THE opening of a judicial probe in France on June 14, 2021, into suspected ‘corruption’, ‘influence-peddling’, ‘money laundering’, ‘favouritism and undue tax waivers’ surrounding the €7.87 billion Rafale-India deal has given new life to a major scandal that the Narendra Modi government has done its best to cover up. The decision of the French National Financial Prosecutor's Office (the parquet national financier or PNF) to support the opening of a judicial investigation into the deal was based on a complaint by Sherpa, an anti-corruption French NGO. The decision was triggered by a series of investigative articles (titled the “Rafale Papers”) published by Mediapart, the independent French online investigative journal. It is significant that this decision of the PNF’s current head, Jean-François Bohnert, reverses a call made by his predecessor, Elaine Houlette, against advice from her professional staff, to dismiss Sherpa’s initial complaint in order “to preserve the interests of France”. The judicial probe under way is into allegations that have been updated with details provided by Mediapart’s “Rafale Papers” investigation.

According to Mediapart, the probe will focus on the role of Anil Ambani, the chairman of Reliance Group, in the Rafale deal, which was concluded by French President Hollande and Prime Minister Modi in an inter-governmental agreement in 2016.

The journal reveals that the criminal investigation will also look into questions surrounding the actions of Hollande, Emmanuel Macron, the current French president who was at the time Hollande’s economy and finance minister, as well as Jean-Yves Le Drian, the then defence minister who is now foreign affairs minister under Macron.

Key to the criminal complaint and the judicial investigation is a partnership contract signed between Rafale manufacturer Dassault Aviation and the Anil Ambani Reliance group, which in 2017 created a joint venture company called Dassault Reliance Aerospace Limited (DRAL), with the building of an industrial plant at a site close to Nagpur. The confidential documents obtained by the journal reveal that Dassault had no interest in forming a partnership with Reliance other than for political reasons.

According to Mediapart, “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 “Rafale Papers” investigation by Mediapart combined with the information obtained by Indian newspapers points to the involvement of another middleman, Sushen Gupta, in India’s defence deals, including the Rafale deal. Gupta was arrested in March 2019 by the Enforcement Directorate, charged with “money laundering”, and released on bail. The ED’s criminal complaint filed against Gupta alleges that he received kickbacks, which were used to bribe “politicians, bureaucrats, and government functionaries” for ‘Choppergate’, the €550 million deal with AgustaWestland as well as “other defence deals”. However, in the chargesheet of May 20, 2019, against Gupta, the Enforcement Directorate contended that “since kickbacks from the other defence deals are not a subject matter of the present investigation” (that is, on the AgustaWestland scandal), “separate investigations would be undertaken” regarding the other deals. And that was the last that has been heard in India about the alleged involvement of this particular middleman in the Rafale deal.

All this ties in with what is already known from N Ram’s six-part investigative articles published in The Hindu between January and April 2019. What is clear now is that it was the glaring set of deviations from the Defence Procurement Procedure (DPP-2013), documented in The Hindu’s investigation, that enabled the suspected corruption, influence-peddling, money laundering, and other offences being investigated in France. Those deviations include the sudden decision to scrap a deal, involving a major ‘make-in-India’ component with public sector involvement, under advanced negotiations; the exaggerated price per Rafale jet agreed upon in face of clear dissent recorded by three members, all domain experts, of the Indian Negotiating Team; the parallel negotiations undertaken by officials of the Prime Minister’s Office despite protests recorded by the defence ministry; the removal of the standard anti-corruption, integrity, and transparency clauses in the inter-governmental agreement and in the supply protocols; the waiver of sovereign or government guarantees or even bank guarantees that financial prudence required and that the government’s financial experts wanted; and the major changes made in the offset clauses relating to obligations, performance, timelines, and transparency, to favour the French suppliers.

The Modi government made determined efforts to stop any investigation of the Rafale deal. It opposed the demand for an investigation in a petition before the Supreme Court and the Court concurred; the CAG report also had the prices for the planes in the 2016 contract redacted at the insistence of the ministry of defence. The government doggedly refused the demand for a joint parliamentary committee to inquire into the deal. It is ironical that despite all these strenuous efforts to bury the issue, the French investigation has resurrected the matter.

After the announcement of the French investigation, there has been no official reaction from the Indian government. The silence is revealing. How long can the Modi government put off an independent, high-level enquiry, when one side of the inter-state agreement finds prima facie grounds to do so?

(July 7, 2021)