India scraps $753m Finmeccanica helicopter deal

File photo of Agustawestland helicopter AW-109 Agusta Westland is the helicopter arm of Italian defence giant Finmeccanica

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India has cancelled a $753m (£455m) helicopter deal with Italian defence giant Finmeccanica after allegations of corruption, officials say.

The contract was for 12 luxury helicopters to transport VIPs.

Defence officials said they scrapped the deal because an integrity pact had been breached by the firm's Anglo-Italian helicopter arm AgustaWestland.

India suspended payments in February after allegations that AgustaWestland paid bribes to win the contract.

The deal for 12 three-engine AW-101 helicopters was signed in February 2010 after the company beat off competition from US and Russian rivals.

The aircraft were for an elite squadron of the Indian Air Force which ferries around the president, the prime minister and other VIPs.

Three of the 12 British-made helicopters ordered have already been delivered to India. The remaining nine were due to be delivered by the middle of 2014 - that order has now been stopped.

Italian prosecutors suspect that kickbacks worth almost $67.6m were paid to Indian officials to secure the contract.

Giuseppe Orsi, the former chief of Finmeccanica, and Bruno Spagnolini, the former head of Agusta Westland, are being tried in Italy on fraud and corruption charges in connection with this deal - they both deny wrongdoing.

Former Indian Air Force chief SP Tyagi has also denied allegations that he or any of his relatives were paid bribes to secure the deal, after Italian investigators named him in the preliminary inquiry submitted to court.

India's Congress party has been hit by a series of damaging corruption scandals in recent years and the opposition has made regular calls for Prime Minister Manmohan Singh to resign.

For Italy, too, this represented the latest in a string of corporate scandals. The Italian government owns about 30% of the company.

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