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Scam-tainted Finmeccanica banned from all future India deals: All you need to know

The Indian government on Tuesday banned scam-tainted Italian defence firm Finmeccanica from future contracts, but decided to honour the contracts now being carried out with the group and its unit, AgustaWestland.

India had earlier cancelled a 560 million euro (about Rs 3,600 crore) order with Finmeccanica's AgustaWestland unit for 12 helicopters after Italian prosecutors alleged the defence group had paid bribes to Indian officials to win the contract.

Finmeccanica has been denying all allegations and even settled the case in Italy for a fine.

The case involving the helicopters had been a major setback for the Congress-led United Progressive Alliance.

Here are the key facts you need to know about the scam:

* The scandal relates to allegations of corruption in supply of 12 VVIP helicopters to India. In February 2013, India froze payments on the 560-million-euro contract to supply these helicopters after the deal became mired in allegations of bribery and the then-CEO of Finmeccanica was arrested by Italian police for allegedly paying bribes to secure the deal. AugustaWestland is a unit of Finmeccanica.

* Italy and India separately investigated allegations that AgustaWestland paid bribes to win the 2010 deal for the helicopters to be used by senior politicians. AgustaWestland has denied all these allegations.

* In October 2013, AgustaWestland invoked arbitration over the deal saying suspension of payment was not provided for under the terms of the contract and that authorities had not responded to its requests for bilateral discussions since April.

* In August 2013, the Comptroller and Auditor General (CAG) also felt there is something fishy about the whole deal. Its report said that the defence ministry had initially set a condition that the helicopters be able to fly to an altitude of 6,000 metres (1,970 feet), which meant AgustaWestland could not compete since the AW101 was certified to fly only to 4,572 metres. Later, the ministry lowered the minimum altitude requirement to 4,500 metres, even though the helicopters were expected to be used in northern and northeastern parts, where terrain is mountainous and altitudes are high, the auditor said.

* CBI is probing former Air Chief Marshal SP Tyagi's role in the deal. Giuseppe Orsi, former chief executive of Augusta Westland, and Bruno Spagnolini, current chief executive, are facing trial in Italy.

* CBI has alleged that the kickbacks were transferred through many confusing transactions between Indian and Tunisian software companies done like technical contracts. Tyagi is alleged to have approved the reduction in the service ceiling for the VVIP helicopters.

* In January 2014, India cancelled the Rs 3,600 crore order with Finmeccanica's AgustaWestland unit for 12 helicopters after Italian prosecutors alleged the defence group had paid bribes to Indian officials to win the contract.

* In July 2014, Finemccanica settles the case in Italy reportedly after paying a fine. However, the Indian government continued the investigation and put all contracts worth Rs 30,000 crore with Finmeccanica and its subsidiaries on hold.

* The government bans Finmeccanica from all future contractsasthe CBI investigation continues.

With inputs from Reuters

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Updated Date: Dec 21, 2014 13:18:16 IST