India will blacklist Finmeccanica SpA and cancel a deal to buy 12 helicopters from the Italian defense group if allegations of bribery are proven against the company, Defense Ministry A.K. Antony said on Wednesday.
Antony said India's Central Bureau of Investigation (CBI) had been ordered to investigate the purchase of the luxury choppers -- destined for use by India's political leadership. He said that if the allegations were proved true, those involved would be punished.
"If anybody is guilty, they will have to pay the price, we will have to take actions, no one will be spared," he told reporters.
Italian police arrested Finmeccanica's chief executive Giuseppe Orsi on Tuesday for alleged bribes paid to secure the sale of 12 AgustaWestland executive helicopters to the Indian Air Force, when he was head of the Finmeccanica helicopter unit.
India, the world's largest weapons importer, has a long history of corruption in defense deals. A multi-million dollar scandal in the 1980s over the purchase of Swedish Bofors artillery guns contributed to an electoral defeat for then Prime Minister Rajiv Gandhi, of the Congress party.
The current Congress party-led government has been buffeted by a series of corruption scandals that opposition parties plan to exploit ahead of general elections due in 2014.
Antony said that so far internal enquiries by the defense ministry have found no evidence against Finmeccanica in the $754 million helicopter deal. He refused to answer specific questions about the Italian allegations and said the CBI investigation would find the truth.
The minister formally ordered the CBI to investigate the deal after Orsi's arrest on Tuesday. It was not clear why the agency had not been asked to investigate before. Antony criticized Italy for not responding to requests for information about the allegations uncovered by Italian investigators.
"From day one, we have been trying to find out the truth and we conveyed that to them," he said. "So far we have not received any details."
(Writing by Frank Jack Daniel, Editing by Ross Colvin and Ken Wills)