Rafale deal hid a million Euros as ‘gift’ to clients, Gurgaon firm under scanner
Hidden commissions, dubious middlemen, anti-corruption clauses removed from contracts and a million Euros paid for ‘gifts’ are some of the irregularities by Dassault detected by auditors
Under French law giving an expensive watch or spending a few hundred Euros on an expensive meal for clients costing a few hundred Euros amounts to corruption. But the French manufacturer of the Rafale fighter jet, Dassault, paid a million Euros to an Indian sub-contractor and showed the amount as ‘gifts to clients’, reported French portal Mediapart in the first of a three-part investigation on evidence of corrupt practices by Dassault.
Pressed to explain the expenditure by auditors from the French anti-corruption agency AFA, Dassault produced an invoice submitted by Sushen Gupta of Defsys Solutions, a mid-sized sub-contractor in India. The invoice claimed that the amount had been spent on producing 50 replicas of the Rafale fighter jets for clients. Each replica was shown to be as large as a small car.
But neither Dassault nor Defsys could produce any evidence to show that the replicas were ever made. No photograph or document was produced.
What is more, the auditors discovered that Defsys had no specialization in making models or replicas of planes or of anything. The company specialized in assembling flight simulators and optical and electrical systems under license from foreign companies for aviation. Owned by the Gupta family, which had set up the unit in Bangalore in 2007, the company put up a unit in Gurgaon in 2014.
In another twist, Sushen Gupta was arrested in 2019 by the Enforcement Directorate and accused of money laundering in the Augusta Westland helicopter deal. He was later released on bail. The same year the Haryana Government appears to have allotted land to Defsys, which curiously transferred the land to a trust owned by the Gupta family as this document seems to suggest:
Charles Duchaine, the AFA chief, told Reuters that he was helpless against foreign firms and resource crunch which hampered investigation. While French firms have been penalized for corruption in the US, he indicated, none of them had been fined in France.
Dassaault failed to answer the following questions by auditors:
1. Why Dassault paid an Indian sub-contractor for making replicas of its own fighter planes?
2. Why Defsys was selected for making the replicas?
3. Where is the proof that the replicas were indeed made?
4. How was the costing of the replicas done at 20,000 Euros for each model?
The auditors suspected that the amount was spent on bribing Indian politicians and officials.
But despite the evidence of irregularities, AFA failed to flag the issue to prosecutors unlike action taken by it in the case of other companies, Mediapart reported.
To sum up the first part of the investigation by Mediapart,
- Soon after the Rafale deal was inked in September, 2016, Dassault paid a million Euros to Defsys Solutions, one of its sub-contractors in India.
- Defsys is a mid-sized company with 170 employees
- Dassault claimed the money was utilised to pay for making 50 large replica models of Rafale jets.
- The French company was, however, not able to furnish any evidence for the same.
- Defsys Solutions is owned by the Gupta family, one of whom Sushen Gupta was arrested in March 2019 by the Enforcement Directorate in a money laundering case relating to the AgustaWestland scam.
- Sushen Gupta was later released on bail
- Dassault failed to explain why an Indian company was paid to make replicas of its own plane.
- Dassault also failed to produce photographs of the replicas made by Defsys Solutions.
- Defsys Solutions was set up in 2007 in Bangalore. In 2014 it opened a unit in Gurgaon