Thursday, 14 February 2013

Indian MoD Statement On VVIP AgustaWestland Copter Purchase

This is an unedited statement by the MoD on the acquisition of VVIP helicopters for the IAF, currently suspended the arrest of Effective Finmeccanica CEO Giuseppe Orsi.

The Facts: In August 1999, the IAF is responsible for carrying Which out VVIP communication task, the Proposed replacement of Mi-8 helicopters due to VIP severe operational constraints, Such as, Inability of Mi-8 to operate at night and in adverse weather , Inability to operate safely at places beyond 2000 meters in elevation etc.. IAF felt the need for the replacement of Mi-8 helicopters as They Were Completing Their total technical life.

2. A comprehensive RFP was Issued in March 2002 to 4 Which Responded vendors. The Technical Evaluation Committee shortlisted three helicopters and flight evaluations accordingly Were Conducted. Since, EH-101 of M / s. AgustaWestland was not certified for 6000 meters of altitude year, it did not participate in. the flight evaluation. The Russian helicopter Mi-172 Could not comply with mandatory 7 Operational Requirements (ORs). After flight evaluation, EC-225 of M / s. Eurocopter France was found suitable for acquisition.

3. On November 19, 2003 meeting was taken by Principal Secretary to PM on this subject. In the meeting, Principal Secretary Observed That was his main concern que le framing of the Mandatory requirements HAS led us into a single vendor Effectively situation. It was aussi PM and President Noted That Have rarely made visits to places Involving flying at altitude year beyond 4500 meters. In the meeting it was Decided to make the mandatory requirement for operational altitude 4500 meters. The higher flying ceiling of 6000 meters, and a height of 1.8 meters cabinet Could be made desirable operational requirements. It was Observed That thesis with revisions, several helicopters Which brings Otherwise all Requirements purpose HAD beens rejected due to the altitude restriction, Would now come into the reckoning.

4. The meeting was a letter dated Followed by 22nd December, 2003 from the Principal Secretary to the PM to Air Chief, Stating That It was unfortunate That Neither GSP nor PMO Consulted while framing thesis was mandatory requirements. He Suggested That CAS and Defence Secretary may review the matter to Jointly draw up realistic Mandatory requirements satisfying operational, security and convenience of VVIPs and Requirements aussi set in motion a fast track process for selection and acquisition of the replacement helicopters.

5. In pursuance of the above directive, the ORs deliberated at length Were Between IAF, NOS SPG / PMO and MoD Between March, 2005 to September, 2006 and the above exchange Were Indicated incorporated.

6. The required numbers of helicopters for VVIP of the circle was further Top deliberated Between Air HQ, MoD and GSP / PMO. The quantity of helicopters for Proposed procurement was revised from 8 to 12 helicopters by Adding four helicopters in non-VIP configuration for security Reasons.

7. The AON for the procurement of 12 helicopters was accorded by the Defence Acquisition Council under 'Buy' category with 30 percent offsets on 3rd January, 2006. RFP Issued to 6 vendors was on 27th September, 2006.

8. Three vendors derived, namely M / s Sikorsky, USA (S-92 helicopter), M / s AgustaWestland, UK (EH-101 helicopter) and M / s. Rosoboronexport, Russia (Mi-172 helicopter) Responded to the RFP.

9. M / s. Rosoboronexport did not submit earnest money deposit and the Integrity Pact, along with Technical and Commercial Proposals Their. It HAD beens made clear to M / s Rosoboronexport in February 2007 That this was a global tender and hence every contractual clause Would Be the same for all vendors. Integrity Pact and have no Earnest Money Deposit Were received from M / s Rosoboronexport, Their Techno-Commercial offer was not accepted.

10. The Technical Evaluation Committee Evaluated the technical Proposals of M / s Sikorsky and M / s AgustaWestland and recommended assessment field trials of Their helicopters.

11. The Field Trial Evaluation of M / s AgustaWestland was Carried out in UK and trials of M / s Sikorsky Were Carried out in USA from 16 January 2008 to February 2008. The Field Evaluation Trial team icts Submitted report in April 2008 and recommended helicopter AW-101 of M / s AgustaWestland for induction into service. GSP was aussi share of the Field Evaluation Trial team.

12. The Evaluation Report of Air Staff HQ Concluded que le S-92 helicopter was non-compliant with respect to SQRs oven for the VVIP helicopter (Missile Approach Warning System, Service Ceiling of 4.5 km, Altitude Drift Down and Hover Out of Ground Effect). The Staff Evaluation Report Assessed the VVIP helicopter AW-101 to be fully compliant with all SQRs.

13. Technical Oversight Committee constituted on 6 August 2008 found que les assessment field trials, compliance to SQRs and selection of vendors Were done selon the prescribed procedures.

14. Contract Negotiation Committee (CNC) was constituted and it Carried out discussions with the vendor icts Between 19 September 2008 and 21 January, 2009. While the CNC was icts Progressing discussions, Air HQ, recommended inclusion of Collusion Traffic Avoidance System (TCAS II) and Enhanced Ground Proximity Warning System (EGPWS) for all 12 helicopters and GSP / PMO recommended inclusion of Medevac System for 8 VVIP helicopters. These additional equipment to be regarded Were essential for safe and effective operation of the helicopter in VVIP transportation role. Agreed to GSP aussi thesis requirements. The CNC thereafter, recommended conclusions of the contract at a negotiated price of EURO 556.262 million.

15. On completion of the proposal was CNC Submitted for approval of the Cabinet Committee on Security (CCS). The CCS regarded the proposal in icts meeting Held on 18 January 2010 and approved the proposal.

16. In pursuance of the decision of the CCS the Ministry of Defence Concluded a contract for the supply of 12 AW-101 VVIP helicopter with M / s AgustaWestland, UK on 08 February, 2010.

17. The box was procurement, Malthus, progressed in Accordance with the procedure, established procurement in a transparent Manner with all stages of procurement Being Followed meticulously. Security aspects as required by SPG / PMO and fully taken into IAF Were consideration. The role of PMO Which Began in 2003 was to Ensure That security, communication and other Requirements of VVIP security Were taken care of and the VVIP helicopter for use is selected on the Basis of broad based QRS.

18. Contract signed with M / s. AgustaWestland includes specific contractual provisions against bribery and the use of undue influence. Article 22 of the contract deals with penalty for use of undue influence. This clause entitles the 'Buyer' to cancel the contract with the 'Seller' and recover from him the Amount of Loss Arising from Any Such cancellation. Article 23 of the contract dealing with agents and agency commission Requires the 'Seller' to confirm and declare That He Has not engaged Any individual or firm, Indian or foreign Whether, whosoever, to intercede, Facilitate or in Any Way to recommend to the Government of India or Any icts of functionaries, Officially or unofficially Whether, to the award of contract to the 'Seller' normal HAS beens Any Amount paid, or promised to be paid Intended to-any individual or firm Such in respect of Any Such intercession, facilitation or recommendation. This clause further Top entitles the 'Buyer' to Consider cancellation of the contract without compensation or Any entitlement to the 'Seller' Who Shall be liable to refund all payments made by the 'Buyer' in terms of the Contract along with interest.

19. In addition to the above contractual provisions, M / s. Agusta Westland HAS signed Integrity Pact with the year Government. The validity of this Integrity Pact is from the date of signing icts and extends up to five years or the complete execution of the contract whichever is later. Under the Integrity Pact, the bidder commits himself to take all Necessary Measures to Prevent corrupt practices, unfair means clustering and illegal activities falling on Any course of the bid or falling on Any pre-contract or post-contract stage. Any breach of the provisions of the Integrity Pact entitles the 'Buyer' to take action against the 'Seller `which includes forfeiture of the earnest money, performance bond, cancellation of the contract without giving Any compensation to recover all the sums paid Already with interest, to cancel contracts with the Any Other bidder and to debar the bidder from Entering Into Any bid from the Government for a minimum period of five years may be extended Which, etc..

20. As regards, the allegations of unethical dealings in helicopter procurement Including box and involvement of middleman payment of bits etc., The first report in the media Appeared in February 2012.

21. Immediately (the next day after the news item in the papers Appeared) DG (Acq) in a factual MoD Sought report in the matter from our Embassy in Rome.

22. MoD aussi Noted the report in the 'Hindu' That of 28/02/2012, quoting Finmeccanica, AgustaWestland filiale states icts That is not Involved in "any irregularity in the deal."

23. Subsequently, more than one MoD received communication from M / s que les AgustaWestland Confirming statements in the press are "completely unfounded and Have Been Issued with malicious intent" and That "no commissions whatsoever Were paid" in the box.

24. In April 2012, MoD wrote again to our Embassy in Rome seeking an update.

25. A detailed report on the status of the case was received from our Embassy in Rome in May 2012. The report made it clear That there are inherent Difficulties in Obtaining formal details of the case Given the independence of the Judiciary from the executive in Italy.

26. MoD in July 2012 wrote to our embassy in Rome Stating That It Could judicial approach The Concerned Authorities directly. A formal request was indeed made by the embassy to the Naples prosecutors office on July 16, 2012.

27. Since information was factual difficulties to arrive at, Defence Secretary wrote to Secretary (West), MEA, in October 2012 reiterating the importance of the need to get information from the Italian Authorities so MoD That Could take further Top Necessary action in this regard.

28. MEA's response again was que les matter HAD beens taken up with the Italian side and the position conveyed for the need for 'reliable information', for "news reports alone Could not be the Basis for the Ministry of Defence to Make Any preliminary determination".

29. In October 2012 Defense Secretary wrote to aussi Secretary (West) to take up the matter with the Government of UK in view of the Alleged involvement of a British citizen and the fait que the contract was signed with M / s AgustaWestland, UK

30. In November 2012, Secretary (West), MEA, Defence Secretary replied to Stating that 'the UK Authorities Were waiting for the results of the investigation in order to Italian ascertain Whether there are further Top action to take'.

31. Earlier, in connection with the letter received from one
Mr. Edmund Allen of Ganton Limited, USA, MoD HAD written on 19/04/12 CBI and Enforcement Directorate to Necessary for action, as Abhishek Verma and others aussi Were Being named in various media reports in connection with several defense deals. Later, Enforcement Directorate in July 2012 MoD Informed That They Were Enquiring into the allegations.

32. In November 2012, a letter was received from the MoD in Director, Income Tax (Investigations) Regarding allegations against Indians possibly Involved in the deal as middlemen and seeking information about em. The current status of the case was conveyed to the income tax in January 2013 Authorities, in return, Income Tax MoD Asked to share it with any 'credible information'.

33. Throughout The process of this case, MoD has-beens to take prompt actions on newspaper reports, and to seek factual information from the Concerned Authorities. Since foreign gouvernements are Involved, the MoD HAS Consistently Pursued matter though MEA.

34. As soon as information was available of one concrete step taken by the HAVING beens Concerned Authorities foreign investigative derived, namely, the arrest of Mr. Giuseppe Orsi, CEO, Finmeccanica on Feb 12, 2013. MoD handed over the case to CBI for investigation and put on hold all payments to further Top Agusta Westland. Besides by this, the Indian Embassy has-beens Requested To Provide the factual position and Any Other relevant information. The CEO of M / s AgustaWestland beens aussi HAS Asked to state categorically clear the position in view of the Current Developments indicating indication Any financial transaction if SPECIFICALLY HAS taken place with Any Indian individual / entity Which would be violative of the Integrity Pact or Any Other terms and conditions of the contract.

35. Already have Mentioned above, both, the integrity pact and contract signed with M / s AgustaWestland, UK, contain specific provisions by Which Action Including strict cancellation of contract, recovery of payment, blacklisting and penal actions can be taken against the vendors. Government is Determined to take all legal and administrative actions as possible against the guilty party and accordingly ordered a thorough probe HAS by CBI.

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