D’assault

Troubling new details emerge on the Dassault Reliance Aerospace Ltd (DRAL) Joint Venture.

Background

In September 2016, India and France signed an Intergovernmental Agreement (IGA) for 36 Rafale multi-role fighter jets in fly-away condition. The deal also has a 50 per cent offset clause to be executed by Dassault Aviation in partnership with Reliance Defence Ltd, a company set up by Indian business tycoon Anil Ambani 12 days before the Rafale deal was first announced in April 2015. 

In September, former French President Francois Hollande stirred controversy when he told Mediapart that the Indian government did not leave Dassault Aviation with any option but to choose Reliance. Mediapart is an independent French online investigative and opinion journal founded in 2008 by Edwyn Pienel, former editor-in-chief of Le Monde. The paper has played a central role in the revelation and investigation of at least three French political scandals: the Bettencourt affair in 2010, the Sarkozhy – Gaddafi case in 2012 and the Cahuzac case involving the French minister of Budget in a fiscal fraud case. They are known for accepting no advertising, no public subsidies and no wealthy patrons, and being entirely financed by reader subscriptions and for breaking some of France’s biggest scandals involving politicians across the ideological spectrum. Their website slogan reads: “Mediapart: only our readers can buy us.”

On Wednesday, the same news organisation’s investigations revealed a Dassault document which seems to confirm Hollande’s allegations. 

Analysis

The Dassault document unearthed by Mediapart says that the alliance with Anil Ambani's Reliance had been presented as a trade-off to the aviation company to obtain access to the Indian market. This seems to substantiate former President Hollande’s claims that Anil Ambani’s Reliance Defence was chosen by the Indian government.

Mediapart quotes a presentation made by Dassault’s chief operative officer Loik Segalen to the company’s staff representatives in Nagpur in May 2017 where he describes the Reliance partnership as “imperative and mandatory” to get the Rafale export contract to India.

Dassault has denied these claims, saying that they have freely chosen to make a partnership with India’s Reliance Group. The Indian government has not yet responded to these claims.

Assessment

Our assessment is that if these allegations are true, there are two major problems to be addressed. The first is that the deal was made without the requisite of transfer of technology, which in itself is a missed opportunity for a nation seeking to improve their defensive capabilities. The second difficulty would arise if it is discovered that heads of state chose to benefit certain private entities at the expense of state-run defence organisations or better established private firms.