Rafale Deal Faces New Row As Report Says Dassault Paid 1Mn Euros As ‘Gift’ To Indian Middleman

A fresh controversy seems to be building up over the 2016 Rafale deal with a French media report alleging that the country’s anti-corruption agency, the Agence Française Anticorruption (AFA), found suspicious payments made to a company owned by a middleman who was arrested by India’s Enforcement Directorate in 2019 in connection with the VVIP chopper scam.

The allegation is that the manufacturer of the Rafale aircraft, Dassault Aviation, had paid about one million Euros to Defsys Solutions for 50 models of the aircraft which were to be given as “gifts”. The category of ‘gifts’ by defence companies is treated as a serious matter in France. This resulted in the company having to explain the cost.

Models of Rafale gifted by Dassault Aviation are on display at various commands and bases of the Indian Air Force (IAF), including at the Air Headquarters. The giant model at the Air Headquarters was manufactured in France while the rest were made in India.

The report by says it “understands that during a scheduled audit of the group, the agency’s inspectors found that Dassault had agreed to pay one million euros 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 company 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. Yet against all apparent logic, the AFA decided not to refer the matter to prosecutors”.

Industry sources said that Rafale explained the process to the French anti-corruption watchdog and the “query was settled”.

What the AFA found

The AFA, which functions in a capacity similar to India’s Comptroller and Auditor General (CAG), was set up in 2017 with the aim of checking whether large companies implemented the anti-corruption procedures set out under Sapin 2, the French anti-corruption law. However, unlike CAG, the AFA also audits private firms.

The report said AFA auditors combing through Dassault’s 2017 accounts found an item of expenditure costing 508,925 euros entered under the heading ‘gifts to clients’.

The amount “seemed disproportionate in relation to all the other entries” under the same heading, said the subsequent confidential report of the AFA audit, which Mediapart claimed it had seen.

“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,” it said.

The report added that Defsys Solutions, which received the payment, belongs to the family of Sushen Gupta, who was arrested by the ED. According to the report, Gupta family members “acted as middlemen in the aeronautical and defence industries for three generations”.

It also highlighted 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”, and cited a report by CobraPost.

Defsys Solutions made models, maintains simulators

According to industry sources, Defsys is not a banned company and does business with various defence companies including Israeli ones, besides Dassault Aviation.

According to sources in the French industry, Dassault Aviation gave around 25 models to the Indian side, which are on prominent display at various locations, including at the residence of top officers. This is a historic practice.

In 2019, a scale model of a fully armed Rafale was placed outside the IAF chief’s house, replacing an earlier model of the Su 30 MKI.

The procurement of the models was said to have been done as part of the Make in India initiative.

Defsys is contracted to carry out maintenance of Rafale simulators at both the Ambala base and the Hasimara base where the second squadron of the Rafale will be based.

The simulators are manufactured by Sogitec Industries, a subsidiary of Dassault Aviation.

As of now it is unclear about the Accuracy of this news as some leaders are denying it, & we will come with a follow up article on the same news whenever any official statement is there.

Media Part

Shankul Bhandare

Hello, I am shankul and I love defence research and development and want to spread it through blogging.

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