World / Dassault gave ₹ 8.6 crore to 'middleman' in Rafale deal from India: French media

Paris: A French media report on Sunday claimed that Dassault Aviation, which manufactures the Rafale jet, paid 1 million euros to a person, described as a “middleman”, in connection with the ₹58,000 crore Rafale deal for 36 jets for the Indian Air Force.

Mediapart claimed the money was paid for the manufacture of 50 large replica models of Rafale jets, even though Dassault provided inspectors of French anti-corruption agency Agence Française Anticorruption (AFA) with no proof that these models were made. The revelation comes at a time when five assembly elections are underway in the country.

A spokesperson for Dassault Aviation was yet to respond to an HT query on the Mediapart report.

India ordered the jets in September 2016 as an emergency purchase through a government-to-government deal.

The Mediapart report said AFA inspectors were surprised when they came across a “suspect payment” of 508,925 euros listed against the head “gifts to clients.” It said the revelation was the first instalment of a three-part investigation dubbed “Rafale Papers.”

“Mediapart understands that during a scheduled audit of the group, the agency’s inspectors found that Dassault had agreed to pay one million euros to a middleman just after the 2016 signing of the Rafale fighter jet deal. That middleman is now accused of money laundering in India in another defence deal,” the report said.

According to Mediapart, the AFA decided not to refer the matter to French prosecutors even though a subsequent confidential report of the agency found that the amount of 508,925 euros “seemed disproportionate in relation to all the other entries” under the same heading.

“The sum is indeed huge for a gift. Though French law does not set out precise limits, legal precedents suggest that giving a watch or an expensive meal costing several hundred euros can be enough to constitute corruption,” the Mediapart report said.

It said to justify the “gift”, Dassault supplied the AFA with a “proforma invoice” of March 30, 2017, which was given by an Indian company called Defsys Solutions. “This invoice, which related to 50% of the total order (€1,017,850), was for the manufacture of 50 models of the Rafale C, with a price per unit of €20,357,” Mediapart said, quoting the AFA report.

The Mediapart report claimed that Defsys belongs to the Gupta family whose members have acted as middlemen in the aeronautical and defence industries for three generations. It said two Indian media reports from January 2019 revealed that one family member, Sushen Gupta, who operated as an agent for Dassault, had worked on the Rafale contract and allegedly obtained confidential documents from India’s Ministry of Defence. Gupta was investigated by Indian agencies over his role in the AgustaWestland VVIP chopper scam.

HT is reaching out to Gupta and will update the copy once he responds.

In October 2018, Mediapart raised questions about the offset contract that was part of the Rafale deal. It said a senior official in Dassault Aviation saw the partnership with Anil Ambani’s Reliance Group as “imperative and mandatory” to getting the “export contract” with India for the Rafale aircraft.

The National Democratic Alliance’s decision to enter a $8.7 billion government-to-government deal with France to buy 36 Rafale warplanes made by Dassault was announced in April 2015, with an agreement signed a little over a year later. This replaced the previous United Progressive Alliance (UPA) regime’s decision to buy 126 Rafale aircraft, 108 of which were to be made in India by the state-owned Hindustan Aeronautics Ltd (HAL).

The deal became controversial, with the Opposition, led by the Congress, claiming that the price at which India is buying Rafale aircraft now is ₹1,670 crore for each, three times the initial bid of ₹526 crore by the company when the UPA was trying to buy the aircraft. It has also claimed the previous deal included a technology transfer agreement with HAL.

The NDA has not disclosed details of the price, but the UPA deal, struck in 2012, was not a viable one, former defence minister Manohar Parrikar has previously said, implying that it would have never been closed and that, therefore, any comparison is moot. Indeed, the UPA was not able to close the deal till 2014, largely over discussions related to pricing of items not included in the initial bid.

The NDA government has said that it cannot disclose the details of the price on two counts: a confidentiality agreement with France, and the strategic reason of not showing its hand to India’s enemies; however, it said that the current deal also includes customised weaponry.