The Indian defense ministry has threatened to carry out the “strongest action” if acted corruptly in the sale of helicopters to the (IAF).
The move follows the arrest in Italy of Finmeccanica chairman and CEO Giuseppe Orsi on Feb. 12 by investigators exploring whetherpaid kickbacks worth around €50 million ($67 million) to secure the sale of 12 VIP helicopters to the IAF in 2010, when Orsi was in charge of the AgustaWestland division.
Finmeccanica has promoted COO Alessandro Pansa to take over for Orsi. He will serve as both COO and CEO.
The current head of AgustaWestland, Bruno Spagnolini, was placed under house arrest at the same time as Orsi.
India has opened its own investigation into the scandal and the purchase of the helicopters has reportedly been put on hold, with payments being withheld until the inquiry is complete.
Indian Defense Minister A.K. Antony says his ministry won’t allow corruption in any military deal and strong measures will be taken if the federal investigative agency detects bribery in the deal.
“We have requested CBI [Central Bureau of Investigation] for an early inquiry,” Antony says. “I can assure you that the moment we get a report from CBI, we will take [the] 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.
“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 says. “We are examining everything.”
He pointed out that in the recent past, the government had blacklisted six firms, four of which were “big” international companies. “Nobody will be spared,” he added.
Antony pushed aside any suggestions that the IAF’s original requirements were modified to suit the Italian firm. “The recommendation was made by the IAF and the Special Protection Group on security considerations,” he said. “The government accepted this.”
Asked whether other deals with Finmeccanica will be affected, Antony says it will depend on the CBI report on the deal.
Finmeccanica officials were expected to meet late on Feb. 13 to discuss governance during the crisis. The arrests have essentially decapitated two of Italy’s largest companies. Shares in the conglomerate, which is 30% owned by the Italian government, closed down 4% that evening.