors arrested the company’s chief executive, Giuseppe Orsi, in Milan on Tuesday. Italian investigators are looking into whether Finmeccanica executives violated bribery and corruption laws in seeking the helicopter deal with the Indian military.
Mr. Antony said that once the government had the C.B.I. report in hand, it would move to take the “strongest action,” which could include canceling the contract, blacklisting the companies and criminal action.
India signed the contract with Finmeccanica’s AgustaWestland helicopter division for the purchase of 12 helicopters in February 2010. Three of the helicopters were delivered in December.
In addition to Mr. Orsi’s arrest Tuesday, Italian officials also placed Bruno Spagnolini, the head of AgustaWestland, under house arrest and raided the AgustaWestland corporate offices in Milan.
Officials at the Indian Defense Ministry said the helicopter contract with AgustaWestland included an integrity clause against bribery or the use of undue influence. Under the terms of the clause, if any person or the company was found to have bribed officials or made any kind of payment, the agreement could be scrapped and the company blacklisted.
The Defense Ministry has put on hold the delivery of the remaining nine helicopters from the company. Finmeccanica, one of the largest aerospace, military and security companies in the world, employs about 70,000 people and reported first-half 2012 revenue of about €8 billion. The Italian government owns a 30 percent stake in the company.
India is expected to spend $80 billion over the next 10 years to upgrade its military. The country has become one of the biggest buyers of military equipment in recent years as it reacts to China’s growing influence in the region and competes with Pakistan.
India purchased about $12.7 billion in arms from 2007 to 2011, about 80 percent of that from Russia, according to the Stockholm International Peace Research Institute. China’s arms purchases during that time were $6.3 billion, 78 percent of which came from Russia.
Arms deals in India have often generated controversy and allegations that companies pay millions of dollars in kickbacks to Indian officials to procure lucrative contracts.
In the 1980s, the government of Prime Minister Rajiv Gandhi collapsed over charges that the Swedish gun manufacturer Bofors paid bribes to supply Howitzer field guns to the Indian Army.
Article source: http://www.nytimes.com/2013/02/14/business/global/india-opens-its-own-inquiry-into-finmeccanica-contract.html?partner=rss&emc=rss