India's Tata says committed to AgustaWestland deal despite scandal

BUSTO ARSIZIO Thu May 29, 2014 2:10pm EDT

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BUSTO ARSIZIO Italy May 29 (Reuters) - Indian businessman Ratan Tata said on Thursday that his group remains committed to its partnership with AgustaWestland in spite of a corruption scandal that has engulfed the helicopter business of Italian group Finmeccanica.

AgustaWestland and holding company Tata Sons struck a deal in 2010 to produce civil helicopters in India for global markets but the joint venture was held up by a lengthy approval process. The first aircraft were due to be delivered in 2011.

Relations between state-owned Finmeccanica and India were damaged by an investigation in Italy into allegations that AgustaWestland bribed Indian officials to win a 560 million euro ($762.46 million) helicopter deal with the Indian Ministry of Defence in 2010.

The former chairman and CEO of Finmeccanica, Giuseppe Orsi, and former CEO of AgustaWestland, Bruno Spagnolini, are currently on trial for alleged corruption in the deal. They and AgustaWestland have always denied any wrongdoing.

"From the Tata side, the relationship remains strong ... If the joint venture is cleared with the government we will go forward," Tata said during a trial hearing in the Italian town of Busto Arsizio.

He acknowledged, however, that fallout from the trial could endanger the joint venture, which was initially forecast to produce up to 30 aircraft a year.

The Indian tycoon, who was called as a witness by defence lawyers, told the judges in court that Orsi had never asked him to find backing in government circles in India, adding that there was no connection between the joint venture and the contract at the heart of the corruption allegations.

New Delhi scrapped the 560 million euro order with AgustaWestland in January, after graft allegations made against the company almost a year earlier, citing a breach of integrity.

AgustaWestland said the scrapping of the contract was unfair and the dispute over the matter is due to be heard by an arbitration court.

In this regard India has taken steps to recover guarantees held with European banks backing the deal. ($1 = 0.7345 Euros)

(Reporting by Danilo Masoni; Editing by David Goodman)

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