Slugfest after French report alleges trace of Rafale deal pay-off

The French report has published alleged fake invoices for payments between 2004-2013, that it claimed enabled French aircraft maker Dassault Aviation to pay at least €7.5 million in kickbacks to a middleman to help it secure a multi-billion deal with India for the sale of Rafale fighter jets
IAF pilots after flying the first batch of five Rafale aircraft during its induction ceremony, in Ambala, Haryana, on Sept. 10, 2020. (Ajay Aggarwal /HT PHOTO)
IAF pilots after flying the first batch of five Rafale aircraft during its induction ceremony, in Ambala, Haryana, on Sept. 10, 2020. (Ajay Aggarwal /HT PHOTO)
Updated on Nov 09, 2021 04:13 AM IST
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By, Hindustan Times, New Delhi

Mediapart, a French online journal, on Sunday published alleged fake invoices for payments between 2004-2013, that it claimed enabled French aircraft maker Dassault Aviation to pay at least €7.5 million in kickbacks to a middleman to help it secure a multi-billion deal with India for the sale of Rafale fighter jets. The Congress-led United Progressive Alliance was in power then, and the deal referred to is the original deal signed by that government with Dassault.

The French publication also claimed that despite being made aware of the existence of documents to this effect in 2018, when the National Democratic Alliance was in power, Indian investigative agencies decided not to pursue the case.

“It involves offshore companies, dubious contracts and ‘false’ invoices. Mediapart can reveal that detectives from India’s federal police force, the Central Bureau of Investigations (CBI), and colleagues from the Enforcement Directorate (ED), which fights money laundering, have had proof since October 2018 that Dassault paid at least €7.5 million in secret commissions to middleman Sushen Gupta,” Mediapart said in a report.

Neither CBI nor ED officials responded to repeated callsfrom Hindustan Times.

Reacting to Mediapart’s revelations, BJP’s Amit Malviya tweeted: “Dassault paid €14.6 Mn to intermediary Sushen Gupta over the period 2004-2013 to sell Rafale. So UPA was collecting kickbacks but couldn’t close the deal? NDA later scrapped it and got into a contract with the French Govt, which upset Rahul Gandhi no end.’’

Five months ago, Mediapart reported that a French judge was appointed to head a probe into suspected “corruption and favouritism” in the deal. In a report in April, the online journal claimed that it was in possession of documents that showed Dassault and its industrial partner Thales, a defence electronics firm, paid “middleman” Gupta several million euros in “secret commissions” in connection with the deal.

HT could not reach Gupta for a response.

According to the April report, the bulk of the payments were made during the UPA regime. “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 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 to another shell company.

In another report in April, Mediapart claimed that Dassault paid €1 million to Gupta for manufacturing 50 large replica models of Rafale jets, even though the planemaker provided inspectors of French anti-corruption agency Agence Française Anticorruption no proof that these models were made.

India’s decision to sign an $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 Congress-led United Progressive Alliance (UPA) government’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. The Opposition, led by the Congress, claimed that the price at which India was buying Rafale aircraft was 1,670 crores for each, three times the initial bid of 526 crores by the company when the UPA was trying to buy the aircraft. It also claimed the previous deal included a technology transfer agreement with HAL.

The UPA deal, struck in 2012, was not a viable one, the then defence minister Manohar Parrikar maintained, implying that it would have never been closed and that, therefore, any comparison was moot. The UPA was not able to close the deal till 2014, largely over discussions related to the pricing of items not included in the initial bid.

The government has said that it cannot disclose the details of the price because of a confidentiality agreement with France, and the strategic reason of not showing its hand to India’s enemies. 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, said India had not overpaid for the jets.

HT has not reviewed any of the documents cited by Mediapart.

Interestingly, in a press conference on Monday, the Congress focused on the government’s inability to stop operations by middlemen like Gupta, who was also involved also in the Agusta Westland deal for VVIP choppers. Gupta was investigated by Indian agencies over his role in the AgustaWestland VVIP chopper scam, also during the UPA’s rule.

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.

The opposition party demanded to know the “deal” between the NDA government and Augusta or Finmecania (the former is a unit of the latter) after news reports said the Centre has lifted its 2014 ban on an Italian company Leonardo SpA (the new name of Finmeccanica ).

Government’s information officer refused to comment on the matter.

Congress chief spokesperson Randeep Surjewala said, “Is it now ok to deal with a company that Modi ji & his Govt called “corrupt-bribe giver-bogus”? Does it mean that fake bogey of corruption is being given a quite burial? Nation awaits answers!”

Congress Party spokesperson Gourav Vallabh said that after “mysteriously withdrawing blacklisting of Augusta Westland/Finmecanica on July 22, 2014” the government has now “lifted procurement ban from it.”

The AgustaWestland scam pertains to irregularities in the purchase of 12 VVIP choppers by IAF from Anglo-Italian firm, which came to light in 2012. It is alleged that government officials involved in procurement of choppers agreed to change the mandatory service ceiling from 6000 meters to 4500 meters for the VVIP choppers, which ultimately benefitted Anglo-Italian firm AgustaWestland.

According to CBI, it has established “money trail” of 62 million Euros (around 415 crore) out of suspected 67 million euros ( 452 crore) total bribe paid to Indian officials through middlemen. The irregularities in the award of contract to AgustaWestland led to estimated loss of 398.21 million euros (around 2,666 crore) to the Indian government in the 556.262 million euros ( 3726.9 crore) contract, according to CBI.

ED arrested Kamal Nath’s nephew Ratul Puri in September 2019 for allegedly using his companies to launder the bribe money in the scandal. A charge sheet was filed against him in November 2019 in which it was stated by the ED that Ratul Puri received proceeds of crime amounting to Euro 704,134.57 and $150,000 from Interstellar Technologies Limited in his foreign entities. The same were thereafter layered through various companies in foreign jurisdictions and then brought into India and invested in Hindustan Power Group whose Chairman is Ratul Puri.

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Sunday, May 29, 2022