India aims to recover 228 million euros in Finmeccanica bank guarantees

Mon May 26, 2014 5:06am EDT
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By Shyamantha Asokan

NEW DELHI (Reuters) - India will move to recover bank guarantees from an aborted 560-million-euro helicopter deal with Italy's Finmeccanica SIFI.MI, the defense ministry said, after an Italian court lifted a freeze on 228 million euros held with European banks.

New Delhi scrapped the deal with Finmeccanica's AgustaWestland unit in January, after graft allegations made against the company almost a year earlier.

The delay highlights the slow headway the Congress party then in power was able to make on vital defense contracts.

Congress suffered its worst ever defeat in India's general election in April and May. Hindu nationalist Narendra Modi, leader of the Bharatiya Janata Party (BJP), is due to be sworn in as prime minister on Monday night.

The overall value of the guarantee scheme with Deutsche Bank SpA DBKGDE.UL, Deutsche Bank AG (DBKGn.DE: Quote), Intesa Sanpaolo (ISP.MI: Quote) and the State Bank of India (SBI.NS: Quote) was around 300 million euros, Reuters reported in January.

India said in February it had cashed in two small bank guarantees but an Italian judge later blocked its efforts to recover the remaining 278 million euros. On Friday, an Italian court revoked the freeze on 228 million euros of that figure.

"<The ministry> is studying the order and will take immediate steps to recover the amounts fully," India's defense ministry said in a statement on Sunday.

Details will only emerge after the new defense minister takes office, a ministry spokesman told Reuters on Monday.   Continued...

The headquarters of Italian defence and aerospace company Finmeccanica is seen in Rome May 3, 2012. REUTERS/Max Rossi