EXCLUSIVE-AgustaWestland invokes arbitration over India chopper deal

Fri Oct 4, 2013 6:13pm IST

Stocks

   

(Adds details on arbitation, quotes)

By Anurag Kotoky

NEW DELHI Oct 4 (Reuters) - AgustaWestland has invoked arbitration over a scandal-tainted deal to sell helicopters to the Indian government, according to a statement on Friday from the unit of Italy's Finmeccanica.

In February, India froze payments on the 560 million euro ($762.91 million) contract to supply 12 helicopters after the deal became mired in allegations of bribery and the then-CEO of Finmeccanica was arrested by Italian police for allegedly paying bribes to secure the deal.

Italy and India are separately investigating allegations that AgustaWestland paid bribes to win the 2010 deal for the helicopters to be used by senior politicians.

AgustaWestland denies the allegations.

The company said in the statement that suspension of payment was not provided for under the terms of the contract and that Indian authorities had not responded to its requests for bilateral discussions since April.

An Indian defence ministry spokesman did not immediately respond to a request for comment.

"The need to resolve this issue has left AgustaWestland with no other option but to invoke arbitration; the next step prescribed by the contract. This is not a step we take lightly," it said.

Arbitration would be conducted in India under the Indian Arbitration and Conciliation Act of 1996, according to the company. Of the three arbitrators, one each would be chosen by the buyer and seller and the third would be nominated under the agreement of both sides, the company said.

India had taken delivery of three helicopters before the deal was stalled. Three more have been ready for delivery to India since April, three are close to completion and work has begun on the final three at the company's plant in Somerset In Britain, said Guy Douglas, an AgustaWestland spokesman in New Delhi.

In August, India's federal auditor found what it said was wrongdoing in the deal.

In its report, the Comptroller and Auditor General said India's defence ministry had initially set a condition that the helicopters be able to fly to an altitude of 6,000 metres (1,970 feet), which meant AgustaWestland could not compete since the AW101 was certified to fly only to 4,572 metres.

Later, India's defence ministry lowered the minimum altitude requirement to 4,500 metres, even though the helicopters were expected to be used in northern and northeastern parts, where terrain is mountainous and altitudes are high, the auditor said.

Jackie Callcut, chief executive of AgustaWestland's India unit, said the altitude requirement was changed to avoid a single-bidder situation.

"The altitude requirement was an irrelevance to AgustaWestland anyway; it was well known the AW101 would have been re-certified to 6,000 metres if needed," she said in a separate statement. ($1 = 0.7340 euros) (Reporting by Anurag Kotoky; Editing by Tony Munroe)

REUTERS SHOWCASE

Oil Prices Fall

Oil Prices Fall

Brent near four-year low after OPEC decides against output cut  Full Article 

Banking Sector

Banking Sector

India says considering plan to reduce stake to 52 pct in state banks   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 

SAARC Summit

SAARC Summit

Summit salvaged after handshake by leaders of India, Pakistan  Full Article 

Social Media

Social Media

Twitter to start tracking users' mobile apps  Full Article 

Forever21 in India

Forever21 in India

Forever21 sets sights on Indian cities, but please hold the hot pants  Full Article 

Japan Economy

Japan Economy

Japan inflation slows in October, output and spending show signs of recovery  Full Article 

Reuters India Mobile

Reuters India Mobile

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