'Rafale' waiver for Ambani: Attack, Denial, Objection

The Rafale deal on Saturday sunk into more controversy following reports that France waived tax worth Rs 143.7 million Euro for Anil Ambani's French-based company, six months after Prime Minister Narendra Modi announced the 36 jet deal with Dassault.

The sensational report in Le Monde immediately gave ammunition to the Opposition in the midst of Lok Sabha elections, which targeted Modi and BJP claiming that it has once again exposed corruption in the deal. The Opposition, especially Congress president Rahul Gandhi, had been claiming that the selection of Ambani as an offset partner in the deal was part of a quid pro quo in place of government-owned Hindustan Aeronautical Ltd (HAL).

While Ministry of Defence insisted that linking tax benefits given to the company with the deal was "totally inaccurate, tendentious and is a mischievous attempt to disinform", Anil Ambani's Reliance group denied "any favouritism or gain from settlement".

Describing the waiver as “Modi 'kripa' (blessings)", Congress accused the Prime Minister of “acting as middleman for Anil Ambani” while CPI(M) said the "whole nexus is now coming out into the open" and that it was the "Modi formula of helping his rich friends".

According to the report, the French authorities had raised a demand of 150 million euros from Ambani's 'Reliance FLAG Atlantic France SAS' but later accepted just 7.3 million euros as a settlement six months after Modi announced that India would buy 36 jets from Dassault in a government-to-government deal.

"During the period under consideration by the French Tax Authorities -- 2008-2012 ie nearly 10 years ago, Flag France had an operating loss of Rs 20 crore (ie Euro 2.7 million). French tax authorities had raised a tax demand of over Rs 1,100 crore for the same period. As per the French tax settlement process as per law, a mutual settlement agreement was signed to pay Rs 56 crore as a final settlement," Reliance statement claimed.

One of the journalists Julien Bouissou, who reported the story along with Anne Michel tweeted, "So between February and October 2015, while the French were negotiating the Rafale contract with India, Anil Ambani enjoyed a tax waiver of 143.7 million euros from the French state. Quite a cozy deal, right?"

The report said the telecom company registered in France was investigated by French tax authorities and found liable to pay 60 million euros in taxes between 2007 to 2010.

Reliance offered to pay 7.6 million euros as a settlement but the French refused and a further investigation for the period 2010 to 2012 showed further issues and asked for an additional 91 million euros in taxes.

"In April 2015, PM Modi announced plans to buy 36 Rafale fighter jets from Dassault. By then, the total amount owed by Reliance to the French state in taxes was at least 151 million euros," Bouissou tweeted. Six months later, French authorities accepted 7.3 million euros as a settlement.

Reliance Communications which owns the Reliance FLAG Atlantic France SAS, said it settled tax disputes as per legal framework in France available to all companies operating in France while insisting that tax demands were "completely unsustainable and illegal". Reliance FLAG owns a terrestrial cable network and other telecom infrastructure in France.

Ministry of Defence said it has seen reports drawing "conjectural connection" between tax exemption to a private company and procurement of Rafale jets by the government.

"Neither the period of tax concession nor subject matter of concession relate to Rafale procurement, concluded in present government's tenure. Any connections drawn between the tax issue and the Rafale matter is totally inaccurate, tendentious and is a mischievous attempt to disinform."

Reacting to the report, CPI(M) General Secretary Sitaram Yechury said the "whole nexus is now coming out into the open" and the Prime Minister's Office was "directly involved" in Rafale scam bypassing Air Force, and National Security Advisor was "illegally negotiating" in Paris.

"As former French President said, Modi asked for Anil Ambani as a partner for the deal. And now this - French tax waivers. Modi goes to France, compromises national security by signing on fewer aircraft, gives deal to crony Ambani, HAL is kept out. So the public pays 41% higher amount for fewer aircraft and crony also gets massive tax breaks. Modi formula of helping his rich friends," he said in a series of tweets.

Congress chief spokesperson Randeep Surjewala told reporters, "this is called zero sum choices, startling tax concession and Modi 'kripa' (blessings)," he said adding,"Prime Minister Modi is acting as middleman for Anil Ambani. How many other companies in France have got a tax benefit? Is this not a quid pro quo for the purchase of aircraft? It is clear only one watchman is the thief," Surjewala said.

"Those that have Modi's blessings can get anything. If Modiji is there, then it is possibile. (Modi ji ki kripa jispar ho jaye uska kuch bhi ho sakta hai, Modi hai to mumkin hai)," he said taunting the BJP with its poll slogan.