Monday, April 05, 2021

Rafale deal faces new controversy over ‘suspicious payments’ to middleman arrested by ED

New Delhi: 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”.

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”.

05/04/21 Snehesh Alex Philip/Print

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