India defers purchase of 197 choppers over bribery claim

NEW DELHI Tue Apr 2, 2013 10:15pm IST

1 of 2. Central Bureau of Investigation (CBI) officials walk out of a building while carrying a bag of documents after conducting a raid as part of probes into the AgustaWestland bribery case in New Delhi March 13, 2013.

Credit: Reuters/Mansi Thapliyal/Files

Related Topics

Stocks

   

NEW DELHI (Reuters) - India on Tuesday deferred a decision on a deal to buy 197 light-utility helicopters pending completion of an investigation into kickback allegations, the latest setback to efforts to upgrade the country's ageing arsenal.

A previous tender to buy 197 helicopters for the army for $550 million collapsed in 2007 after claims of irregularities in the field trials.

Defence deals have drawn heavy scrutiny in recent weeks after Italian police arrested the head of defence group Finmeccanica(SIFI.MI) over allegations that subsidiary AgustaWestland paid bribes to win a $750 million deal to supply 12 luxury helicopters for political VIPs.

While looking into the Finmeccanica deal, Italian investigators said, they found papers suggesting a serving Indian army brigadier offered to help AgustaWestland win the contract for the 197 helicopter in return for a $5 million bribe. It is not clear if bribes were indeed paid.

"The 197 helicopters did not come up for discussions today because the army would like to see that there is an enquiry into some of the allegations made against one of its officers," Sitanshu Kar, a defence ministry spokesman, told reporters.

AgustaWestland did not make the short list in the tender. Eurocopter, a unit of aerospace and defence company EADSEAD.PA, and Russian Kamov are competing for the deal.

India plans to spend $100 billion upgrading its creaking military hardware over the next decade to match its growing economic clout and keep up with neighbours China and Pakistan as they modernize their own defence capacities.

India has emerged as the world's top arms importer, but deal after deal has been held up by graft claims and a tortuous procurement process.

The acquisition of the light reconnaissance helicopters has a troubled history. The government scrapped an earlier tender process, widely expected to go to Eurocopter's Fennec in 2007, because of allegations of unfair field trials.

India is considering whether to blacklist AgustaWestland over the VIP deal. It placed six defence companies on a blacklist last year because of corruption allegations.

These included Rheinmetall Air Defence, part of Germany's Rheinmetall AG(RHMG.DE), Israel Military Industries and Singapore Technologies Kinetics, which have been barred from doing business in India for 10 years.

(Reporting by Anurag Kotoky, writing by Manoj Kumar; Editing by Frank Jack Daniel and Mark Heinrich)

FILED UNDER:

Economic Pulse

REUTERS SHOWCASE

Nifty Above 8,600

Nifty Above 8,600

Nifty hits record high above 8,600; state-run lenders gain  Full Article 

Indian in Iraq

Indian in Iraq

India says no contact with 39 men held by Islamic State in Iraq.  Full Article 

Sahara Issue

Sahara Issue

Sahara looks to raise $650 million loan to fund bail.  Full Article 

Bhopal Tragedy

Bhopal Tragedy

Bhopal's toxic legacy lives on, 30 years after industrial disaster.  Full Article 

Essar Group

Essar Group

Exclusive - Essar's planned oil-for-steel deal tests Iran sanctions  Full Article 

Islamic Fund

Islamic Fund

India gets new Islamic equity fund but debt market still off-limits  Full Article 

Fiscal Deficit

Fiscal Deficit

April-October fiscal deficit nears 90 pct of full-year target  Full Article 

Oil Prices

Oil Prices

Oil hits new four-year low post OPEC as glut looms  Full Article 

Gold Imports

Gold Imports

India eases gold import rule in surprise move.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage