File picture: AgustaWestland chopper AW-101
The government broke its own procurement rules to award a 3,700-crore contract for 12 helicopters to Italian-owned AgustaWestland, the government's auditor has said in a detailed report. The auditor's report, presented in Parliament today, comes as the government is battling the perception of substantial corruption. National elections are due by May.
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The Comptroller and Auditor General (CAG) said the Defence Ministry did not comply with rules from the very beginning of the tender process to the conclusion of the contract with AgustaWestland, a division of Italy's Finmeccanica Defence Group.
The CAG report also says that Indian negotiators set a higher base price for the purchase of the helicopters, intended for the use of top politicians including the Prime Minister. "The benchmarked cost adopted by the contract negotiating committee was unreasonably high compared to the offer cost," the auditor said. "Hence it provided no realistic basis for obtaining an assurance about the reasonableness of the cost of procurement of AW101 helicopters," it added.
The report also questions the decision of former Air Force Chief Fali Major to conduct the helicopter trials abroad in 2007, given that these are normally conducted at home. The report said the decision "lacked justification."
The CBI is investigating Fali Major's predecessor, Air Chief SP Tyagi, for allegedly receiving kickbacks via three of his cousins to influence the deal in favour of AgustaWestland.
The auditor points out that the Air Force never tested the AgustaWestland chopper AW-101 that it would agree to buy.
Field trials of AgustaWestland's bid were conducted on representative helicopters Merlin MK-3A and Civ-01 and on a mock-up of the passenger cabin, and not on the actual helicopter, the CAG said.
The CAG report says current Comptroller and Auditor General Shashikant Sharma, who was a senior official in the Defence Ministry at the time, was party to the changes in specification that ultimately favoured AgustaWestland.
The auditor said the defence ministry had initially set a condition that the helicopters should be able to fly to an altitude of 6,000 metres, which meant that AgustaWestland could not compete since the AW101 was certified to fly only to 4,572 metres. Later the minimum altitude requirement was lowered to 4,500 metres, making the firm eligible.
India froze payments to the company in February as the scandal unfolded, first in Italy and then at home. AgustaWestland has denied any bribery and asked India to pay the sums due under the contract.
Three helicopters had been delivered to India before the deal was stalled in February.
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