India on Tuesday launched an inquiry into reports of alleged bribery of government officials by Finmeccanica, after the head of the Italian aerospace giant was arrested.
Italian police arrested chairman and chief executive Giuseppe Orsi as part of the country’s investigation into alleged kickbacks paid to Indian government officials, media reports in Italy said.
The kickbacks related to Finmeccanica’s $748-million sale of 12 helicopters to India, according to Italian media.
“A probe by the CBI (Central Bureau of Investigation) has been ordered,” Indian defence ministry spokesman Sitanshu Kar told AFP.
India’s defence ministry said separately in a statement that it had sought the CBI inquiry after receiving no information from the Italian and British governments about the allegations involving the deal, which was sealed in 2010.
“Since no specific input has been received so far from the two governments, the ministry of defence has decided to refer the case to the CBI for inquiry,” the statement said.
Prosecutors in Italy were reported to suspect that bribes worth around 10 percent of the deal were paid to ensure Finmeccanica’s AgustaWestland helicopter unit won the contract.
Orsi and state-controlled Finmeccanica have long denied any wrongdoing and said all business with India was conducted through official channels.
The Italian magistrate in the case also issued an order for the head of AgustaWestland, Bruno Spagnolini, to be put under house arrest, Italian reports said.
Two suspected intermediaries in the bribes, who live in Switzerland, have also been given extradition requests, the reports said.
An Indian defence ministry source told AFP the arrest of Orsi and the Indian CBI investigation may not have any immediate impact on the helicopter deal.
“The ministry will wait and see before taking a final call on taking delivery of the remaining helicopters,” the source said.
The Press Trust of India said the ministry has decided to “put on hold the receipt of the remaining nine of the 12 AW101 helicopters”.
But defence ministry spokesman Kar refused to comment on that report.
The contract stipulated that the choppers would be delivered between January and July this year.
India’s defence minister A.K. Antony told parliament last year the Congress government, which has been buffeted by a string of corruption scandals, would slap “suitable penalty measures” in the event of wrongdoing by Finmeccanica.
Antony said the defence ministry, which is spending billions of dollars upgrading its outdated military equipment, had sought details from the Italian government after reports of alleged kickbacks surfaced in the Indian media.
But he said Rome replied it had “no official position… in view of the independence of the (Italian) judiciary”.
An Indian foreign ministry spokesman reiterated on Tuesday that India had received no information on the Italian probe.
India’s main opposition Bharatiya Janata Party said “many Indian names” were allegedly involved in the sale and accused the government of dragging its heels in seeking to identify them.
In the 1980s, a previous Congress government, led by then-prime minister Rajiv Gandhi, collapsed over charges of kickbacks paid to Indian officials by the Swedish group Bofors to clinch a $1.3-billion artillery deal.
India banned middlemen in defence deals following the Bofors scandal.
Finmeccanica said in an emailed statement its operations “will continue as usual”.
It said it was issuing the statement “with reference to the precautionary measures issued today towards the chairman and CEO of Finmeccanica and the CEO of the controlled company AgustaWestland”.
In addition, Finmeccanica said it “expresses support” for Orsi and hoped “clarity is established quickly”.