Finmeccanica threatens to reconsider ongoing projects in India

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New Delhi | Published: May 31, 2016 7:32:12 PM

It said the exposure of company's business to India is very marginal

AgustaWestlandIt said the exposure of company’s business to India is very marginal. (Reuters photo of AgustaWestand)

Stung by India initiating process of blacklisting it, VVIP chopper scam-tainted Italy’s Finmeccanica has warned that it may “assess” its ongoing projects of supplying components and essential services if “agreed and transparent solution” to current uncertainty was not found.

In a statement, Leonardo-Finmeccanica also asserted that its business to India was “very marginal” and said “despite the context of uncertainty”, the company “in the spirit of cooperation”, has over the past few years continued to supply components and services essential to ensuring the operation of platforms and equipment for the Indian armed forces.

Finmeccanica is a major player in the Indian defence market. From 127 mm guns to the 76 mm guns on various naval ships and spare parts for Seahawk helicopters to radars on several ships and helicopters, the group has a huge presence.

Terming India as an “interesting market” for it, the company hoped that “an agreed and transparent solution” was found as soon as possible, in order to shed light on current initiatives and future business opportunities.

“Should this not be the case, the company will not refrain from assessing the situation given the limited size of the ongoing business in the country,” it said.

Defence Minister Manohar Parrikar had said the government has decided to cancel all ongoing tenders for defence equipment won by Finmeccanica as a precursor to blacklisting of the firm, which is being investigated for bribery in the AgustaWestland VVIP helicopter deal.

“Wherever there is capital procurement of Finmeccanica and their subsidiaries, all Requests for Proposal [RFP] will be closed. I am very clear,” he had said. Parrikar clarified that only fresh capital acquisition was being cancelled and the firm would continue to conduct annual maintenance and supply spare parts for defence supplies already acquired.

The company in the statement said it acknowledges the statements made by Parrikar even though to date it has not received any official communication from the delegated government authorities.

It said the exposure of company’s business to India is very marginal, since over the past few years no new orders coming from the country have been included in Leonardo- Finmeccanica’s budget forecast.

In particular, the contract for the supply of torpedoes, being cancelled by India, was never formally signed and therefore never included in Leonardo-Finmeccanica’s backlog, it said.

Emphasizing that it has now moved high in international ranking of defence companies committed to anti-corruption by Transparency International, the company took a dig at the Defence Ministry, saying “some important suppliers” to the Indian armed forces are below it in ranking.

The Italian defence major said since the appointment of the current senior management in 2014, Leonardo-Finmeccanica has set off on a new path, “undertaking a deep internal restructuring, under which the leadership of the company has been renewed”.

The new organisation has also introduced more extensive and stringent procedures of corporate governments and compliance, including a detailed anti-corruption code and whistleblowing measures, it said.

“It is not by chance that Leonardo-Finmeccanica has reached the top of the international ranking of defence companies committed to anti-corruption, as highlighted in the Anti-Corruption Index 2015 produced by Transparency International, which sees the company moving to the more qualified band B which includes leading international operators in the sector, but not some important suppliers to the Indian Ministry of Defence,” it said.

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