CAG faults high costs in AgustaWestland chopper deal

NEW DELHI (Reuters) - The Comptroller and Auditor General of India (CAG) said on Tuesday the government may have overpaid in a 560 million euro deal to buy 12 luxury helicopters from AgustaWestland, a division of Italy's Finmeccanica defence group.

The report piles further pressure on the Congress-led coalition government as it battles charges of corruption in the run-up to elections next year.

India and Italy are both investigating the 2010 deal to supply AW101 helicopters, which has been mired in accusations that AgustaWestland paid bribes to win the contract from the defence ministry.

"The benchmarked cost adopted by the contract negotiating committee was unreasonably high compared to the offer cost," the CAG said in a report to parliament.

"Hence it provided no realistic basis for obtaining an assurance about the reasonableness of the cost of procurement of AW101 helicopters," it added, pointing to deviations from purchase policy by the defence ministry.

India froze payments to the company in February as the scandal unfolded. It had taken delivery of three helicopters before the deal was stalled.

Bruno Spagnolini, former CEO of AgustaWestland, and Giuseppe Orsi, former chairman of Finmeccanica, are being tried in Italy on the accusations. Both deny wrongdoing.

The Italian arrest warrant for Orsi and Spagnolini, seen by Reuters, said the Indian tender was changed to deliberately favour the Italian firm.

(Reporting by Nigam Prusty and Anurag Kotoky; Writing by Sanjeev Miglani; Editing by Clarence Fernandez)