Defence Minister A.K. Antony Wednesday pledged "strongest action" if it is proved that bribes swung the $750 million deal for 12 VVIP helicopters for the IAF, as the opposition prepared to raise a storm in parliament opening a week later.
Antony said the the Central Bureau of Investigation (CBI) had been asked to conduct an early inquiry after Italian authorities arrested the head of Finmeccanica company on corruption charges.
"I can assure you that the moment we get a report from CBI, we will take strongest action provided in the integrity pact," Antony said. This would include "cancellation of the contract and blacklisting the companies".
"We are examining everything. If (contractual) terms have been violated, we will take the strongest action. We are not bothered about who they are or how big they are," Antony added.
The minister sought to downplay a media report on the alleged involvement of a former IAF chief, Air Chief Marshal S.P. Tyagi, during whose tenure the AgustaWestland deal was negotiated.
Tyagi denied any wrongdoing after a preliminary inquiry report filed by prosecutors in Italy Tuesday sought to link him to the corruption charges.
"The charge I was bribed to tweak a change in requirement to suit (AgustaWestland)... Changes are not made by the Air Headquarters... Final changes have to be approved by the minister of defence," he said.
"Air Headquarters can recommend it. But to the best of my knowledge Air Headquarters have not recommended any changes. I am shocked... I have no clue what this is all about."
Antony denied the suggestion that the IAF's original requirements
were modified to suit the Italian firm. "The recommendation was made by the IAF and the SPG on security considerations."
The contract for the helicopters was signed in February 2010. The IAF sought the choppers as a replacement for its Mi-17 cargo helicopters which had been modified for VVIP deployment.
External Affairs Minister Salman Khurshid said "if the CBI required any assistance from the government ... directly or through courts, (it) will ask for it and we would respond".
The Congress welcomed the CBI probe, with party leader Digviyaja Singh saying the deal had been initiated when the Bharatiya Janata Party headed the central government.
The Comptroller and Auditor General had called the deal a waste of resources.
Opposition figures are comparing the scandal to the bribery charges made when India agreed to buy Sweden's Bofors artillery guns, allegations which led to the election defeat of Prime Minister Rajiv Gandhi in 1989.
The BJP also questioned the delay in ordering a probe into the purchase of the helicopters.
It said the matter would be taken up in parliament when it meets for the budget session Feb 21.
Khurshid denied the helicopter purchase could be compared with the Bofors saga.
"Those who say this is another Bofors will please provide me the final conclusion of the Bofors, including the Supreme Court judgment, and I would say you are right," he said.