India ex-air force chief faces Italian chopper probe

NEW DELHI (AFP) - Indian police said on Monday they would probe a former Indian air force chief and 10 others over a US$748 million (S$927 million) contract for 12 Italian helicopters amid charges that the deal was won through kickbacks.

A senior police official said that the Central Bureau of Investigation (CBI) had filed a "preliminary enquiry" report which also links four companies to the alleged scandal.

Former air chief marshal "S.P. Tyagi and his cousins were names mentioned in the report", the official said, without elaborating.

"If criminality is established, then the next step would be to register a case against the 11 and the four companies," the police official told AFP on condition of anonymity.

The Press Trust of India and India's Hindustan Times newspaper also said Tyagi, who has strongly denied any wrongdoing, was listed in the CBI report as one of the 11 people to be probed.

India's defence ministry earlier this month said it had "initiated action for cancellation" of the helicopter contract from AgustaWestland, a unit of Italian aerospace group Finmeccanica, intended for use by top Indian politicians.

India on February 14 put payments to the company on hold and asked the Italian firm to reply if any terms of the contract and an "integrity pact" it signed in 2010 had been violated.

Finmeccanica insisted in its response last week to the Indian government that it had acted "correctly" in the deal.

The Italian company's chief executive was arrested on February 12 in Milan as part of a probe by Italian prosecutors.

The purchase came under scrutiny from Italian investigators looking into allegations the group had broken the law by paying bribes to foreign officials, leading to the arrest of Finmeccanica's boss Giuseppe Orsi.

Italian prosecutors suspect that kickbacks worth around 10 percent of the deal, or 50 million euros, were paid to Indian officials to ensure AgustaWestland won the contract, Italian media reports say.

Cash was allegedly handed to a cousin of the former Indian air force chief with more money funnelled via a web of middlemen and companies in London, Switzerland, Tunisia and Mauritius.

Finmeccanica's Orsi also denies any wrongdoing and his lawyer has called his arrest "unjustified".

The chopper deal was cleared by Indian Prime Minister Manmohan Singh, whose Congress-led government has been buffeted by a series of corruption scandals that analysts say could affect the party's electoral chances in 2014 polls.

AgustaWestland, a wholly owned Anglo-Italian unit of Finmeccanica, was manufacturing the helicopters at its plant in southwest England.