VVIP chopper deal: India begins contract cancellation process

Last Updated: Fri, Feb 15, 2013 13:30 hrs

New Delhi, Feb 15 (IANS) As more high-profile names cropped up in connection with bribery allegations in the $750 million VVIP chopper deal, the Indian government Friday put the contract with Italian firm Finmevcanica on hold and began the process to cancel it.

In a three-para statement, the Ministry of Defence said it has "initiated action for cancellation of contract for procurement of 12 AW101 helicopters for the use of VVIPs".

It also issued a formal show cause notice to AgustaWestland, the subsidiary of Finmeccanica, seeking cancellation of contract and "taking other actions as per the terms of the contract and the Integrity Pact". The company has been given seven days to reply.

The action comes a day after the government warned Finmeccanica of legal action, including blacklisting, and asked whether any slush money had been paid to fix the deal that has led to a political uproar.

The defence procurement scam came to light when the Italian government arrested Finmeccanica CEO Giuseppe Orsi Tuesday for allegedly paying bribes to clinch the chopper deal.

The government launched a Central Bureau of Investigation (CBI) probe into the bribery charges on Tuesday.

Clarifying its position, the government Thursday had noted that the mandatory technical requirements of the chopper were changed in the tender during the A.B. Vajpayee government in 2003, with the then national security adviser Brajesh Mishra playing a key role.

It had also noted that the changes in the tender were incorporated during March 2005 to September 2006 when Pranab Mukherjee was defence minister and S.P. Tyagi was the Air Chief. Mukherjee is now president of India and Tyagi is facing allegations that three of his kin took kickbacks to swing the deal.

More from Sify: