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)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Pricing Controls

REUTERS SHOWCASE

India-China Relations

India-China Relations

India says to defend China border after standoff ahead of Xi visit.  Full Article 

Importing Iron Ore

Importing Iron Ore

As mining curbs bite, India offers market to glut-hit iron ore.  Full Article 

Drug Approval

Drug Approval

Epirus, Ranbaxy win India approval for arthritis drug copy.  Full Article 

Rajan Speaks

Rajan Speaks

RBI chief Rajan says limiting reliance on foreign debt.  Full Article 

Debt & Equity Deal

Debt & Equity Deal

KKR to lend $175 million to GMR Infrastructure - source.  Full Article 

Preparing for IPO

Preparing for IPO

Alibaba boosts IPO as demand strengthens.  Full Article 

India-Vietnam Ties

India-Vietnam Ties

India tightens Vietnam defence, oil ties ahead of China Xi's visit.  Full Article 

Reuters India Mobile

Reuters India Mobile

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