India defends procurement process in AW101 deal

Singapore
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India's ministry of defence (MOD) has defended its handling of the purchase of 12 AgustaWestland AW101 helicopters which are now the subject of an investigation into bribery allegations by the Italian authorities.

The investigation has led to the arrest of Finmeccanica chief executive Giuseppe Orsi on 12 February, while further investigations into other Finmeccanica and AgustaWestland executives are continuing in Italy and India.

In a statement released on 14 February, the MOD detailed the procurement process and its handling of the corruption allegations, which surfaced in February last year.

The MOD says that a global request for proposals for eight new VIP helicopters was initially called in 2002, which resulted in the EH101 (as the AW101 was designated then), Eurocopter EC225 and Mil Mi-172 being shortlisted.

However, with one of the operational requirements being certification to an altitude of 6,000m (1,830m), this left the EC225 as the sole machine meeting the requirements.

That led to a decision to issue a new request for proposal in September 2006 where the operational requirements were revised to allow for machines with a 4,500m ceiling certification, while the decision was also made to increase the number of aircraft to be bought from eight to 12.

Following a thorough evaluation process, the AW101 was selected over the Sikorsky S-92 and Mi-172. Contract negotiations took place between September 2008 and January 2009, with the €560 million ($748 million) contract signed in February 2010.

The contract included a separate integrity pact, which bound AgustaWestland to "take all measures necessary to prevent corrupt practices, unfair means and illegal activities during any stage of the bid or during any pre-contract or post-contract stage".

"The procurement case was, thus, progressed in accordance with the established procurement procedure in a transparent manner with all stages of procurement being followed meticulously," says the MOD.

When allegations of bribery in the acquisition process emerged in February 2012, the MOD says that it sought a factual report through India's embassy in Rome.

The ministry also received assurances from AgustaWestland that the reports were unfounded and that no commissions were paid during the procurement process.

The MOD subsequently requested in July 2012 that the embassy in Rome approach prosecutors in Naples directly for more information on its investigations of the allegations, while similar requests were also made to authorities in the UK.

"Throughout the process of this case, MOD has been prompt to take action on newspaper reports, and to seek factual information from the concerned authorities," it says.

With the arrest of Orsi on 12 February this year, the MOD says that it has handed the case over to India's central bureau of investigation and suspended payments to AgustaWestland.

It adds that any bribery or commissions paid by the company could lead to a number of actions "including cancellation of contract, recovery of payment, blacklisting and penal action".