'Why the odds are stacked against France’s new Rafale investigation': A Pretty Good Account and Analysis
Sukla Sen
The details revealed in French media reports offer enough evidence to justify reasonable suspicion over the integrity of the Rafale deal. The problem lies elsewhere. The French establishment, across the media, business, government and more, is aligned with, if not complicit in, the justification of France’s role as a global arms vendor. This has deep roots in French strategic interests as they have long been understood, with arms sales an integral part of them, and has never been shaken by corruption scandals, no matter how severe. Experts have long considered the global arms trade to be structurally corrupt. For France to hold on to its defence industry, dependent on exports for its viability, it has every reason to ignore malfeasance. The truth of the Rafale deal risks becoming the latest sacrifice on this altar. [Emphasis added.]
France is the third largest arms vendor in the world. It delivered major armaments to 75 countries between 2015 and 2019, and exports were rising steadily until the COVID-19 pandemic, with India among the top buyers. The French weapons industry is closely enmeshed with the state, and its success is considered a matter of national pride and security. Florence Parly, the French defence minister, has said that “arms exports are the business model of French sovereignty.” As of 2013, exports generated nearly a quarter of all employment in the French defence industry, equivalent to more than forty thousand jobs.
The Rafale jet is especially symbolic, with every export deal celebrated as a national achievement. After a sale to Greece this January, Parly described the aircraft as “the jewel of our armies.” More recently, she welcomed another deal with Egypt by underlining that it was crucial for France’s sovereignty and the maintenance of seven thousand French industrial jobs for three years. The 2016 sale to India was widely seen as a “breath of fresh air” for a French aviation industry badly hit by the global financial crisis. Jean-Yves Le Drian, the defence minister at the time, hailed it as the “biggest contract signed by French military aeronautics.”
Lucie Béraud-Sudreau, a researcher at the Stockholm International Peace Research Institute, has written that the French state espouses the doctrine that arms sales are intrinsic to the country’s strategic autonomy. For France to not depend on other countries, it requires its own weapons-manufacturing capacity. But “the French defence industry cannot survive on domestic orders alone” because of the limited size of France’s own forces. “Arms exports are therefore both an expression and a vital component of France’s sovereignty.” Little wonder, then, that France’s weapons sales tend to be aggressive, indiscriminate and non-transparent.>>
The deluge of revelations in France about suspected corruption in the Rafale deal began in 2018 with a seemingly unlikely protagonist—Julie Gayet, an actor and the partner of the former French president François Hollande. Word got out that, some two and a half years earlier, the Indian businessman Anil Ambani had stepped in as a patron for one of Gayet’s films. Just days after Ambani's generous gesture, Hollande, on a state visit to India, signed a memorandum of understanding for the delivery of 36 Rafale fighter jets, built by the French defence manufacturer Dassault Aviation. As part of the deal, worth a reported €7.87 billion, half of the purchase value was to be re-invested in India. Ambani’s debt-ridden Reliance Group, which had only the barest experience in defence manufacturing and none at all in aviation, emerged as the main beneficiary of this “offset.”
There was a flurry of denials that these events had any connection, but Hollande’s line of defence was hardly ideal. Speaking to Mediapart, the French outlet behind many key disclosures about the Rafale deal, he said that the financing for Gayet’s project could only have been a coincidence, since the offset partner had been proposed by the Indian government. This added fuel to another burning question: was the Indian government, under Narendra Modi, guilty of favouring an undeserving party as a beneficiary?
At this point, the response of the French media was little more than flippant. One typical article stated that Gayet and Hollande had “found themselves” in the middle of a national scandal in India but said nothing about possible corruption in France’s top government and corporate circles. Another seemed embarrassed at Hollande’s “enormous blunder” in fingering the Indian government, as if the real problem was his failure to keep such secrets when a massive arms-export deal was at stake.
Two years on and after many more revelations, the Rafale deal seems murkier than ever, with French conduct not exempted. The anti-corruption NGO Sherpa, led by the lawyer William Bourdon, lodged complaints in 2018 and 2019 with the Parquet National Financier, or PNF, which prosecutes serious economic and financial offences, but both were turned down. It was only in June this year that a court opened a judicial probe to look into a fresh complaint filed by Sherpa in April 2021, following more disclosures by Mediapart.
The complaint alleges “active and passive corruption and influence peddling,” “concealment of corruption, influence peddling and favouritism,” and “active bribery.” Given the nature of the Rafale deal, which was signed directly between the French and Indian governments, any findings of wrongdoing by French parties are likely to implicate their Indian counterparts as well.
The judicial probe, headed by the judges Pascal Gastineau and Virginie Tilmont, could be a landmark in a major domestic and international scandal. Yet, besides a handful of exceptions such as Mediapart, the French media is still tepid towards the story. The opposition is not protesting vigorously, and the government, now under Emmanuel Macron, is also far from enthusiastic. Until mid 2019, the chief of the PNF was Éliane Houlette, variously described for her rigour on the job as “a tsunami,” “a killer” and “a cold-blooded rattlesnake.” But when it came to Sherpa’s first two complaints, Houlette dismissed them as being founded on “unsubstantiated suspicions” and added, “We have to weigh things carefully, preserve the interests of France, the functioning of the institutions.”
The details revealed in French media reports offer enough evidence to justify reasonable suspicion over the integrity of the Rafale deal. The problem lies elsewhere. The French establishment, across the media, business, government and more, is aligned with, if not complicit in, the justification of France’s role as a global arms vendor. This has deep roots in French strategic interests as they have long been understood, with arms sales an integral part of them, and has never been shaken by corruption scandals, no matter how severe. Experts have long considered the global arms trade to be structurally corrupt. For France to hold on to its defence industry, dependent on exports for its viability, it has every reason to ignore malfeasance. The truth of the Rafale deal risks becoming the latest sacrifice on this altar.
France is the third largest arms vendor in the world. It delivered major armaments to 75 countries between 2015 and 2019, and exports were rising steadily until the COVID-19 pandemic, with India among the top buyers. The French weapons industry is closely enmeshed with the state, and its success is considered a matter of national pride and security. Florence Parly, the French defence minister, has said that “arms exports are the business model of French sovereignty.” As of 2013, exports generated nearly a quarter of all employment in the French defence industry, equivalent to more than forty thousand jobs.
The Rafale jet is especially symbolic, with every export deal celebrated as a national achievement. After a sale to Greece this January, Parly described the aircraft as “the jewel of our armies.” More recently, she welcomed another deal with Egypt by underlining that it was crucial for France’s sovereignty and the maintenance of seven thousand French industrial jobs for three years. The 2016 sale to India was widely seen as a “breath of fresh air” for a French aviation industry badly hit by the global financial crisis. Jean-Yves Le Drian, the defence minister at the time, hailed it as the “biggest contract signed by French military aeronautics.”
Lucie Béraud-Sudreau, a researcher at the Stockholm International Peace Research Institute, has written that the French state espouses the doctrine that arms sales are intrinsic to the country’s strategic autonomy. For France to not depend on other countries, it requires its own weapons-manufacturing capacity. But “the French defence industry cannot survive on domestic orders alone” because of the limited size of France’s own forces. “Arms exports are therefore both an expression and a vital component of France’s sovereignty.” Little wonder, then, that France’s weapons sales tend to be aggressive, indiscriminate and non-transparent.
The country’s belligerent weapons policy began with President Charles de Gaulle’s insistence in the 1960s that the country should not have to rely on the United States for its force de frappe, or striking capability. France is a signatory to the Arms Trade Treaty and a legally binding EU Council Common Position that requires it to prevent arms sales if it has knowledge that these would be used against civilians. Yet the country doggedly refuses to accept the role of its arms exports in atrocities. Of late, the fight against terrorism has become a ready pretext to justify sales to many regimes.
Macron set off a controversy in 2018 by denying that Saudi Arabia was a big arms client for France, though in reality it is one of the largest ones. Later, he said that concerns over human-rights violations in Egypt would not affect future arms sales to the country since it was important that Cairo retain its ability to fight terrorism in its region. Late last year, a report was released in the French parliament following criticism of arms deals with these repressive governments. It makes 35 proposals, several of which aim to give the parliament supervisory power over the actions of the executive.
France’s track record of questionable defence deals runs much longer. During Apartheid, the country was South Africa’s main arms supplier. Researchers with the World Peace Foundation at Tufts University have recorded arms deals where there have been substantive, well-grounded allegations of corruption. These include nine deals between 1988 and 2008 where France is the only vendor, or one of the primary ones. In an infamous sale of six La Fayette-class frigates to Taiwan in 1991 for $2.8 billion, the kickbacks were valued at a whopping $500 million. The Taiwanese navy unsuccessfully sued to have the sum returned, and a French investigation stalled, with prosecutors unable to show conclusive proof that bribes went to key players in the country. The former French president Nicolas Sarkozy faced legal scrutiny in the “Karachigate” scandal, involving kickbacks in arms deals with Pakistan and Saudi Arabia, and one of his closest aides was jailed last year.
Suspect deals continue to be the norm rather than the exception in the global arms trade, which sees an estimated $100 billion in sales every year. The researcher Joe Roeber wrote in 2005 that the arms industry is “hard wired” for corruption, which is central to transactions and not just a “sleazy add-on.” Secrecy is key, since an arms deal is “clean” only as long as its obscure arrangements are not discovered. Roeber offered an indicative figure: forty percent of all corruption cases in international trade until the mid 1990s were linked to arms deals. For perspective, the arms trade accounts for only about half a percent of global trade.
According to a study by the Stockholm International Peace Research Institute, the most frequently used means of undue influence in defence deals are bribery, promises of employment, offers of preferential business access and undeclared conflicts of interest. Deals typically rely on both “covert” and “overt” advisors, the SIPRI study states, each with their own functions. The researcher Xiaodon Liang, after studying more than forty arms deals, has proposed a typology of corrupt third-party agents that are involved in almost every sale. This covers five types—sales agents, national conduits, gatekeepers, money-launderers and offset managers—with individuals often playing multiple roles. These intermediaries provide critical information on, and access to, officials who can be corrupted and power brokers who need to be sated. Crucially, they also provide guidance on how bribes or other untoward stimulants can be disguised.
Liang’s study found that national conduits are the most notorious intermediaries in weapons deals with India. These are agents who operate primarily in one country but control purchases across either the country’s entire defence sector or one category of weapons systems within it. With the Rafale deal, the businessman Sushen Mohan Gupta seems to have been the national conduit. Besides “representing” Dassault in this sale, he has also been arrested as part of the investigation into the AgustaWestland helicopter scandal. The Indian investigative outfit Cobrapost reported that it had obtained notes hand-written by Gupta that, prima facie, linked him to both deals. Gupta has denied ever acting as a commercial agent in defence deals.
The SIPRI study says that offset agreements, where a vendor agrees to make investments in the buyer country, are recognised as a major corruption risk and allow for undue benefits to favoured companies as well as to friends, relatives and political allies of the parties involved. Typically, these agreements are even less transparent than the primary arms deals they are attached to. Dassault’s joint venture with Anil Ambani’s Reliance Group fits this description closely. Sherpa’s complaint asking for a judicial probe particularly questions the “sudden” appointment of Reliance Group despite its poor economic health and lack of relevant expertise, and points out that the company is run by “a man notoriously close to the Indian Prime Minister.”
But bureaucratic hurdles and stringent defence-secret laws offer strong resistance to transparency regarding French arms deals. There is little public information available on them except for an annual parliamentary report that, according to activists, does not provide sufficient information to assess the legality of arms sales. In a recent poll by the French chapter of Amnesty International, three in four of those surveyed believed that the arms trade lacks transparency and should be better regulated. Sébastien Nadot, a member of parliament from Macron’s own La République En Marche party, has said that France’s arms sales “are never really questioned in a democratic way.”
France’s General Secretariat for Defence and National Security, an advisory inter-ministerial body, recently announced reforms to the “secret défense,” which came into force in July 2021. The reforms aim to “facilitate data exchanges with allied countries by aligning classification levels”—presumably a response to pressure on the French government to declassify dossiers on the Rwanda genocide, the Algerian war of independence and other bloody episodes—but whether they bring any more transparency to arms exports has yet to be tested.
The journalist Jean Guisnel has written a book on corruption in arms deals that describes how sales contracts usually appear without much information which may pose a risk for the signatories. Instead, many aspects of a deal are only contained in “side letters” that remain concealed. “It is precisely these documents that the examining magistrates in charge of politico-financial affairs related to armament contracts seek with great ardour, systematically running up against the ‘defence secret’ classification defined by article R2311 of the French Code of Defense,” Guisnel writes. For a judicial probe to access such documents would require the consent of the document holder—which would mean the French defence ministry in the case of the Rafale deal.
This would not be easy for the reasons already described and because of the list of current political heavyweights linked to the deal. Macron was the finance minister when the Rafale deal was signed, and Le Drian, who supervised the deal as defence minister, is the current minister of foreign affairs. The newspaper Le Monde has reported that, just as India and France were negotiating the Rafale sale, France settled a tax dispute with a French company controlled by Anil Ambani’s Reliance Communications following a meeting between Macron and the Indian businessman, with dues of more than €140 million waived.. Mediapart has reported that French negotiators twice removed from the draft agreement an anti-corruption clause required under India’s defence procurement procedures that provided for “penalty for use of undue influence,” arguing that it was “not applicable” until the Indian side “gave in.” Le Drian has denied that the French side pushed for this removal. Despite these revelations, French investigative agencies did not initiate any probe.
All of this raises questions over what power judges have to compel the disclosure of information as part of the court-ordered investigation. William Bourdon, of Sherpa, told me that he does not underestimate secret défense as a potential barrier, but added that “the winds are changing in France.” Since an inquiry into the notorious Taiwan frigates case was quashed by defence secrecy laws in the 1990s, he believed, a number of legal academics, jurists and magistrates had come to feel that these cannot any longer be instrumentalised to protect those involved in bribery or money-laundering. Bourdon was confident that there was already sufficient information available for the inquiry to proceed and that “we can be sure that at the end there will be individuals, public or private, who will be tried and prosecuted.”
The crucial point will be when the investigating judges require access to official documents, Bourdon said. If authorities refuse to provide these on grounds of defence secrecy, a commission will have to be formed to decide whether or not the documents should be classified. “The judges certainly could ask for the judicial co-operation of India,” he added, “and we can expect mutualisation of information and documentation between the two countries, which could be helpful for bringing out the truth.”