NEW DELHI (AFP) - India said Thursday it has suspended payments to an Italian company pending the outcome of an inquiry into whether a US$748 million (S$ 924 million) helicopter contract was won through kickbacks.
The government has "put on hold all further payments" to Finmeccanica's AgustaWestland helicopter unit until the inquiry by the Central Bureau of Investigation (CBI) is completed, a defence ministry statement said.
The CBI investigation into alleged bribery of Indian government officials by Finmeccanica was announced on Tuesday after the head of the Italian aerospace giant was arrested in Rome.
Italian media reports said the company's chairman and chief executive Giuseppe Orsi has been detained as part of an investigation into alleged bribes paid to Indian government officials.
Italian prosecutors suspect that kickbacks worth around 10 per cent of the Italian deal were paid to Indian officials to ensure AgustaWestland helicopter won the contract.
India also said it had asked AgustaWestland to indicate "specifically if any financial transaction has taken place with any Indian individual or entity" which would violate an "integrity pact" it signed with the firm.
The government said it would take strict action including "the cancellation of the contract, recovery of payment, blacklisting and penal action" if the probe finds that any clause in the integrity pact with AgustaWestland was broken.
Under the terms of the 2010 agreement, 12 helicopters were to be delivered to India by 2014. India has already received three of these for use by its top politicians.