New Delhi: India will blacklist Finmeccanica Spa and cancel its deal to buy 12 helicopters from the Italian defence group if allegations of bribery are proven against the company, defence minister AK Antony said on Wednesday.
Holding that the government "cannot allow corruption" in military deals, Antony said that "strongest action" will be taken if the CBI detects bribery in the $750 million deal for 12 VVIP AgustaWestland helicopters for the Indian Air Force (IAF).
"We have requested CBI (Central Bureau of Investigation) for an early inquiry. I can assure you that the moment we get a report from CBI, we will take strongest action provided in the integrity pact... that includes cancellation of the contract and blacklisting the companies. But before CBI's report, I don't want to jump to any conclusion," Antony said.
The Indian defence ministry Tuesday ordered a CBI probe into the 2010 deal following the arrest of the helicopter's Italian manufacturer Finmeccanica's chief on charges of graft in the contract.
"We are examining everything. If (contractual) terms have been violated, we will take the strongest action. We are not bothered about who they are or how big they are," Antony added.
He noted that in the recent past, the government had blacklisted six firms, four of which were "big" international companies. "Nobody will be spared."
The minister sought to downplay a media report on the alleged involvement of then IAF chief S.P. Tyagi, during whose tenure the AgustaWestland deal was negotiated.
The Indian Express reported that the allegation against Tyagi was made in a preliminary inquiry report filed by prosecutors in Italy Tuesday.
"It is shocking for me and I am sure it is shocking for everybody... it's bad news for the entire air force, it's horrifying," Tyagi told a TV channel.
"The charge was I was bribed to tweak a change in requirement to suit Agusta... Changes are not made by the Air Headquarters... final changes have to be approved by the minister of defence. Air Headquarters can recommend it. But to the best of my knowledge Air Headquarters have not recommended any changes. I am shocked... I have no clue what this is all about," he said.
"There should be an inquiry, only then can the facts be established," Tyagi said.
Antony also denied the suggestion that the IAF's original requirements were modified to suit the Italian firm.
"The recommendation was made by the IAF and the SPG on security considerations. The government accepted this," Antony added.
"Under the terms of the integrity pact, if corruption is proved, then we can cancel the contract and get back whatever money that has been paid," he said.
With the first three helicopters having been delivered, the Indian government has thus far paid some 30 percent of the contracted amount. The remaining nine helicopters are due by late 2013 or early 2014.
Questioned whether other deals with Finmeccanica - for instance a Rs.500 crore deal for radars for the Indian Navy - would also be affected, Antony said this would also depend on the CBI report on the chopper deal.
He also brushed aside a suggestion that blacklisting of foreign vendors would affect the modernization plans of the armed forces.
When it was pointed out that this was not the first time graft charges had surfaced in the Agusta Westland deal, the minister said: "When the reports first emerged 11 months ago, we wrote to the Indian ambassador, the Italian government and the prosecutor. Then again there were reports. The MEA (ministry of external affairs) contacted the Italian and British governments. From day one we have been trying to get at the truth."
The contract for the helicopters had been signed in February 2010. The IAF has sought the AgustaWestland choppers as a replacement for its Mi-17 cargo helicopters that have been modified for VVIP deployment. The Comptroller and Auditor General had made an adverse comment, saying it was a waste of resources.
Italian police arrested Finmeccanica's chief executive Giuseppe Orsi on Tuesday for alleged bribes paid to secure the sale of 12 AgustaWestland executive helicopters to the Indian Air Force, when he was head of the Finmeccanica helicopter unit.
"I have met Carlo in my cousins' place but when you say you have contact with him, then the answer is no. What connection could I have with him. I want to tell you that the whole process started after I retired... the entire process of evaluation, trials, contracts took place in 2010," Tyagi told reporters.
Names of Tyagi's three cousins Julie, Docsa and Sandeep Tyagi have also figured in reports suggesting that they had also a role to play in clinching the deal. He denied that his relationship with his cousins had any business dimension.Reports today suggested that Italian investigators have alleged in a preliminary inquiry submitted in an Italian court that business conglomerate Finmeccanica bribed S P Tyagi when he was chief of the Indian Air Force to swing the controversial AgustaWestland VVIP chopper deal in favour of the company.