CAG Report on Agusta Westland Chopper Deal tabled in Parliament

The Report of the Comptroller and Auditor General of India on Acquisition of helicopters for VVIPs was tabled in Parliament on 13 August 2013.

The Comptroller and Auditor-General (CAG) stated that the Ministry of Defence had set a base price for the helicopters higher than what the company itself wanted, that it deviated from standard procedures on many occasions and revised the specifications of the helicopter so that at the end there was just one seller - AgustaWestland.

Highlights of the CAG Report

1.The benchmark cost of 4871.5 crore rupees, a price set by a committee formed as per the Defence Procurement Procedure (DPP) for the 12 helicopters was unreasonably high as compared to the 3966 crore rupees quoted by AgustaWestland.
2.The CAG questioned the decision of the then Air Chief, to hold the trials of helicopters by the two contenders for the deal abroad and said the decision lacked justification.
3.The Indian Air Force never tested the AgustaWestland helicopter AW-101 that it would agree to buy. Instead, field trials of AgustaWestland's bid were conducted on representative helicopters Merlin MK-3A and Civ-01 and on a mock-up of the passenger cabin, and never on the actual helicopter.
4.The CAG held responsible the Ministry of Defence and Air Force for causing an inordinate delay in the acquisition process and also limiting the process to only one contender, which eventually favoured AgustaWestland.
5.The CAG stated the procurement of four additional helicopters in the deal for 1240 crore rupees as avoidable and said the assessed requirement was not commensurate with the low utilisation levels of existing helicopters providing transportation to VVIPs.

What is AgustaWestland Issue?

Government of India signed contract with Italian defence giant Finmeccanica in February 2010 for supplying of 12 VVIP three-engine AW-101 choppers from AgustaWestland for the Communication Squadron of Indian Air Force.

Italian government alleged that officials of Finmeccanica, the parent company of AgustaWestland, had bribed top Indian officials, including former Air Chief SP Tyagi, to land the contract for the choppers.

Italian agencies are probing allegations of corrupt practices and financial irregularities against top executives of U.K.-based AgustaWestland and its parent company, Italy-based Finmeccanica.

Indian investigation agency CBI has been probing alleged corruption in the AgustaWestland deal.