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Arrest in Italy, helicopters on hold in India

Feb. 12 (Agencies): Italian police arrested the head of a defence aerospace giant over allegations that bribes of about Rs 362 crore were paid to secure the sale of 12 helicopters to India.

The arrest of Finmeccanica SpA chief executive and chairman, Giuseppe Orsi, in Milan prompted the Indian defence ministry to put on hold the receipt of the remaining nine helicopters for which a Rs 3,600-crore deal was struck in 2010.

The Centre also ordered a CBI probe into the deal struck when Orsi was head of the group’s AgustaWestland unit.

The police were searching Orsi’s home and the offices of AgustaWestland close to Milan, a source close to Orsi’s lawyer said. The Milan offices of state-owned Finmeccanica, Italy’s second-biggest corporate employer after Fiat Spa, were searched, a judicial source said.

“Giuseppe Orsi, the head of Italian defence and aerospace giant Finmeccanica, was arrested on Monday in relation to a probe into international corruption. He is suspected of involvement in the payment of bribes regarding the sale to the Indian government of 12 helicopters produced by Finmeccanica’s subsidiary AgustaWestland,” Italian news agency Ansa said.

Prosecutors suspect around 50 million euros (Rs 362 crore approximately) were ploughed into kickbacks to ensure AgustaWestland won the contract, the agency reported.

The current CEO of AgustaWestland, Bruno Spagnolini, has been put under house arrest, the agency said.

In February 2010, India had inked the deal to buy the three-engine AW101 helicopters from AgustaWestland for the Indian Air Force’s elite Communication Squadron, which ferries the President, the Prime Minister and other VIPs.

Soon after the news of the arrest reached Delhi, defence minister A.K. Antony ordered a CBI probe into the deal.

The ministry said it had sought information from the governments of Italy and the UK but “no specific inputs” were received substantiating the allegations.

“Since no specific input has been received from the two governments, the ministry of defence has decided to refer the case to the CBI for inquiry,” a defence ministry spokesperson said. “In a recent report appearing in certain sections of the media, it has been reported that the chairman of Finmeccanica has been arrested in connection with the investigation into the case of the sale of helicopters to India.”

He added that the contract signed with AgustaWestland includes “specific contractual provisions against bribery and the use of undue influence as well as an integrity pact”.

Amid suspicion of bribery, the Indian mission in Rome had sought a detailed report from the Italian government. But Italy had said the report could not be shared as it was under judicial process, the spokesperson said.

The Italian firm had pipped American Sikorsky to bag the deal, which was cleared by the cabinet committee on security despite initial objections from the finance ministry.

The deal has been under the scanner for over a year now after Italian media reports suggested the arrest of two alleged middlemen in Europe for paying bribes to secure it.

Orsi, a long-serving defence industry executive, has always denied any wrongdoing with regard to the corruption probe, which has been going on for a year.

In a brief statement issued in Rome, Finmeccanica expressed its support for Orsi. “…Finmeccanica expresses support for its Chairman and CEO, with the hope that clarity is established quickly, whilst reaffirming its confidence in the Judges.”