The Indian military have commenced legal proceedings which they hope will lead to the cancellation of their order for twelve VVIP AW101 helicopters.  Through the formality of issuing a “show cause notice”, AgustaWestland now have to respond to the court within seven days on specific points to determine whether the contract remains valid or not.  These seven days expire Thursday or Friday this week, HeliHub.com understands.

The manufacturer issued a statement saying that they are confident of full compliance with the relevant laws, and are standing by past and present senior executives and managers including Guiseppi Orsi and Bruno Spagolini (see also AgustaWestland – Orsi and Spagnolini arrested).  Meanwhile Orsi denies any wrongdoing and his lawyer has called the allegations against him “inconsistent” and his arrest “unjustified” – he has officially resigned according to a statement from Finmeccanica, which had already replaced him to ensure someone was still at the helm in Italy.

The CBI in India (their equivalent of the FBI in the US) has engaged the services of a lawyer In Italy to help understand the local law and expedite the obtaining of documents from AgustaWestland (read more).

If the process goes India’s way, they will then cancel the contract and immediately invoke the various contract clauses to get back monies owed.  Three AW101s have been delivered so far out of twelve, but as much as 45% of the monies have been paid.  Delivery of the next batch of three – due March – is on hold, as are the following two batches due in May and July.  India would make a formal request to AgustaWestland to repatriate the extra money paid to them, after deducting the price of three helicopters and related costs.

After cancellation, India would then start a process of blacklisting – although local press are undecided as to whether that would focus on AgustaWestland or parent Finmeccanica, pulling in other subsidiaries such as Selex and DRS Technologies.  India would blacklist the organisation for 10 years, during which they would not enter into any contract with it.  This not only penalises the supplier, but also puts the Indian military in rather a difficult situation for obtaining spares etc, meaning they would have to go via third party contractors and liable to pay hugely inflated prices.  One wonders whether this process is all worth the effort when it could be limited to aircraft procurement – but that is not how the Indian law works, apparently.

It is currently unclear whether this would only apply to military contracts or all government and even state government contracts – noting that the AW139 has become the favoured VIP transport helicopter for a number of Indian state Chief Ministers.

This week, British Prime Minister David Cameron leads the largest ever trade delegation taken by a UK Prime Minister – yes, you guessed, to India.  The AgustaWestland situation will undoubtedly overshadow the trip.

The next few days will also provide us more information on the future of the contract to supply the AW101s.  HeliHub.com continues to work on the basis that all parties are innocent until proven otherwise, even though the Indian press appears to be taking the opposite route.

Jeremy Parkin – HeliHub.com

Photo (c) Copyright 2013 and reproduced with express permission of Rick Ingham Photography