India has cancelled, with immediate effect, its 3,600 crore rupee deal with the Anglo-Italian firm Agusta WestLand International Ltd. for supply of 12 VVIP choppers. An official release said, the deal was scrapped on the grounds of breach of the pre-contract Integrity Pact and the agreement by Agusta WestLand. The move came in the wake of the charges that kickbacks to the tune of 360 crore rupees were paid in the deal.

AgustaWestland has, however, denied any wrongdoing, saying that it will defend its reputation.

The 2010 deal was for supply of 12 VVIP helicopters, out of which three had already been delivered. The controversy erupted in February last year, with the arrest of two top officials of the firm.

The Anglo-Italian firm had been pressing for arbitration, but the Government was of the view that integrity-related issues are not subject to arbitration. Later, on the Attorney General’s advice, the Ministry decided that it will get into the arbitration process after the deal is scrapped, and nominated Justice BP Jeevan Reddy as its arbitrator to safeguard the interests of the Government.