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India to appeal in Italian court in attempt to recover guarantees in scrapped helicopter deal

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NEW DELHI — India will appeal a decision by an Italian court to reject New Delhi's request to recover $387 million in bank guarantees in a scrapped helicopter deal, the defense ministry said Tuesday.

India canceled the contract with Italian-owned Finmeccanica's helicopter arm AgustaWestland in January amid allegations that the company paid bribes to win the $750 million deal for 12 luxury helicopters to ferry VIPs.

India's action came a day after a court in Milan ruled in favor of AgustaWestland, preventing India from recovering the guarantees.

"The government of India will be filing an appeal against the order of the Italian court in Milan," defense ministry spokesman Sitanshu Kar said in a statement.

"Simultaneously, the government will vigorously pursue all options for encashment of the bank guarantees," Kar said.

India signed the agreement for the AW101 helicopters in February 2010, but suspended payments after allegations that AgustaWestland paid bribes to clinch the deal.

India received three of the helicopters and stopped the delivery of the remaining nine.

The defense ministry says the agreement was terminated because an integrity pact was breached by AgustaWestland.

Former Finmeccanica head Giuseppe Orsi is on trial in Italy on fraud and corruption charges for his alleged role in bribery to secure the contract. He denies any wrongdoing. Bruno Spagnolini, the former chief executive of AgustaWestland, is also on trial.

Italian prosecutors suspect that kickbacks worth around $68 million, amounting to around 10 percent of the deal, were paid to Indian officials to steer the contract to AgustaWestland.

The company has denied any wrongdoing.

A former Indian air force chief, S.P. Tyagi, is one of several people facing charges in India over his involvement in the deal.

India's Central Bureau of Investigation filed charges last year under corruption prevention laws against Tyagi, three of his cousins and officials of four defense companies after an investigation found that large bribes were paid to secure the contract.

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