Directeur de la publication : Edwy Plenel
www.mediapart.fr
Dassault document adds to corruption
claims over Rafale sale to India
PAR KARL LASKE ET ANTTON ROUGET
ARTICLE PUBLIÉ LE JEUDI 11 OCTOBRE 2018
French defence minister Florence Parly with Reliance Group chairman
Anil Ambani (centre) and Dassault CEO Éric Trappier (left), inaugurating
the Nagpur joint venture plant, October 27th 2017. © Reliance Group
The 8 billion-euro sale to India by France of 36
Dassault Rafale jet fighters has become the centre of
corruption allegations levelled against Indian Prime
Minister Narendra Modi and his close friend, Indian
businessman Anil Ambani, chairman of the Reliance
Group which was handed the role of local industrial
partner of Dassault to build parts for the jets despite
no aeronautical expertise. The claim that Ambani
was given the joint venture contract as a favour by
Modi to save his struggling business is the subject of
a complaint lodged this month with India’s Central
Bureau of Investigation. Now Mediapart has obtained
a Dassault company document in which a senior
executive is quoted as saying the group accepted to
work with Reliance as an “imperative and obligatory”
condition for securing the fighter contract. Karl Laske
and Antton Rouget report.
On October 27th 2017, Indian businessman
Anil Ambani, chairman of the Reliance Group
conglomerate who is close to India’s prime minister
Narendra Modi, warmly embraced French defence
minister Florence Parly who had arrived in the central
Indian city of Nagpur for the inauguration of a site
destined to manufacture parts for 36 French-built
Rafale fighter jets Paris had sold to New Delhi in a deal
signed in 2016 worth 8 billion euros.
Accompanying Parly to the site in central India
was Eric Trappier, CEO of Dassault Aviation,
manufacturer of the Rafale.
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The Nagpur site, which is also to assemble Dassault’s
Falcon business jets, is a joint venture between the
French aerospace group and Reliance, which was
handed the role as the Indian industrial partner in the
Rafale deal – the result of what is called an “offset”
agreement to benefit the local economy. Unveiling
a ceremonial foundation stone, set on a piece of
turf under a marquee, the French defence minister
hailed the ‘Dassault Reliance Aerospace Limited’ joint
venture as being “an example of mutually beneficial
technological partnership”.
French defence minister Florence Parly with Reliance Group chairman Anil Ambani
(centre) and Éric Trappier (left), during the inauguration of the Nagpur joint
venture plant, October 27th 2017 (Reliance Group PR handout). © Reliance Group
But according to an internal Dassault document
obtained by Mediapart, a senior management figure
of the French group told staff representatives that
the joint venture with Reliance was agreed as a
“compensation” in the Rafale deal and that it was both
“imperative and obligatory” for Dassault in securing
the fighter contract.
Meanwhile, the inauguration of the new plant close
to Nagpur has since proved something of a mirage,
for the site, initially due to begin activity this year,
remains largely unbuilt. There is just one construction,
which resembles a warehouse, and a piece of land
under development, as shown in the photo below taken
today, October 10th, by a journalist commissioned by
Mediapart. It was in August 2015, and with the help of
subsidies from the surrounding state of Maharashtra,
Directeur de la publication : Edwy Plenel
www.mediapart.fr
that Reliance bought 119 hectares of land close to
Nagpur’s Mihan airport for a sum equivalent to 7.5
million euros.
The site of the ‘Dassault Reliance Aerospace Limited’ joint
venture plant on October 10th 2018. © Monica Chaturvedi
This month a detailed complaint alleging corruption in
the joint venture deal was sent to the director of India’s
Central Bureau of Investigation by Arun Shourie, a
prominent economist and former minister, together
with lawyer and anti-corruption activist Prashant
Bhushan and former minister Yashwant Sinha. In
their complaint, presented on October 4th, they accuse
Prime Minister Narendra Modi of “abuse of authority”
and of carrying out his public duties “dishonestly
and improperly”, and “his long-time friend and
close associate”, Reliance chairman Anil Ambani,
of receiving “undue advantage” for his group which
they described as being on “the point of insolvency”
before the signing of the Rafale deal. They also accuse
former Indian defence minister Manohar Parrikar and
Dassault and its boss CEO Eric Trappier of “abetting”
the alleged offences detailed in their document.
One lighter comment in the complaint by the trio
accompanies an aerial view of the Nagpur site.
“Please see if you can find the DRAL facility
with a magnifying glass, if possible, in the 289
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acres of Dhirubhai Ambani Aerospace Park in the
accompanying satellite image of 29th of September,
2018,” they write.
The single building on the Nagpur site of the ‘Dassault Reliance Aerospace
Limited’ joint venture plant, October 10th 2018. © Monica Chaturvedi
The October 4th complaint accuses Modi of having
conspired to annul a work share agreement that,
in the early stages of the French bid to supply
India’s air force with fighters, was concluded between
Dassault and India’s state-owned aerospace and
defence corporation, Hindustan Aeronautics Limited
(HAL). At the time, the proposed deal with Dassault,
initiated with the Indian government prior to Modi’s
election in May 2014, was for the purchase of 126
Rafale fighter jets, to be built in India and for which
HAL and Dassault, the complaint reads, were to
respectively share 70% and 30% of the production.
Instead, Modi was to secure a deal for 36 Rafale
fighters, costing twice as much per unit as outlined
in the earlier negotiations. The final deal brokered
by Modi allowed for a partnership between Dassault
and the Reliance Group, which created defence and
aerospace arms shortly before and after the inking of
the contract. In it, Dassault agreed to re-invest 50%
of the 8 billion-euro purchase price of the aircraft in
local industrial production, known as an “offset” deal
and which is common to many defence contracts. As
part of this, Dassault boss Éric Trappier announced
in October 2017 that his company was to invest 100
million euros in the Nagpur plant where, he said,
production would commence in 2018.
At the end of September this year, members of India’s
parliamentary opposition parties lodged an official
“memorandum” with the Comptroller and Auditor
General of India (CAG) demanding an investigation
into the 2016 Rafale deal agreed between Modi and
then French president François Hollande, alleging
Directeur de la publication : Edwy Plenel
www.mediapart.fr
favouritism, mismanagement of public funds, the
endangering of national security and the contravention
by Dassault Aviation of market regulations.
According to an internal document from Dassault
obtained by Mediapart and revealed here, the
alliance between the French company and Anil
Ambani’s Reliance Group was a “compensation”
for the purchase of the Rafales. The document
contains a summary by staff representatives of a
presentation of the Dassault Reliance Aerospace joint-
venture plant in Nagpur made to them on May
11th 2017 by Dassault Aviation’s Chief Operating
Officer, effectively the group’s second most-powerful
executive, Loïk Segalen. According to the summary,
Segalen told the representatives: “It was imperative
and obligatory for Dassault Aviation to accept this
compensation in order to obtain the Rafale India
export contract.”
Contacted by Mediapart, Dassault Aviation refused to
offer any comment on the issues raised in this report.
In an interview with Mediapart published last
month, former French president François Hollande,
who oversaw the Rafale sale to India, said of the
choice of the Reliance Group as local partner: “We
didn’t have any say in this matter. It is the Indian
government which had proposed this service group,
and Dassault who negotiated with Ambani. We didn’t
have the choice, we took the interlocutor who was
given to us.”
'Modi and Ambani acted in concert to keep
all in the dark'
Reliance Group chairman Anil Ambani became
involved in the Rafale contract shortly after Indian
Prime Minister Narendra Modi met with Hollande in
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Paris on April 10th 2015, when it was announced that
Modi had changed the original terms of the proposed
deal with Dassault.
An aerial viwe of the Dassault-Reliance joint venture plant in Nagpur. © Google Maps
In their complaint lodged this month with India’s
Central Bureau of Investigation, Arun Shourie,
Prashant Bhushan and Yashwant Sinha write: “Mr.
Modi obtained an ‘undue advantage’ from Dassault
Aviation, for awarding a contract for 36 Rafale
aircrafts in ‘fly-away’ condition, by abusing the
authority of his office and doing his public duty
dishonestly and improperly. The ‘undue advantage’
has been received by his close associate and friend Mr.
Ambani. As a consideration for abusing his official
authority and doing his public duty dishonestly, Mr
Modi compelled Dassault to choose Mr. Ambani as an
offset partner, by way of which Mr. Ambani received,
and is receiving, and will continue to receive, for the
next 40 years, an ‘undue advantage’. That is to say that
though the offence commenced on 10th of April, 2015,
it is, as of date, a continuing offence.”
Meanwhile, as Mediapart reported last month, when
Hollande visited New Delhi in January 2016, Anil
Ambani released a statement announcing his group
had agreed to part-finance a film co-produced by
the then French president’s partner, the actress Julie
Gayet. The announcement was made on January 24th
2016, the same day that Hollande arrived in the Indian
capital. The funding for Tout là-haut (English title,
To the top) – initially to be 3 million euros but
later reduced to 1.6 million euros – was vital for
the continued shooting of the film, which tells the
story of French snowboarder Marco Siffredi who died
descending the slopes of Mount Everest.
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Questioned by Mediapart, Hollande said he was “not
at all informed” about the film production deal with
Ambani’s group, and that he knew “nothing” about the
Reliance Group, adding, “this group had no reason to
give me any grace [favour] of any sort. I could not
even imagine that there was any link with Julie Gayet’s
film”.
A Reliance group PR photo of François Hollande (left) meeting with
Anil Ambani at the Eysée Palace in January 2017: Hollande told
Mediapart he had known “nothing” about the Reliance Group. © Reliance
It remains that Hollande was a key figure in the sale
of the Rafale jets to India. At a press conference
after meeting with Hollande in Paris on April 10th
2015, Modi, speaking in Hindi through an interpreter,
announced: “I have asked President Hollande to
supply 36 ready-to-fly Rafale jets to India […] Our
civil servants will discuss [terms and conditions] in
more detail and continue the negotiations.”
In their complaint to India’s Central Bureau of
Investigation, Shourie, Bhushan and Sinha write of the
April 2015 discussions in Paris: “It is significant that
Mr. Modi chose to keep the IAF [Indian Air Force],
HAL, the Foreign Ministry, and even the Defence
Minister in the dark about his impending designs.
The Foreign Minister was not present in France. The
Defence Minister, unaware at the time of the new deal,
was reportedly inaugurating a fish shop in Goa. The
only two people aware of the impending conspiracy
at the time were Mr. Modi and Mr. Ambani.” They
note that Ambani had “accompanied” Modi to Paris
for the talks. “Evidently, on the date of the commission
of the offence both the conspirators were present at
the same location and had ensured that other public
servants duty-bound to protect India’s public interest
and within whose domain the subject matter of the deal
squarely [fell] were absent,” they add.
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One month before the April 10th meeting in Paris,
Dassault Aviation CEO Éric Trappier announced that
progress had been made in negotiations with HAL
over the contract for 126 Rafale fighters – the number
initially envisaged by the previous Indian government.
But in early June 2015, Trappier, speaking to the press
during a presentation of his company’s new business
jet, was to comment that, “36 Rafales is fine for
me”, adding: “We will take the leadership in order to
choose our sub-contractors. We will take those who
are efficient. If they are not, we will have the right to
change them, which was not the case in the tender.”
According to a statement released by Dassault
on September 21st, the offset deal with Reliance
in accordance with “defence procurement procedure
regulations”, and that “in this framework, and in
accordance with the policy of Make in India, Dassault
Aviation has decided to make a partnership with
India’s Reliance Group. This is Dassault Aviation’s
choice, as CEO Eric Trappier had explained in an
interview published in MINT newspaper on April 17,
2018”.
One of the key issues is that Ambani’s Reliance Group,
mostly centred on telecommunications activity and
deeply in debt, was unknown in the aeronautic and
defence industry. One month before the new Rafale
contract was established, Ambani’s group took a stake
in Indian defence sector company Pipavav Defence
& Engineering. Ambani’s defence arm, Reliance
Defence, was established just 12 days before Modi
visited Paris in April 2015, when the new deal was
announced, and on April 24th 2015, two weeks after
that visit, Ambani created Reliance Aerostructure
Limited, which was to become Dassault’s partner in
the joint venture. “It is crystal clear that Mr. Modi
compelled Dassault to offer an undue advantage by
way of offsets in exchange for ensuring that he killed
the old deal and offered the new one to Dassault,”
write Shourie, Bhushan and Sinha in their complaint
this month. “Mr. Modi and Mr. Ambani had acted in
a premeditated concert to keep everyone else in the
dark and at the very last moment, Mr. Modi himself
changed the deal and presented a ‘take it or leave it’
scenario to Dassault and the French.”
Directeur de la publication : Edwy Plenel
www.mediapart.fr
When the inter-governmental agreement for the sale
of the 36 Rafales was signed by François Hollande
and Narendra Modi in January 2016, not all of the
financial issues in the deal had been settled, and it was
not until September that year that the re-investment
into local industrial partnerships of 50% of the value of
the contract was finally agreed by Paris. That was also
when French defence minister, Jean-Yves Le Drian,
signed off the various technical conditions in the
contract.
It has been alleged that Dassault raised the per unit
price of its fighter jets to partly compensate the
requirement of re-investing in India half of the sale
price. According to the complaint lodged by Shourie,
Bhushan and Sinha, the cost per aircraft rose by 118
million euros to total 188 million euros.
When the joint venture with Reliance was sealed,
the Indian group had not yet received an official
licence for its new industrial activity. When it finally
did receive a licence, this was specifically for the
manufacturing and servicing of military planes and
helicopters, observe Shourie, Bhushan and Sinha,
which excluded the option of assembling Dassault
civilian business jets, as included in the terms of the
joint venture.
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Ambani, they write, “is not engaged in the
manufacture of any defence products or providing
of defence services. He has no machinery. No
manufacturing plant. No Research & Development.
No technical know-how. No competent human
resources in defence. No supply chain. No access to
raw materials required. Mr. Ambani makes little to
no investment in these Joint Ventures. To illustrate,
Reliance Rafael Defence Systems Private Limited, is
a J.V. with Israeli firm Rafael […] Mr. Ambani has
made an investment of ZERO rupees in this venture
thus far. Of course, this J.V. does not manufacture
anything. All of these are dummy companies.”
Anil Ambani did not reply to Mediapart’s request for
an interview.
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• The French version of this report can be found here.
English version by Graham Tearse
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