This would have delayed concrete and demonstrative action against AgustaWestland, the UK-based subsidiary of the Italian aerospace and defence giant Finmeccanica.
TOI on Friday had reported that the government was moving towards cancellation of the contract, after first ordering a CBI inquiry into the bribery allegations in the case on Tuesday and then freezing all future payments to AgustaWestland on Wednesday. The new decision was taken swiftly on Friday, within hours of the MoD receiving the English translation of the preliminary inquiry report filed in an Italian court.
Sources said the decision to cancel such a major contract was also taken through an unusual route. Besides deciding not to wait for formal reports from the CBI or the Indian Embassy in Rome, the ministry chose not to hold elaborate discussions with the IAF brass. The process was promptly set in motion after the MoD acquired the preliminary 64-page report filed in the tribunal of Busto Arsizio city following the arrest of the top executives of Finmeccanica and AgustaWestland by the Italian police on Tuesday.
In fact, the cancellation, with Antony powering it, may have happened even earlier “but the translation took a couple of days”, an official explained. MoD is still fine-tuning its “future course of action’’, grappling with questions like whether the blacklisting process should include only AgustaWestland or the entire Finmeccanica group. The conglomerate, also into the power, energy and other sectors, is in contention for Indian military deals worth over $6 billion. It also has civilian contracts and collaborations with major Indian private sector players.
AgustaWestland had been asked point-blank in the showcause notice, issued by MoD’s director-general of acquisitions Santosh Agnihotri, whether it paid bribes in the contract inked with India in February, 2010. The report, which MoD got officially translated, has also alleged that former IAF chief Air Chief Marshal Shashi P Tyagi had been bribed to ensure the contract for the 12 three-engine AW-101 helicopters went to AgustaWestland. “The company, however, is sure to deny the allegations. More robust documentation, probably in the shape of the CBI report, may then be needed to go ahead with the cancellation of the contract,’’ said the source.
The MoD is not too flustered about getting back the money already paid to AgustaWestland, which works out to around 45% of the total contract value, due to the antigraft provisions and the integrity pact inked with the firm. “There is also the 5% earnest money deposited by the company as part of the integrity pact. But stronger documentation will be needed in case of arbitration,’’ said a source.
Last year, India had invoked penal provisions of the integrity pact for the first time to cash the Rs 224 crore bank guarantee given in a contract by Israeli Military Industries, one of six armament companies blacklisted for 10 years in connection with the corruption scandal against former Ordnance Factory Board chairman Sudipto Ghosh.
There is also a question mark over operation and maintenance of the three AW-101 helicopters already inducted into the IAF since only the initial lot of spares are in place.
COURTESY:
http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=TOIM/2013/02/16&PageLabel=14&EntityId=Ar01400&ViewMode=HTML
TOI on Friday had reported that the government was moving towards cancellation of the contract, after first ordering a CBI inquiry into the bribery allegations in the case on Tuesday and then freezing all future payments to AgustaWestland on Wednesday. The new decision was taken swiftly on Friday, within hours of the MoD receiving the English translation of the preliminary inquiry report filed in an Italian court.
Sources said the decision to cancel such a major contract was also taken through an unusual route. Besides deciding not to wait for formal reports from the CBI or the Indian Embassy in Rome, the ministry chose not to hold elaborate discussions with the IAF brass. The process was promptly set in motion after the MoD acquired the preliminary 64-page report filed in the tribunal of Busto Arsizio city following the arrest of the top executives of Finmeccanica and AgustaWestland by the Italian police on Tuesday.
In fact, the cancellation, with Antony powering it, may have happened even earlier “but the translation took a couple of days”, an official explained. MoD is still fine-tuning its “future course of action’’, grappling with questions like whether the blacklisting process should include only AgustaWestland or the entire Finmeccanica group. The conglomerate, also into the power, energy and other sectors, is in contention for Indian military deals worth over $6 billion. It also has civilian contracts and collaborations with major Indian private sector players.
AgustaWestland had been asked point-blank in the showcause notice, issued by MoD’s director-general of acquisitions Santosh Agnihotri, whether it paid bribes in the contract inked with India in February, 2010. The report, which MoD got officially translated, has also alleged that former IAF chief Air Chief Marshal Shashi P Tyagi had been bribed to ensure the contract for the 12 three-engine AW-101 helicopters went to AgustaWestland. “The company, however, is sure to deny the allegations. More robust documentation, probably in the shape of the CBI report, may then be needed to go ahead with the cancellation of the contract,’’ said the source.
The MoD is not too flustered about getting back the money already paid to AgustaWestland, which works out to around 45% of the total contract value, due to the antigraft provisions and the integrity pact inked with the firm. “There is also the 5% earnest money deposited by the company as part of the integrity pact. But stronger documentation will be needed in case of arbitration,’’ said a source.
Last year, India had invoked penal provisions of the integrity pact for the first time to cash the Rs 224 crore bank guarantee given in a contract by Israeli Military Industries, one of six armament companies blacklisted for 10 years in connection with the corruption scandal against former Ordnance Factory Board chairman Sudipto Ghosh.
There is also a question mark over operation and maintenance of the three AW-101 helicopters already inducted into the IAF since only the initial lot of spares are in place.
COURTESY:
http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=TOIM/2013/02/16&PageLabel=14&EntityId=Ar01400&ViewMode=HTML
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