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Rediff.com  » News » Contract termination notice without firm basis for action: Agusta

Contract termination notice without firm basis for action: Agusta

January 03, 2014 11:14 IST

After India scrapped its Rs 3,600 crore deal for supplying VVIP choppers, Anglo-Italian firm AgustaWestland on Friday said that the contract termination notice sent to it does not offer any firm basis for taking any action against it.

In a statement, the firm also said the Defence Ministry in a press release issued in February last year had stated that the tender process had been duly followed.

The firm said it welcomed India's decision to get involved in the arbitration process and it will soon propose names of persons for selecting the third arbitrator as part of the exercise.

"AgustaWestland still finds that neither the termination notice by the Ministry of Defence nor the showcause notice, from which this termination notice stems, offers adequate basis to take any action against the company," it said.

It is the Ministry of Defence's admitted position (PIB release of Defence Ministry statement February 14, 2013) that the tender process has been duly followed, it said.

"Accordingly, the termination notice received yesterday will have to be discussed within the framework of a fair arbitration process.

"To this end, AgustaWestland will soon propose the names of the persons for the purpose of selecting the third arbitrator by agreement of the parties, as requested by the Indian Ministry of Defence," the statement said.

In the statement, the firm said it has received the orders issued by the Indian government for cancelling the deal and appointment of an arbitrator from its side, as requested by AgustaWestland on November 25 and December 4, 2013.

On January 1, India cancelled the Rs 3,600 crore deal signed on February 8, 2010 for procuring 12 VVIP choppers from AgustaWestland and along with it agreed for arbitration process by appointing retired Justice B P Jeevan Reddy.

AgustaWestland had appointed former Justice B N Srikrishna on its behalf for the purpose.

In the statement, Agusta said it was committed to working with the Indian government to "resolve the issues, to allow the Indian armed forces to receive the equipment they need and is ready to perform the remaining obligations under the agreement for the supply of the 12 VVIP/VIP helicopters.

"AgustaWestland will continue to support the three helicopters already delivered to and currently operated by the Indian Air Force," it said.

The firm said it follows "stringent ethical procedures" and "is ready to take the necessary actions, on top of the arbitration measures, included in a mitigation plan already prepared.

"This plan includes a reduction to the workforce to re-address the company business model and the reallocation of existing working capital that will be reflected also on the supply chain.

"The completion of this plan, the positive company performance and the recent order intake will ensure a solid platform for revenues and cash flow streams," it said.

India has already received three helicopters from the Anglo-Italian firm but froze payments and delivery of the remaining nine choppers after bribery allegations surfaced against the firm in Italy along with the arrest of its two top executives there.

India already has initiated the process of seizing bank guarantees of the firm and is also expected to impose a penalty of more than Rs 4,000 crore on the firm. 

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