AgustaWestland Seeks Release of Payment in Indian VVIP Deal

AgustaWestland has sought release of payment from the Indian MoD on grounds that it is performing its part of the contract in the supply of 12 VVIP helicopters to India.  In separate communications to the Indian MoD and the External Affairs ministry, the company has invoked the performance clause in the contract.

The Indian MoD had suspended payments to the Anglo-Italian company following the discovery of a bribery trial by India’s Central Bureau of Investigation (CBI) in the Euro 500 million deal.  Approximately 10% of the value of deal was allegedly paid to agents in Switzerland and the U.K. to bribe Indian officials for swinging the deal in AgustaWestland’s favor.

Informed sources told Defenseworld.net that the communication contends that AgustaWestland had already supplied three helicopters; three more were awaiting delivery while the remaining six were being manufactured in the U.K. as per the contract schedule. Not taking delivery of the manufactured choppers would render them inoperable incurring additional costs.

The Indian MoD on its part has put the deal on hold meaning no further deliveries will be accepted nor payments made until the CBI completes its probe and files a charge-sheet against the guilty. If the Anglo-Italian company is found to be complicit, the MoD may invoke a clause in the agreement to cancel the deal altogether and ban the company from doing business with in India for 10 years.

The Indian Air Force (IAF) which is operating three VVIP helicopters was faced with a situation of not having sufficient spares to keep the three choppers flying. However, this situation was resolved with the release of spare from the stock already with India. However this could prove to be a problem if no further spares are ordered.

Meanwhile all eyes will be on the 'instant trial' beginning June 19 against ex-CEO of the Italian state-controlled defence giant Finmeccanica Giuseppe Orsi and the CEO of its helicopter unit Agusta Westland Bruno Spagnoli for allegedly paying kickbacks in the Indian VVIP chopper deal. The Indian government is unlikely to initiate further action until the trial in Italy is completed.

AgustaWestland had already washed its hands off the duo by appointing a new CEO and setting up an “oversights committee”, to improve internal audit. It could use this move to argue before the Indian MoD that it has put its house in order.