Rafale deal: India says "too early" to probe graft angle

By Manoj Kumar

NEW DELHI (Reuters) - Defence Minister A.K. Antony said on Tuesday it was "too early" to consider the possibility of foul play in a planned $10 billion deal with France's Dassault Aviation for Rafale war planes.

India has threatened to scrap a $750 million deal for a dozen AgustaWestland helicopters after Italian police arrested the former head of parent company Finmeccanica , Giuseppe Orsi, last week for allegedly paying bribes to Indian politicians to win the contract.

The Rafale deal, one of the world's largest defence deals, has come under increased scrutiny in the Indian media because of the Finmeccanica case.

Antony was responding to a question from Reuters at a news conference on whether the government was looking into any possibility of foul play in the deal with Rafale to buy 126 fighter jets, which is in the final stages of negotiation between Dassault and India.

"It is too early," he said, adding that there were many levels of scrutiny in all deals.

"I can assure you one thing, as far as our government is concerned, regarding integrity, transparency, we will not compromise," he said.

"We will go to any extent to take action," he said, if there was any evidence of foul play.

The Finmeccanica case has caused shockwaves in the defence industry in India, the world's largest weapons importer. The Defence Ministry is considering cancelling the deal, which would put in question some $12 billion in sales the Italian company is chasing.

India prohibits any middlemen in arms deals.

Several Indian newspapers have quoted a 2002 Paris court judgment that a British-based broker, Christian Michel, was employed by Dassault during a bid to sell India 10 Mirage 2000 jets. The court ruled that Dassault and Michel had parted ways by the time that deal was signed in 2000.

Michel is now accused by Italian prosecutors of funnelling bribes to Indian officials to swing the AgustaWestland helicopter deal.

(Writing and additional reporting by Frank Jack Daniel; Editing by Raju Gopalakrishnan and Robert Birsel)