India's Central Bureau of Investigation has raided several homes and businesses in New Delhi after launching a formal investigation into the AgustaWestland bribery case.
Italian industrial giant Finnmecanica and its' helicopter manufacturing subsidiary AgustaWestland are accused of paying more than $750 million in bribes to Indian officials, including senior military figures, to secure a contract to supply helicopters to the Indian Air Force.
The probe was launched after Italian police arrested the head of Finmeccanica, Giuseppe Orsi, in connection with the case.
The government will take the "strongest possible action" if the CBI finds wrongdoing, junior Indian defence minister Jitender Singh told parliament as the raids got under way.
The CBI said in a statement that four firms and 12 individuals, including former Indian air force chief S.P. Tyagi, were being investigated.
The CBI said searches were carried out at 14 locations, including the offices of Aeromatrix, one of the companies named in a separate bribery inquiry by Italian prosecutors.
CBI spokeswoman Dharini Mishra said Finmeccanica's Orsi, Bruno Spagnolini, former CEO of AgustaWestland, who has been placed under house arrest by Italian police, alleged middlemen U.S.-born Guido Ralph Haschke and his partner, Carlo Gerosa, and three of Tyagi's cousins were also under investigation.
No arrests had been made so far, she told Reuters.
The CBI has already questioned many of the Indians involved in the case.
The formal registration of the inquiry now allows the agency to make arrests and to ask Italy and Britain for more information.
Italian prosecutors accuse Orsi of paying bribes to intermediaries to secure the deal to supply a dozen AW101 VIP transport helicopters, when he was head of AgustaWestland.
They allege the middlemen paid Tyagi to change technical specifications in the tender to favour the company.
Orsi has denied any wrongdoing.
India has frozen payments for the helicopters pending the CBI inquiry and has said it is seeking to cancel the deal.
It has already taken delivery of three of the aircraft.
Indian Defence Minister, A.K. Antony, who has previously threatened to cancel the deal and blacklist the companies and has faced a barrage of opposition questions in parliament over the case, struck a more cautious note on Wednesday.
Mr Antony told Reuters: "The CBI is investigating the matter. I do not want to say anything at this point of time," he told Reuters in parliament.
Antony asked the CBI to investigate the allegations for the first time last month despite the fact that they first surfaced a year ago.
He has complained that Italy rebuffed Indian requests for information on a judicial investigation into the bribery allegations.
The case has put pressure on Prime Minister Manmohan Singh whose government has been buffeted by a string of graft cases.
The ruling Congress party is expected to face a tough fight for a third term in office in elections due by 2014.
In recent years, India has emerged as the world's largest weapons importer, but procurements are periodically held up by allegations of corruption.
Finmeccanica could be blacklisted in India for at least five years if investigators prove bribery.
- Staff Reporter with inputs from ReutersBLOG COMMENTS POWERED BY DISQUS