NEW DELHI — Allegations of corruption in the purchase of 12 Italian helicopters are threatening India's desperately needed multibillion-dollar modernization of its defense forces.
The chief executive of the Italian defense and aerospace company Finmeccanica, Giuseppe Orsi, was arrested in Milan this week on charges of bribing Indian officials to secure a $750 million deal in 2010 to sell the AW-101 medium-lift helicopters.
In response, India ordered a federal probe into the charges and put payments on hold. The Defense Ministry also deferred discussions this week on another contract to buy 197 light utility helicopters, fueling fears that the controversy may paralyze the government's already painfully slow decision-making process.
Defense Minister A.K. Antony told reporters Wednesday that if the probe reveals proof of graft, the Italian company and its Britain-based subsidiary “are liable for criminal actions; they are liable to be prosecuted; the company is liable to be blacklisted.”
“We are not bothered about who the companies are, how strong they are, how influential they are,” Antony said. “Nobody will be spared.”
In a statement Friday, the Defense Ministry said it has notified the Finmeccanica subsidiary, AgustaWestland, that it is seeking to cancel the contract. The company was asked to reply to the notice in seven days.
Defense analysts said the dramatic revelations of bribery that are being splashed across Indian newspapers every day — and the probe they have prompted — may cast a shadow over India’s ambitious plans to replace its aging military arsenal. Those plans made the country the world’s largest arms importer last year. The bribes were allegedly offered to officials as high as the former air force chief.
The case has reminded many Indians of another defense corruption scandal in the 1980s, which helped bring down a government and pushed back many key defense purchase decisions. A similar delay, they now warn, may threaten India’s security at a time when its lumbering military needs to urgently transform itself into a leaner and more lethal force to face potential threats from neighbors such as China and Pakistan.
“The unfortunate fallout of the current helicopter controversy is that decisions will get stalled, people will play safe and not take any decisions at all, and that will affect our defense modernization and preparedness adversely,” said Mrinal Suman, a retired army major general who instructs foreign defense manufacturers on Indian weapons procurement policies. “The modernization of our armed forces is already lagging behind by 15 years. About half of the weapons and equipment in India’s armed forces are obsolete.”
In 2011, V.K. Singh, then chief of the Indian army, said the army’s major combat weapons were in an “alarming” state, making India unfit for war.
India in recent years has embarked on plans to upgrade its Soviet-era arsenal with new fighter aircraft, antitank missiles, maritime patrol aircraft, infantry combat vehicles, helicopters, assault rifles and submarines — a shopping list worth about $100 billion over more than a decade. READ MORE
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