India vows to scrap Italy chopper deal if graft proved

India's government ordered investigation into alleged bribery of government officials by Finmeccanica.

NEW DEHLI: India threatened Wednesday to cancel a deal to purchase 12 helicopters from the Italian firm Finmeccanica if an official inquiry proved the contract worth nearly $750 million was secured through kickbacks.

"If we find any evidence of corruption then we will blacklist the company and even cancel the deal," Defence Minister A K Antony told reporters in New Delhi.

"We don't want to jump the gun... (but) we can get our money back at any stage."

India's government announced Tuesday that it had ordered the Central Bureau of Investigation to probe reports of alleged bribery of government officials by Finmeccanica, after the head of the Italian aerospace giant was arrested.

Italian media reports said the company's chairman and chief executive Giuseppe Orsi had been detained as part of an investigation into alleged kickbacks paid to Indian government officials.

Italian prosecutors were reported to suspect that bribes worth around 10 percent of the deal were paid to ensure Finmeccanica's  Agustawestland helicopter unit won the contract.

Under the terms of a deal signed in 2010 and valued at $748-million, the entire fleet should be delivered by 2014. India has already received three of the 12 helicopters which were meant to be used to transport top politicians.

The 2010 deal was cleared by Indian Prime Minister Manmohan Singh and later vetted by the defence and the finance ministries.

Antony said his ministry's "integrity is foolproof" while promising that the inquiry would "examine every stage of the contract" process.

"We cannot ignore corruption. Whatever the consequences in any deal, if there is corruption, we will take action," he added.

Indian newspapers quoted from the 64-page Italian probe report on Wednesday, stating that former air force chief S P Tyagi was bribed to swing the deal.

Tyagi said he welcomed the Indian inquiry but denied any wrongdoing.

"These allegations are totally baseless and I am denying them categorically. The deal was signed in 2010 whereas I retired in 2007 itself," he told reporters.

But Tyagi acknowledged that three of his cousins had contacts with Finmeccanica.

"The fact is they are related to me... but I have never had discussions about the chopper deal."

India's Foreign Minister Salman Khurshid said the government was in touch with Italy in a bid to obtain more information.

"We have obviously remained in touch with Italy, so that they give us information," Khurshid told reporters.

Antony meanwhile voiced frustration at the lack of response from Italy to repeated requests for information on the allegations since they surfaced a year ago.

"After we saw reports, the Indian media reports of arrests and investigation going on in Italy, immediately we wrote to the Indian Ambassador in Italy to get the details from the Italian government and also the prosecutor who is conducting the inquiry," he said.

The country's main opposition Bharatiya Janata Party said "many Indian names" were allegedly involved in the sale and accused the Congress-led government of dragging its heels in seeking to identify them.

"We see the making of second Bofors scam in the latest Italian chopper deal," said BJP leader Ravi Shankar Prasad in reference to a scandal over a tank contract which led to the downfall of a previous Congress government in 1989.

Finmeccanica said in an emailed statement on Tuesday that its operations "will continue as usual" after what it called the "precautionary measures issued" against Orsi.