AgustaWestland seeks arbitration to settle India row

AgustaWestland says it is seeking arbitration to settle a row over the supply of 12 helicopters to India, which suspended the deal amid charges the Anglo-Italian firm paid bribes to clinch the contract. The 556-million-euro ($753-million) deal to buy the luxury AW101 helicopters for use by Indian political VIPs came under scrutiny in India earlier this year after Italian investigators began looking into allegations AgustaWestland paid bribes to win the 2010 contract. AugustaWestland, which has denied the accusations, said late Friday it had requested talks with Indian authorities to "resolve the issues confronting us and to allow the Indian armed forces to receive the equipment they need". "Regrettably, there has been no response from India's MoD (Ministry of Defence)," Britain-based AgustaWestland, a unit of Italy's Finmeccanica SpA, said in a statement. The "need to resolve this issue has left AgustaWestland with no other option but to invoke arbitration through counsel, the next step prescribed by the contract", the company said. "This is not a step we take lightly," it added. There was no comment immediately available from India's defence ministry. Soon after the arrest of Finmeccanica's former chief executive, Giuseppe Orsi, in Italy over the case, Indian Defence Minister A.K. Antony suspended the payments to the company and threatened punitive action against the firm if any wrongdoing was uncovered. While India has already received three of the helicopters, Antony halted delivery of the remaining nine. The aircraft were expected to fly such dignitaries as India's president and prime minister. In winning the deal, AgustaWestland beat the S-92 helicopter of US-based Sikorsky Aircraft Corp, a unit of United Technologies Corp. India's auditor general said in an August report the defence ministry "deviated from procurement procedure and tender on several instances in the deal", including altitude requirements. Indian detectives raided former air force chief, S.P. Tyagi's home as part of the probe into the allegations of bribery. Tyagi has denied any wrongdoing. Italian prosecutors suspect kickbacks worth around 10 percent of the deal -- 50 million euros -- were paid to Indian officials, according to Italian media reports. Cash was allegedly handed to Tyagi's cousin with more money funnelled via a web of middlemen and companies in London, Switzerland, Tunisia and Mauritius. In its latest statement, AgustaWestland questioned India's unilateral suspension of the contract saying "neither the contract nor the associated 'Integrity Pact' confers such rights on the Indian Defence Ministry". The deal was cleared by Indian Premier Manmohan Singh's Congress-led government, which has been hit by a string of corruption scandals that analysts say could scupper the party's re-election chances in polls due by May 2014. The arbitration proceedings, which are confidential, will be held under India's arbitration act, the company said.