Bribery & Corruption: How the French & Indian Governments Allegedly Conspired to Violate Global Anticorruption Conventions

France's leading defense contractors benefitted from the purported conspiracy; Fran?ois Hollande's girlfriend received a film deal; Indian firms, "Friends of Modi," and "other middlemen" profited handsomely. In fact, hardly anyone is clean in this "dirty deal."

A stunning report released in April 2021 from the Paris-based media outlet Mediapart reveals the details of a multi-billion euro defense contract involving the sale of Dassault's Rafale aircraft to the Indian Air Force. The report alleges widespread corruption and bribery involving both persons and entities in India and France. Alarmingly, the bombshell allegations imply that the French anticorruption agency (Agence Fran?aise Anticorruption (AFA)) and the French public prosecution services’ financial crimes branch, the Parquet National Financier (PNF), elected to not pursue an investigation. Observers are shocked that any Western democracy would cloak such corporate malfeasance under the cover of "national security." The deal has attracted attention for years from the Indian press but at present no French, British or American media outlet has published an investigation aside from Mediapart. Since we are aware that an incipient request to the US Securities and Exchange Commission (SEC) to initiate a criminal inquiry with the US Department of Justice (DOJ) under the United States' Foreign Corrupt Practices Act (FCPA) is being prepared, we publish Mediapart's investigation in the public interest of any affected stakeholders.

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"Rafale Papers" : MediaPart's Coverage - Part 1 (English version)

? Mediapart 2021

Sale of French Rafale jet fighters to India: How a state scandal was buried

In 2016 France and India signed a 7.8-billion-euro deal for the purchase of 36 Rafale jet fighters made by French defence group Dassault. Mediapart can reveal that, alongside this controversial deal, Dassault also agreed to pay one million euros to a middleman who is now under investigation in India in connection with another defence deal. The French anti-corruption agency Agence Fran?aise Anticorruption (AFA) discovered this separate arrangement during a routine audit of Dassault. The AFA nonetheless decided not to alert the prosecution authorities over the payment. This is the first part of Mediapart's investigation into a state scandal which also raises questions over both the justice system and the political authorities.

Yann Philippin reports. (English version by Michael Streeter) | April 4, 2021

It was a great day for the French defence industry. In New Delhi on September 23rd 2016 the French minister for defence, Jean-Yves Le Drian, and his Indian counterpart Manohar Parrikar, watched by éric Trappier, CEO of French company Dassault Aviation, signed one of the biggest arms deals ever concluded by the French state. This was for the sale of 36 Rafale fighter jets – made by Dassault – to the Indian state for 7.8 billion euros. To put this sum into context it is the equivalent of the annual gross domestic product of a country such as Benin in West Africa.

The deal was a major triumph for Dassault and its industrial partners – Safran, Thales and MBDA – and also for the socialist president of France, Fran?ois Hollande. It had taken 15 years of effort by successive French government to conclude, after an initial purchase process that had begun back in 2001.

There were, however, some problems that almost derailed the contract. In 2018 formal legal complaints were made about possible corruption and favouritism in connection with the deal, following revelations in the press. But in the following year preliminary proceedings in both France and India ended with no further action being taken.

Officially, everything was clean and the Indian Rafale deal 'affair' was nothing but a mirage.

Yet in reality there is a scandal, as Mediapart can today reveal with the publication of the “Rafale Papers”, a three-part investigation into the affair based on numerous documents and previously unpublished witness accounts.

French and Indian investigators in fact discovered a great deal of compromising information in the background to the deal; hidden commissions, dubious middlemen, suspicions of confidential documents being leaked and anti-corruption clauses being removed from contracts. But the affair was buried in both countries.

The Rafale case threatened to tarnish government at the highest levels. In India it implicated someone very close to the ultra-nationalist prime minister Narendra Modi, who had announced the deal in April 2015. The affair potentially threatens two presidents of France: Fran?ois Hollande and his successor Emmanuel Macron. Also potentially in the firing line is Jean-Yves Le Drian, who as defence minister effectively became Hollande's roving Rafale salesman before being named foreign minister under Macron.

The picture would not be complete without the Dassault group. The only French supplier of air force fighters, it is a strategically important company that is always quick to point out that Rafale jet fighter production safeguards 7,000 jobs. It is also one of the most influential companies in France and for more than 70 years it has cultivated a network of contacts within government. Dassault feels it “can't be touched” said several sources with close knowledge of the case, who asked to remain anonymous. In this first part of our “Rafale Papers” investigation, Mediapart can reveal how the French anti-corruption agency, the Agence Fran?aise Anticorruption (AFA), which is answerable to both the Budget Ministry and the Ministry of Justice, first spotted a suspect payment by Dassault.

Mediapart 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.

Questioned by Mediapart, Charles Duchaine, a senior French magistrate and the AFA's director, refused to comment on the grounds that the agency is bound by “professional confidentiality”. A spokesperson for the company meanwhile told Mediapart: “Dassault Aviation will be making no comment.”

The Agence Fran?aise Anticorruption was set up in 2017 with the aim of checking whether large companies have implemented the anti-corruption procedures set out in the French law known as Sapin 2. Companies are audited one by one, with a new timetable established every six months.

In October 2018 the French public prosecution services’ financial crimes branch, the Parquet National Financier (PNF), received an alert flagging possible “corruption” over the sale of the Rafale fighter jets to India, following numerous revelations in the press. By a quirk of the calendar, this coincided with Dassault's turn to be audited by the AFA.

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”. This 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 has 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.

To justify this larger than usual “gift” Dassault supplied the AFA with a “proforma invoice” dated March 30th 2017 which was supplied by an Indian company called Defsys Solutions. “This invoice, which related to 50% of the total order (€1,017,850), was for the manufacture of 50 models of the Rafale C, with a price per unit of €20,357,” the AFA report said.

The AFA inspectors who found these details in mid-October 2018 asked the company for an explanation. Why had Dassault ordered an Indian company to make models of its own aircraft, at 20,000 euros a plane? Why was this expenditure entered in the accounts as a “gift to client”? And were these models, each one of which was supposed to be the size of a small car, really ever made?

Mediapart understands that the Dassault group was unable to provide the AFA with a single document showing that these models existed and were delivered, and not even a photograph. The inspectors thus suspected that this was a bogus purchase designed to hide hidden financial transactions.

There was growing concern about this issue at the group's headquarters at Saint-Cloud in the suburbs of west Paris. According to several sources familiar with the case, the group complained that the inspectors were apparently “too finicky and asked for too many documents”.

To understand Dassault's concerns, one simply has to follow the money. The company Defsys Solutions, who sold the Rafale models, is one of Dassault's sub-contractors in India on the Rafale contract. However, this mid-sized company with 170 employees is not a specialist in making models. Instead, it assembles flight simulators and optical and electronic systems for the aeronautical industry, often under licence for foreign companies.

Defsys belongs to the Gupta family, whose members have acted as middlemen in the aeronautical and defence industries for three generations. In January 2019 the Indian media – first Cobrapost and then The Economic Times - revealed that one family member, 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.

By coincidence, it was this middleman who sent the one-million-euro invoice for the jet fighter models to Dassault six months after the September 2016 signing of the Rafale deal by the French defence minister Jean-Yves Le Drian and his Indian counterpart Manohar Parrikar.

In March 2019 Sushen Gupta was arrested by agents from the Enforcement Directorate, the powerful Indian agency that fights money laundering. He was later freed on bail facing charges of “money laundering” over the so-called 'Choppergate' corruption scandal involving the sale of helicopters to India by the Italian-British group AgustaWestland. Sushen Gupta and his alleged accomplices, who deny wrongdoing, are suspected of having received nearly 50 million euros in hidden commissions from that group, which were then paid out as bribes to Indian officials, the Enforcement Directorate suspects. Questioned by Mediapart, the middleman did not respond.

Sushen Gupta's arrest and the revelations in the Indian press did not escape the notice of the Agence Fran?aise Anticorruption. By 2020, when it came to finalise its report of its Dassault audit, the AFA had hard information incriminating Dassault: the proof that the aeronautical company had paid an Indian middleman – and one who had since been accused in a separate case - via a one-million-euro deal for model aircrafts that may not even exist.

Yet the director of the AFA, Charles Duchaine, decided not to refer the matter to the prosecution authorities. Instead, the aircraft models issue was relegated to two short paragraphs in the AFA's final report on its Dassault audit.

In an interview he gave in October 2017 to the magazine Décideurs, however, Charles Duchaine had signalled his desire to “punish deviant behaviour”. He told the publication: “Article 40 of the criminal law procedural code obliges any public servant or official to report to the relevant prosecution authorities any offences they notice in the course of their duties. We will fulfil this obligation as soon as we have the material to do so.”In 2017 the AFA showed itself to be rather more aggressive following another audit it carried out, this one at Sonepar, a French company which is the world leader in the distribution of electrical products. Mediapart understands that in this case the AFA reported concerns to the prosecution authorities in Paris in April 2018 even before finalising its own report. This led to the opening of a vast judge-led investigation into a suspected cartel in the electrical materials market.

The decision by Charles Duchaine not to inform the prosecution authorities is even harder to understand given that at the time the AFA discovered the affair of the Rafale models, the French public prosecution services’ financial crimes branch, the Parquet National Financier (PNF), was also looking into the Franco-Indian Rafale affair. But as Mediapart will show in the next part of the “Rafale Papers” investigation, the PNF also ended up taking no further action.

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"Rafale Papers" : MediaPart's Coverage - Part 2 (English version)

? Mediapart 2021

Rafale jets sale to India: Macron, Hollande and the blind eye of France's anti-corruption services

In this second of a three-part series of investigations into the controversial sale by France to India of 36 Rafale fighter aircraft, Mediapart details how the then head of the French public prosecution services’ financial crimes branch, éliane Houlette, shelved investigations into evidence of corruption behind the deal, despite the contrary opinion of her colleagues. France’s current president, Emmanuel Macron, and his predecessor, Fran?ois Hollande, are cited in the allegations levelled in the case. Houlette has since justified her decision as preserving “the interests of France, the workings of institutions”.

Yann Philippin reports. (English version by Graham Tearse and Michael Streeter) | April 6, 2021

It was at the end of October 2018 when éliane Houlette, then head of the French public prosecution services’ financial crimes branch, the PNF, was handed a legal statement filed by a well-established anti-corruption NGO alerting her office to a suspected and potentially far-reaching scam involving the French state and one of the country’s industrial giants, Dassault Aviation.

The Paris-based NGO, an association called Sherpa, reported – notably citing media revelations – suspected corruption, including money laundering, influence peddling and favouritism, surrounding the sale by France to India of 36 Dassault Rafale multi-role fighter jets in a deal worth 7.8 billion euros.

The document filed by Sherpa – called a “signalement”, which in France is a form of official alert to suspected criminal behaviour that can be filed by persons or entities who are not directly victims of the alleged crime – was politically highly sensitive, not only because it centred on a massive arms deal agreed between governments, but also because it threatened possible ramifications for French President Emmanuel Macron, his predecessor Fran?ois Hollande, and Jean-Yves Le Drian, who served as Hollande’s defence minister and who Macron subsequently appointed as foreign affairs minister – a post he still holds.

It was in January 2016 when then president Fran?ois Hollande and India’s Prime Minister Narendra Modi signed an inter-governmental agreement for the Rafale contract. Immediately before that contract was inked, Dassault Aviation’s principal Indian industrial partner in the deal, the Reliance Group, with multiple activities in defence, construction, telecommunications and entertainment, pledged 1.6 million euros in funding for a feature film co-produced by Hollande’s personal partner, the actress Julie Gayet.

Fran?ois Hollande, questioned by Mediapart in 2018, said he was at the time “not at all informed” of the investment in Gayet’s film by Reliance. He also said that Reliance Group, and its chairman Anil Ambani, a friend of Modi’s, had been imposed on Dassault as industrial partner in the Rafale deal by the Indian government (see more here and here). Both Dassault and then French defence minister Jean-Yves Le Drian have denied the suggestion.

Meanwhile, according to a report in April 2019 by French daily Le Monde, Emmanuel Macron, who served as Hollande’s economy minister between 2014 and 2016, was allegedly involved in the granting by the French tax authorities of a generous tax adjustment to a French subsidiary of Reliance, reducing the subsidiary’s tax debt from an initial total of 151 million euros to 7.6 million euros. The French presidential office, the élysée Palace, told the daily that Macron’s advisors from the time when he was economy minister could not recall an alleged meeting on the subject between him and Reliance Group chairman Anil Ambani.

Documents and first-hand accounts obtained by Mediapart show that, following the potentially explosive alert filed by Sherpa, PNF chief éliane Houlette made no serious attempts to investigate the suspicions of corruption and favouritism surrounding the Rafale deal. She did however hold an informal meeting with a lawyer representing Dassault.

In June 2019, shortly before leaving her post as head of the PNF, Houlette decided to close the preliminary investigation into Sherpa’s complaint, citing the “absence” of any offence, in a move which went against the advice of the deputy prosecutor in charge of the case and who refused to write up the official notification of it being dropped.

Houlette’s decision, however, was finally validated by two magistrates of the Paris public prosecution services and was enacted by Jean-Fran?ois Bohnert, who succeeded her as head of the PNF.

“One can’t, all the same, take aim at everything,” said Houlette in an interview with Paris Match magazine published in July 2020. “It is necessary to weigh things up, to preserve the interests of France, the workings of institutions.” The fact that Houlette, a high-profile figure of the fight against corruption in France, and who, from 2014 to 2019, had been the first head of the PNF following its creation, could justify closing a sensitive case on the basis of national interest prompted no public reaction.

Contacted by Mediapart, éliane Houlette declined to be interviewed. “I am no longer financial [crime] prosecutor,” she said. “Address yourself to Mr Bohnert, it’s he who will reply to you. I don’t intend to reply.”

Dassault did not reply to questions submitted to it by Mediapart. The responses in full of others cited in this report can be found by clicking on the 'More' tab, top of page, or by clicking here.

The story of the events begins in 2012 when, following a public tender, Dassault Aviation was chosen to negotiate a contract for the supply to the Indian Air Force of 126 Rafale jets. Of these, 108 were to be assembled in India – in what is known as an “offset” agreement, for the benefit of the local economy – by the state-owned aerospace and defence corporation Hindustan Aeronautics Limited (HAL), which the Indian government had appointed as Dassault’s principal industrial partner.

The sums involved attracted covetous interest; as part of the provisional deal, Dassault was to plough around 4 million euros – half of the value of the contract – back into Indian companies, such as through component purchases.

Negotiations to hammer out the detail of the definitive contract continued for three years before a sudden turnaround in April 2015. That was when Indian Prime Minister Narendra Modi, who came to office the previous year, announced that he wanted to overturn the terms of the original tender, and instead purchase just 36 Rafale jets, all of which would be manufactured in France.

HAL was sidelined from any further involvement, and the state-owned company was replaced as Dassault’s local industrial partner by the private conglomerate Reliance Group, whose chairman and majority shareholder, Anil Ambani, enjoys close relations with Narendra Modi. At the time, the Reliance Group had no experience in aeronautics and was in poor financial shape. Furthermore, Ambani appeared to have known in advance that his group would be awarded the principal partnership with Dassault.

The decision to change the original Rafale contract into a new deal for the purchase of 36 of the fighter aircraft was announced by Modi on April 10th 2015 during a press conference in Paris after a meeting with then French president Fran?ois Hollande. Less than three weeks before Modi’s visit to Paris, Ambani also travelled to the French capital to hold a meeting, on March 23rd, with several top advisors to then French defence minister Jean-Yves Le Drian. In a confidential email revealed since by the Indian National Congress party, during the meeting, the Reliance chairman is reported to have raised the matter of a Memorandum of Understanding (MoU) “in preparation and the intention to sign during the PM visit” – an apparent reference to Prime Minister Modi’s visit to France the following month.

Reacting to the leaked email, Reliance said the MoU referred to an agreement with Airbus and did not involve the Rafale contract. But on March 28th 2015, five days after his meeting in Paris with Le Drian’s advisors, Ambani created a subsidiary called Reliance Defence, and in April 2015, when the new Rafale contract was announced, it reached an agreement to create a joint-venture association with Dassault – more than one year before the Rafale deal was definitively sealed.

In a reply to questions submitted to him by Mediapart, Jean-Yves Le Drian commented that, “Mr Anil Ambani had had contacts within the French administration, as is normal for the leader of a large foreign industrial group”. He gave no further detail on the subject.

The circumstances surrounding the Rafale contract erupted into a scandal in India during the summer of 2018, following local press revelations. Indian daily The Hindu published confidential documents pointing to “parallel negotiations” over the deal that were led by the Indian prime minister’s office behind the backs of the defence ministry, and highlighted the vast rise in the unitary price of the jet fighters in the new contract in which Reliance was favoured.

Meanwhile, Dassault and the French and Indian governments all insisted that the French aircraft manufacturer had freely chosen to associate itself with Reliance. That argument collapsed after Mediapart published an interview on September 21st 2018 with Fran?ois Hollande (who left office in 2017) in which he stated that, “It is the Indian government which had proposed this service group”, referring to Reliance, and that “We didn’t have any say in this matter”. Subsequently, on October 10th 2018, Mediapart revealed the contents of a Dassault company document in which a senior executive was quoted as saying the group accepted to work with Reliance as a “compensation” in the Rafale deal and that it was both “imperative and obligatory” for Dassault to do so in order to secure the fighter contract.

As also reported by Mediapart, it was on January 24th 2016, the same day when Fran?ois Hollande arrived in New Delhi on a three-day visit when he was to sign the preliminary contract for the sale of the Rafale jets, that Reliance announced its investment of 1.6 million euros in a film, Tout là-haut, co-produced by Hollande’s personal partner Julie Gayet.

On October 26th 2018, French anti-corruption NGO Sherpa addressed its legal alert, or “signalement”, to the financial crime prosecution services, the PNF, in which it denounced “potential acts of corruption, the granting of undue advantages, influence peddling, aiding and abetting these offences, receiving the proceeds of corruption and money laundering by France and the company Dassault”. 

As French weekly magazine Paris Match revealed, PNF chief éliane Houlette decided to close all further preliminary investigations into Sherpa’s alert, a move which was contrary to the opinion of one of her deputy prosecutors, Jean-Yves Lourgouilloux, who was nominally in charge of the case. “One doesn’t open [a full investigation] over simple unsubstantiated suspicions […] There was a will to force my hand,” she told the weekly.

Contacted by Mediapart, Jean-Yves Lourgouilloux said: “I left the PNF more than 18 months ago now. I cannot comment on this case.”

According to several judicial sources, éliane Houlette’s decision to close the case, and also her comments about the affair, prompted strong feelings against her within the PNF, and fed suspicion in some quarters of her lack of pugnacity in probing cases that might embarrass the Macron administration. 

Mediapart learned that Houlette carried out no enquiries to speak of before closing the preliminary case, and interviewed only one person at her office, in an informal meeting where no statement was officially recorded. This was a meeting with Kiril Bougartchev, a lawyer representing Dassault.

While Houlette has declined to reply to questions about the case, a representative of the PNF, in a written reply to questions submitted by Mediapart (see the reply in full by clicking on the ‘More’ tab above this page), underlined that “the Dassault company's lawyer was not interviewed by our prosecution service”. That was a confirmation that no interview of the lawyer was made in which a formal statement would have been added to the case file. However, the PNF did not confirm or deny that there had been an informal interview with the lawyer.

Kiril Bougartchev did not reply to questions submitted to him by Mediapart.

Such informal interviews with lawyers are perfectly legal in France, but they rarely occur at the beginning of an investigation. Moreover, Sherpa, whose alert initiated the PNF procedure, was never invited to such a meeting. 

Dassault used the opportunity to steer the PNF’s appreciation of the case, arguing that the Indian authorities had not imposed the choice of Reliance as its industrial partner in the new deal for the Rafales given that the Indian group had already been chosen as a partner three years earlier, in February 2012, in the first contract. Which was what Dassault Aviation CEO éric Trappier set out in an interview with Indian television channel CNBC TV18 (see video below).

To prove its argument, Dassault sent a copy of that earlier contract to the PNF. But that was an attempt to mislead the prosecution services. There are two, separate Reliance groups in India, one led by Anil Ambani, and the other by his brother, Muskesh Ambani. The contract signed by Dassault in 2012 was with Muskesh Ambani’s Reliance Industries, which abandoned all activity in the defence industry two years later.   

Dassault had no links in 2012 with Anil Ambani’s group Reliance ADAG. As Dassault itself recognised in a statement it released in April 2018 , the partnership with Anil Ambani’s group was decided in April 2015.

The suspicions surrounding the Rafale deal deepened in April 2019 when Le Monde revealed the generous tax adjustment granted to Reliance Flag Atlantic France, a French subsidiary of the Reliance Group specialised in telecommunications. The French daily detailed that the company had faced a massive tax debt demand of 151 million euros, but that the French tax administration finally agreed, in October 2015, six months after the Rafale deal was announced, to reduce the amount owed to 7.6 million euros.   

Le Monde also reported that a Reliance employee close to Anil Ambani had spoken, on condition his name was withheld, of how he and Ambani, in early 2015, had met with Emmanuel Macron, who was then France’s economy minister, at his ministerial office, “where the tax problem was settled in a phone call to his administration”.

The élysée Palace told Le Monde that the meeting in question was not recorded in Macron’s official agenda, and that “none of his advisors” of the time recalled “such a meeting between Emmanuel Macron and Anil Ambani”. 

In short, the French president refused to personally comment on the alleged meeting, which is neither clearly denied nor confirmed. Contacted by Mediapart on the subject, Macron did not reply.

On May 21st 2019, Sherpa sent another alert to the PNF, this time about the decision to vastly reduce the tax debt owed by the Reliance Group’s French subsidiary. Two months later, PNF chief éliane Houlette closed the case, shortly before she left her post on June 30th that year.

With the help of several judicial sources, Mediapart has learnt how she justified her decision to staff within the PNF. Mediapart also questioned the two magistrates from the Paris public prosecution services, Muriel Fusina and Yves Micolet, who at the time were preparing to take up posts as interim heads of the PNF during the four months between Houlette’s departure and the arrival of her successor.

Explaining her decision, Houlette spoke to her colleagues within the PNF about the need to protect national interests (as she later told Paris Match, “to preserve the interests of France”), arguing that there was no reason to order an investigation into a contract between two governments. She also argued that the suspicions of corruption were without a serious basis and had been blown out of proportion by the press in the context of legislative elections in India.

Concerning the funding by Reliance of the film co-produced by Fran?ois Hollande’s partner Julie Gayet, Houlette argued that there was no evidence to suspect wrongdoing given that Reliance itself had announced its investment in the film, and therefore had nothing to hide.  

But that was to ignore that the statement released by Reliance would have been largely ignored without the subsequent investigations by the media, and that the statement did not detail the sum invested, namely 1.6 million euros.

The most surprising of éliane Houlette's explanations relates to the reduced sum that Reliance was asked to pay by the French tax authorities after the tax adjustment. The PNF boss initially indicated that the reasoning behind this decision was not known because of “tax confidentiality”.

Yet this confidentiality does not apply to the justice system, as shown in the case of the massive tax rebate given to businessman Bernard Tapie (see here in French). This rebate was discovered by investigating judges after they started examining the case and saw internal emails from the public finance directorate, the Direction Générale des Finances Publiques (DGFIP).

éliane Houlette herself made no official request for information from the tax authorities. Instead, she chose to make an informal phone call, without taking written notes, to a senior official at the DGFIP. This official was Frédéric Iannucci, who headed the DVNI, the unit that carries out tax inspections on large companies.

“The tax administration is in regular contact with the Parquet National Financier, as the law permits and encourages,” Frédéric Iannucci told Mediapart when asked about this informal consultation, declining to say more because of “tax confidentiality”.

The DGFIP told Mediapart that Iannucci had replied “in [our] name as well”. 

The boss of the PNF at the time explained to her colleagues and to the prosecution service at the Paris courts, the parquet géneral, that Frédéric Iannucci had given a “very plausible explanation”. This was that the tax authorities had initially adopted a tough stance because the company was not producing the documents that had been asked for, then changed their stance when Reliance finally provided them.

Following a 2011 tax inspection, the tax authorities had accused Reliance Flag Atlantic France (RFAF), who operated a submarine telecommunications cable, of artificially reducing its profits in France by paying over-the-odds fees to other companies in the group which were based in tax havens.

As RFAF had refused to provide the relevant documents, the tax authorities took the view that all the expenditure was excessive, and so non-deductible against tax. That explains the initial huge tax bill of 151 million euros. “It's standard strategy: the tax authorities get out the nuclear weapon to push the company to supply the documents,” explained a tax expert whom Mediapart consulted. “If they cooperate it's quite normal for the final amount of the tax adjustment to go down, because part of the expenditure corresponds to genuine services.”

But the informal response that the head of the DVNI gave to Houlette does not answer every question. Why did Reliance wait until 2015 and the announcement of the Rafale contract before producing the documents they had refused to supply over the previous four years? Was the 143-million-euro reduction in tax justified? How was it that the final amount of the tax readjustment to pay – 7.6 million euros – corresponded exactly to the sum that the company had decided to set aside in its accounts?

When questioned, the DGFIP refused to comment.

Only a judicial investigation could have determined for sure whether there had been any political intervention. But éliane Houlette had “no doubts” and wanted to close the case because of the “absence of an offence”, against the advice of her assistant prosecutor in charge of the case.

The PNF said that Houlette had “left open the possibility” for Muriel Fusina and Yves Micolet – the two senior prosecutors from the parquet général prosecution service at the courts in Paris who took over as interim heads of the PNF after she left her position – to “confirm or overturn her decision”. They approved it on July 15th 2019. The prosecutor general at the court of appeal in Paris, Catherine Champrenaul, said she was not asked to “pronounce” on the issue.

Meanwhile, according to several legal sources, the deputy prosecutor in charge of the case at the PNF let it be known within the organisation that he refused to draft and sign the formal legal notice closing the case because he would have been unable to cite a reason for closing it.

The result was that when the current boss of the PNF, Jean-Fran?ois Bohnert, took up his duties on October 14th 2019, the legal notice closing the case had still not been written. In the end it was his number two, Jean-Luc Blachon, who dealt with it.

The PNF said that the decision to close the case had been made by éliane Houlette and her successors after “careful analysis” of the alert they had received from Sherpa. “None of the factual elements revealed by the association Sherpa justified the opening of a criminal investigation for corruption or illegal conflict of interest,” it told Mediapart. As a result, “it was not referred to any investigation unit […] and no investigation was carried out”, it said.

The PNF emphasised the fact that the decision was taken before Jean-Fran?ois Bohnert was appointed, and that he did “not have any knowledge of this case”, while Jean-Luc Blachon had simply “formalised [the closure of the case] on an administrative level”. The PNF boss Jean-Fran?ois Bohnert could reopen the case if there was new information as “Madame Houlette had … envisaged”, but the financial prosecution service said they were unaware of any “additional information […] since July 15th 2019”.

Having been informed in February 2020 that its alert was no longer being pursued and no further action was being taken, Sherpa asked to see a copy of the file, as it has a right to do. Jean-Luc Blachon, the number two at the PNF, refused, on the grounds that no prosecutor or detective had exercised their “police powers” during “investigations”.

France's criminal procedure code does permit a prosecutor to refuse to hand over to a complainant the file on a case that has been closed. But several lawyers to whom Mediapart spoke found the reasons cited by the PNF in the Dassault case very surprising.

“This argument is completely bizarre, and the PNF's decision is very rare,” said Sherpa's president and founder William Bourdon, who is a lawyer. “I've had just one refusal to send a file in a case that's been closed in my whole career. That was a terrorism case.”

The PNF responded that it was “not materially possible” to send the file as “no investigation was carried out”.

“Our conviction is that an investigation should have been necessary, but that it seems to have been stopped,” said William Bourdon. He said that Sherpa now intends to “make a new complaint”, as a civil party, because “we're persuaded that this very serious affair merits a judicial investigation”.

The case could already have been relaunched. In October 2018 the French anti-corruption agency, the Agence Fran?aise Anticorruption (AFA), discovered new information that was embarrassing for Dassault, as Mediapart revealed in the first part of this investigation. But the AFA did not refer this information to the prosecution authorities.

The questionable payment discovered by the AFA was just the tip of the iceberg. In India, many confidential documents on the Rafale contract have been discovered. As will be seen in the final part of Mediapart's investigation, the contents of those documents are explosive.

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"Ragale Papers" : MediaPart's Coverage - Part 3 (English version)

? Mediapart 2021

'Rafale Papers’: the explosive documents in France-India jets deal

In this final report in a three-part investigation into the controversial sale by France to India of 36 Rafale fighter aircraft, Mediapart reveals, with hitherto unpublished documents, how an influential Indian business intermediary was secretly paid millions of euros by Rafale manufacturer Dassault Aviation and French defence electronics firm Thales. They succeeded in removing anti-corruption clauses from the fighter contract which was subsequently signed by then French defence minister, now foreign minister, Jean-Yves Le Drian.

Yann Philippin reports. | April 8, 2021

It was on March 26th 2019 in New Delhi when officers from India’s Enforcement Directorate, a government agency tasked with fighting economic crime and money laundering, arrested Sushen Gupta, an influential intermediary in arms deals. After spending two months in preventive detention, he was charged with “money laundering” and released on bail.

The charge related to a vast corruption scandal which first erupted in 2013, dubbed “Choppergate”, which centred on a 550-million-euro contract for the sale to India of helicopters manufactured by the Italian-British firm AgustaWestland. While several individuals cited in the case were eventually cleared of wrongdoing by the Italian justice system, in India the investigations are continuing.

Gupta and other intermediaries were paid, using inflated invoices for what were termed as “software consultancy” contracts, more than 50 million euros in commissions by AgustaWestland through offshore companies. According to the criminal complaint filed against Gupta, who denies wrongdoing, the Enforcement Directorate (ED) suspects that part of the money was paid as bribes “to politicians, bureaucrats and government functionaries”.

In their investigations into the routes of the secret funds, the ED discovered that Gupta also “received kickbacks” in order to influence the result of “other defence deals”. The money was found to have transited through the same shell companies and the same types of “software consultancy” contracts used in the helicopter deal.

According to information gained by Mediapart, one of those “other defence deals”, which is not identified in the charge sheet, is the inter-governmental agreement signed in 2016 for the 7.8-billion-euro sale by France to India of 36 Rafale fighter aircraft, built by Dassault Aviation.

In the official charge sheet dated May 20th 2019 against Sushen Gupta, the ED wrote that “since kickbacks from the other defence deals are not a subject matter of the present investigation” about the AgustaWestland scandal, “separate investigations would be undertaken” regarding the other deals.

Already in 2019, Indian investigative news website Cobrapost, and followed later by Indian daily The Economic Times, revealed the contents of documents demonstrating links between Dassault, Sushen Gupta and the sale of the Rafale fighter jets.

Yet two years later, there remained no visible evidence that the ED had opened an investigation focused on the Rafale deal. Contacted by Mediapart, the agency did not comment on whether such a probe had been launched.

Which raises the question as to whether the suspicions of corruption surrounding the Rafale contract had been buried by the investigative authorities in India, as was the case in France (see more on this in the first and second part of Mediapart’s “Rafale Papers” investigations here and here ). What is certain is that the affair has become highly sensitive given that serious questions are raised about the involvement in the deal of a close acquaintance of ultra-nationalist Indian Prime Minister Narendra Modi (see more here)

Meanwhile, thanks to witness statements, the results of searches of premises and international judicial assistance, the ED has gathered a mass of evidence concerning Sushen Gupta, including computer files, email correspondence, banking details, agendas and other handwritten documents.

Mediapart has obtained a number of confidential documents from the ED’s case file, which shed new light on the behind-the-scenes events of the Rafale deal.

The first two reports in this three-part investigation have stirred public opinion in India over recent days, and Mediapart’s revelations here are likely to heighten the controversy.

According to documents obtained by Mediapart, Dassault and its French industrial partner Thales – a defence electronics firm in which Dassault and the French state are the major shareholders – paid Sushen Gupta several million euros in secret commissions to offshore accounts and shell companies, using inflated invoices for software consulting. These payments were on top of a questionable contract with Dassault for making replica models of Rafale jets, worth 1 million euros, which was revealed in the first of this series of reports.

As middleman for Dassault and Thales, Sushen Gupta, amid the discussions over the Rafale deal in 2015, obtained confidential documents from India’s defence ministry relating to the activities of the negotiating team. The Enforcement Directorate, in its official charge sheet against him, wrote that Gupta had gained “sensitive data which should have only been in possession of the Ministry of Defence”.

It is not clear how Sushen Gupta, who did not respond to Mediapart’s attempts to interview him, managed to obtain the information. Three years earlier, in a note from his archives dated September 7th 2012, and which appeared to be addressed to Dassault, he warned: “Cannot stop now too late for me, I owe people money and commitments. […] People sitting in office asking for money. […] Those people will, if we don’t pay, put us in jail and […] then we are really finished, deal scrapped.”

How France removed anti-corruption clauses in the contract

The evidence found by the Indian investigators may help to understand why Dassault and France-based European missile manufacturer MBDA, which was also a party to the Rafale deal, worked hard to remove anti-corruption clauses in the inter-governmental agreement for the jets, which was negotiated and signed by Jean-Yves Le Drian, who was then France’s defence minister during the presidency of Fran?ois Hollande, and who is now foreign affairs minister under President Emmanuel Macron.

Those anti-corruption clauses could have had costly consequences for the industrialists, for they allow for India to rip up the contract and/or to demand compensation not only if acts of corruption are discovered, but also if the seller paid an agent in order to “intercede, facilitate or in any way to recommend [the seller] to the Government of India or any of its functionaries”. 

India’s defence ministry was required, under the terms of the country’s “Defence procurement procedure” to include the clauses in question – “penalty for use of undue influence” and “agents/agency commission” – into the contract. But the French “Team Rafale” wanted them excluded. 

In July 2015, in an annex to the contract concerning the weaponry of the jets, supplied by MBDA, the French side wrote into the text that the two anti-corruption clauses were “Not Applicable”. But the Indians deleted this and reintroduced the anti-corruption clauses (see extracts from the documents immediately below).

? Document Mediapart

Six months later, in the contract proposed on January 13th 2016 by the French team, concerning Dassault’s supply of the aircrafts, the two anti-corruption clauses were again marked “Not Applicable” (see document below).

? Document Mediapart

According to a report in The Hindu, the Indian authorities finally approved the removal of the clauses in September 2016, just before the signing of the final contract, at a meeting presided by the Indian defence minister, Manohar Parrikar.

Did his French counterpart, Jean-Yves Le Drian, also approve the removal of the anti-corruption clauses? Was he informed of the move? “In no case do we validate the information that you refer to,” commented a spokesperson for Le Drian, now French foreign affairs minister, adding that, “the inter-governmental agreement […] concerned only the requirements of the French government to ensure the delivery and quality” of the Rafale jets.

However, in the case of a sale agreed between two governments, the contracts are legally adjoined to the inter-governmental agreement. The heart of the negotiations was led, on the French side, under the direct authority of then defence minister Jean-Yves Le Drian, by a team of 11 people, made up of eight senior members of the French weapons procurement and export agency (the DGA) and the French air force, along with two representatives of Dassault and one for the MBDA.

Questioned by Mediapart, the MBDA replied: “MBDA does not habitually comment on negotiations concerning contracts.” Also contacted, Dassault declined to comment, as it has also declined to respond to all the issues raised in this report.

Fran?ois Hollande, who was French president at the time of the events (in office from May 2012-May 2017), told Mediapart that he was “at no moment informed of these aspects of the negotiation”, and that he therefore could “not have approved an eventual removal of these [anti-corruption] clauses”.

Secret commissions and overpriced contracts

To better understand why the French industrial partners wanted to remove the clauses, it is necessary to focus on the activities of Sushen Gupta, the commercial agent for Dassault and Thales. Gupta, who has US nationality, comes from an Indian family whose members have worked as intermediaries in the aeronautic and defence markets over three generations. Sushen and his brother were taught the business by their father, Dev Gupta, who is now retired.  

The family’ consultancy firm, Indian Avitronics, works with a number of major aviation industry corporations, including several French groups. One of the latter is aircraft equipment manufacturer Safran, which notably makes the engines for the Rafale jets (see document below). Between 1997 and 2003, Safran paid 1.2 million euros into a Swiss-registered company belonging to the Gupta brothers. Contacted by Mediapart, Safran declined to comment on the subject.

Above: an extract of a document from the archives of middleman Sushen Gupta concerns consultancy work he was engaged in in 2010 for Safran’s military engine branch concerning a joint project with India for equipping Kaveri fighter aircraft. ? Document Mediapart

Sushen Gupta is known for his network of political and military contacts. In 2007, he boasted to a major Western aeronautics corporation that “contacts at all levels have been developed and maintained” with the Indian government. In the charges levelled against him, The Enforcement Directorate noted that he “had prior information about the future requirements of Indian Air Force, which is something not available in public domain”.

Dassault and Thales paid highly for Gupta’s know-how. They hired him at the beginning of the 2000s, at the very moment when India announced it was looking to buy 126 fighter jets. According to evidence from the ED’s casefile, the two French firms paid him several million euros over the 15 years leading up to the signature of the contract.

The problem is that the money was not paid into the Indian-registered consultancy firm of the Guptas, but was instead transferred, in the form of secret commissions, some of which have questionable justifications, into offshore companies.  

According to the Enforcement Directorate’s charge sheet, Thales ordered from the Gupta brothers “reports for various subjects” and the remuneration was paid into a shell company, with no offices or staff, registered in Dubai, which was managed by the lawyer for the Gupta family. According to an accounts spreadsheet belonging to Sushen Gupta, which only covers the years 2004 to 2008, Thales paid 2.4 million euros via this financial route. Contacted by Mediapart, Thales declined to comment.

To receive payment from Dassault, Sushen Gupta used the same system he employed in the “Choppergate” scandal for which he now faces prosecution, involving an IT services company called IDS, where a member of his family worked. IDS obtained apparently inflated contract payments from Dassault, and in return would discreetly pay the middleman.    

In a statement given to an Indian investigator, a member of the IDS management explained that it was an individual called “Pierre” at Dassault who instructed him to pay commissions into a fronting company registered in Mauritius Island called Interstellar. A Dassault company document (see below) shows that the French company placed 2 million euros-worth of orders with IDS in 2004, and planned to place 4.6 million more. Between 2002 and 2005, IDS transferred 900,000 euros to Interstellar.

Above: An extract from an internal company document from Dassault Aviation detailing the orders and payments to Indian IT services company IDS. ? Document Mediapart

The financial scheme was subsequently changed. An IDS manager told the investigators that from 2004, Dassault placed orders for computer services with a Singapore-based company called Interdev, which was presented as a “System integrator for Dassault in Asia”. In reality, it was a shell company with no real activity, administered by a straw man for the Guptas who is currently on the run in South Africa.

Interdev paid IDS for IT services and transferred commission payments to Interstellar in Mauritius, under cover of sub-contracting work of a questionable nature. In the document reproduced immediately below, it is indicated that “Dassault has granted Interdev the right to sub-contract part of the agreement to Interstellar”, which is described as being “specialized in software […] and other IT services”. But in fact, the Mauritius-registered company was an empty shell, and is now wound down.

? Document Mediapart

According to an accounts spreadsheet belonging to Sushen Gupta, an entity called simply “D”, which is a code he regularly used to designate Dassault, paid 14.6 million euros to Interdev in Singapore over the period 2004-2013. Interdev transferred just 2.6 million euros to the Indian IT services company IDS, while 11.9 million euros was transferred to Interstellar in Mauritius (see the document below).

An accounts spreadsheet belonging to middleman Sushen Gupta detailing the financial movements of the Singapore-based company Interdev. “IDS” is an Indian IT services company, while “MRU” refers to the offshore company Interstellar, registered in Mauritius. ? Document Mediapart

Questioned by Mediapart, Dassault declined to comment. Neither Sushen Gupta nor IDS responded to Mediapart’s attempts to contact them.

Even with the information from the spreadsheets, it is very difficult to ascertain where the millions of euros paid out by Dassault and Thales finally ended up, given the multiple offshore shell companies involved, registered in opaque tax havens like Switzerland, Liechtenstein and the United Arab Emirates.

Several million euros went into financing the Gupta’s comfortable lifestyle (including the purchase of two Porsche cars totalling 310,000 dollars and a marriage celebration costing 150,000 dollars paid in cash), along with investments, notably in the hotel business and property.

But there are also numerous payments to individuals, who are often designated on documents by their initials, and sometimes by codes, such as “A34”. The Enforcement Directorate investigators found trace of large cash withdrawals. One employee of Indian Avitronics, the Gupta family’s aeronautics consultancy firm, gave a statement to investigators in which he said that Sushen Gupta had given him cash with instructions to give it to certain individuals whose names, he said, he “did not remember”.

The Enforcement Directorate, in its written complaint detailing charges and evidence, suspects that part of the money was also used for “bribing officials in India” in the context of, “Various defence deals”. A confidential note found in the computer archives of the intermediary suggests that the Rafale deal may have been one of them. 

“People sitting in office asking for money”

It was on January 31st 2012 when Dassault won the tender issued by India for the supply of 126 fighter jets. But that was just the beginning of a process of negotiations necessary before the signing of a contract. In March that year, the Indian defence ministry launched an internal investigation into the results of the tender after a member of the Indian parliament claimed that the Rafale was more expensive than the Typhoon fighter jet proposed by Eurofighter.  

A key point in the negotiations concerns the requirement made by India that Dassault would place half of the total value of the contract into Indian firms, such as buying from them aircraft components, in what is known as an “offset” agreement.

Under the initial contract, the state-owned aerospace and defence corporation Hindustan Aeronautics Limited (HAL) was to assemble, in India 108 of the 126 Rafale jets. Dassault chose as its principal partner in the private sector Reliance Industries Ltd (RIL), a group owned by billionaire Mukesh Ambani, even though it had no experience of aeronautic manufacturing. In February 2012, Dassault and RIL signed an agreement to create a joint-venture company in India that would provide Dassault with components.

Sushen Gupta was involved in the process of selecting Indian industrial partners. On April 13th 2012, his Singapore shell company, Interdev, drew up three contracts for consultancy services for Dassault, for a total of 4 million euros. The work involved providing research reports on the defence market in India and identifying potential industrial partners (see document below).

? Document Mediapart

It is unclear whether the contracts were signed. According to a Gupta accounts spreadsheet, “D” made a payment of 500,000 dollars to Interdev five days later. But Sushen Gupta wanted more.

In his digital archives, there is a Word document containing what to all appearances was a message prepared for Dassault, written in the form of a bullet-points note. The document was modified for the last time on September 7th 2012 at 7.22am, and contained, on top of the message, an electronic ticket in the name of Sushen Gupta for a flight from Paris to New Delhi, which took off the same day at 10pm (see below).

? Document Mediapart

The contents of the documents suggest that Gupta had a meeting with Dassault Aviation, headquartered close to Paris, on September 7th 2012. In his notes, Gupta angrily wrote: “For the first time I am asking myself, why am I doing this? […] What is our fault? […] I have done what you wanted. We have come from India for some answers.” 

The note might appear to suggest that money had been distributed by the Gupta’s to Indian officials and that Dassault had not compensated the payments: “The risk is taken,” he wrote, “you have an agent we have paid, now make sure it is legal clean and defendable we are not avoidable and must anticipate the worst. […] No money no decisions. So far you are happy because I have spent money? Now you are upset because you have to pay? […] Now is not the time to fight. You should not have started, now finish.”

Further down the document is a more explicit series of bullet-point notes (see below): “Cannot stop now too late for me, I owe people money and commitments. […] People sitting in office asking for money. […] Sushen, he promised because you promised. […] People [are] demanding what do we do? […] Those people will, if we don’t pay, put us in Jail and RIL [Reliance Industries Ltd] will exit – then we are really finished, deal scrapped as per commitment of RM [editor’s note, defence minister Rakhsa Mantri] in Parliament.”

An extract of notes prepared and last recorded on September 7th 2012 found in the archives of Sushen Gupta. ? Document Mediapart

The intermediary saw no risk in the payments, noting: “Cash from elsewhere, not connected. What is the worry?” He also suggested to Dassault to ask for a contribution from its Indian industrial partners: “What have other Indian companies done to deserve the work?”

While Dassault offered no comment about the notes or the existence of a meeting with Sushen Gupta, the latter did not respond to Mediapart’s attempts to contact him.

What is established is that Gupta continued to be a strategic consultant for Dassault and that, three years later, he obtained confidential Indian defence ministry documents about the Indian negotiating team’s position on the Rafale contract.

The intermediary obtained confidential documents from the Indian defence ministry

In 2014, the negotiations over the Rafale contract became bogged down, notably because of disagreements between Dassault and the state-owned aerospace and defence corporation HAL.

On May 12th 2014, the Indian National Congress party lost power in the country’s general elections and Narendra Modi, head of the ultra-nationalist Hindu BJP party, became prime minister. In a note he sent to Dassault, dated June 24th 2014, Sushen Gupta raised the possibility of a “meeting with Indian political high command”. Clearly well informed, he also reported that the Indian defence minister was to be replaced “before end of July”. In the event, the minister was replaced that November.

On April 10th 2015, following a meeting in Paris with then French president Fran?ois Hollande at the élysée Palace, Indian Prime Minister Narendra Modi made the surprise announcement that the tender for 126 fighter jets had been overturned, and that India now wanted to purchase 36 Rafale jets, built in France and “ready-to-fly”, in a contract to be agreed between the two states.

It was a major turnaround; the state-owned company HAL was removed from the deal as was also Mukesh Ambani’s group Reliance Industries Ltd. The latter was replaced by the group Reliance ADAG, owned by Mukesh Ambani’s brother Anil Ambani, a close acquaintance of Modi (see more in Mediapart’s previous investigations here and here ).

Because the Rafale deal would now be an inter-governmental agreement, the negotiations were led between the French and Indian defence ministries. On the French side, under the authority of then defence minister Jean-Yves Le Drian, the negotiating team included eight senior defence ministry and air force staff, two Dassault executives, and a representative of missile manufacturer MBDA.

One of the key issues was of course the purchase price of the aircraft. On May 13th 2015, the Indians demanded, as France had promised, that the cost of the Rafale jets should be the lowest ever offered by Dassault. The Indians had a trump card to play, which was that in July 2014, the European consortium Eurofighter, which lost out in the original tender, had presented a new offer to India, knocking down the price of its Typhoon jets by 20%.

The situation rapidly became a confrontation between the two sides. After performing complex “benchmark” calculations, the Indian negotiators concluded, in a confidential report dated August 2015, that the overall purchase price for the Rafale jets, including their weaponry, should be 5.06 billion euros (see the document below). But in January 2016, Dassault proposed more than double the price: 10.7 billion euros, and excluding the missile equipment.

The detail of the calculations of the “benchmark costs”, the justified cost of the Rafale purchase, as estimated by the Indian defence ministry negotiating team on August 10th 2015. ? Document Mediapart

For the French camp, Sushen Gupta’s assistance was to prove precious. According to information gained by Mediapart, he obtained confidential documents from the Indian defence ministry on the subject of the dispute over the purchase costs (see below). These included the minutes of meetings by the Indian Negotiating Team (INT), the arguments they had prepared to present to the French, and detailed notes on the calculations of the costs (“benchmarking of costs”) and the methodology employed. Gupta even obtained an Excel sheet created by one member of the INT for calculating the purchase price (“price benchmarking”).

The minutes, or “Record of discussions”, as drawn up by the Indian defence ministry’s negotiating team (INT) of the second meeting of discussions. ? Document Mediapart

The intermediary also obtained the complete contents of the revised Eurofighter offer as it had been presented by Airbus (a member of the consortium) to the Indian defence ministry in July 2014 (see an extract of this below).

? Document Mediapart

Questioned by Mediapart about the documents obtained by Sushen Gupta, the Indian defence ministry did not respond.

The intermediary had gathered all the information needed for the French to counter the Indian team’s demands. He took an active part in Dassault’s strategy, calculating on computer spreadsheets what the best deal might be. On one of these, created on January 20th 2016, one of the columns concludes a suggested overall purchase cost of 7.87 billion euros. That was precisely what the French negotiating team proposed to the Indians during a negotiations meeting the following day. But the Indian side again demanded a lower price, and after the French refused, the meeting was called to an abrupt end.

Four days later, on January 25th 2016, then French president Fran?ois Hollande was in New Delhi to sign a protocol agreement with Indian Prime Minister Narendra Modi, amid grand ceremony, for the sale of the 36 Rafale jets. But the agreement was a non-binding political one. Hollande declared that the negotiations were “progressing”, but in fact they had become blocked. 

An article published in English in May 2016 by French website Intelligence Online (IOL) reported that Thales had engaged Gupta’s services to “woo” Modi’s Hindu nationalist BJP party in order to unblock the situation. “Thales made sure it had the support of Dev Mohan Gupta, who heads Indian Avitronics,” IOL reported, adding: “[…] Gupta's sons Sushant and Sushen are on good terms with President of BJP Amit Shah, the finance minister Arun Jaitley and the head of the Indian air Force, Arup Raha.”

The contract was finally definitively signed on September 23rd by Indian defence minister Manohar Parrika and his French counterpart Jean-Yves Le Drian. The Indian authorities had finally accepted the French offer of a total cost of 7.87 billion euros, a sum they had rejected six months earlier.

That final deal did not meet with unanimous satisfaction at the Indian defence ministry, to the point where three of the seven members of the Indian Negotiating Team (INT) signed a confidential report highlighting anomalies they said they had noticed.

In the document, revealed by The Hindu, they notably denounced the change that was brought about in the calculation of costs which, they argued, ended up with a purchase price that was too favourable for Dassault. They also argued that the Eurofighter was a cheaper option.

Those conclusions were contradicted by the office of the Comptroller and Auditor General of India, the CAG, which found that the final cost of the Rafale jets was 17% less than the initial tender offer. Meanwhile, the Indian Supreme Court ruled in 2019 that there were insufficient grounds for opening an investigation into the matter. But that decision was made without the information gathered in the AgustaWestland probe by the Enforcement Directorate.

For Dassault, the deal ended very well, and Sushen Gupta was once again rewarded. In March 2017, one of the Gupta family’s Indian companies, Defsys Solutions, invoiced Dassault for 1 million euros for the production of 50 replica models of the Rafale jet (see more on this in the first of this three-part report). 

Defsys Solutions also became, as announced in a statement released by Dassault, one of the sub-contractors to the Rafale deal. Dassault declined to disclose to Mediapart the nature or the cost of that contract.

? Mediapart 2021

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