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AgustaWestland braces for India AW101 showdown

AgustaWestland has seized upon the Indian defence ministry’s 1 January announcement that it will appoint an arbitrator in regard to the scandal-hit acquisition of 12 VVIP-roled AW101 helicopters.

In a media statement, the Anglo-Italian company confirmed that it has received a termination notice from India’s defence ministry, but is adamant that New Delhi has inadequate basis for the move.

“AgustaWestland still finds that neither the termination notice by the Ministry of Defence nor the show cause notice, from which this termination notice stems, offers adequate basis to take any action against the Company,” it says.

“It is the Ministry of Defence's admitted position [PIB release of MoD statement February 14, 2013] that the tender process has been duly followed. Accordingly, the termination notice received yesterday will have to be discussed within the framework of a fair arbitration process. 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.”

The defence ministry’s 1 January statement said that it had notified AgustaWestland of the cancellation – although as of 2 January, the Anglo-Italian company said it had not received this.

It also, however, said it would appoint an arbitrator – AgustaWestland had been pressing for the matter to go before arbitration. The defence ministry’s decision to appoint an arbitrator suggests that there could be a degree of ambiguity around the deal until the country’s attorney general offers a fresh opinion.

In October 2013, AgustaWestland received a final show cause notice from New Delhi, seeking an explanation as to why the acquisition should not be cancelled as a result of it “violating the terms of the pre-integrity pact".

A total of €51 million ($70 million) is alleged to have been paid as kickbacks by AgustaWestland to secure the order, an accusation strenuously denied by the company.

In August last year, India’s comptroller and auditor general stated that the “entire process of acquisition posed serious questions on accountability and lack of transparency in the finalisation of contract, which need to be addressed”.

Three of the helicopters have already been delivered to the Indian air force and AgustaWestland says it is committed to supporting these aircraft.

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