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One middleman, two defence deals
The TLDR: All of us know that defence contracts are irredeemably dirty. Now, we have one shady middleman who has been connected to two dubious deals—each pointing the finger of shame at a different political party.
Who is this guy?
His name is Sushen Mohan Gupta, and he comes from a khandaan of defence middlemen—dating back to granddaddy Brij Mohan Gupta who entered the biz of aviation after World War II. So yeah, this guy has pedigree! He is the owner/director of a number of companies, but two are of most interest:
Interstellar Technologies: He controls this company along with Rajiv Saxena. It has been named in a scandal attached to the 2010 AgustaWestland chopper deal (more on that later).
- The main allegation is that Gupta-ji paid nearly Rs 560 million (56 crore) as kickbacks to influential people to ensure that AgustaWestland company won the contract.
- And this money was allegedly routed through the bank accounts of Interstellar.
- Gupta has been arrested in connection to this investigation, and is currently out on bail.
- The case made by the Enforcement Directorate claims that Gupta held classified documents and sensitive information pertaining to the defence ministry, the Indian Air Force and Hindustan Aeronautics Ltd (HAL).
- The government is also using Gupta to connect Congress honcho Kamal Nath’s nephew Ratul Puri to the kickbacks.
Defsys Solutions: This company is owned by Gupta and claims to be “involved in research and experimental development on natural sciences and engineering.” But it has suddenly shot to prominence thanks to an investigation by a French news site, Mediapart:
- Mediapart accessed an audit report of Dassault Aviation prepared by a French anti-corruption agency Agence Française Anticorruption (AFA).
- Back in 2015, Dassault landed the big deal to supply the Indian Air Force with Rafale fighter jets (more on that below).
- What caught Mediapart’s eye: An invoice raised by Defsys for €1,017,850 (Rs 87 million) to pay for the manufacture of 50 large-size replicas of the Rafale jets—at an eye-watering unit price of €20,357 (Rs 1.7 million). The invoice was dated six months after the Rafale deal was inked.
- AFA stumbled on this payment when it found 50% of the invoice amount listed as "gifts to clients"—and noted that it “seemed disproportionate in relation to all the other entries.” When pushed, Dassault coughed up the above invoice.
- But AFA naturally wondered why a French aviation company would pay an Indian company to build replicas of its own aircraft—that too the size of a small car.
- The kicker: AFA could not find a “single document showing that these models existed and were delivered.”
Sigh, okay, tell me about these deals
Shady deal #1: In 2010, the UPA government inked a Rs 36 billion (3,600 crore) deal to buy 12 helicopters from AgustaWestland, owned by Italian defence manufacturer Finmeccanica. (Read the detailed background here.)
The ‘chor chor’ allegation: The CBI claims that three middlemen paid hefty bribes to then Indian Air Force chief SP Tyagi. The aim: to change the deal’s specifications—such as cabin height, maximum altitude, etc.—so AgustaWestland helicopters would qualify for the contract.
Point to note: Other than Gupta-ji, one of the alleged middlemen is Christian Michel. He was arrested in Dubai and extradited to India. At the time of his extradition, the BJP government spokesperson claimed that Michel was "known to be a Gandhi-family loyalist"—and "his extradition and custody could spell serious trouble for the Congress' first family.” Also this: The Indian government may have helped Dubai security forces kidnap and return Princess Latifa to the royal family in return for Michel’s extradition. (We explained that scandal here).
Shady deal #2: In 2015, the Modi government inked a Rs 590 billion (59,000 crore) deal to buy Rafale fighter jets made by Dassault Aviation. The agreement included an ‘offset’ clause, requiring Dassault to invest 50% of the contract value in Indian projects. To fulfill the ‘offset’ clause, Dassault picked Anil Ambani’s Reliance Defence as its partner to manufacture aviation parts.
The ‘chor, chor’ allegation: The Modi government allegedly forced Dassault to choose Ambani’s company, and paid a higher price for the aircraft—compared to a previous Rafale deal negotiated by the UPA government (which was never signed). Helping raise those eyebrows: Anil Ambani’s firm had no track record in defence manufacturing. And two, Dassault had been close to signing with the government-owned Hindustan Aeronautics Limited when it suddenly opted for Reliance.
The bottomline: This is only the first of three installments of the Mediapart investigation into the Rafale deal. Their reporter Yann Philippin says "The biggest revelations are due for episode 3.” Yeh dirty picture abhi baaki hai (this dirty movie hasn’t ended yet).
Reading list
The Telegraph has the best details on Gupta and his companies. Outlook India has everything you need to know about the AgustaWestland chopper deal. CobraPost claims to have accessed two diaries of Gupta—which show that he was the kingpin of both the AgustaWestland and Rafale deals. The Hindu did two big investigative pieces on the Rafale deal: read part one and two.
