Rafale jets deal ‘middleman’ paid in ‘secret commissions’: French report

In the third and final part of its investigation into the Rafale deal, Mediapart, a French online journal claimed that the payments to Gupta were channelled through offshore accounts and shell companies, using inflated invoices for software consulting. Gupta’s name figures in the AgustaWestland charge sheet.
According to the journal, the bulk of the payments were made before 2013.(ANI Photo)
According to the journal, the bulk of the payments were made before 2013.(ANI Photo)
Updated on Apr 09, 2021 07:03 AM IST
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By HT Correspondent, Hindustan Times, New Delhi

Mediapart, a French online journal, claimed in the third part of its Rafale story on Thursday that it was in possession of documents that showed Dassault Aviation, which manufactures the Rafale jet, and its industrial partner Thales, a defence electronics firm, paid “middleman” Sushen Gupta several million euros in “secret commissions” in connection with the 59,000 crore deal for 36 jets for the Indian Air Force (IAF).

In the third and final part of its investigation into the Rafale deal, the journal claimed that the payments to Gupta were channelled through offshore accounts and shell companies, using inflated invoices for software consulting. Gupta’s name figures in the AgustaWestland charge sheet.

According to the journal, the bulk of the payments were made before 2013. “According to an accounts spreadsheet belonging to Sushen Gupta, an entity called simply “D”, which is a code he regularly used to designate Dassault, paid 14.6 million euros to Interdev in Singapore over the period 2004-2013,” the report said. It said Interdev was a shell company with no real activity, and administered by a straw man for the Gupta family.

The report said according to another accounts spreadsheet belonging to

Gupta, which only covers the years 2004 to 2008, Thales paid 2.4 million euros to another shell company.

Numerous controls are carried out by official organisations, including the French anti-corruption agency, and no violations were reported, notably in the framework of the contract with India for the acquisition of 36 Rafales, Dassault said in a statement on Thursday, adding that the plane maker acts in strict compliance with laws.

“Since the early 2000s, Dassault Aviation has implemented strict internal procedures to prevent corruption, guaranteeing the integrity, ethics and reputation of the company in its industrial and commercial relations. In the context of the Sapin 2 law (anti-corruption law), the company has completed and strengthened its system for the prevention and detection of corruption and influence peddling, both at the level of the parent company and its subsidiaries,” the statement said.

Thales did not respond to an HT query on the Mediapart report. The Enforcement Directorate also didn’t comment on the revelations.

In the first part of its series that came out on Sunday, Mediapart claimed that Dassault Aviation paid €1 million to Gupta for the manufacture of 50 large replica models of Rafale jets, even though the plane-maker provided inspectors of French anti-corruption agency Agence Française Anticorruption (AFA) no proof that these models were made. The Congress on Monday demanded an independent investigation into the matter, even as law minister Ravi Shankar Prasad termed the report “baseless.”

“As middleman for Dassault and Thales, Sushen Gupta, amid the discussions over the Rafale deal in 2015, obtained confidential documents from India’s defence ministry relating to the activities of the negotiating team. The Enforcement Directorate, in its official charge sheet against him, wrote that Gupta had gained ‘sensitive data which should have only been in possession of the Ministry of Defence’,” the Mediapart reported on Thursday.

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

The French website claimed that Dassault and European missile-maker MBDA worked hard to remove anti-corruption clauses from the Rafale fighter contract, which was subsequently signed by then French defence minister, now foreign minister, Jean-Yves Le Drian.

“In July 2015, in an annexe to the contract concerning the weaponry of the jets, supplied by MBDA, the French side wrote into the text that the two anti-corruption clauses were “Not Applicable”. But the Indians deleted this and reintroduced the anti-corruption clauses,” according to the journal.

“Those anti-corruption clauses could have had costly consequences for the industrialists, for they allow for India to rip up the contract and/or to demand compensation not only if acts of corruption are discovered, but also if the seller paid an agent in order to ‘intercede, facilitate or in any way to recommend [the seller] to the Government of India or any of its functionaries’,” the report claimed.

François Hollande, who was French president between May 2012 and May 2017 said he was “at no moment informed of these aspects of the negotiation”, and that he, therefore, could “not have approved an eventual removal of these [anti-corruption] clauses,” the website said.

It said it contacted MBDA, which replied that it “does not habitually comment on negotiations concerning contracts.”

Six months later (after July 2015), in the contract proposed on January 13, 2016 by the French team, concerning Dassault’s supply of the aircrafts, the two anti-corruption clauses were again marked “Not Applicable,” the journal said.

“According to a report in The Hindu, the Indian authorities finally approved the removal of the clauses in September 2016, just before the signing of the final contract, at a meeting presided by the Indian defence minister, Manohar Parrikar,” the journal reported.

Dassault and Thales paid a lot for Gupta’s know-how in the defence sector, Mediapart claimed. “They hired him at the beginning of the 2000s, at the very moment when India announced it was looking to buy 126 fighter jets. According to evidence from the ED’s case file, the two French firms paid him several million euros over the 15 years leading up to the signature of the contract,” the report claimed.

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.

In the second part of its investigation, Mediapart reported on Tuesday that the former head of the financial crimes branch of France’s public prosecution services shelved an investigation into alleged evidence of corruption in the Rafale jet deal with India despite the objection of colleagues. Éliane Houlette, former head of the financial crimes branch of the public prosecution services, justified her decision to shelve the investigations as preserving “the interests of France, the workings of institutions”, Mediapart reported.

French President Emmanuel Macron and his predecessor, François Hollande, were cited in allegations levelled in the case, the report said.

Mediapart has written about the Rafale deal earlier too.

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.

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 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.

The Supreme Court heard a public 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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Tuesday, October 19, 2021