However, it did not refer matter to prosecutors, according to Mediapart probe.
French aircraft manufacturer Dassault Aviation had paid one million euros to an Indian company owned by a middleman, being investigated for another defence deal in India, in connection with the €7.87-billion Rafale deal between India and France in 2016, French anti-corruption agency Agence Française Anticorruption (AFA) found in its audit, according to a French media report.
“That middleman is now accused of money laundering in India in another defence deal. The company said the money was used to pay for the manufacture of 50 large replica models of Rafale jets, even though the inspectors were given no proof that these models were made. Yet, against all apparent logic, the AFA decided not to refer the matter to prosecutors,” according to an investigation by Mediapart.
Dassault had provided AFA with a “proforma invoice” dated March 30, 2017, supplied by an Indian company called Defsys Solutions, which, according to the AFA investigation report, was related to 50% of the total order (€1,017,850), for the manufacture of 50 models of the Rafale C, with a price per unit of €20,357.
However, the report said Dassault was unable to provide the AFA with a “single document showing that these models existed and were delivered, and not even a photograph” when AFA inspectors subsequently found these details in mid-October 2018 and asked the company for an explanation.
“The inspectors thus suspected that this was a bogus purchase designed to hide hidden financial transactions,” it said.
Defsys Solutions is one of Dassault’s sub-contractors in India for the Rafale deal. However, the company with 170 employees is not a specialist in making models and instead assembles flight simulators and optical and electronic systems for the aeronautical industry, often under licence for foreign companies, according to the report.
In addition, the company belongs to the Gupta family, one of whom is being investigated in the AgustaWestland VVIP chopper deal. Sushen Mohan Gupta was arrested by the Enforcement Directorate in March 2019 for kickbacks in the AgustaWestland deal and later released on bail.
Mr. Gupta is also alleged to have worked for Dassault and obtained confidential documents from the Defence Ministry in India.
Rafale was originally shortlisted in the Medium Multi-Role Contract Aircraft (MMRCA) deal for 126 jets, but the deal got held up over pricing and technology transfer issues.
In April 2015, during a visit to France, Prime Minister Narendra Modi announced the direct purchase of 36 jets, citing “critical operational necessity” of the Indian Air Force.
The MMRCA deal was subsequently scrapped.
In September 2020, the IAF inducted a batch of five Rafales, of the 36 jets contracted from France under the €7.87 billion Inter-Governmental Agreement signed by India in September 2016.