(adds details from Italian sources, context)
By Frank Jack Daniel
NEW DELHI, Feb 18 (Reuters) - India's Prime Minister
Manmohan Singh said on Monday his government had nothing to hide
in a $750 million deal for AgustaWestland helicopters that the
defence ministry is threatening to cancel over allegations of
The ministry has asked AgustaWestland, owned by Italy's
Finmeccanica, to show by Friday that no bribes were
paid in the deal or face cancellation of the order.
AgustaWestland has said it will comply with the request to
provide clarification within seven days.
The case, which escalated last week with the arrest of
Finmeccanica head Giuseppe Orsi, is putting pressure on India's
government and has become a political issue in Italy less than a
week from a general election.
India has already received three of the 12 helicopters it
bought to transport political leaders.
In his first comments on the affair since the arrest of
Orsi, who has since been replaced at Finmeccanica, Singh said
the Indian government wanted to debate the issue in parliament,
which begins a new session on Wednesday.
"Parliament is the appropriate forum to discuss all issues
raised by the opposition. We are ready for any discussion,"
Singh told reporters. "We have nothing to hide."
The furore over the helicopter deal follows a string of
graft cases that have buffeted Singh's government, which faces
elections due by early 2014. The opposition is expected to raise
the issue once parliament opens.
An Indian Defence Ministry official said the decision to
send a show cause notice to Finmeccanica, the first step toward
scrapping the deal, was taken partly to fend off expected
political pressure in parliament.
Pressure is building in Italy too, where the Finmeccanica
case adds to a string of high-profile corporate probes into
possible bribery reminiscent of the scandals that devastated
Italy 20 years ago.
State-controlled Finmeccanica, Italy's second largest
employer after Fiat, could be blacklisted for several
years in India if the government scraps the deal, potentially
putting at risk some $12 billion in defence contracts being
chased by the Italian defence group.
HUNT FOR EVIDENCE
India's Central Bureau of Investigation (CBI), which began a
probe of the deal after Orsi's arrest, is due to send an
investigator and a judicial officer to Rome this week along with
Arun Kumar Bal, a senior official overlooking acquisitions at
the Defence Ministry. The team is due to meet Italian
prosecutors, the CBI said.
The team's goal is "to gather as much evidence as possible
relating to the allegations of corruption", said ministry
spokesman Sitanshu Kar.
However, an Italian judicial source with direct knowledge of
the situation told Reuters that prosecutors in Busto Arsizio,
the northern town where the AgustaWestland probe is being
conducted, had not been contacted by Indian authorities.
Finmeccanica had also not been contacted by the Indian
delegation, a company source told Reuters.
Italian prosecutors allege Orsi employed three middlemen to
channel millions of dollars to Indian officials, including to
former Indian air force chief S.P. Tyagi, to manipulate the
tender in a way that favoured the Italians.
Orsi's lawyer said last week the Italian corruption probe
has produced no evidence of any illicit payments.
Indian officials involved have defended the change and deny
Tyagi has denied all wrongdoing, as has his cousin, Sanjeev
Tyagi, who Italian prosecutors allege set up meetings between
the company and the air chief.
(Additional reporting by Jo Winterbottom Satarupa Bhattachrjya
and Annie Banerjiin New Dehli, Emilio Parodi, Lisa Jucca and
Danilo Masoni in Milan, Writing by Frank Daniel and Lisa Jucca,;
Editing by Raju Gopalakrishnan and Jeremy Laurence)