Indian Firm Paid 1 Mn Euros By Dassault in Rafale Deal: Report

Defsys Solutions, the alleged middleman, has been accused of money-laundering in another defence deal in India.

A report by French News portal – Mediapart.fr on – Sunday, 4 April, alleged the existence of a middleman and payment of commission for the India-France deal of acquiring 36 Rafale aircraft for 7.8 billion Euros, ie Rs 60,000 crore.

(Photo: Indian Air Force/Twitter)

A report by French News portal – Mediapart.fr on – Sunday, 4 April, alleged the existence of a middleman and payment of commission for the India-France deal of acquiring 36 Rafale aircraft for 7.8 billion Euros, ie Rs 60,000 crore.

On 23 September 2016, Prime Minister Narendra Modi signed a formal agreement with France to acquire 36 Rafale aircraft. The report shed light on the investigation of French anti-corruption agency, Agence Française Anticorruption (AFA), which raised red flags about the involvement of a middleman, an Indian company called Defsys Solutions.

The middleman has been accused of money-laundering in another defence deal in India, noted the report.

Defsys Solutions, a sub-contractor in the Rafale deal, is a company run by Sushen Gupta, who is now out on bail over an investigation by the Enforcement Directorate and CBI in the 2013 Indian Helicopter Bribery Scandal, also known as the Augusta Westland VVIP chopper deal, overseen by the then Congress government.

The Controversy

Rafale paid 1.1 Million Euro to Defsys Solutions after signing the 2016 deal with India, noted the report. “The invoice indicated Defsys was paid 50 percent of an order worth 1,017,850 Euros for the manufacture of 50 dummy models of the Rafale jets. Each model was priced at over 20,000 Euros,” reported Mediapart.

The expenditure of 508,925 Euros, reflecting 50 percent of the order, however, was written off as “Gifts to Clients”, and the report noted that no proof was submitted to AFA on that the aircraft models that were made, or why the expenditure was listed incorrectly.

Dassault’s Defence

In response to the investigation, Dassault, on 30 March 2017, claimed that the payment was for Defsys Solutions to manufacture 50 large replica models of Rafale, and submitted a proforma invoice to AFP, which reflected the same.

The AFA noted that this entry was disproportionate to other entries, but decided not to refer the case to prosecutors, added the report.

Dassault Aviation refused to comment on the matter to the French news portal.

Congress Asks PM Modi to Answer the Nation

In a strong statement calling for answers from PM Modi, Congress General Secretary, Randeep Singh Surjewala stated that the “allegations of causing loss to public exchequer, bribery and payment of commission in India’s biggest defence acquisition was once again staring in the face of the Modi Government”.

The Congress asked for a full and independent investigation into the defence deal over the allegations of bribery and commission, and to whom it was paid in the Indian government.

“India’s ‘Biggest Defence Deal – the purchase of 36 Rafale Jet Fighters from Dassault Aviation – is a sordid saga of ‘loss to public exchequer’, ‘squandering national interests’, propagating the ‘culture of crony capitalism’ and ‘shrouded in secrecy’ by negating the mandatory aspects of procurement prescribed in ‘Defence Procurement Procedure’”, the Congress statement read.

Congress highlighted the three questions that AFA raised:

“Why did the Dassault ask an Indian company to make models of its own aircraft and that too at a cost of 20,000 Euros per piece? Why was this expenditure then listed as “gifts to clients”? Were these models ever made? If yes, where and when were they displayed?”

Asking whether the payment of 1.1 million Euros by Dassault was a commission paid to the middleman for the Rafale deal, Congress noted the violation of the “integrity clause”, which is part of the Defence Procurement Procedure, asked, “Has it (Modi government) not vitiated the Rafale deal entailing imposition of heavy financial penalties on Dassault, banning of the company, registration of an FIR and other penal consequences?”