India has suspended payments to Italian industrial giant Finmeccanica following allegations the company paid bribes to secure a $750 million deal for 12 VIP helicopters.
The Indian Central Bureau of Investigation launched an investigation after Finmeccanica CEO Giuseppe Orsi was arrested in Milan on Tuesday.
Further payments to the company will be frozen until the CBI investigation is complete, the Indian defence ministry said Thursday.
Former Indian Air Force chief SP Tyagi and three of his cousins have been named in the Italian charge sheet for accepting bribes in return for Finmeccanica winning the deal.
Mr Tyagi denies the allegations.
India signed the agreement in February 2010 to purchase a dozen three-engine AgustaWestland AW101 helicopters meant to ferry VIP's such as the president, prime minister and senior ministers.
Three of the 12 helicopters have already been delivered to India and the rest are expected to arrive by the middle of 2014.BLOG COMMENTS POWERED BY DISQUS