Indian MoD cancels VVIP helicopter contract with AgustaWestLand

The Indian Government has cancelled the controversial VVIP helicopter contract with AgustaWestLand International (AWIL) on grounds of breach of the pre-contract integrity pact (PCIP) and the agreement, with immediate effect.

Covering supply of 12 AW101 medium-lift helicopters to the Indian Air Force (IAF), the €560m contract ran into controversy in early 2013 following allegations that the company paid INR3.6bn ($58.8m) in bribes to European and Indian middlemen to win the deal.

The IAF has so far taken delivery of three helicopters, having paid approximately 45% of the total contract value.

The Ministry of Defence (MoD) also appointed former Supreme Court judge Justice BP Jeevan Reddy as its arbitrator, as requested by the Anglo-Italian company on the 25 November and 04 December, 2013, respectively.

Meanwhile, AWIL’s parent company, Finmeccanica said in a statement that both the termination and show cause notices served by the MoD does not offer adequate basis to take any action against it, and noted that the tender process has been duly followed.

"The IAF has so far taken delivery of three helicopters, having paid approximately 45% of the total contract value."

The company will continue working with the Indian Government to resolve the issues, and will now discuss the termination notice within the framework of a fair arbitration process, the statement added.

”To this end, AgustaWestland will soon propose the names of the persons for the purpose of selecting the third arbitrator by agreement of the parties, as requested by the Indian Ministry of Defence.”

AWIL had nominated another former Supreme Court judge, Justice B N Srikrishna, to safeguard its interests in November last year.

The company had also expressed readiness to perform the remaining obligations under the agreement, and continue support for the helicopters already delivered to and currently operated by IAF.