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Govt to encash Agusta's Rs 3,000cr bank guarantee

Friday, 3 January 2014 - 12:00pm IST | Place: New Delhi | Agency: DNA

A day after scraping the Rs 3,600 crore deal for purchase of 12 VVIP helicopters from  AgustaWestland, the defence ministry has initiated the process of encashing the bank guarantee of around Rs 3,000 crore furnished by the Anglo-Italian firm. 

Though India has already made payment of 30 per cent to the company, the defence ministry said the country would would not lose any money. Sources said AgustaWestland has deposited 350 million euros in three foreign banks and State Bank of India as guarantee for the deal.

Moreover, the defence ministry will also levy damages of more than 650 million euros on the company for violating the integrity clause of the deal.

However, the ministry has not taken any final decision on the fate of three AW-101 helicopters, which the IAF received last year.

The deal was for supply of 12 AW-101 helicopters for Indian VVIPs was frozen after allegations of kickbacks surfaced in February last year.    

India terminated with immediate effect the agreement, which was signed on February 8, 2010, on grounds of breach of “the Pre-contract Integrity Pact and the agreement” by the firm.           

AgustaWestland has invoked arbitration proceedings and India has appointed Justice (retd) Jeevan Reddy as its nominee for the arbitration. AgustaWestland has nominated Justice  (retd) BN Srikrishna as its nominee for the arbitration.

As per the rules, in case the two parties do not have an agreement on the payments within 60 days, a three-member tribunal is expected to be set up for arbitration. The tribunal is expected to have one member from each party and the third member will be mutually decided but will not be from either of the two nations or any nations that either party has an objection to.

Firms banned by MoD in last eight years
1. Israeli Military industries
2. Singapore Technologies
3. Rheinmetall Defence
4. CDR, Russia
5. TS Kisan Private Limited
6. RK Machine Tools

Finmeccanica, maker of Augusta Westland, also in race for
1. Multi role helicopters
2. Naval utility helicopters
3. Reconnaissance and surveillance helicopters for the army and the IAF
4. Light utility helicopters
5. Replacement of Avro transport aircraft for IAF

Major defence deals delayed
126 Dassault-made Rafale fighter jet:  Approx Rs 1,30,000 cr
197 Light Utility Helicopters: Rs 3,500 cr
Project 75-India to procure six new frontline submarines: Rs 70,000 cr
M777 ultra light howitzers: Rs 16,000 cr
Attack helicopters: Rs 9,000 cr
VVIP choppers: Rs 3,600 cr

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