(Adds details on arbitation, quotes)
By Anurag Kotoky
NEW DELHI Oct 4 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
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
"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
($1 = 0.7340 euros)
(Reporting by Anurag Kotoky; Editing by Tony Munroe)