Dassault Paid 1 Million Euros As Gift To Indian Middleman In Rafale Deal

Dassault Paid 1 Million Euros As Gift To Indian Middleman In Rafale Deal
Credits: Indian Air Force

Dassault, the manufacturer of Rafale jets, agreed to pay one million euro to an Indian middleman just after the signing of the Indo-French contract in 2016, an investigation by the French publication Mediapart has revealed.

An amount of 508,925 euro was allegedly paid under “gifts to clients” head in the 2017 accounts of the Dassault group.

The irregularity was first discovered by the inspectors of the French Anti-Corruption Agency, Agence Française Anticorruption (AFA), during their scheduled audit of Dassault.

“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,” Mediapart reported citing the confidential audit report on Sunday evening.

One of these models can be seen outside the residence of the Air Chief. Sources say other models are installed at the Western Air Command, the IAF base in Gwalior; some are headed to the new Rafale squadron being set up in Hasimara and others lie in a warehouse waiting to be installed.

This amount “seemed disproportionate in relation to all the other entries”, said a subsequent confidential report of the AFA audit.

The French Anti-Corruption Agency, however, did not flag the prosecution authorities over the alleged payment, which, according to the French publication, “raises questions over both the justice system and the political authorities”.

“As they combed through the 2017 accounts, the AFA inspectors raised an eyebrow when they came across an item of expenditure costing 508,925 euros and entered under the heading ‘gifts to clients’,” the AFA report said.

Related Article: Why IAF Is Not Buying More Mirage-2000s Or Rafale Instead of Su-30s and Mig-29s

“The sum was 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 audit coincided with a tip received by the French public prosecution services’ financial crimes branch, the Parquet National Financier (PNF), in October 2018 which alleged irregularities in the defence deal.

According to the AFA report accessed by Mediapart, Dassault tried to justify “the larger than usual gift” with a proforma invoice from an Indian company called Defsys Solutions.

Dated March 30, 2017, the invoice suggested that Defsys was paid 50 per cent of an order worth 1,017,850 for manufacturing of 50 dummy models of the Rafale jets. Each dummy, according to the AFA report, was quoted at a hefty price of 20,357.

However, the Dassault group reportedly was unable to provide any documentary evidence to the AFA inspectors, which could establish the existence of those models. Dassault could also not explain why the expenditure was listed as a “gift to clients” in their accounts.

Defsys is one of the subcontractors of Dassault in India which has been linked with controversial businessman Sushen Gupta. Sushen Gupta was earlier arrested and later granted bail for his alleged role in another major defence scam in India, the AgustaWestland VVIP Chopper case.

The Enforcement Directorate has charged Sushen Gupta for allegedly devising a money-laundering scheme for the payouts during the purchase of the helicopters. Dassault and Defsys have not yet issued a statement in this regard.

The 7.8 billion government-to-government deal for 36 fighter jets was signed in 2016. The Indian Air Force has already raised its first squadron of the Rafale jets at Ambala and is due to raise the second one at Hasimara in West Bengal.

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