India May Drop Helicopter Order If Corruption Uncovered

India may cancel a $753 million deal for helicopters agreed with Italy’s Finmeccanica SpA if investigators uncover evidence of corrupt payments, the country’s defense minister said today.

Finmeccanica Chief Executive Officer Giuseppe Orsi was arrested yesterday on accusations of corruption and tax fraud as authorities probe alleged illegal payments tied to the contract for the sale of 12 AW101 helicopters to India in 2010. The company has denied wrongdoing.

“We will take the strongest possible action under Indian law, we will not spare anybody” if graft is shown to have occurred at any stage, Defense Minister A.K. Antony said at a press conference in New Delhi. “We will not tolerate corruption in defense deals.”

India’s arms-buying has been slowed by officials’ sensitivities over corruption scandals in previous purchases, including one that helped drive the Congress Party of Prime Minister Manmohan Singh to defeat in 1989 elections. In March last year, retired army chief General V.K. Singh said he was offered 140 million rupees ($2.6 million) if he approved the purchase of 600 vehicles he considered sub-standard.

Evidence against Orsi is “inconsistent” and the arrest is “unjustified,” the CEO’s lawyer, Ennio Amodio, said in an e-mailed statement yesterday.

The Times of India newspaper reported today that three of the helicopters had been delivered to India, while three more are due to arrive by June. The entire fleet should be complete by March 2014, the paper said.

Federal Probe

Antony, whose personal probity helped him win charge of the department that has been plagued by scandals, said that he had been unable to contact the Italian government and prosecutors for details of why Orsi was arrested.

“I have no information in my hands,” Antony said. “I have tried to get the details but nothing is available to me.”

Antony yesterday asked India’s Central Bureau of Investigation to probe the helicopter sale. The contract signed with AgustaWestland includes “specific contractual provisions against bribery and the use of undue influence as well as an integrity pact,” the defense ministry said in an e-mailed statement.

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