Chopper deal may be too hot to handle for UPA

The emerging scam in the sale of 12 Italian-made Augusta Westland helicopters for the exclusive use of VVIPs, including the prime minister, is sure to rock the UPA II. The Italian government's move to arrest its own citizen, Giuseppe Orsi, current CEO of Finmeccanica Group, for alleged corrupt practices in signing the Rs 4000 crore sale agreement with India has already put the Manmohan Singh government on the defensive. Alarmed by the swiftness of Italian government, Defence Minister AK Antony has now ordered a CBI investigation in the deal.

The main opposition party, the BJP, has promptly jumped on the issue to target the Congress-led UPA and is calling the proposed CBI inquiry a cover up exercise. BJP spokesperson Prakash Javadekar said, "It is ironical that India, whose exchequer was under loot, is keeping silent on the issue and Italy, which benefited from the said deal, is taking action on its own citizen. This is a classic example of cover up by corruption-ridden UPA government at the Centre." The BJP is getting all its ammunition ready to fire on the Congress in the coming budget session of Parliament.

Finmeccanica head Giuseppe Orsi. AFP

Finmeccanica head Giuseppe Orsi. AFP

Javadekar had earlier written on the subject to the defence minister but did not get any substantive response. He had been filing questions on the subject since the last budget and winter sessions. Now, since the Italy has already acted and arrested CEO of the company that supplied the VVIP choppers, this could be the one big issue that opposition had been looking to raise the political temperature against the UPA. Amid speculations of early polls, the BJP would hope to see it become some kind of Bofors II.

Whether it would be politically explosive for the Congress would depend on what details come up during the course of investigation. For now it is good fodder. The Bofors issue has proved that Italy and defence deals make a perfect political recipe for the opposition to exploit.

Orsi was the CEO of Augusta Westland in 2010 when the deal for a dozen VVIP helicopter was signed with India. India has signed a contract with Augusta Westland—a subsidiary of Italian Finmeccanica Group—for procuring 12 helicopters (eight VVIP versions) at a total cost of €556.262 million (Rs 3893 crore approximately). State-controlled Finmeccanica had previously said that it has always done business in India through official channels. In a statement in February, the company said, "AgustaWestland is not involved in any irregularity concerning the supply of helicopters in India. No notice related to the investigations has been served."

As per the Defence Procurement Procedure (DPP) an integrity pact needs to be signed between the buyers and the bidders for all procurement schemes amounting to Rs 100 crore and above.

The matter had briefly come up in Parliament during the winter session when some members asked questions on the deal. Antony had then said that the "Defence Ministry is constantly pursuing the matter and committed to take suitable penalty measures in event of allegations being substantiated. However, in the absence of any specific information in this regard, government has not ordered any formal inquiry into the case so far," He had added that the contract contained the standard clause relating to penalties for use of undue influence - Any breach of these provisions entitles the Defence Ministry to cancel the contract and all of any other contract with the company.

After the news of Italian government placing Augusta Westland CEO under house arrest broke today, the government maintained that the Italian government never passed on the details to India. "We had asked the government of Italy through our mission in Rome for details of the investigation but were told that it is a judicial process and the government of Italy is unable to share any information. That remains the position even today," the external affairs ministry spokesman said.

The UPA government will need to do a lot more firefighting. Defence deals have always been sensitive political issue.

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