New Delhi, Jan. 1: The Centre today cancelled a Rs 3,600-crore contract to buy super-luxury helicopters for the President, the Prime Minister and other dignitaries from Anglo-Italian firm AgustaWestland over suspicion it had violated an “integrity pact” by using agents to swing the deal.
The decision was taken after defence minister A.K. Antony met Prime Minister Manmohan Singh. The specifications for the VVIP choppers were determined by the defence ministry in consultation with the PMO and the Special Protection Group before the deal was signed.
The contract to procure 12 AW-101 helicopters — dubbed “lal battis in the sky” after red beacons on vehicles symbolising power — was signed on February 8, 2010. Eight of them were meant to be in VVIP configurations.
Showcased in the James Bond film Skyfall, the AW-101s were being primed for VVIP duty by the Indian Air Force. Three of the helicopters were delivered in super-large aircraft in December 2012.
The air force has requested the defence ministry for directives on what to do with the three helicopters. It is not able to fly the machines adequately for practice because it has run short of spares.
Nine more AW-101 helicopters were still to be delivered when India froze the deal in February last year after investigators in Italy arrested Giuseppe Orsi, the CEO of Italian conglomerate Finmeccanica that is the holding firm of the UK-based AgustaWestland.
The roles of former air force chief S.P. Tyagi and 12 others in swinging the deal are being probed by the CBI. Tyagi has denied involvement. The CBI had registered the FIR against Tyagi and 12 others in March last year for alleged cheating, criminal conspiracy and corruption. The agency indicated this evening the probe would go on despite the scrapping.
The cancellation had been on the cards since the defence ministry sent the company two showcause notices.
Agusta today said it had not received any notice from the government and denied charges of wrongdoing.
Antony’s office took its time in moving to annul the deal because of the legal implications. Defence ministry sources said the decision to “terminate with immediate effect the agreement with AgustaWestland International Ltd on grounds of breach of the pre-contract integrity pact” was reached after consultations with the law ministry and attorney-general G.E. Vahanvati.
A defence ministry statement said: “Based on the opinion received earlier from the attorney general, it has been the view of the government that integrity-related issues are not subject to arbitration.”
The ministry was concerned that AgustaWestland had sought arbitration and appointed an arbitrator from its side. After this, the ministry sought the attorney-general’s opinion again and appointed former Supreme Court Judge Justice B P Jeevan Reddy as its arbitrator.
The cancellation of the contract on grounds that Agusta used middlemen is in line with Antony’s policy of “zero-tolerance for corruption”. The use of agents in arms deals is still a subject of debate because it is legitimate in many countries.
A CBI spokesperson, speaking after the termination was announced today, said letters rogatory — requests to foreign countries for help in investigations — had been sent to Italy, Mauritius and Tunisia seeking details about the Italy-based Finmeccanica, AgustaWestland, IDS Tunisia and IDS Mauritius.
“The matter is still under investigation as we are awaiting the response from the three countries about the overseas companies and individuals. We will file the chargesheet only after collecting sufficient evidence,” said Kanchan Prasad, the agency’s spokesperson.
Besides Tyagi and the others, including two of his cousins, the agency’s FIR names six firms. These include the Italy-based Finmeccanica, AgustaWestland and Mohali-based IDS Infotech — allegedly linked to the cousins of Tyagi.
But today’s decision to scrap the contract has put the air force in a quandary as the Soviet-vintage Mi-8 helicopters now used to ferry VVIPs are scheduled to be phased out from next year. US firm Sikorsky’s S-92 Superhawk was in competition with Agusta Westland before the AW-101 was contracted.
The AW-101 was deemed too costly even for the US President. The White House had initially selected the helicopters but later revised its choice in favour of the S-92. The reason given was that it was not kosher for the American President to fly in a British helicopter.