Rafale fights jets, Rafale deal, India, France, Defence Minister Rajnath Singh, Dassault Aviation
There were apprehensions that the delivery of Rafale jets could be delayed due to the pandemic. Photo: PTI

Explainer: The 'scandal' surrounding India's Rafale deal with France

Rafale appears to have flown into yet another controversy. A French investigative news publication, Mediapart, reported a “scandal” linked to the sale of 36 Rafale fighter jets from France’s Dassault, the manufacturer of the latest IAF acquisition, to India.

A three-part report published on French website Mediapart claimed that Dassault Aviation and French defence electronics firm Thales paid millions of euros to Sushen Gupta, an Indian middleman, to influence the fighter jet deal.

On its part, Dassault Aviation, the maker of Rafale fighter jets, has said the company acts “in strict compliance” with France’s anti-corruption legislation, the Sapin 2 law. It said the deal with India was made on a “government-to-government basis”. It suggested that the company was not involved in any wrongdoing as the deal took place under the purview of the Indian and French governments.

Here’s an explainer on the background and the allegations:

What was the deal?: Prime Minister Narendra Modi first announced the off-the-shelf deal for 36 Rafale fighter jets in 2015. The first batch of five Rafale jets arrived in India on July 29, 2020, nearly four years after India signed an inter-governmental agreement with France to procure the aircraft at a cost of ₹59,000 crore. Since then India has received 14 Rafale which have come directly from France, refueled by the UAE Air Force tankers midway.

Legal position in India: In 2020, in its verdict ruling out a court-mandated probe into the Rafale deal, the Supreme Court rejected the argument that the government had bought an overpriced fighter jet. The bench, led by Chief Justice of India Ranjan Gogoi, had in 2019 completely steered clear of the pricing of the fighter jets in its verdict last year.

Also read: Amid tensions with China, IAF ex-chief calls Rafale ‘game changer’

The Indian link: Mediapart alleged, referring to an investigation by France’s anti-corruption agency (Agence Française Anticorruption, AFA), that Dassault paid one million euro to a middleman in India just after the Rafale deal was signed.

The exact charge: Mediapart claims that the money was paid for the manufacture of 50 large replica models of Rafale jets, even though Dassault provided inspectors of AFA with no proof that these models were made. The report said the French investigators were given an invoice from Indian company Defsys Solutions run by Sushen Gupta, who is being investigated by the CBI and Enforcement Directorate in the AgustaWestland case involving kickbacks paid in India in a deal for VVIP choppers.

The ‘gift’: The Mediapart report said AFA inspectors were surprised when they came across a “suspect payment” of euro 508,925 listed against the head “gifts to clients”. It said to justify the “gift”, Dassault supplied the AFA with a “pro forma invoice” of March 30, 2017, which was given by an Indian company called Defsys Solutions. “This invoice, which related to 50 per cent of the total order (euro 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.

Who’s Sushen Gupta: Mediapart claims Gupta’s deep business links to Dassault and Thales spanned nearly two decades. These connections involved paying him “several million euros in secret commissions to offshore accounts and shell companies” using inflated invoices for software consulting. These payments were allegedly made over a 15-year-period – including when the UPA government of Manmohan Singh was in power. These payments were “on top of a questionable contract” that an Indian company with close links to Gupta had with Dassault in 2017 for making replica models of Rafale jets.

ED & ‘confidential papers’: The media report, which is partly based on information obtained from the Enforcement Directorate’s case file on Gupta, also claims that the businessman illegally obtained confidential documents from India’s Defence Ministry and used them to help the French side get a better bargain in the Rafale deal.

Intricate payment: “The problem is that the money was not paid into the Indian-registered consultancy firm of the Guptas, but was instead transferred, in the form of secret commissions, some of which have questionable justifications, into offshore companies,” Mediapart said. The report alleges that Gupta received payment from Dassault using the same system that he is being investigated for in the AgustaWestland scam – an intricate process involving an IT services company called IDS. The IDS allegedly obtained inflated contract payments from Dassault, and in return would discreetly pay the middleman.

‘Choppergate’: Gupta was arrested by the Enforcement Directorate in March 2019 on charges of money laundering. The charges against him relate to the 2013 scandal, dubbed “Choppergate”, which centred on a 550-million-euro contract for the sale to India of helicopters manufactured by the Italian-British firm AgustaWestland.

Gupta’s version: In a statement on Friday (April 8), Gupta’s legal counsel denied any involvement of his client in the Rafale deal. He said that an individual could not have influenced a government-to-government transaction. He called the Mediapart report “fabricated and factually incorrect”.

What Dassault says: In the statement released on Thursday, Dassault Aviation said the company and India’s Reliance Group established the Dassault Reliance Aerospace in 2017 and built a plant in Nagpur in a joint venture. The statement makes no mention of Sushen Gupta, or the alleged inflated payments mentioned by Mediapart in its reports.

Congress demand: The Congress has demanded Prime Minister Narendra Modi’s statement. “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?” asked Congress spokesperson Randeep Surjewala. The Congress has demanded that an FIR be lodged and an independent probe must follow. It reminded the government that during the UPA rule, then Defence Minister A K Antony had followed the stipulated procedure in the case of AgustaWestland.

BJP’s defence: Union Minister of Law and Justice Ravi Shankar Prasad called the Congress charges baseless. “The Supreme Court, CAG (Comptroller & Auditor General) found nothing wrong (in the deal),” Prasad said. “Is Congress again talking about Rafale? It lost case in Supreme Court”.

Also read: French firm Dassault wants to start making Rafale jets in India

He blamed the “corporate rivalry” in France. “But the most interesting thing is that the article mentions Sushen Gupta. Who is Gupta? He was arrested over AgustaWestland in 2019 by our government. And the name of (Gandhi) family members came up in that 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.

Read More
Next Story