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India Puts $750M Helicopter Deal On Hold

Fri, 02/15/2013 - 8:38am

NEW DELHI (AP) -- India's Defense Ministry said Friday that it has put a $750 million contract to purchase helicopters from Italian company Finmeccanica on hold amid allegations that bribes were paid to obtain it.

The ministry said a formal notice has been sent to Finmeccanica's AgustaWestland helicopter division seeking cancellation of the contract. The company has a week to respond to the Indian notice.

"With today's show cause notice, the operation of the contract has been put on hold. The company has been asked to reply to the notice in seven days," the ministry said in a statement.

India signed the contract with AgustaWestland for the purchase of 12 helicopters in February 2010. Three of the helicopters were delivered in December.

India has launched its own investigation into the 60 million euro ($750 million) deal after the Italian defense and aerospace giant's chief executive was arrested in Milan on Tuesday on charges he paid bribes to obtain the contract.

Giuseppe Orsi, CEO of Finmeccanica, and Bruno Spagnolini, chief of AgustaWestland, are being investigated on charges they paid bribes in India.

Indian Defense Ministry officials have said the contract includes an integrity clause against bribery or the use of undue influence. Under the terms of the clause, if any person or the company is found to have bribed officials or made any kind of payoff, the agreement can be scrapped and the firm blacklisted.

The Defense Ministry has already put on hold the delivery of the remaining nine helicopters.

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