Italian firm to lose Rs 44,000-cr biz

Finmeccanica's troubles have just begun to unfold. The state-controlled Italian defence group has run into a dead end in the Indian defence sector, with kickback charges to secure the Rs 3,760-crore VVIP chopper deal jeopardising its chances of taking part in other military contracts worth almost $8 billion. Rahul Singh reports.

Finmeccanica's troubles have just begun to unfold. The state-controlled Italian defence group has run into a dead end in the Indian defence sector, with kickback charges to secure the Rs 3,760-crore VVIP chopper deal jeopardising its chances of taking part in other military contracts worth almost $8 billion (Rs 44,000 crore).

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Highly placed sources said the government would freeze business with Finmeccanica while the CBI probes allegations that it bribed a former air force chief to win the contract for supplying 12 AgustaWestland AW101 choppers.

Finmeccanica was angling for lucrative defence contracts. "No one will want to touch the firm with a barge pole now," a top official said.

The defence ministry had frozen business with seven arms firms in June 2009 for their involvement in the Ordnance Factory Board controversy while a CBI probe was on. It eventually blacklisted them for 10 years.

The government has already put on hold all further payments to AgustaWestland, the UK-based subsidiary of Finmeccanica, anticipating a stormy budget session.

A key contract that Finmeccanica was pitching for involved equipping the Indian Navy with 16 multi-role helicopters, to be followed by another for 75 more choppers, pegged at $3 billion (Rs 16,500 crore).