New Delhi: Influential defence businessman Sushen Gupta, currently the subject of a money laundering investigation by the Enforcement Directorate (ED) in the VVIP chopper scam, allegedly acted as an agent for Dassault Aviation in the controversial sale of Rafale jets to India and received millions of euros as commission from Dassault Aviation and its partner, Thales, a new report published by the Paris-based investigative website Mediapart says.
The media report, which is partly based on information obtained from the ED’s case file on Gupta, also claims that the businessman illegally obtained confidential documents from India’s defence ministry and used them to help the French side get a better bargain in the Rafale deal.
These explosive revelations, which come in the third and final part of Mediapart‘s latest investigation into the Modi government’s purchase of 36 Rafale aircraft are likely to reignite demands in India for full-fledged criminal investigation.
The fact that the ED has not formally opened a probe into the Rafale deal despite being aware of Gupta’s alleged use of confidential defence ministry documents in helping the French side raise the price India eventually paid will heighten suspicions that the agency is trimming its sails to suit the political agenda of the ruling party,
Gupta’s deep business connections to Dassault and Thales spanned nearly two decades, the Mediapart report claims, and involved paying him “several million euros in secret commissions to offshore accounts and shell companies” using inflated invoices for software consulting.
These payments spanned a 15-year-period – including when the UPA government of Manmohan Singh was in power – and were “on top of a questionable contract” that an Indian company with close connections to Gupta had with Dassault in 2017 for making replica models of Rafale jets invoiced at one million euros. The details of this contract, which were red-flagged by a French anti-corruption agency, were revealed in the first part of Mediapart’s investigation into the Rafale deal earlier this week.
“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 report notes.
“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,” it adds.
The report alleges that Gupta received payment from Dassault using the same system that he is being investigated for in the AgustaWestland scam – an intricate process involving an IT services company called IDS. IDS allegedly obtained 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,” the report notes.
What does ED know?
According to Mediapart, the ED, in its written complaint detailing charges and evidence, suspects that part of the money that Gupta received for his consultancy services 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,” the report notes.
In the official charge sheet against Gupta, the Mediapart report notes, 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… 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,” it adds.
Rafale deal role
Months after Dassault won the tender issued by India for the supply of 126 fighter jets, in January 2012, it appears that Gupta was involved in the process of “selecting Indian industrial partners”.
A Singapore-based shell company called Interdev, with connections to Gupta, helped draw up three contracts for consultancy services for Dassault for a total of four million euros. The potential work, according to the Mediapart report, involved providing research reports on the defence market in India and identifying potential industrial partners, although it’s unclear if these contracts were finally signed.
“What is established is that Gupta continued to be a strategic consultant for Dassault and that, three years later [i.e. in 2015], he obtained confidential Indian defence ministry documents about the Indian negotiating team’s position on the Rafale contract,” the report notes.
It’s unclear how exactly Gupta managed to obtain these documents – the Mediapart report does not elaborate this point – but it claims that the Indian middleman’s assistance proved “precious” for the French camp during the Rafale deal negotiations.
Because the 36-fighter-jet deal took place through an ‘inter-governmental agreement’, negotiations were handled by 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.
Gupta was able to help out Dassault in this process. The report points out:
“…he obtained confidential documents from the Indian defence ministry on the subject of the dispute over the purchase costs. 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”)…”
These documents were crucial for the French side when it came to countering the Indian team’s demands. According to the Mediapart report, Gupta took an “active” role in Dassault’s negotiation 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,” the report points out.
“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,” it adds.
Later, after the-then French president Francois Hollande signed a protocol agreement with Modi for the sale of 36 Rafale jets, negotiations over price continued to progress but were on the verge of being stuck.
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 in September 2016 by the-then raksha mantri Manohar Parrikar and his French counterpart Jean-Yves Le Drian.
The Mediapart report hints that Gupta’s involvement may have been one of the reasons why Dassault and MBDA (also party to the Rafale deal), allegedly “worked hard” to remove anti-corruption clauses in the inter-governmental agreement for the 36 jets.
“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’,” the report notes.
As was first reported by The Hindu, the Modi government approved the removal of these clauses in September 2016, just before the signing of the final contract, and despite earlier objections from members of the Indian negotiating team.