India has decided to cancel the scandal-tainted helicopter deal with AgustaWestland, prejudging the outcome of a meeting on Wednesday between company executives and defence ministry officials to discuss the contract, Reuters on Tuesday quoted three sources as saying.
The defence ministry had on October 23 issued a final show-cause notice to the UK-based firm for cancelling the controversial Rs. 3,760-crore contract to supply 12 choppers to the Indian Air Force.
Italian investigators had alleged the firm bribed former air chief SP Tyagi to change the tender requirements and paid middlemen more than Rs. 450 crore in kickbacks while the deal was being set up. A CBI probe is underway in the case.
A senior defence ministry official said there was no hope that AgustaWestland officials could salvage the deal in the meeting scheduled for Wednesday.
“This is just a face-saving exercise by Agusta. But the government has already decided to cancel the deal because they have violated the integrity pact," said one of two sources in the ministry who declined to identified. A spokesman for Finmeccanica declined to comment.
The deal for the AW101 helicopters went off track in February after the then-chief executive of Finmeccanica was arrested by Italian police for allegedly paying bribes to secure the deal, prompting India to freeze payments to the company.
This will be the first instance of a contract being cancelled after the initiation of deliveries — raising a question mark on the fate of three AW-101 choppers already parked in IAF hangars. The choppers could be returned.
India has already paid more than Rs. 1,300 crore to AgustaWestland. The contract was suspended in February following the kickback scandal.
As reported by HT on February 16, the IAF is considering going back to Russia to acquire new VVIP fleet to replace its ageing Mi-8 choppers.
The decision to cancel the deal draws a line under a dispute that has embarrassed the Indian government heading into elections under a cloud of corruption scandals.