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

French media reports that country's corruption watchdog flagged payments made by Dassault Aviation to Defsys Solutions, company owned by Sushen Gupta who was arrested in VVIP chopper scam

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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”.

Also read: IAF inducts Rafale, here’s how the deadly fighter jets will boost India’s air power

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.

Also read: The big questions about the Rafale deal you didn’t know whom to ask

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.

(Edited by Manasa Mohan)

Also read: With a new report on PMO’s role in Rafale negotiation, where does the story go from here?


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  1. No matter how frivolous the charge is, an immediate investigation must start, rejecting the charges out right is falling into the same trap that congress ended up in with prolonged litigations.
    Order a credible highest level enquiry and stop the matter turning into a drunk monkey.
    The section of media, bunch of lawyers, and frustrated politicians besides the ANDOLANJEEVI should the prevented from getting active.
    There is no need to talk of SC judgements and election victories, that is history.

  2. I am amused by French media report just after govt announcement of modi going to meet macron and ordering more 36 Rafale It means some countries like pak, China, usa not liking this more order

  3. The article could not touch the main controversial issue raised by RG, and news reporting by The Hindu, Caravan etc. of the deal. Rather he went on unnecessary details. Why price of 36 Rafale exceeded the previous contracted price of 126 Rafale. Why PMO trespassed in the deal superceding defence ministry.

  4. makes a good argument for the us supply chain contracting process through the defence security cooperation agency in government to government deals.

  5. The article by the french newspaper was published day after media reported that PM modi will settle the deal for additional 36 rafael jets in his next visit to France. Rafael’s competitors are trying to derail this project as under MMRCA deal mostly likely India will buy Rafael in batches. If APA has already cleared Dassualt then they this Hungama, that too for 8 crores. Supreme court has dismissed petitions related to Rafael. Congress is scoring self goal after self after. This is advantage Modi Govt.

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

  7. Making a full scale model of the aircraft and 50 other models foe display. Is one million euro not reasonable expense for that?
    And where is Pappu’s claim of Rs 50,000 crores out of Rs 58,000 deal? Yes, and the fully customized 36 planes came for only Rs 8,000 crores. No wonder Indian public sees him as a pappu.
    AK Antony and congis should be investigated why for 10 years they kept making a farce of negotations and putting national security in peril. In 10 years could not clinch a deal. Why? Not enough kickbacks for Pappu Vadra clan?

  8. However, the Dassault group reportedly was unable to provide any documentary evidence to the AFA inspectors

  9. Phillip is an excellent defence analyst.

    I must request him to analyse why payment to middlemen have reduced from hundreds of crores to around 8 crores.

    Now even the scandal amount have become insignificant ☺

  10. Like a coin Modi too has two faces. one for the public and one for the face wearing 10 lakh suit the other wearing saffron robe like a monk. Modi is not only financially corrupt but also morally. He will go to any extent to promote himself and the interest of his cronies .He has taken corruption to new heights, sacrificing Public institutions in favor of corporates. In Rafale deal it is the HAl which is sacrificed for the Ambanis.

    • Go and check out in which year has the HAL received it’s largest ever order and has reported the highest net profit

  11. The Rafale deal was negotiated by the late Mr. Manohar Parrikar – a man of impeccable integrity. Its just not possible that he would have been bribed.
    Seems like the French counterparts of the Indian liberal/secular cabal are desperately trying to make a mountain out of a mole hill.

  12. Just saying… Gupta Chachha was so sure that there is no merit in the Rafale deal to discuss it in SC….

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