French judge to probe Rafale deal

French judge to probe Rafale deal

  • A French judge has been tasked with investigating the controversial 2016 multi-billion-dollar sale of Rafale fighter jets to India on “corruption” suspicions, the national financial prosecutors’ office (PNF) said.
  • The decision once again puts the spotlight on the role of the Anil Ambani-headed Reliance Group which is an offset partner to Dassault Aviation, manufacturer of the Rafale, in the €7.8-billion deal.
  • According to French investigative website Mediapart, the judicial investigation was formally opened into the Inter-Governmental Agreement on June 14 following a decision by the financial crimes branch of PNF.
  • The deal has faced several questions in the past pertaining to allegations of corruption, favouritism and deviations in procedure.
  • Mediapart’s investigation has also made new revelations regarding Reliance Group’s role in the deal. The report states that the first MOU between Dassault and Reliance was signed just weeks before the surprise announcement on the direct purchase of 36 jets was made.
  • The PNF had initially refused to investigate the sale, prompting Mediapart to accuse it and the French Anti-corruption Agency of “burying” suspicions surrounding the deal.
  • In April, Mediapart claimed that “millions of euros of hidden commissions” were given to a go-between who helped Dassault conclude the sale, of which “some... could have been given as bribes” to Indian officials.
  • Dassault retorted that no wrong-doing was flagged in the group’s audits.

Role of Anil Ambani

  • “Documents seen by Mediapart show that Dassault and Reliance had in fact signed their first MoU — a document setting out broad outlines of an agreement — on March 26, 2015.
  • That was 15 days before Mr. Modi’s announcement of the turnaround, and the exclusion of Hindustan Aeronautics Limited [HAL], and begs the question as to whether the two companies had been informed of it in advance,” the report states.
  • The MoU which was signed at a time when Dassault was still in talks with HAL under the earlier deal, was for a possible joint venture between the two companies.
  • Following the deal, Dassault and Reliance created a Joint Venture (JV) in 2017 Dassault Reliance Aerospace Limited (DRAL) for discharging the offsets. Revealing the details of the partnership, the report, citing documents accessed, states that Dassault provided Reliance “with remarkably generous financial terms for the establishment of their JV.”
  • Stating that ordinarily partners in a jointly owned subsidiary would provide equal funds for its capital. But that was not the case with DRAL. “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.”
  • While Reliance brought neither funds nor know-how of any significance to the joint venture, it did bring 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 report added.
  • Sherpa had already asked for an investigation into the deal in 2018, but the PNF took no action. In this first complaint, the NGO had denounced the fact that Dassault chose Reliance Group as its Indian partner, a conglomerate headed by billionaire Anil Ambani, who is close to Prime Minister Narendra Modi.