New Delhi: In a development that will reignite demands for an independent probe into the controversial Rafale deal in India, a French judge has been appointed to lead a judicial investigation into alleged corruption and favouritism in the 7.8 billion euro sale of 36 fighter aircraft, the French website Mediapart said in a new report on Friday night.
India had ordered the aircraft in September 2016 as an emergency purchase through a government-to-government deal.
Investigative reporter Yann Philippin of Mediapart revealed that the “highly sensitive probe” into the 2016 inter-governmental deal was formally opened on June 14 following a decision by the financial crimes branch of the French public prosecution services, the PNF.
The probe has been launched in the wake of a series of investigative reports published by Mediapart in April 2021 about the deal, including the role of a middleman whose disclosures India’s Enforcement Directorate is reportedly aware of but has not bothered to investigate so far. Following the exposé, the French anti-corruption NGO Sherpa filed a complaint with the tribunal of Paris, citing “corruption”, “influence peddling”, “money laundering”, “favouritism” and undue tax waivers surrounding the deal.
According to Mediapart, the PNF has confirmed that the newly opened investigation will focus on all four of the alleged crimes.
The PNF’s decision to seek a formal probe represents a U-turn from the stand it took in 2019. At that time, its head, Eliane Houlette, going against the advice of one of her staff and without carrying out any investigations, dismissed an initial complaint filed by Sherpa. The reason she cited to justify her decision was “to preserve the interests of France”.
Now, two years later, writes Phillipin, “her successor as head of the PNF, Jean-François Bohnert, has decided to support the opening of a probe, after the complaint was updated with details from Mediapart’s recent series of investigations.”
Besides other aspects, the criminal investigation will examine questions surrounding the actions of former French president François Hollande, who was in office when the Rafale deal was signed, and the current French president Emmanuel Macron, who was Hollande's economy and finance minister at the time, as well as the then defence minister, Jean-Yves Le Drian, now Macron’s minister for foreign affairs.
The investigation will be led by an independent magistrate, an investigating judge.
While Dassault Aviation has yet to react to the latest developments, the company has consistently denied any wrongdoing and maintained that it “acts in strict compliance with the OECD Anti-Bribery Convention and national laws”.
Mediapart noted that Dassault had said, “Numerous controls are carried out by official organizations, including the French Anti-Corruption Agency. No violations were reported, notably in the frame of the contract with India for the acquisition of 36 Rafales.”
Given the central role played by Anil Ambani’s Reliance group – Dassault’s Indian partner in the deal for the 36 aircraft – the probe is likely to also examine the nature of the association between the two companies.
India and Dassault had officially been negotiating terms for the purchase and manufacture of 126 Rafale jets right up to Prime Minister Narendra Modi’s publicly announced decision – on April 10, 2015 – to scrap that deal and replace it with the outright purchase of 36 fighters. While Manohar Parrikar, India’s defence minister at the time, was unaware of Modi’s decision until the very end, it now appears Anil Ambani may have had an inkling of it.
In a sensational new revelation, Mediapart reported that the first MoU between Dassault and Anil Ambani’s company was actually signed on March 26, 2015.
Mediapart has also revealed new details of the partnership contract signed between Dassault Aviation and Anil Ambani’s Reliance, which in 2017 created a joint venture company called Dassault Reliance Aerospace Limited (DRAL), for the building of an industrial plant near Nagpur.
The confidential documents obtained by Mediapart reveal how Dassault had in fact no interest in forming a partnership with Reliance other than for political reasons. And its primary expectation from Reliance was “marketing for programs and services with the GOI”.
“The two partners agreed a maximum investment in the subsidiary of 169 million euros. Of that sum, Dassault, which held a 49% stake in DRAL, pledged to provide up to 159 million euros, representing 94% of the total, while Reliance would provide just the remaining 10 million euros.
“While Reliance brought neither funds nor know-how of any significance to the joint venture, it did bring to it its capacity for political influence. In an extract from one of the documents obtained by Mediapart detailing the agreements between Reliance and Dassault, Anil Ambani’s group was handed the mission of “marketing for programs and services with the GOI” – the acronym for “government of India”.
The latest revelations about the terms of the deal between Dassault and Reliance will reignite questions that have swirled around ever since Francois Hollande revealed in a 2018 interview that Reliance’s selection as Dassault’s partner was prompted by the Indian government and that France “had no choice” in the matter.
While the Modi government, Reliance and Dassault have denied Hollande’s version of events, the French government has not formally repudiated what the former president said.
The deal became controversial, with the Opposition, led by the Congress, claiming that the price at which India is buying Rafale aircraft now is ₹1,670 crore for each, three times the initial bid of ₹526 crore by the company when the UPA was trying to buy the aircraft. It has also claimed the previous deal included a technology transfer agreement with HAL.
The NDA has not disclosed details of the price, but the UPA deal, struck in 2012, was not a viable one, former defence minister Manohar Parrikar has previously said, implying that it would have never been closed and that, therefore, any comparison is moot. Indeed, the UPA was not able to close the deal till 2014, largely over discussions related to pricing of items not included in the initial bid.
The NDA government has said that it cannot disclose the details of the price on two counts: a confidentiality agreement with France, and the strategic reason of not showing its hand to India’s enemies; however, it said that the current deal also includes customised weaponry.
The Supreme Court heard a public interest case on the deal and in November 2019, said it saw nothing wrong in it. In a February 2019 report, the government’s auditor, the Comptroller and Auditor General of India audited the deal and said India had not overpaid for the jets.
India has raised two squadrons of the jet on western and eastern fronts. The first squadron is fully operational at Ambala with 18 Rafale jets, whereas the second squadron is at the Hasimara airbase in West Bengal. The Indian Air Force is expected to induct all the 36 Rafale fighter jets by 2022.