Rafale Deal Dassault Paid 1 Million Euros as 'Gift' to Indian Middleman

Anti-Corruption Report Rafale Deal Dassault Paid 1 Million Euros as 'Gift' to Indian Middleman

Monday, April 5, 2021

A French media report on Sunday claimed that Dassault Aviation, which manufactures the Rafale jet, paid 1.1 million euros to a person, described as a “middleman” in connection with the Rafale deal

French publication MediaPart shared a report revealing the existence of a middleman, payment of commission and concerns raised by the French Anti-Corruption Agency (AFA).

The report titled, “Sale of French Rafale jet fighters to India: how a state scandal was buried” stated that Dassault (the manufacturer of French fighter jet Rafael) paid one million Euros to a middleman in India following the India-France deal for 36 Rafaels was made.

Mediapart said that Dassault could neither provide documentary evidence of the models nor explain why the spending was listed as a “gift to clients” in their accounts.

The article adds that the French anti-corruption agency Agence Française Anticorruption (AFA) discovered this separate arrangement during a routine audit of Dassault, but the AFA decided not to alert the prosecution authorities over the payment.

The AFA audit report, as accessed and reported by Mediapart, said the expenditure “seemed disproportionate in relation to all the other entries” under that same category.

Then, Dassault provided the AFA a “proforma invoice” from March 30, 2017, which was raised by Defsys Solutions. The AFA audit report said that the invoice amounted to more than one million euros and it was meant for manufacture of the 50 car-sized models of Rafale, Mediapart reported.

"The company (Dassault) said the money was used to pay for the manufacture of 50 large replica models of Rafale jets, even though the inspectors were given no proof that these models were made," Mediapart reported while citing the confidential audit report. When the AFA asked Dassault why it had ordered an Indian company to make models of its own aircraft, at the cost of 20,000 euros a plane, and why the expenditure for that was clocked as “gift to client”, the plane-manufacturing company could not provide a satisfactory explanation.

The AFA inspectors had then suspected that the said payment was made on false grounds to hide financial transactions, the Mediapart report said.

Besides, Defsys Solutions, the apparent recipient of the payment, is owned by Sushen Gupta. As also mentioned by Mediapart, Gupta was arrested in 2019 by the Enforcement Directorate of India for laundering around Rs 55 crore, allegedly paid as kickbacks to swing a chopper deal in favour AugustaWestland. Gupta was later released on bail.

On Monday, Congress media cell chief Randeep Singh Surjewala told reporters that the “allegations of causing loss to the exchequer, bribery and payment of commission in India’s biggest defence deal once again stare in the face of the Modi government”.

Surjewala quoted excerpts from the Mediapart report, titled “Sale of French Rafale jet fighters to India: how a state scandal was buried”, claiming that an investigation conducted by the French anti-corruption agency – Agence Française Anticorruption (AFA) – has revealed that after signing the deal in 2016, Dassault paid 1.1 million Euros to an Indian company called Defsys solutions. The amount paid to Defsys, which the report says is a company owned by “the Gupta family, whose members have acted as middlemen in the aeronautical and defence industries for three generations”, was shown by Dassault under the head “gifts to clients”.

The Indian company at the heart of this aircraft model contract – Defsys Solutions – is apparently one of Dassault’s sub-contractors in India on the Rafale contract.

About the Defsys group’s Indian owners, the Mediapart report states: “In January 2019 the Indian media – first Cobrapost and then the Economic Times – revealed that one family member, Sushen Gupta, operated as an agent for Dassault, had worked on the Rafale contract and had allegedly obtained confidential documents from India’s Ministry of Defence.” The report goes on to say, “By coincidence, it was this middleman who sent the 1 million Euro invoice for the jet fighter models to Dassault six months after the September 2016 signing of the Rafale deal by the French defence minister Jean-Yves Le Drian and his Indian counterpart Manohar Parrikar… In March 2019, Sushen Gupta was arrested by agents from the Enforcement Directorate… He was later freed on bail facing charges of money laundering over the so-called ‘Choppergate’ corruption scandal involving the sale of helicopters to India by the Italian-British group AgustaWestland.”

On the basis of the revelations, Surjewala questioned whether “a full and independent investigation into India’s biggest defence deal to find out as to how much bribery and commission in reality, if any, was paid and to whom in the Indian government was not required now?”

The Congress chief spokesperson added that when similar allegations of kickbacks and impropriety were made public with regard to the AgustaWestland chopper deal during the UPA regime, then defence minister AK Antony had followed the standard procedure by cancelling the deal and ordering an investigation. “Should the same procedure not be followed now with regard to Rafale… the Prime Minister must clarify on this,” Surjewala said.

He added, “Any evidence of middleman or commission or bribery has serious penal consequences of banning of the supplier defence company, cancellation of contract, registration of FIR and imposition of heavy financial penalties on the defence supplier company.”

Congress party asked the following 5 questions

1-was the payment shown by Dassault as Gifts to Clients in reality a commission paid to middleman for the rafale deal?

2-how can middleman and payment of commission be permitted in a government-to-government defence contract or in any defence procurement in India in violation of the mandatory defence procurement procedure?

3-Has it not vitiated the rafale deal entailing imposition of heavy financial penalties on Dassault, banning of the company, registration of an FIR and other penal consequences?

4-Does it now not require a full and independent investigation into India biggest defence deal to find out as to how much bribery and commission in reality, if any was paid and to whom in the Indian government?

5-Will Prime Minister, Shri Narendra Modi answer to the Nation?

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