Chopper deal: Process started to encash bank guarantee

A day after terminating the tainted VVIP helicopter deal with AugustaWestland, the Defence Ministry has set in motion the process of encashing the bank guarantee of around Rs 1700 crore furnished by the Anglo-Italian firm.
Stating this, Defence Ministry sources today asserted that India will not lose any money in the Rs 3600 crore deal in which payment of 30 per cent has already been made.
The deal was for supply of 12 AW-101 helicopters out of which three had already been delivered before the contract was frozen after allegations of kickbacks surfaced in February last year.
"MoD is not going to lose any money. India will not lose any money," a ministry source said amid concerns over the fate of the money already paid.

AugustaWestland is said to have deposited over 200 million euros (about Rs 1700 crore) in international and Indian banks as bank guarantee for the deal.
Official sources said the ministry would soon take a call on the fate of three choppers. It is unprecedented that any defence deal had been scrapped midway during the acquisition under such circumstances, they said.

India terminated with immediate effect the agreement, which was signed on February 8, 2010, on grounds of breach of "the Pre-contract Integrity Pact (PCIP) and the agreement" by the firm, the ministry had said yesterday.
Controversy over the 2010 deal for the supply of 12 helicopters for Indian VVIPs erupted in February last year with the arrest of two top officials of the firm in Italy, triggering a political storm here. Former IAF chief S P Tyagi is one of the accused in the case being probed by the CBI.

AgustaWestland has invoked arbitration proceedings and India has appointed Justice (retd) Jeevan Reddy on its behalf for arbitration as it does not want to go unrepresented.