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India To Recover AgustaWestland Guarantees

: Jun 15, 2014 - : 1:31 am

India will make immediate efforts to recover bank guarantees worth $311 million from Finmeccanica subsidiary AgustaWestland issued as part of a helicopter deal that was later cancelled following corruption allegations.

The decision comes after an Italian court on May 23 reversed its previous order, allowing India to claim performance guarantees which AgustaWestland had issued in connection with $770 million-worth contract to supply 12 AW101 helicopters to India.

The court also ordered AgustaWestland and Deutsche Bank to refund legal expenses to the Indian government.

The appellate court in Milan, in its judgment May 23, has “substantially upheld the claims of Government of India against AgustaWestland International Ltd (AWIL), AW Spa and Deutsche Bank, Italy, on the encashment of bank guarantees and performance bond in the VVIP helicopter case,” an official at India’s defense ministry says.

The Indian government will take “immediate steps to recover the amounts fully,” he informs.

The court’s ruling will allow India to encash “an amount of €228 million ($311 million) maximum against a call seeking to cash €278 million,” an official at Finmeccanica says.

 He says further that AgustaWestland will “assert its rights to recover the aforesaid amounts in the arbitration process already initiated.”

 India had cashed two bank guarantees in February. But a court in Milan had ruled in March in favor of AgustaWestland, blocking India from claiming the remaining funds of nearly €278 million ($380 million).

 India made its largest defense contract cancellation, terminating on Jan. 1 its contract for the purchase of a dozen AW101 helicopters on grounds of breach of the pre-contract integrity pact, amid allegations that the Anglo-Italian company had paid kickbacks worth $67 million to Indian officials to secure deal.

 India has taken delivery of three of the helicopters, with the remaining nine due to be delivered this year. But Indian authorities put the agreement on hold following the arrest of Finmeccanica Chairman and CEO Giuseppe Orsi by Italian investigators in February.

 He is currently on trial in Italy on allegations of graft and bribery. He has denied allegations.

 

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