India launches legal bid to sever £500m AgustaWestland helicopter deal
Westcountry business leaders have voiced their support for AgustaWestland, as it faces legal action by the Indian Government over a £500 million contract win.
India's Defence Ministry has begun proceedings to cancel a multi-million pound contract with AgustaWestland for 12 AW101 helicopters commissioned to be built at Yeovil.
According to Indian media reports, the country's Defence Ministry issued AgustaWestland with a final "show cause" notice on Monday, amid allegations of bribery over the contract win which saw it beat US and Russian rivals to secure the deal in 2010.
It has given the helicopter manufacturer a final warning and 21 days to explain why the contract for the helicopters should not be cancelled.
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The Times revealed yesterday that a report from India's Comptroller and Auditor- General suggested that the bidding process, including certain aircraft specifications, had been manipulated to favour AgustaWestland.
AgustaWestland, which employs 3,000 staff at its Somerset base, denies any wrongdoing.
In February this year, Giuseppe Orsi – the former chairman and chief executive of Italian defence firm Finmeccanica which owns AgustaWestland – quit his role, following his arrest as part of a corruption investigation involving the sale of the helicopters to the Indian government. He has denied any wrongdoing.
The Indian government froze the contract for supply of the aircraft, after allegations of bribery emerged. Former Indian Air Force chief Shashi Tyagi is also reported to be among those to have been questioned in connection with alleged kickbacks, which he denies.
Three of the helicopters being built for the contract at Yeovil have already been delivered to the Indian Airforce, with the remainder due to be handed over next year.
Reports emerged earlier this month that AgustaWestland was seeking arbitration to resolve the issue.
As one of the most significant employers in the Westcountry, an estimated 10,000 people work either directly for AgustaWestland or within its regional supply chain.
Its UK head of strategy and business development Simon Barker is among the private sector representatives on the Heart of the South West Local Enterprise Partnership for Devon and Somerset's board.
A spokesperson for the HotSW LEP said: "AgustaWestland has our fullest support and we await the outcome."
Rupert Cox, chief executive of Somerset's Chamber of Commerce said: "For us, it will be disappointing if one person's actions should threaten employment in the area and the local supply chain.
"But we're impressed by the way that AgustaWestland is fillings its order books with other activities and I'm sure it will weather this storm. They've been winning good contracts of late and I know they are close to winning more."
At the time of going to press, AgustaWestland had not responded to the WMN's requests for comment.