Union Minister Ravi Shankar Prasad.(PTI)
Union Minister Ravi Shankar Prasad.(PTI)

Rafale deal: Cong, BJP trade barbs as report says €1 mn paid to ‘middleman’

India ordered the jets in September 2016 as an emergency purchase through a government-to-government deal.
By Rahul Singh and Saubhadra Chatterjee
UPDATED ON APR 06, 2021 02:01 AM IST

A report in Mediapart, a French online journal, late on Sunday claimed that Dassault Aviation, which manufactures the Rafale jet, paid €1 million to a Sushen Gupta, described as a “middleman”, in connection with the 59,000 crore deal for 36 jets for the Indian Air Force.

The Congress demanded an independent investigation into the matter even as law minister Ravi Shankar Prasad termed the report “baseless”. Gupta, whose name figures in the Agusta Westland charge sheet, did not respond to queries seeking comment.

Mediapart claimed that 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 reporter who wrote the article, Yann Philippin said he found it very “suspicious” that the discovery was “covered up by AFA, which did not report it to French prosecutors”.

A spokesperson for Dassault Aviation did not respond to a HT query on the Mediapart report.

The report is the latest controversy to dog the deal, and Philippin said it was the first of three parts with the second part focusing on the way the French justice system dealt with initial “suspicions” that rose in 2018, and the third , “on the deal itself and what happened behind the scenes”.

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 listed against the head “gifts to clients”.

“Mediapart understands that during a scheduled audit of the group, the agency’s inspectors found that Dassault had agreed to pay €1 million 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, 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 “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.

According to the French report, AFA questioned Dassault, but the jet-makers have not been able to answer the queries.

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, 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.

ED and the Central Bureau of Investigation (CBI) are probing allegations of money laundering in the 2007 contract for the purchase of 12 luxury VIP helicopters for use by top political leaders, including the President, the Prime Minister, and former PMs. The deal was cancelled in early 2014 over allegations of wrongdoing. Among the people named in the charge sheets filed by ED is Ratul Puri, the nephew of former Madhya Pradesh chief minister and senior Congress leader Kamal Nath.

Referring to the Mediapart article, Congress chief spokesperson Randeep Surjewala said: “Was the payment of €1.1 million shown by Dassault as ‘gifts to clients’ in reality a commission paid to middleman for the Rafale Deal? 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?”

Arguing that the latest media report vitiated the Rafale deal, Surjewala said the revelation entailed imposition of heavy financial penalties on Dassault, banning of the company, registration of an FIR and other penal consequences.

“Does it now not require 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?” the Congress said, asking if Prime Minister Narendra Modi would answer to the nation on this.

After the report was released, Union minister of law and justice Ravi Shankar Prasad called it baseless and said, “It’s completely baseless. The Supreme Court, CAG found nothing wrong [in the deal].”

This is not Mediapart’s first article on the deal.

In October 2018, it 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.

After the latest article, the Congress has demanded that the standard procedure—lodging an FIR, independent investigation and related moves—must follow and reminded the government that during the UPA rule, then defence minister AK Antony had followed the stipulated procedure in the case of AgustaWestland.

The Opposition party said that defence procurement has an “integrity clause” that says there can be no middleman or payment of commission or bribe.

Union minister Prasad said, “Is Congress again talking about Rafale? It lost case in Supreme Court. The CAG has also rejected the charges. In 2019 polls they displayed Rafale models everywhere and said so much against the PM. Yet, the lost the polls.”

“I had once said that Rahul Gandhi doesn’t do his homework. It now looks like the Congress spokespersons also don’t do it. As you all know corporate rivalry goes on in France. But the most interesting thing is that the article mentions Sushen Gupta. Who is Gupta? He was arrested over Agusta Westland in 2019 by our government. And the name of (Gandhi) family members came up in Agusta Westland case. And (former foreign minister) Salman Khurshid has publicly acknowledged that he knows Gupta’s family. So, I want to tell the Congress to do proper homework before you speak,” said Prasad.

The National Democratic Alliance’s (NDA) 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 Supreme Court heard a publc interest case on the deal and in November 2019, said it saw nothing wrong in it. In a February 2019 report, the government’s auditor, the Comptroller and Auditor General of India audited the deal and said India had not overpaid for the jets.

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