French portal reveals why India accepted a high price for Rafale fighter jets

In the third and final part of the investigation into the Indo-French Rafale fighter plane deal, French online portal Mediapart disclosed damning details of how Dassault paid millions of Euros to Defence businessman Sushen Gupta over a period of 15 years.

The amount, as much as 14 million Euros or over Rs 100 Crore, were routed through shell companies in Singapore and Mauritius, the report alleges. More importantly, India’s Enforcement Directorate (ED) had the evidence of these payments in 2018 but does not appear to have launched a ‘visible’ investigation into the Rafale deal and Gupta’s role.

Gupta, Mediapart says, appears to have accessed classified Defence Ministry documents between the years 2012 and 2016 and alerted Dassault about the Indian Negotiating Team’s bargaining points. Significantly, Prime Minister Narendra Modi in 2015 had converted the deal into an inter-governmental purchase agreement.

The new revelations made by Mediapart can be summed up as follows:

1. The Indian Negotiating Team (INT) had fixed 5 billion Euros as the fair price for the 36 jets in fly-away condition. Dassault, however, quoted a price of 10.7 billion Euros for the planes without weapons. This was turned down by the INT. Even when Dassault reduced the price to 7.8 billion Euros, the INT did not find it acceptable. But in September, 2016 the Indian Government agreed to the new price.

2. While Dassault was paying Sushen Gupta from 2001 onwards, when the procurement of fighter jets was first announced by the Indian Government, Gupta was arrested by ED in the Augusta-Westland case called Choppergate. Mediapart accessed documents in ED’s charge sheet filed against Gupta.

3. The Indian Negotiating Team had thrice insisted on retaining the anti-corruption clauses in the final contract but Dassault each time pressed that the clauses be dropped. While the clauses, still part of the Defence Procurement Rules of the Indian Ministry of Defence, do not provide immunity to middlemen, they allow the Indian Government to cancel the contract if evidence of corruption or payment to middlemen to influence the deal surface. The clauses also empower the Indian Government to demand compensation from the supplier or vendor. But since the clauses were dropped, it will be difficult for India to take any commercial action against Dassault.

4. French journalist Yann Philippin, who did the investigation for the last three years for Mediapart, told Indian news portal The Wire that he is convinced that there is enough evidence to warrant a formal investigation into the deal both in France and in India.

In a series of reports in 2018, Mediapart had raised questions about the selection of Anil Ambani’s Reliance Defence as Dassault’s offset partner in India. It had quoted the then French President Francois Hollonde saying that the Indian Government had foisted Mr Ambani on the French. It had also accessed internal memos in which a Dassault executive mentioned that it was imperative to accept Anil Ambani as the partner if Dassault wanted to secure the deal.

Mediapart claims to have sought the response of the Indian Defence Ministry, Enforcement Directorate and Dassault among others but received no response.