LONG READ: THE GUPTA PAPERS: HOW THE MODI GOVERNMENT IS COVERING UP TWO DECADES OF DEFENCE CORRUPTION TO SAVE THE RAFALE DEAL

Nileena MS

{ONE}

ON A CLOUDLESS DAY in March 2012, an Audi sped along the highway connecting Milan and Lugano. Its two occupants, the 68-year-old Italian-American businessman Guido Ralph Haschke and his friend and business partner Carlo Gerosa, were scared. The Italian police had been zeroing in on them in its investigation of bribery allegations in the Indian government’s 2010 purchase of 12 helicopters—worth Rs 3,727 crore—from AgustaWestland, a subsidiary of the state-controlled defence company Finmeccanica, now called Leonardo.

“Julie seemed too agitated,” Haschke told Gerosa, referring to Sanjeev Tyagi, a cousin of the former air chief marshal SP Tyagi, who would later be indicted in the AgustaWestland case. “In any case, Gautam has a lot more experience,” Gerosa replied. Gautam Khaitan, a Delhi-based lawyer, would soon become the focus of the investigation. “Gautam is your lawyer,” Gerosa added, “that counts for something and then, in any case, there is no proof of the bank transactions nailing them.” The conversation, which was secretly recorded by the Italian police, indicated that Haschke and Gerosa had helped route payments from AgustaWestland, through a string of bogus consultancy contracts, to senior members of the Indian government and armed forces in order to influence the procurement of the helicopters.

It also throws light on how the money had been routed. “It’s clear that if the money is not here any longer it must have ended up somewhere … in Mauritius,” Gerosa said. “Before making an international request to Mauritius they have to find out that it ended up in Mauritius,” Haschke replied.

After the taped conversation was presented in an Italian court, in February 2013, the Indian defence ministry ordered a probe by the Central Bureau of Investigation. Both the Italian and Indian investigations were able to quickly narrow down their search to the Mauritian shell company Interstellar, which the CBI claims was owned by a Dubai-based chartered accountant called Rajiv Saxena. In January 2019, three months before the general election that returned Narendra Modi to power, Saxena was extradited to India. Alleging that the company documents showing his ownership were forged, he turned approver and gave the Enforcement Directorate two diaries, a USB drive and several loose sheets that, he said, belonged to Sushen Mohan Gupta—a Delhi-based businessman with a vast network of links to defence firms across the globe.

In July this year, I was able to access much of Sushen’s material that forms the basis for the ED’s prosecution complaints. After conducting a digital forensic examination and matching the payments mentioned with bank statements shared by the Mauritian authorities, the ED had confirmed their veracity. About five hundred entries of payments in his material matched Interstellar’s account statements. The Caravan also verified the material it had access to against payments mentioned in the ED’s prosecution complaints, copies of which are in the possession of The Caravan. Finally, The Caravan also cross-referenced the material with reports published by the investigative news portal Cobrapost and the French investigative outlet Mediapart, which previously had access to, and had reported on, the Gupta Papers.

The diaries and meticulous spreadsheets in the material should have been explosive. In their totality, the Gupta Papers illustrate a saga of corruption in dozens of arms deals, stretching from the 1990s to 2015. They show that Sushen and his various companies were able to twist every level of the country’s defence procurement procedure to suit the needs of arms manufacturers who were paying him kickbacks. This included knowing the details of the defence ministry’s requests for proposals before they were tabled, changing critical aircraft requirements of the Indian Air Force, having access to competing bids that had been shared only with the defence ministry and IAF, manipulating flight trials, aiding in massively inflating the cost of deals to the Indian exchequer, having the minutes of internal defence ministry meetings to determine prices, determining which Indian manufacturers would get offset contracts, undermining the capabilities of state-owned manufacturers that could make similar products and, finally, determining who would make the spare parts and handle the upgradation of these aircrafts. The Gupta Papers also illustrate the exact circuitous route through which these kickbacks were laundered into India via a slew of shell companies.

These deals, in which kickbacks were evidently paid, cost the Indian exchequer, when adjusted for inflation, an estimated Rs 1,818 billion. Of this, roughly Rs 833 billion was during the tenure of the UPA and Rs 984 billion was under the NDA.

The Caravan limited this investigation to 15 deals that can be corroborated through the different sets of documents that the ED had access to: Sushen’s material and Interstellar’s company records and bank statements shared by the Mauritian government. Besides the AgustaWestland case, we found payments being made to him by successful bidders during the period when the procurement of helicopter engines from the French company Turbomeca, between 1997 and 2003; the procurement of ten Mirage jets from the French company Dassault Aviation, in 2000; the transfer of technology from a French company that is partially owned by Thales, in 2005, that enabled the construction of Scorpène-class submarines in India; agreements with the Ukrainian company SpetsTechnoExport to upgrade Ka-25 and Mi-17 helicopters, as well as MiG-21 and Su-30 jets, that were ongoing in the mid-2000s; the 2007 deal with the Israeli company Elbit Systems to develop a battle surveillance system; the 2008 tripartite agreement with the Israeli defence ministry and the Elisra Group, an Elbit subsidiary, to equip the IAF’s Sukhoi jets with their missile warning system; the 2010 AgustaWestland contract; a 2013 deal with another Elbit subsidiary to upgrade 56 navy helicopters with sensor systems; the 2007, 2009 and 2014 agreement with STE to overhaul and supply spare parts for the Antonov transport aircraft; and the 2016 Rafale deal with Dassault, were occurring.

There are multiple means to arrive at how much Sushen received for these deals. The most airtight, but most conservative, method is by analysing Interstellar’s bank statements. Collating only those that are clearly legible, and using the lowest US dollar and Euro conversion rates for each half decade, 2000 to 2005, 2005 to 2010 and 2010 to 2015, a minimum verifiable amount Interstellar received from arms manufacturers as kickbacks is still more than Rs 250 crores. Beyond this, Sushen’s material, which includes funds flowing into other companies he controls, reveal a trail that is much larger, with just a handful of transactions accounting for more than €16 million, $4 million and 400 thousand francs. These flows of funds cannot be independently verified by The Caravan and should have been investigated by the ED.

These deals—not including those pertaining to the Su-30, Mi-17, MiG-21 and the 2014 Antonov deal for which there are no verifiable amounts—cost the Indian exchequer an estimated Rs 1,818 billion, when adjusted for inflation. Of this, roughly Rs 833 billion was during the tenure of the United Progressive Alliance and Rs 984 billion was under the National Democratic Alliance. Sushen’s influence clearly extended over successive administrations, as he maintained financial arrangements with leaders from both sides. Those that stand out in Sushen’s material are Ratul Puri, the nephew of the former Madhya Pradesh chief minister Kamal Nath; Ranjan Kishore Bhattacharya, the husband of the former prime minister Atal Bihari Vajpayee’s foster daughter; and Arvind Khanna, the vice-president of the Bharatiya Janata Party’s Punjab unit, who defected from the Congress in January 2022.

Despite the ED and CBI having all this material, they seem to have largely overlooked Gupta in their AgustaWestland investigation, instead using aspects of the diary piecemeal to build a case against Khaitan and Saxena, among others. The investigation accelerated in this direction after an ED raid on Sushen’s office in June 2016 unearthed material related to the Rafale deal, at a time when the Modi government was facing allegations of corruption in it. Not only has the government not cancelled these deals, as is required by integrity clauses in most of them, it has not bothered to blacklist the offending companies. In fact, it has continued buying from these companies and even denied allegations of illegality in these deals when foreign investigators found evidence of them. The result is the continued activity of the Gupta companies and the further weakening of India’s defence capabilities, as many of these deals illustrate how his manipulations led to the IAF and Indian Navy getting substantially poorer products.

INDIA’S HISTORY of importing fighter jets is as old as the country itself, starting with the 1948 purchase of de Havilland Vampire jets from its recently departed coloniser. But the Vampire was an exception. For many decades, Western nations were reluctant to sell it aircrafts, making the country rely heavily on the Soviet Union until the 1980s. At this time, the IAF had a fleet strength of almost forty squadrons, each comprised of 21 planes, but they were all nearing obsolescence. In the late 1990s, the Kargil War proved a rude shock to India’s defence brass, underlining that a much larger expansion of aircraft acquisitions was a necessity. A year after the war, the parliamentary standing committee on defence noted that nearly forty percent of the fleet would soon be fully obsolete.

After a decade of nearly no defence procurement, given the dissolution of the Soviet Union, the Vajpayee government opened up defence production to the private sector, allowing foreign direct investment up to 26 percent. India suddenly became the world’s second largest importer of defence aircraft and equipment. But the government, which had been able to take power only after the Congress was stained by the Bofors scandal—a 1987 case of corruption in the buying of field guns—was all too aware that the sudden wave of defence procurement would harbour an equally large wave of corruption allegations. To deal with this, in 2002, the government instituted a binding document called the defence procurement procedure, which would regulate all acquisitions.

Expert analysis indicates that about forty percent of corruption in legal international trade is linked to arms deals. It is an easy trade for intermediaries, given the secrecy, the astronomical costs and the technical complexity involved in each purchase. Further complicating the issue, foreign governments tend to lend their weight to international arms deals and purchases, rendering them an instrument of foreign policy and adding further layers of secrecy. “At the highest levels, middlemen can make or break a company’s prospects in the market,” the investigative journalist Josy Joseph writes in his book A Feast for Vultures.

From the moment a contract proposal is prepared, the middleman’s influence is visible. The parameters detailed in a bid are often tweaked to qualify their client; trials are manipulated to bring up their client to the list of winners; negotiations are deftly manoeuvred to the best possible situation for the client; and the final parameters ensure that political decisions go the right way. Not everyone involved in the selection is on the payrolls of the agent. However, at every stage, there are key people on the take. For those who do their bidding, the rewards are huge.

India is no exception to this pattern. This corruption often took the form of retired military officers leading lobbying efforts. According to a 1986 article in India Today, their work involved finding the arms requirements of various services before they were publicly declared and then wining, dining and greasing the pockets of the officials handling and monitoring the acquisitions. Often, defence corruption tended to become a family business. The company Eureka, led by Rajiv and Sudhir Chowdhrie—nephews of a former chairperson of Hindustan Aeronautics Limited—reportedly pushed the interests of several arms manufacturers. The Chowdhries had business and familial ties with the former navy chief SM Nanda and his son Suresh, who represented the interests of MTU, a German company that provides engines for many of India’s naval crafts and tanks. The Khanna family, led by the former lieutenant colonel Vipin Khanna and his brother Vinod, reportedly represented several other major foreign manufacturers.

These families lived glitzy lives, often in the media limelight because of their close relationships with the country’s most powerful political families. Sudhir, for example, came from a Punjabi family—rich enough to present him tiger cubs when he was young—and lived in palatial houses in Delhi and London with a collection of rare artworks and over a hundred vintage cars. He writes in his autobiography of being close to the Nehru–Gandhi family, and his niece married Kamal Nath’s son. Suresh was known for hosting lavish parties for the political and military elite at his home or in The Claridges, the famous Delhi hotel that he owned—so premium that it used to be the usual haunt of Hyderabad’s last nizam, the richest person in the world at the time. Thanks to their media ownership, they rarely got bad press, except in stray incidents such as when Suresh’s son Sanjeev, driving a newly imported BMW, killed several pedestrians.. Vipin owns a gargantuan business empire in software, investment banking, liquor and hospitality, and married the daughter of the erstwhile king of Patiala. His wife is the paternal aunt of the former Punjab chief minister Amarinder Singh, and his son Arvind Khanna has been investigated in multiple defence corruption cases.

The Guptas were clearly a worthwhile investment, particularly since several top executives in their companies previously worked at the IAF, HAL, DRDO, BEL and ISRO. In the mid-2000s, IA’s top management included a retired wing commander, an air commodore, a major general and a group captain.

The Gupta family, in contrast, has always stayed under the radar, despite its immense influence in the arms trade. Brij Mohan Gupta, the patriarch of the family, started as a cloth merchant in Delhi before venturing into aviation, in 1958, by founding Indian Avitronics. IA emerged as one of the most influential intermediaries in the defence sector over the next five decades. It was based in an office in a central Delhi neighbourhood that also housed several members of parliament and major embassies. The firm initially supplied aeronautical spare parts to the armed forces, state-owned defence companies and national airlines. By the 1970s, IA was providing consultancy services to over a dozen US firms, including United Technologies, Lear Siegler, American Avitron and Kollsman. It also started facilitating contracts related to air defence systems, radars and command-and-control systems.

According to US department of commerce documents released by Wikileaks, Brij Mohan approached the US manufacturer Westinghouse Electric Corporation in 1974, with the confidential information that the Indian Navy was planning to purchase low-frequency communication equipment worth almost $5 million. He also told them that three companies—one each from France, West Germany and the United States—were being considered for the deal. The US embassy in Delhi told the state department that Brij Mohan “believes he can make the sale and is confident enough and willing enough to travel to the U.S.” At the time, the state department was managing a secret expansion of the Kabul airport. (The new Afghan president, Mohammad Daoud Khan, had begun turning against the Soviet Union.) The only two non-US companies informed of the plans were IA and Rotax Electronics, a company owned by Brij Mohan’s second son, Surinder Gupta.

Over the next three decades, under Brij Mohan and his eldest son, Dev Mohan Gupta, IA underwent a major expansion, opening branches in Bangalore, Hyderabad, Mumbai, Korwa, Nasik, Calcutta Madras, Kanpur and Lucknow, all cities with defence manufacturing operations. In 1996, IA became a subsidiary of a conglomerate called DMG Finance and Investment, controlled by the family and presumably named after Dev Mohan. Among the many enterprises they own is the Taj Vivanta in Katra and the Mall of Mysore, beside a slew of defence firms. Filings with the ministry of corporate affairs show that Dev Mohan, his wife, Shubhra, and his sons, Sushen and Sushant, were major shareholders of IA and DMGFI, with the net worth exceeding Rs 350 crore.

IA’s customer base increased to include foreign manufacturers such as Northrop, Barden and Pratt & Whitney. It also started working with the French companies Microturbo, Technofan, PPG Aerospace, Dedienne Aerospace, Aerazur and Danzas. In 2002, it formed a joint venture with the Actia Group, a French electronic and telecommunication manufacturer. At the same time, IA also started providing services to Israeli, Ukrainian and Belarusian companies. IA’s advertising material, found in Sushen’s material, shows that it handled several large deals. One outline document boasts that when the IAF purchased training aircraft from the British company BAE Systems, in 2003, for Rs 1,500 crore, “Indian Avitronics was deeply involved in its equipment license agreement.” While facing a probe in the UK, an arms manufacturer already admitted to paying kickbacks in this deal and the CBI and ED are also investigating it. Given that agents influencing deals is illegal, much of the Gupta sales pitch is incriminating material.

In a 2005 sales representation to the US manufacturer Pratt & Whitney, IA claimed that Dev Mohan had significant experience in “dealing at all levels” of the Indian government. In that contract alone, IA quoted a consultancy fee of $72,000 per annum. Given that the Guptas consulted for over two dozen arms manufacturers, their total earnings would be astronomical. But they were clearly a worthwhile investment, particularly since several top executives in the Gupta companies previously worked at the IAF, Hindustan Aeronautics Limited, the Defence Research and Development Organisation, Bharat Electronics Limited and the Indian Space Research Organisation. In the mid-2000s, IA’s top management included a retired wing commander, an air commodore, a major general and a group captain. RP Kashyap, a DMGFI director, had worked as the IAF’s director in charge of stores and mechanical transport, and as an assistant director of purchases at the Indian high commission in London, where he liaised with British Aerospace, Rolls Royce and other European defence suppliers.

The defence procurement procedure instituted in 2002 seemingly did little to dampen the influence of intermediaries in arms deals. The Vajpayee years were full of allegations of defence corruption. The trouble began when the investigative magazine Tehelka published a set of sting operations in which senior defence officials and politicians agreed to take bribes to push through defence procurement deals from a fictional arms manufacturing company. Among those who took bribes were the deputy secretary of the defence ministry, the national president of the BJP and the deputy director of the directorate general of ordnance and supply. The DGOS head even informed the journalists that they would have to pay everyone for the purchase to be finalised, including the defence minister, George Fernandes. Fernandes resigned soon after Tehelka’s investigation. In July this year, however, the Delhi High Court awarded damages of Rs 2 crore to one of the impugned officers in a defamation suit filed by him.

The Tehelka journalists also met several defence intermediaries, who told them about bribing officials for various other arms deals. One of them, RK Jain, a close aide to Fernandes, admitted to taking kickbacks from Suresh Nanda on behalf of Israeli companies in a Rs 1,150 crore deal to buy Barak missiles for the Indian Navy. This was done despite objections from members of the expert team that had visited Israel to observe the missile’s performance. Intermediaries admitted to paying kickbacks in 14 other deals. Another intermediary they met, the Rashtriya Swayamsevak Sangh trustee RK Gupta, boasted about his easy access to Vajpayee and how he could help broker deals for them with the topmost members of the government.

The Gupta Papers reveal that others closer to Vajpayee were also likely involved in defence corruption. Vinod Mehta, the founding editor of Outlook, notes that, during his final term, the prime minister’s office was controlled by three individuals: Ranjan Bhattacharya, the bureaucrat NK Singh and the national security advisor, Brajesh Mishra. “Atalji, never keen on matters of detail, blessed the arrangement by not interfering,” Mehta writes. The Gupta Papers reveal transactions between Gupta-run companies and Talent Marketing, a company in which Bhattacharya is a director and his wife Namita Kaul is a shareholder. Another company called, Troilus Hospitality, is a partnership between a Bhattacharya directed company and companies directed by Sushen. In a spreadsheet in Sushen’s material called “Inter company balances” noting the payments between his many companies, he also includes Talent, suggesting it was closely linked to the Gupta-family whose director and beneficiary was Bhattacharya.

Documents detailed further below show that during the Vajpayee years, the Guptas functioned as intermediaries for several companies and routed kickbacks in many deals. These include the deal to buy ten Mirage jets, in 2000, and the procurement of Turbomeca engines, which together cost the national exchequer Rs 3,041 crore. It is unclear if any payments from the Guptas to companies run by Bhattacharya influenced the Mirage deal. But another major deal that began in the Vajpayee era has clear financial ties to Bhattacharya and relied on decisions by Brajesh Mishra: the AgustaWestland deal.

{TWO}

THE RUSSIAN MI-8, rechristened the Pratap, was the backbone of India’s helicopter fleet, running successful sorties during India’s annexation of the Siachen glacier and its misadventures in Sri Lanka, and proving to be an effective carrier of VIPs and special-operation troops. At one time, Mil Helicopters, the Soviet company that produced the Mi-8, supplied 77 percent of all helicopters procured by India. But, by the late 1990s, like nearly everything else in India’s hangars, the Prataps were ageing quickly, prompting the IAF to propose their replacement—starting, of course, with replacing the helicopters for VVIPs.

In March 2002, the defence ministry issued requests for proposals from 11 helicopter manufacturers, making it one of the first deals that would be bound by Vajpayee’s defence procurement procedure. Among the requirements outlined was that the helicopter should be able to fly to an altitude of six thousand metres, so that VVIPs could be taken to strategic locations in Ladakh or the Siachen glacier. Only two proposals fulfilled this requirement: the Russian Mi-127 and the French EC-225. The former was dropped after a technical evaluation.

But, when the EC-225 was forwarded to the price negotiation committee in November 2003, Vajpayee’s office stepped in, arguing that the altitude requirement had led to a single-vendor situation, which had to be avoided. Brajesh Mishra argued that the requirement should be reduced to forty-five hundred metres—just under what AgustaWestland’s EH-101 could manage—despite the IAF arguing multiple times that this would thwart the purpose of the purchase and citing that it had followed the defence procurement procedure. In January 2005, soon after the Vajpayee government was voted out, SP Tyagi took over as air chief marshal. According to the Italian investigation, Tyagi met AgustaWestland’s general manager, Georgi Zappa, the very next month. He then organised a meeting at IAF headquarters, in which they agreed to reduce the altitude requirement. The government then sent out another request for proposals, conducted another set of technical evaluations and finally ordered the purchase of 12 VVIP helicopters from AgustaWestland in February 2010.

The investigations of the CBI and ED, as well as the Gupta Papers, show that AgustaWestland paid kickbacks to have the ceiling lowered, manipulate the technical evaluation and secure the contract, and that this process began before 2005 itself. The deal was critical for AgustaWestland and its parent company, Finmeccanica. In the early 2000s, Finmeccanica, Italy’s second largest industrial group, was already facing four investigations relating to systems of patronage, slush funds and bribery. Having lost a major contract with the United States, the Indian deal essentially became a lifeline for the company—it would inject Rs 3,600 crore into Finmeccanica and possibly open up the Asian market, which was seen as potentially being worth more than $50 billion.

Brajesh Mishra argued that the requirement should be reduced to forty-five hundred metres—just under what AgustaWestland’s EH-101 could manage—despite the IAF arguing multiple times that this would thwart the purpose of the purchase and citing that it had followed the defence procurement procedure.

According to the Italian investigation, Carlo Gerosa had known the Tyagi brothers for a long time and introduced them to Guido Haschke. During one of Haschke’s regular trips to India in the early 2000s, they mentioned to him that India was looking to buy VVIP helicopters. They asked him if he had any contacts with Finmeccanica or other manufacturers. Haschke later told Italian courts that he and Gerosa planned to represent the potential supplier in India in exchange for a consultancy fee. Soon after the altitude requirement was lowered, Haschke added, he met Finmeccanica’s CEO, Giuseppe Orsi, and told him that he was in touch with the Tyagi brothers and could play a role “to promote and provide necessary consultancy services during the development of the tender.” This would have been illegal, because the procurement process required AgustaWestland to sign an integrity pact that explicitly forbade the deployment of agents, consultants or intermediaries.

According to the Italian investigation, AgustaWestland sent €28 million as kickbacks through Haschke and Gerosa. To launder the money into India in the guise of consultancy contracts, the company seems to have sent it through several entities. The oldest of these is IDS Infotech, a Mohali-based software consultancy that was incorporated in 1989 by the business mogul Partap Aggarwal, who still remains its managing director. Between 2007 and 2010, IDS Infotech received €2.1 million from AgustaWestland, ostensibly to render three-dimensional models at an hourly rate of €19 per person. The ED concluded this was almost certainly a cover because, given the size of IDS Infotech’s engineering department, it would have been impossible to justify the number of man-hours it raised bills for, making this a clear case of fake invoicing for money-laundering.

In June 2008, IDS Infotech created a subsidiary registered in Tunisia called IDS Information Technology and Engineering. This company was given to Gerosa and Haschke months after its incorporation. The two Italians also became directors of another company, a Chandigarh-based consultancy firm called Aeromatrix Info Solutions, along with Gautam Khaitan, who was also IDS Infotech’s legal advisor. Praveen Bakshi, the head of the apparently overworked engineering department, was named CEO of Aeromatrix. Both Bakshi and Saxena did not respond to questions, saying the case was sub-judice.

All three of these companies, the ED found, were working on behalf of the Guptas. Bakshi, who had accompanied Aggarwal at a 2007 meeting in Italy with Bruno Spagnolini, the CEO of AgustaWestland, to finalise the 3D-modelling contract, told investigators that Sushen had facilitated the deal. The Guptas seem to have had familial ties with IDS Infotech. Dheeraj Aggarwal, who was the company’s chief financial officer at the time, later told the ED that Dev Mohan Gupta was related to Satish Bagrodia, one of IDS Infotech’s co-founders. Satish is also the brother of former minister of state for coal Santosh Bagrodia, a Congress man whose tenure was marred by allegations of corruption in the allocation of coal blocks to companies related to his family. IDS Infotech, which was largely focussed on health transcription services, made an unlikely transition to defence technology in the early 2000s, when it began doing software work for Dassault Aviation. It also secured a contract with the Brazilian aircraft manufacturer Embraer. Partap told investigators that the Guptas helped the company secure a number of projects.

Through a business transfer agreement in November 2009, IDS’s contracts with AgustaWestland were transferred to Aeromatrix. The ED notes that, after this, the Tunisian subsidiary started getting a string of purchase orders from AgustaWestland, for which it was paid €20.8 million. The consultancy work for these orders was supposed to be done by Aeromatrix, but the company only received €3.8 million of this money, while, oddly, €1.88 million was transferred to IDS Infotech. So, where did the remaining €15.12 million go?

THE ITALIAN INVESTIGATION revealed that, of the money the Tunisian subsidiary received from AgustaWestland—its sole client—€12.4 million was sent to a Mauritian company called Interstellar. Mauritius is not an unusual place for defence corruption funds to be parked. Despite being a tiny archipelago of just over a million people, it has, for years, been the single largest source of foreign direct investment in India. The Vajpayee government’s tax waiver to Mauritian investments and the country’s secretive banking regime have made it a favourite for arms dealers inventing webs of shell companies there, from which money can be “invested” into Indian enterprises.

The Interstellar companies have a long and complicated history, often changing directors and company names. Interstellar Holdings was incorporated in 1996, with two Mauritians as directors and shareholders. In 2002, it made another company, FIDECO, its managing agent. In 2008, another company, called ML Administrators—which later changed its name to MA Corporate—took over as the managing agent. Interstellar also had other companies as its directors, Kreston in 2003—which has the same director as FIDECO, a Mauritian businessman called Ismail Bahemia—and Beaufort in 2008. However, during this period the agents signing out payments seem to change from transaction to transaction. Letters authorising payment show Bahemia signing on Interstellar’s behalf as late as 2012 despite another document from 2008 indicating that Bahemia lost signing rights for Kreston. Even later documents are shown to be signed by ML Administrators, not MA Corporate which their name changed to. Following the investigation Mauritian authorities have directed MA Corporate to remove their money-laundering reporting officer.

The ED has maintained that Rajiv Saxena, the Dubai-based chartered accountant, was the sole director of Interstellar since 2003. However, Interstellar’s agreements with defence manufacturers in 2007 showed Kreston as the “sole director.” These overlapping claims related to Interstellar buttress Saxena’s argument that company records were forged to show his involvement. A similar allegation has come from a man called Rajkumar Rajgarhia, who is shown as the signatory for Interstellar’s Delhi bank account but claims that he never met Saxena, opened an account or signed documents related to it. The CBI disputes these claims. This is among many issues with Interstellar’s paperwork that the ED and CBI chose not to investigate further.

The biggest issue the ED failed to explore, though, is how these companies changed when the Italian investigation began. In April 2012, after the Italian police searched his house, Gerosa instructed the Tunisian company to stop all payments to Interstellar Technologies—the name Interstellar Holdings had adopted since 2005. In the next six months, four bank accounts of Interstellar Technologies were shut down. Several other companies we have mentioned in this investigation have also shut down since. The registered addresses of MA Corporate and ten other companies managed by it were changed. In November, ML Administrators dissolved Interstellar Technologies. The ED assumes this was the end of the company. However, documents shared with the agency by the Mauritian authorities suggest that another company with the exact same name, Interstellar Technologies, with the same address, has existed and remained active well after 2012, changing its name to Fibreline Technologies. Its current managing agent is a company called ML Associates, based in the Seychelles. Another document shows what appears to be the incorporation of another Interstellar Technologies in Seychelles in September 2012. Neither the CBI nor the ED has investigated these companies, an omission that conveniently ignores any transactions they would have made after Modi came to power. The Mauritian documents also note Interstellar paying $2,50,000 to Gudami International. Its director, reportedly, is the director of an Adani company based in Singapore. The ED never probed this further.

While the history of Interstellar is complicated, the ED concludes that “the only constant factor is the fact that Dev Mohan Gupta and Sushen Mohan Gupta have had transactions with this /through this company since its incorporation.” Emails show Sushen instructing money transfers to various companies and individuals. In an email from January 2012, he wrote that he would “immediately send 160KE to your account in 2 tranches of 80K from Interstellar MRU.” In another email from the same month, he writes, “could you kindly send 400KU to Kapline from the Euros received in Interstellar.” The ED’s prosecution complaint says that these emails indicated that Sushen “was well aware of the receipt of funds and was deciding its transfer and utilisation.” Interstellar’s bank statements confirm that these payments were made, it adds. “It is seen that kickbacks have been regularly transferred to entities created or maintained for his benefit, to his relatives/friends, used for payments of his holidays or for payments for creation of assets in India and abroad.”

Funds from Interstellar’s account were also used for Sushen’s personal expenses. For example, the CBI attached to its supplementary charge sheet a set of instructions from Interstellar to ML Administrators for a payment of €7,500 to be made to a resort in Thailand, in December 2010, and a confirmation that the transaction was made. The Gupta Papers, which contains meticulous accounts of the loans, payments and expenses Sushen incurred over the years, confirms this transaction. Interstellar was essentially paying for his vacations and much else, making it clearly identifiable as his company. The personal expenses of the family were grand, including extravagant Holi and Diwali celebrations, maintenance of cows, huge swimming pools in their various properties and a large monthly bill for Dev Mohan’s alcohol consumption. In some months, the family of six spent over forty lakh rupees on personal expenses.

In one of its prosecution complaints, the CBI traces a transfer of $28,000—one of many—to Nimrata Thakkar, the daughter of Balraj Singh Thakkar, a former chief of the army’s southern command who joined a Gupta company, Kairali Coffee Estate, soon after he retired. Balraj told the ED that he had asked Sushen to transfer the money in order to alleviate Nimrata’s financial difficulties. The fact that Sushen’s personal loans to friends—Balraj is an old family friend whom he lovingly calls “Balli uncle”—came out of the Interstellar account further confirms his control over the company.

The final and most telling evidence that Interstellar was a wholly Gupta entity was where the money routed into the company finally ended up. According to the ED, Sushen gave instructions to transfer funds from Interstellar to three companies: Kapline Global, Citation and Crescent Commercial. Payments from Interstellar to these companies are listed in his material. According to the ED, Sushen was paying the annual renewal charges for these companies, as well as for several others located in tax havens. These included Lyot Global, Asaki Anstalt, Prokuration Anstalt and Evita Services Corp—according to the ED. A spreadsheet in Sushen’s material titled “Total Accs” shows Lyot having an inflow of €59,94,800 from Mauritius and Dubai between 2006 and 2008. Interstellar also transferred money to Gupta’s friends and relatives, including a cousin and an uncle. One document, titled “Remittances made from the account of Interstellar,” lists three payments to “D Munot” and “Munot” in 2003 and 2004. Dinesh Munot is Sushen’s father-in-law, and the Munot family holds shares and were directors in Gupta companies.

The April 2010 cover of SP’s Aviation magazine announcing the arrival of AgustaWestland helicopters in India. The Gupta Papers show that many of the companies used to route kickbacks in the deal were controlled by Sushen Gupta. APRIL 2010- SP’S AVIATION MAGAZINE COVER

Some of the money was also routed to a Singaporean e-commerce company called Interdev, which has existed since at least 2000, when its director and majority shareholder was a man called Dev Inder Bhalla. An economics graduate from Lucknow University, Bhalla became a citizen of Singapore and was director of a magazine for the Indian diaspora. There is evidence of Interdev working with Sushen, primarily in relation to deals between the IDS and Dassault Aviation. The ED, which found a trove of emails between these companies after raiding Gautam Khaitan’s office in Delhi in September 2014, notes that Sushen was giving clear instructions for payments that had to be made to and from Interdev and concludes that he “was the actual beneficiary of M/s Interdev.” Saxena told the agency that Sushen had admitted to him that Interdev was his company and that Bhalla was merely managing it.

The ED does not seem to have investigated Interdev’s transactions further, despite having sent a letter rogatory to the Singaporean government in 2016. Documents show Sushen paying fees to Bhalla. Despite being a crucial link in the money trail, Bhalla and Interdev appear to lie on the periphery of the investigations. Interdev’s evident kickbacks from Dassault, the manufacturer of the Rafale jet, might explain this reluctance.

Neither the CBI nor the ED has investigated these companies, an omission that conveniently ignores any transactions they would have made after Modi came to power.

Bhalla manages another company, Sabhah Investments, which has the same address in Mauritius as Interstellar. The connections between Sabhah and Sushen are extensive. The authorised signatory for its bank transactions is Bahemia, whose signature is across many of Interstellar’s documents. In March 2007, according to documents shared by the Mauritian registrar of companies, Interstellar passed a resolution to give Sabhah a €160,000 loan. This loan is confirmed by a SWIFT transaction document from Barclays and by a document listing Sabhah’s transactions, which was emailed to Khaitan in July 2014. The ED’s documents show that Sabhah’s loans were squared off against Lyot Global, a Gupta-controlled offshore company. Saxena told the ED that Sushen had admitted to owning Sabhah, even offering him shares in the company when he owed him money. The ED claims that Sushen was paying renewal charges for Sabhah as well.

Again, Sushen’s ties with Sabhah are clearest when one considers where its money went. This is a key step to establish because, if AgustaWestland sent the money to bribe senior defence and government officials, it would need to somehow make its way into India. Sabhah paid Rs 43 crore to acquire 23.7 percent of the shares of a Delhi-based tourism and hotel company called DM South India Hospitality, owned by the Guptas. Handwritten loose sheets in Sushen’s collection show several transactions between Sabhah and DM South India, with small portions of the payments being made to Bhalla and “GK.” American Hotels and Restaurants, another Delhi-based hotel company that the Guptas own, also received large amounts of funds from its shareholder Sabhah. The document emailed to Khaitan shows that, in November 2004, Sabhah paid American Hotels €820,000 and DM South India €3.1 million.

All of this information was amassed by the emails the ED found in Khaitan’s office alone, but the agency failed to look further into the full list of transactions of the company. In December 2010, a limited liability company called Darun Hospitality was incorporated in Delhi. Its two directors, representing the companies they owned, were Sushen and Ranjan Bhattacharya.

A WORRIED VOICE cut through Vimal Nagpal’s phone, sometime in 2013. Nagpal was the head of business at AgustaWestland India, and the voice over the phone could only be one person, the man who had bought him the phone and SIM card and asked him to use it only to receive his calls: the British businessman Christian Michel. Michel asked Nagpal whether a trove of documents—nearly ten thousand pages long and pertaining to AgustaWestland’s dealings in the country—had been given to the CBI. Nagpal replied that he had no knowledge of the documents. They had never been sent to AgustaWestland India and likely only went to Finmeccanica’s India office. Michel asked him to quietly check if Finmeccanica had handed over the dossier to the CBI. It had.

Michel was the second route of payment for bribes related to the AgustaWestland deal. Documents received by the Indian government from the Italian investigation show that AgustaWestland had hired him for the deal in 2006 and that €30 million in kickbacks were to be routed through him. Michel’s official purpose in India was to buy back 14 WG-30 helicopters that the Rajiv Gandhi government had procured, in 1985, from Westland Helicopters—the British company that would merge with Agusta in 2000—despite opposition from the Planning Commission and the finance minister, VP Singh. In fact, even Rajiv had opposed the deal for months, calling the WG-30 “unsuitable” in a parliament speech, before abruptly changing course. The sequence of events suggested foul play.

The WG-30 case was dear to Michel. His father, Wolfgang, had reportedly been an intermediary in the deal. The Guptas also seem to have been involved. A file in Sushen’s material, titled “Notable Achievements,” includes “Historical Sales of Westland Helicopters to Pawan Hans,” a state-run transport company. The helicopters were truly unflyable, however, with most being consigned to junkyards and marshes on the outskirts of Mumbai that the defence ministry could not even locate. The deal stuck out like a sore thumb in the relationship between Westland and the Indian government, and Michel had been sent to re-acquire the helicopters to prevent this affecting future deals. To this end, Westland paid two of his companies, the Dubai-based Global Services and the Britain-based Global Trade and Commerce, €6.05 million and €18.2 million, respectively.

The helicopters were never bought back. Instead, a large portion of the funds—the ED estimates Rs 6.33 crore—went to an Indian company, called Media Exim. Media Exim then went on a buying spree, acquiring buildings in some of Delhi’s poshest neighbourhoods, as well as jewellery and art. These properties were later sold, with the profits rerouted to Global Services, often in the guise of exports of jewellery, or Punjabi and Hindi music, that were billed but never actually exported. This process made it seem like these were not kickbacks but legitimate earnings.

Other routes also seem to have been taken to bring in money. The ED and CBI, based on the Italian investigation, traced payments from Michel’s companies to those owned by Saxena and Ratul Puri, Kamal Nath’s nephew. Saxena told the ED that these payments, worth $1.24 million, were received in 2011 and 2012, and transferred out under Puri’s directions. A spreadsheet in Sushen’s material lists five payments from Interstellar to “Rpuri.” According to one of the ED’s prosecution complaints, Puri’s companies had transactions with DM Power and American Hotels. While Sushen does have other industrial interests that might require payments to Puri’s energy companies, the ED suggests that this was merely a route to launder money for the AgustaWestland deal. Puri did not respond to questions.

By 2006, when Michel entered the scene, the altitude requirement for the helicopters had already been lowered and the defence ministry was about to issue a new request for proposals. In the next few years, Michel visited India over fifty times a year, meeting various senior military and defence ministry officials. Between 2007 and 2013, several inexplicable changes were made to procurement and testing procedures, leading to the AW-101 helicopter finally being selected.

For example, in 2007 and 2008, flight evaluation trials were meant to be run on the AW-101 and the S-92 helicopter, manufactured by the US firm Sikorsky Aviation. The AW-101, however, was still being developed, so the officials from the IAF and the Special Protection Group who went to Britain tested two other helicopters instead, not the one the country was going to buy. No explanation was given for why the IAF broke from procedure and why they defeated the very point of a flight evaluation test. In April 2008, Michel told Giuseppe Orsi, the Finmeccanica CEO, that Sikorsky was sure to win if the commercial bids were opened because its helicopter was significantly cheaper. He said that he was trying to have Sikorsky disqualified at the trial stage itself. Sikorsky’s bid, later revealed to be about Rs 2,228 crore, was never opened, while AgustaWestland’s price dramatically rose to Rs 3,966 crore—22 percent more than the benchmark price it had originally cited.

Multiple factors helped Michel and the Guptas swing the deal, the first being their close relations with senior officials. The CBI charge sheet in the case notes Michel meeting several officials, including his friends regularly attending functions at the Tyagi family’s mansion in Sainik Farm. A Finmeccanica internal report from 2009 says that the company could count on the support of the Tyagis, who had informed them that the deal would be struck in three or four months. Michel’s network also worked to enlist the aid of journalists in Delhi’s corridors of power. Michel also sent AgustaWestland several confidential documents, including the defence ministry’s operational requirements, the results of Sikorsky’s flight evaluation test and the technical committee’s report on the deal, none of which were ever released to the public. The ED notes that the Gupta Papers too contain several confidential documents including notations marking future purchases by the IAF.

Gautam Khaitan, the lawyer of the Guptas, outside the CBI office in Delhi, in May 2016. Documents in the ED’s possession showed that Sushen was instructing payments through Khaitan, but Sushen continued to remain peripheral to the AgustaWestland investigation. ARUN SHARMA / HINDUSTAN TIMES

Westland, Finmeccanica, Khaitan, SP Tyagi, Orsi, Partap Aggarwal, IDS Infotech, Aeromatrix, Satish Bagrodia, Sabhah, Interdev, Dev Bhalla and Michel did not respond to detailed questionnaires emailed to them. I was unable to contact Gerosa, Haschke and Interstellar.

Almost exactly three years after the defence minister, AK Antony, signed the AgustaWestland deal, Orsi was arrested by the Italian police for various bribes the company had allegedly paid. The Italian investigation had already named 11 people in relation to the Indian deal, including the Tyagis, Haschke, Gerosa and Michel. On the same day as Orsi’s arrest, the defence ministry asked the CBI to investigate the case, and a first-information report was registered against 13 suspects. Antony—often called “Saint Antony” due to his penchant for widely advertising an image of incorruptibility—soon cancelled the AgustaWestland deal, saying that the company had failed to live up to its integrity clause. During his tenure, he had done so for six other deals, with the violating companies being blacklisted from future arms purchases.

The CBI initially acted quickly. Khaitan’s office was raided in March 2013 and a trove of documents seized. Oddly, though the documents—which are highlighted frequently in subsequent ED and CBI charge sheets—show clear communications between Khaitan and Sushen, with the latter giving instructions for payments, Sushen was not put under the scanner. In January 2014, just three months before the general election, the prosecutor in the Italian case presented to the court a document that, Haschke claimed, Michel wrote while explaining the budget he had set aside for bribing senior government officials in India. Michel disputes this. What caught the most attention in the Indian press was a reference of payments to someone marked “AP.” The BJP immediately accused the deal of being masterminded by the ruling Congress, arguing that “AP” was a reference to Ahmed Patel, the political secretary of the party president, Sonia Gandhi. It frequently brought up the deal during its election campaign.

Four months into Modi’s first term as prime minister, the ED again raided Khaitan’s office and found more documents tying the Guptas to the case. However, only Khaitan was arrested. The ED released its first prosecution complaint by the end of 2014, largely naming the same people that the CBI and the Italian investigation had. The CBI and ED seemingly went into hibernation after that, not releasing any charge sheets for two years. This mirrored the behaviour of the government. After a local court in Italy acquitted Orsi and Spagnolini in October 2014, the Indian government decided not to appeal, which it easily could have as a civil party to damages in the case.

In June, the ED raided Gupta’s offices. Three months after the raid, the government signed a deal for the purchase of 36 Rafale jets, quietly dropping the anti-corruption clause that had been a requirement for any defence procurement since 2002.

It was only another Italian court verdict that seemingly woke up Indian investigators again. In April 2016, an appeals court in Italy reversed the trial court’s decision, finding Orsi and Spagnolini guilty and saying that there was evidence of kickbacks being paid to Indian officials, including the Tyagis. Two months later, the ED filed its first supplementary prosecution complaint, which only looked into a few of Michel’s associates, again avoiding the Guptas. In June, the ED raided Gupta’s offices, a fact tucked away in one sentence of a supplementary prosecution complaint filed three years later and seemingly not announced in a press release, as is routine. I could not find a single media article covering the raid.

Three months after the raid, the government signed a deal for the purchase of 36 Rafale jets, quietly dropping the anti-corruption clause that had been a requirement for any defence procurement since 2002. Even a brief look at the Gupta Papers reveals just how crucial Sushen was to the Rafale deal, wielding an outsized influence that tied him to the manufacturers Dassault, Thales and Safran; reportedly to senior defence ministry officials, including those in the contract negotiation committee; and, finally, to Reliance, the controversial offset partner whose inclusion first raised red flags about corruption in the deal.

{THREE}

SUSHEN GUPTA WAS NOT a happy man when he reached Paris in early September 2012. His material suggests he was supposed to meet officials from Dassault Aviation and, as Sushen does for many of his meetings, he made detailed notes of what he was going to tell them. The notes for his September 2012 meeting, in a file titled “Strategy Going Forward,” were more of a rant, full of fury about not getting his due in a deal that he had orchestrated. “For the first time I am asking myself why I am doing this?” he writes.

Do you want my help? … I was doing fine before … I have done what you wanted … The risk is taken, you have an agent we have paid, now make sure it is legal clean and defendable we are not avoidable and must anticipate the worst … So far you are happy because I have spent money? Now you are upset because you have to pay?

The deal Sushen had stuck out his neck to support was the Indian government’s proposal to buy 126 Rafale jets. The deal had been a decade in the making. Following the Kargil War, the parliamentary standing committee on defence had suggested a fast-track purchase of jet fighters to replace the country’s ageing fleet. The IAF concluded that, to fully bolster its force, it would need 126 medium multi-role combat aircrafts—jets that could serve as both fighters and bombers. In November 2004, soon after the UPA came to power, the Indian government sent out requests for the 126 jets, earmarking a jaw-dropping Rs 42,000 crore for the deal, which would make it not just India’s but the world’s largest ever arms deal. The next year, the Indian government amended the defence procurement procedure, requiring foreign manufacturers to select Indian offset partners, who would be given manufacturing contracts worth a certain percent of the full deal, in order to help grow the Indian economy and technical expertise in defence manufacturing.

In August 2007, proposals were invited for six models: the Russian MiG-35, the Swedish JAS 39 Gripen, the American F-16 Fighting Falcon and F/A-18 Super Hornet, the Typhoon produced by Eurofighter—a partnership of British, Dutch and Italian firms, including Finmeccanica—and, finally, the Rafale, which was produced by Dassault alongside the French companies Thales, which would supply electronic equipment, and Safran, which would produce the jet engines. In April 2009, multiple Indian newspapers reported that the Rafale was out of the running, having fallen short of the required technical criteria, and would be left out of upcoming field trials. A month later, however, the Rafale was back in contention, with an anonymous defence ministry official saying that the disqualification had been based on missing documents that had since been delivered. Why a company as experienced with Indian sales as Dassault would miss vital documents is unclear, but it is shortly after this period that Sushen likely entered the deal.

In Sushen’s diary, the first mention of the MMRCA deal is in a page where he is seemingly monitoring the flight trials that started in July 2009. His association with the deal could have stretched earlier, of course, given that the diary only begins in May 2008, a month after Rafale first placed its bid, but no prior involvement can be confirmed by The Caravan. The page is not clearly dated, but Sushen refers to events taking place in September 2009. In his section on the flight trials, he notes what the features of the Rafale are “Autopilot … 14 Hard Pts Wpn Crg … one sortie full land … AESA demo”—likely referencing requirements related to weapon cargo the jets can carry and a demonstration of their electronic scanning or radar capabilities. Interestingly, Sushen is able to point to exactly how competitor jets did in their tests. This is information that nobody but the IAF is supposed to have had. He also notes that Gripen’s test would be done between “Mid-April—Mid July … +3 mos for report staff review.” The IAF submitted its staff evaluation report on the trials in late September 2010, roughly three months after July.

This was not the only confidential information Sushen had about the deal. His material contains the Eurofighter Typhoon’s commercial proposal, which was submitted to the IAF in June 2010, and a 2007 letter from the IAF to the US embassy’s office of defence corporation, requesting proposals for the deal. None of these should have been available to anyone but the IAF, Eurofighter and the embassy.

In another page of the diary, Sushen marks further notes on the flight trials of Rafale’s competitors: “F-18 no 9g turn … F-16 starting @ Leh/ marginal manoeuvres.” The field trials for all six jets were conducted in Bengaluru, Jaisalmer and Leh. In the “Strategy Going Forward” document, Sushen notes, “App for flight – Done – 0.5MEu … Support During Flt Trial – Done – 1.0 Meu.” This indicates how much he was to be paid for supporting during the flight trials. The file is from September 2012, and Sushen notes more payments that are due: “ShortList – Done – 2.0 MEu … Shortlist Only EF/R – Done – 2.0 MEu.” In April 2011, the government officially shortlisted Eurofighter and Rafale. Rafale likely wanted two jets to reach the bidding stage, in order to avoid the process being restarted because of a single-vendor situation, as in the VVIP helicopters deal. The note includes two other jobs that Sushen has completed but for which the payment is unclear. These are “L1 – Done – ?.?” and “MoU RIL – Done – ?.?” In January 2012, Rafale was declared L1, or the lowest bidder for the MMRCA contract. A month later, Dassault signed a memorandum of understanding with Mukesh Ambani’s Reliance Industries Limited to build wings for its Falcon business jets.

It was Mukesh Ambani’s first major foray into the defence manufacturing industry, an area he had had no experience in but could bluster into, as he had in other industries, by sheer might of wealth. At that time, he was the richest Indian, with a net worth estimated by Forbes at around $21 billion. In September 2008, Ambani had incorporated a new company called Reliance Aerospace Technologies, but the company had seen no business over the next four years. In early 2011, the company began aggressively poaching specialists to set up its bid to enter the defence industry. In April that year, it hired Vivek Lall, Boeing’s head of defence, space and security. During Lall’s tenure in the post, the company had won orders in India worth $8 billion. The rest of the Reliance team also grew.

In the lead-up to Rafale being selected, it is clear that Sushen worked closely with RIL. Among the documents exclusively for his Dassault-related work is an RIL internal document from August 2012, which shows Lall as its author, explaining how the company hoped to expand in the defence market. “Reliance seeks to establish itself as the preferred partner in precision manufacturing and lead system integrator for the aerospace sector in India,” the document says. “Dassault Aviation (DA), being selected the lowest bidder (L1) in the prestigious and globally significant Medium Multi Role Combat Aircraft (MMRCA) procurement programme of the Government of India (GoI), makes an ideal partner for RIL to commence its foray into the aerospace sector.” In the reasons he gives for this, the document adds, “To ensure that it meets its commitment, DA seeks to essentially replicate its French production facility and activities in India. DA proposes to form a joint venture (JV) with RIL which will lead its efforts towards this objective.” In the “Progress made so far” section, the document notes, “Strategic support for platform selection. L1 decision by GoI announced on February 3, 2012,” suggesting that, like Sushen, RIL helped ensure the Rafale won out in the deal.

Some of Sushen’s documents suggest Reliance’s expansion into defence manufacturing was crucial for him, as he hoped to build a structure to address the manufacturing concerns his companies had over Hindustan Aeronautics Limited. Documents from his material showed that, for over a decade, the Gupta companies had been receiving commissions from manufacturers for different stages of defence production done by HAL. Now, they hoped to build a larger structure over Reliance. “JV was a one way street, cannot go back. You identified RIL I just delivered,” he writes in his notes before the Paris meeting. “RIL still not confirmed how can I build my structure on them? … Always made it clear I am working for you not them.”

A month after Lall wrote the internal document, Sushen was in Paris, sounding indignant. His concern seems to be that, while he had done all the work to win the contract, Dassault had been moving towards giving offsets to other companies. By September 2012, a Finmeccanica whistle-blower had gone to court, alleging corruption in the AgustaWestland deal, which prompted the Indian defence ministry to request a report on the case from the Indian embassy in Rome. Sushen knew that if the investigation continued, it would lead to Interstellar and him. This was likely why he was arguing for Dassault to give him offsets and make it seem like a fully legal relationship. “Why not ask all ToP/IoP for contribution? Why only JV + Us?” he writes, referring to the offset partners. “What have other Indian companies done to deserve the work? … Real Company / Real Work / Real Profit / Known Application – What is the problem? … Tax will be paid … Funds are legitimate … Better to take openly and honestly like all other normal IoP/ToP.”

Sushen seemed particularly worried because he was running low on funds. “Why have I gambled for you? JV also a big company why should they avoid procedure?” he writes. “People sitting in office asking for money … We have borrowed at 18% based on your commitments and old work.” In the document where he has listed work done for Dassault and the payments due, the calculation ends with “11 ME (-0.8 DHL -1.2 SW -.4 Trans) delta 8.6.” Of the €11 million Dassault apparently owed Sushen for his work, €8.6 million was yet to be paid. He continues explaining the full danger of the situation if the money does not come through. “Those people [will] if we don’t pay put us in Jail and RIL will exit – then we are really finished, deal scrapped as per commitment of RM in parliament.” (“RM” is a common acronym for Raksha Mantri, or the defence minister.)

Documents from Sushen’s material showed that, for over a decade, the Gupta companies had been receiving commissions from manufacturers for different stages of defence production done by HAL. Now, they hoped to build a larger structure over Reliance.

Sushen ends with a reminder of what he is owed because of his long relationship with Dassault. “In the past I trusted you you trusted me,” he writes. “We are working together for so many years one opportunity has come we are taking a friendly benefit at no loss to OEM”—original equipment manufacturer, Dassault in this case—“as per pre approved GoI procedures due to good relationship why should OEM object in fact would make our relationship strong.”

IN THE EARLY 2000s, the Guptas wrote a fax that would prove critical for their future. Sushen had barely any actual working experience under his belt at the time. Born in 1975, he had attended the elite American Embassy school, located in a thirteen-acre campus at the centre of Delhi’s diplomatic district. He passed with flying colours and Boy Scouts of America badges before heading to Carnegie Mellon University for a double major in mechanical engineering and industrial management. He swung major internships during his college days, at the Indian headquarters of the Bank of America and at Pratt & Whitney, where he was an assistant project manager for two months. As a 21-year-old, he represented IA at Eurosatory, the largest international defence and security exhibition, in Paris, and at the world’s second largest air show, in the English town of Farnborough.

While his younger brother Sushant finished his bachelor’s degree—also at Carnegie Mellon—in 1999, and immediately dove into industrial tie-ups with Russian aerospace companies, old partners of the firm, Sushen was pursuing new opportunities. The fax was sent directly to Alain Dauphin, a senior Dassault official, according to Dev Mohan’s testimony. The letter was direct. “Our personnel are highly experienced industry veterans with extensive knowledge in Indian aerospace design, manufacturing, purchasing, logistics, planning and maintenance and repair and have been interacting with the private industry in the country,” he wrote. “At the moment we work for over 75 leading aerospace companies. Due to our extensive and extremely competent organization we can offer complete support from initially identifying business opportunities in India.” He then listed the many companies IA had helped win Indian contracts.

The fax seems to have worked. Documents shared by the Mauritian authorities and Sushen’s material show that companies which the ED claims the Guptas controlled were receiving payments from Dassault from the early 2000s. According to Partap Aggarwal’s statement to the ED, Sushen introduced him to a Dassault team that visited India in 2001. Sushen also introduced Aggarwal to Interdev as the “System Integrator for Dassault in Asia.” The following year, IDS Infotech began working with Dassault. Aggarwal told the ED that, after the company was approved as a vendor, a Dassault official asked him to pay Interstellar a professional fee, including “client management fee and commission.” He said that Sushen had been part of this meeting. Other work contracts of IDS Infotech for Dassault were carried out through Interdev, he claimed, adding that Sushen conducted the price negotiations and insisted that IDS reduce its price.

Praveen Bakshi also told the ED that Sushen had introduced IDS Infotech to Dassault, following which several engineering services contracts were signed. After 2005, the agreement involved Interdev too, with the understanding that IDS Infotech would do all the work but the work orders would be between Dassault and Interdev. Interdev would then send the purchase orders to IDS Infotech. Bakshi, too, complained that, during this period, the price paid to IDS Infotech dropped substantially. He added that Aggarwal had informed him that Sushen was “controlling the price and hence the resultant drop in price.”

The bank statements of Interstellar include two agreements referring to Dassault. The first is a consultancy agreement between IDS and Interstellar, dated 1 June 2001, signed only by an authorised signatory of Interstellar. The agreement says that Interstellar, which was under close discussion with Dassault, would provide marketing assistance to help IDS Infotech win a contract. The document mentions a commission of 40 percent of the total contract value. The following year, Interstellar raised two invoices to IDS. One, dated 28 October 2002, appears to be commissions for software work, a contract for which was awarded to IDS Infotech on 23 September. The invoice for the amount, €108,160, is exactly 40 percent of the total value of the project, €270,400. Another invoice raised on the same day follows the same 40-percent pattern.

The second agreement, dated 27 February 2004, is a purchasing agreement between Interdev and Interstellar. According to this agreement, Dassault and Interdev had entered into a purchasing agreement, on 21 January, which gave Interdev the right to subcontract part of the agreement to Interstellar, including “development of drawing, CATIA numerical data, software development, hardware and associated services by ITH for Dassault.” Sushen’s material has an unsigned January 2004 document of Dassault tilted “creation of Catia Numerical Data.” A loose sheet, marked confidential by Dassault, shows payments listed against the specific projects named in the agreements. Payments of €6.63 million, between 1 January 2001 and 17 November 2003, are listed, with €435,900 already paid and the remaining pending. Another loose sheet has €185,625 marked against “D-final delivery” and also refers to a first instalment of €11,28,000 for IDS Infotech.

All of these payments were made during Vajpayee’s tenure as prime minister, a period in which Dassault was involved in only one major deal with the Indian government: the September 2000 purchase of ten Mirage aircrafts for Rs 1,500 crore. Almost immediately after the purchase, the opposition protested, saying that the ten aircrafts had already been sold to Jordan in 1989, for 1.2 billion francs, but were being resold to India at a much higher price of 2.1 billion francs—a markup of about Rs 630 crore. Such an unreasonable rise in price for second-hand products is likely because of the influence of intermediaries and kickbacks.

Within half a decade of his fax to Dassault, Sushen had grown to become one of the primary agents of the three largest French defence manufacturing firms in India. It was no wonder that, when trouble hit the Rafale bid, Dassault called in Sushen.

A spreadsheet on Sushen’s material shows funds coming in from “D” to IDS Infotech, “MRU and OPK”—frequently used in his notes to refer to Mauritius, and OP Khaitan and Company, Gautam Khaitan’s law firm. From January 2004 to April 2012, Dassault credited €14.52 million amount to this account. Another spreadsheet shows “credits” against “D” as €63,40,350. Alongside the Dassault payments, Mediapart, which ran a series of stories about corruption in the Rafale deal, found that, between January 2004 and 2008, Thales paid Sushen €2.4 million through a Dubai-based company run by Khaitan. The biggest Indian import Thales was involved in before the Rafale deal was the transfer of technology to facilitate the construction of six Scorpène submarines, worth Rs 18,798 crore, from Armaris—later renamed the French Naval Group—which is partially owned by Thales. This deal has since grown to cost Rs 31,229 crore. Though the deal was initially approved by the Vajpayee government, it was signed, in October 2005, by the Manmohan Singh government. During its tendering process, German and Russian competitors complained that they had not been allowed to fairly bid for the contract, a fact that was underlined by the Central Vigilance Commission too. An investigation by Outlook pointed fingers at Abhishek Verma, an arms trader whose parents were both Congress MPs, as the main intermediary for the deal. The CBI, however, quickly dropped its investigation into the case.

In January 2022, Sanjay Bhandari, the promoter of a company called Offset Indian Solutions—which the income tax department claims is financially linked to Robert Vadra, Sonia Gandhi’s son-in-law—sued Thales, saying he had worked as an intermediary for them in multiple deals but had not been paid. In Bhandari’s deposition in the French court, a copy of which is with The Caravan, he claims he met François Dupont, the managing director of Thales India at the time, who requested his aid in pushing through the deal. Bhandari claims he was able to obtain all the authorisations and agreements necessary for the execution of the contract, for which he was compensated by Thales through another intermediary. Bhandari, however, claimed that he had also worked for a second deal: the 2011 modernisation programme for the Mirage 2000 jets, worth €2.4 billion. He said that he won this contract for Thales, but the company failed to pay him the €20 million he had been promised.

Bhandari claimed that the payments for this were to be routed through two channels. The first was through Thales awarding contracts to two Bengaluru-based companies, AvioHeliTronics InfoSystems and AXISCADES Engineering Technologies. The latter, Bhandari told the court, is owned by Rajeev Chandrasekhar, the current minister of state for electronics and information technology. Chandrashekhar was a member of the parliamentary standing committee for defence—a body whose role includes overseeing the decisions of the defence ministry—between 2014 and 2017. His ownership of AXISCADES was proven by an in-depth investigation of its holding patterns, published by Scroll in 2019.

The second route for payments, Bhandari said, was through “UHY consulting, headed by Mr. Rajeev Saxena.” According to Saxena’s statement to the ED, he had entered into contracts with Thales for consultancy services as per Sushen’s directions. The Guptas’ role in Thales’s deals with India was not investigated by either the CBI or the ED, despite documents in their possession pointing to these payments. In a response sent after the publication of this story, Thales denied Bhandari’s claims and said that a French court had also rejected them. It also said that it, “never signed a contract with Mr. Sushen Gupta through any company in connection with any project.”

The final major manufacturer of the Rafale, Safran, also likely had an old relationship with the Guptas. Safran is France’s largest aircraft engine manufacturer, among the country’s most influential defence companies. In Sushen’s material is a spreadsheet that notes down the exact amounts of money that flowed in and out of Swiss bank accounts—presumably controlled by the Gupta family—between 1995 and 2007. It includes five payments received between December 1997 and October 2003, totalling 489,854 francs and €807,343, from “Microturbo”—the old name for Safran. The Caravan cannot independently confirm that these transactions took place without access to the records of the Swiss bank accounts.

Safran was involved in several projects during this time, particularly the ALH Turbomeca programme, a co-development venture between Turbomeca—Safran’s subsidiary since 2001—and HAL to produce engines for the Dhruv helicopter. The deal cost India at least Rs 1,541 crore, and Safran has grown to be India’s largest engine supplier, with three-quarters of Indian aircraft being equipped by the company.

Within half a decade of his fax to Dassault, Sushen had grown to become one of the primary agents of the three largest French defence manufacturing firms in India. Another document lists nine other smaller French companies the Guptas were representing by 2006. It was no wonder that, when trouble hit the Rafale bid, Dassault called in Sushen.

SUSHEN’S MATERIAL CONTAINS dozens of letters he drafted for others to send under their own names: companies sending proposals to the Indian government, defence manufacturers requesting their own governments to pressure India into hastening negotiations and even defence firms writing to the defence ministry accusing rival companies of using illegal means. He was a man who seemed to understand how to play the red-tape game at South Block—which houses the ministries of defence and external affairs—using glowing praise, professionally-filled application forms and external pressure when necessary. In the letters he drafted, it is not always clear who they are to be sent by and to, and he goes to some lengths to cover up his own intentions behind other, more nationalistic, concerns. On 6 August 2013, when the Rafale deal was stuck over the question of fixing a contract with HAL, Sushen seemingly drafted a letter from an unnamed member of the parliamentary standing committee on defence to HAL officials.

“Your immediate attention is brought to the recent 3 crashes on: 7th June 2013 (MiG 21 Rajasthan), 24th June 2013 (MiG 29 Gujarat), 15th July 2013 (MiG 21 Rajasthan) Pilot Dead, Loss of 22 fighter aircraft since April 2010,” he wrote. “There is a grave need to restore the confidence of pilots in the Indian Airforce … Unfortunately it has come to the light of this committee that HAL is currently lacking on all fronts. Such a [lackadaisical] approach is causing a great deficiency in force numbers as well as creating doubts in the minds of our brave pilots to operate the machines in service.” The letter demanded that HAL must make a presentation to the standing committee within a week on their concerns, which it listed. Quietly tucked in, as point five of eight, was “Reasons for delay in submissions of draft contract and ‘Make’ bid for 126 MMRCA program—Committed timelines and milestones in the program (HAL dependent).” It is clear that Sushen’s intention with the letter was to apply pressure on HAL over the contract, since the draft is among his material reserved for his work for Dassault.

At the time, Dassault and the Indian government were negotiating over how the work would be shared. The initial proposal was that Dassault would manufacture 18 of the 126 jets, while the rest would be produced by HAL, which was to sign a transfer-of-technology agreement. Dassault, however, argued that it would assume legal liability for only the 18 jets it produced, with HAL being the licensed manufacturer of the other 108 aircraft. Sushen drafted at least six letters for Dassault to send to the Indian government’s contract negotiation committee in 2013 and 2014, quoting various sections of the defence procurement procedures and of the original request for purchase to build the case for HAL assuming liability for the 108 jets it produced. Alarmingly, Sushen’s material reportedly contains the minutes of several meetings of the contract negotiation committee, possession of which allowed Sushen to game proposals on Dassault’s behalf with full knowledge of the Indian government’s internal concerns. Liberally sprinkled into his letters are mentions of major joint-venture partners Dassault had already scouted in India. If two separate agreements were not signed, Sushen would have likely not been able to build his structures over RIL’s joint venture with Dassault, as he hoped to do.

Sushen’s reports to Dassault indicate that the arrival of the Modi government seemed to do little to derail the negotiations. A June 2014 letter notes that three subcommittees of the contract negotiation committee had passed his proposals and that, once the committee passed the full proposal, all that would be required were approvals from the defence and finance ministries, and from the cabinet committee on security. In a section titled “open issues,” Sushen notes that the joint venture is yet to be officially signed and that they needed to meet the “Indian Political High Command,” noting that the government lacked a full-time defence minister and that the “top monk” was “likely to change before end July.” By November, after a brief stint, Arun Jaitley was replaced by Manohar Parrikar as defence minister. Sushen also noted that he would write a number of white papers on behalf of the defence ministry, and Sushen’s material contains one such draft. Although the ministry never officially published this, it is nevertheless worrying that Sushen believed he could get drafts he wrote passed off as white papers under the new regime.

In the same letter, pointing to the Modi government’s international inclinations, Sushen notes that “Proximity to Israel should be highlighted.” In his letters, Sushen is able to use the Modi government’s aggressive international posturing to his own end. In a letter to the contract negotiation team and the defence ministry, to be sent by Dassault in January 2015, he notes that the Chinese air force has 73 Su-30, 76 Su-27, 165 J-11 and 250 J-10 fighter jets, some of which have fared badly in the past against the Rafale, and that the “hard stand” taken by India over Dassault being made the licensed manufacturer of the whole contract was deteriorating the Indo-French strategic relationships, bringing up other deals in which he himself had a hand.

Sushen also notes additional victories. For example, he seems to have successfully worked into the negotiations his estimate of the amount of work production in India would take—31,286,972 man-hours, according to his notes in multiple documents—a crucial factor that would define how much money he could get from offset agreements. This number is repeated as an “expert opinion” in a letter drafted for Dassault to send to Parrikar, dated April 2015. By then, multiple announcements by Jaitley and Parrikar, both in parliament and to the press, indicated the deal was moving forward successfully.

However, that month, after a meeting with the French president, Modi suddenly announced that instead of the old deal, he had agreed to buy 36 Rafale jets in “fly-away condition.” The decision blindsided everyone. Two days earlier, the foreign secretary, S Jaishankar, had told the media that discussions were underway between Dassault, HAL and the Indian defence ministry. A few days before, Dassault’s CEO spoke publicly of his “great satisfaction to hear … from HAL chairman that we are in agreement for the responsibilities sharing.” Even Parrikar said that he had no knowledge of the change in the deal, speculating that “the decision is probably the outcome of the discussion between the prime minister and the president of France.” There are some hints that the Guptas had expected this turn of events if the main deal fell through. As early as mid-2010, a notation in Sushen’s diary says, “NSA to Elysee counterpart on Friday 2 30 pm how many can you deliver by dec? Qty 36 said ok.” This likely indicates that the national security advisor at the time, Shivshankar Menon, had discussed with his French counterpart an emergency purchase of 36 jets if the deal fell through.

In a section titled “open issues,” Sushen notes that the joint venture is yet to be officially signed and that they needed to meet the “Indian Political High Command,” noting that the government lacked a full-time defence minister and that the “top monk” was “likely to change before end July.”

Besides changing the number of jets India would acquire, Dassault also changed its joint-venture partner from RIL to the Reliance Group, headed by Mukesh Ambani’s younger brother, Anil. Thirteen days before Modi’s announcement, Anil—who accompanied the prime minister to Paris—registered a new subsidiary called Reliance Defence. Ten days after the Rafale agreement was signed, Reliance Group and Dassault announced the creation of a joint venture, Dassault Reliance Aerospace Limited, with the Reliance Group holding a majority of the shares. It was a decision that made very little sense for Dassault, given that Reliance Group had even less experience than RIL and that Dassault was pushed to make a majority of the financial investment in the joint venture. RIL had quietly let its MoU with Dassault lapse in 2014.

Officials in both France and India have changed their story multiple times on why the Reliance Group was chosen as a partner in the deal. In a September 2018 interview with Mediapart, François Hollande, the French president at the time of the deal, said that the Indian government had proposed Reliance Group, adding that his government “didn’t have any say in this matter.” A month later, Mediapart revealed the contents of Dassault company documents in which a senior executive was quoted as saying that the group agreed to work with the Reliance Group as “compensation” and that it was both “imperative and obligatory” for Dassault to do so in order to secure the contract.

The sudden shift in both the number of aircrafts and the joint-venture partner does not seem to have fazed Sushen. The reduction in the price of the deal was kept minimal because of a steep, almost inexplicable rise in the price of each jet, one that was almost immediately attacked by opposition parties. The initial deal for 126 Rafales was for $10.2 billion, compared to the Modi government’s agreement to get just 36 Rafales for $8.7 billion. Dividing the totals by the numbers of aircraft in each case, the Congress alleged that the government had agreed to pay roughly three times more per aircraft—Rs 1,670 crore—than it could have.

Sushen’s documents suggest how this steep rise in price would be justified. A spreadsheet titled “Benchmark,” made in September 2015, calculates the pricing of all 51 components of the jet over different time periods. All parts in the 36 jets would have cost €6.51 billion in March 2012, while the price rose to €6.73 billion by March 2015. However, even by Sushen’s estimates, a three-year period saw only a cost rise of about €220 million. How the price rose from €6.73 billion in March 2015 to €7.8 billion in September 2016, a €1.07 billion rise in a single year, is inexplicable.

HAL was entirely cut out of the new deal, allowing Sushen to build his structures on Reliance Group. The offset contracts given to Indian companies in the Rafale deal have evaded closer scrutiny so far. Sushen’s documents indicate that compensation for his role in facilitating the deal mostly came in the form of offset projects allocated to companies owned by or linked to him, ensuring money flows for over at least a decade. The “Strategy Going Forward” document has a list of proposed companies for offsets. Horizon Aerospace India, a subsidiary of the DMG group, is proposed as a partner for the manufacture for fuel tanks, pylons and bomb racker adapters. Horizon did not finally get this contract, but two other Gupta companies—Defsys and Spiral EHL Engineering—did. Sushen’s suggested partner for the offset pertaining to “data package including software CAD/CAM, translation and documentation work” is IDS Infotech, which he calls “Historic Supplier.”

Gupta seems to have tried to use his influence to win others offsets in the Rafale deal. “ZF” is proposed for ground support equipment, jigs, fixtures and tooling. A note along with the proposal says, “helped with loans promised work.” The directors of ZF Steering Gear India is Sushen’s brother-in-law Utkarsh Munot and his father-in-law Dinesh Munot. Though ZF did not figure in the list of companies that was allotted this work, Horizon appears to have won a contract for ground support equipment.

Sushen’s documents indicate that compensation for his role in facilitating the Rafale deal mostly came in the form of offset projects allocated to companies owned by or linked to him, ensuring money flows for over at least a decade.

Defsys was also proposed as the partner for the manufacturing of simulators. The document mentions “Sogitec sourcing discussions/selection.” Sogitec, a Dassault subsidiary, is the IAF’s contractor for the supply of flight simulators and training systems. Defsys also won the final contract for the maintenance of Rafale simulators at training centres in the Ambala and Hasimara army bases. Horizon was also awarded a contract for simulator services. For their help in the deal, Gupta companies appear to have won offsets in other deals, too. A collection of documents marked “Sogi” in Sushen’s material, has the details of a December 2015 technical proposal, as well as other bidding details, for a full mission simulator for the upgradation of Mirage 2000 aircrafts for the IAF. Sogitec was awarded the contract in July 2015. The IAF soon linked the Rafale simulators in Ambala and Hashimara with Mirage 2000 simulators.

These offsets were not the only payments to Sushen for his role in the Rafale deal. Mediapart reported that Dassault’s accounts for 2016 included an expenditure of €508,925 under the heading “gifts to clients.” According to another report, by the French anticorruption agency, the company provided a “proforma invoice” for Defsys to be paid €20,357 each for 50 models of its aircraft. (The most expensive Rafale model on Dassault’s website costs just €145.) Defsys has denied this. It was later suspended from dealings with the defence ministry for its involvement in the AgustaWestland case. Dassault, Safran, Defsys, Rajeev Chandrashekhar, RIL, Lall and Menon did not respond to questions.

While dismissing a petition to investigate the Rafale deal, in November 2019, the Supreme Court did add that the CBI was free to probe malpractice in the deal. All of the evidence presented in this piece has been with the CBI and ED since January 2019. Even if the CBI were to act on this evidence, though, the Rafale deal is unlikely to be revoked as has happened for every previous defence corruption case in the country. In July 2015, French negotiators marked two anti-corruption clauses in the contract as “not applicable,” a fact first revealed by The Hindu. The Indian negotiators re-inserted the clauses, as required by the defence procurement procedure. In early 2016, the French negotiators again marked the clauses “not applicable.” Sushen’s offices were raided that June. After that, Indian negotiators never bothered to re-insert them. Evidence of corruption did not lead to the revocation of the 36 Rafale jets deal, nor was Dassault blacklisted by the government, as in previous cases where companies were found to be indulging in malpractice. Antony blacklisted six arms manufacturers based on prima facie evidence alone. Despite the Indian government having all the evidence presented in this investigation, in July 2023, the defence acquisition council approved the purchase of 26 Rafale Marine aircraft and three Scorpène submarines, reportedly costing upwards of Rs 80,000 crore.

{FOUR}

IN MAY 1999, the Indian Army noticed large-scale Pakistani incursions into the Kargil–Dras sector of the erstwhile state of Jammu and Kashmir. The IAF immediately provided close air support to the army personnel attempting to fight off the incursions but found its equipment to be severely hampered at the high altitudes of Kargil, with limited sight and inaccurate unguided missiles. On 30 May, less than a month into the conflict, the air chief marshal, Anil Tipnis, chose to commit Mirage 2000H fighters capable of delivering laser-guided bombs to ground attack operations. The Mirages had been quickly retrofitted with laser-guided missiles from Israel. Their precision strikes helped quickly turn the conflict. Besides this, during the short war, India bought forty thousand rounds of 155-millimetre ammunition for around $48 million, thirty thousand rounds of 160-millimetre mortars for around $12 million and unmanned aerial vehicles from Israel. At the time, India was facing sanctions on technological imports following its 1998 nuclear tests, and the Israeli support started a major expansion in Indo-Israeli defence cooperation.

In the following decade, Indian purchases alone, worth an estimated $10 billion, made Israel one of the world’s largest arms exporters. The period also saw dwindling Indian support for the Palestinian anti-colonial struggle. While India did not buy full aircraft from Israel as it did from France or Russia, it instead upgraded nearly every major fighter and bomber with Israeli equipment, an equally profitable venture for the Israelis. Much of India’s missile infrastructure was also bought from Israel, beginning with the now infamous Barak deal in October 2000, when the Vajpayee government got defence missiles worth $270 million from the state-owned Israel Aerospace Industries. Soon, a “specially empowered” committee of the defence ministry visited Tel Aviv to finalise a contract to purchase for over three thousand assault rifles and almost two hundred sniper rifles.

In 2003, a year that included the second meeting of the India–Israel Joint Working Group on Defence Cooperation, India, Israel and Russia signed a tripartite agreement for cooperation on purchase of an Airborne Warning and Control System. This agreement began the first refitting of India’s vast Russian-made air fleet with Israeli equipment, with three Phalcon AWACSs being integrated into the IL-76 transport aircraft, for an estimated $1.1 billion. Under the Vajpayee and Manmohan Singh governments, nearly every other major aircraft in the IAF had avionics and weapon system revamps from Israeli companies, primarily IAI, Elisra, ELTA, Rafael, Elbit Systems and ELOP. Sushen’s material and the Mauritian documents show that several of these companies paid commissions to the Guptas during this period.

An explanation to why various agencies of the Indian government spent Rs 273.80 crore on an installation that would actually reduce the effectiveness on the IAF’s most used aircraft can be garnered from Sushen’s involvement in the deal.

These deals occurred with very little fair competition between different manufacturers and thus were pulled up on several occasions by the comptroller and auditor general. One such case is the Dual Colour Missile Approach Warning System, made by Elisra, that the IAF decided to integrate into Su-30MKI aircraft in 2006. By November 2008, the ministry sanctioned the project for 50 installations at the cost of Rs 193 crore, with the state-owned Defence Avionics Research Establishment signing an agreement with Elisra. A few months later, DARE informed Elisra that the sensors were bigger and heavier than the aircraft would allow for, a concern shared by the IAF. Rosoboronexport, the Russian manufacturer of the Su-30, also said the sensor would significantly worsen the performance of the jets.

DARE and Elisra seem to have simply tested the sensor on a transport aircraft and concluded that it would work for the Su-30MKI, a flaw of reasoning that, according to the CAG, was accepted by the IAF and the expert committee overseeing the deal. By July 2013, meanwhile, the project cost had increased to Rs 273.80 crore. The CAG noted that, “though increase in weight of IR sensors was a cause of concern to Air HQ as well as DARE, IR sensors were accepted with its present weight and with this, possibility of adverse effect on flight envelop of Su-30 MKI aircraft remained.”

An explanation for why various agencies of the Indian government spent Rs 273.80 crore on an installation that would actually reduce the effectiveness on the IAF’s most used aircraft can be garnered from Sushen’s involvement in the deal. The first clear reference to the deal in his diaries is sometime before June 2012, in which Sushen notes, “ELS + DARE:- contract for DCMAWS 25th meeting DARE for project review. We will have favourable comments. Only 50 sets Su-30 qty (200) for Su-30 he will push … ELS (IR based) M will push.” A spreadsheet in Sushen’s material notes a payment of Rs 5 lakh, dated 18 February 2012, marked against “Sudhir DCMAWS.” On the same day, he marks a monthly payment of Rs 3 lakh for Sudhir. But payments for other Elisra projects go back as far as 10 October 2005, when Sushen marks a payment of Rs 2 lakh to “Ajai Sush Elisra.” In the years leading up to the “Sudhir DCMAWS” payment of February 2012, there are ten other payments mentioning Elisra that add up to Rs 1 crore.

In another file, Sushen accounts for the money he received from various arms manufacturers. This file shows Sushen receiving €822,202 from Elisra between November 2005 and October 2007, and $2,761,095 between September 2009 to October 2011. The spreadsheet shows an incoming payment of $676,820 from Elisra in August 2010—a note against this figure says “95K Carisma, 209.82 Alliance, 137 K Inter, 106.25 K Anixa and 128.75 Afri* Bottling.” Another transaction of $310,900 from Elisra three months later has the note “118 Interstel, 116 Anixa, 111 Carisma.” These entries underline how Elisra was not only sending money to Interstellar but also to shell companies that the ED claims are Gupta-controlled, including Carisma, Capital and Anixa, all of which are also managed by MA Corporate. Rajnish Gupta, an old business associate of Sushen who is listed as the owner of these companies, told the ED that he did not enter into any agreement with Elisra and was not aware of these transactions. He accused MA Corporate of fabricating documents.

Interstellar had an agreement for “consultancy services” with Elisra worth $390,000. The Mauritian documents also show payments coming to Interstellar from Elisra around the same time they come from Blue Island, a Malta-based shell company whose Israeli director, Gavriel Michael, figured in the Paradise Papers investigation by the International Consortium of Investigative Journalists. Among the Mauritian documents is a letter, dated 4 March 2009, from “Gabi Machaeli”—with the same Israeli address the Paradise Papers mark against Michael—granting a loan of $900,000 to Interstellar. Michael transferred nearly the same amount to Interstellar shortly after. Elisra payments to Interstellar are from April 2009 to May 2011, and are all in roughly similar tranches to the Blue Island payments, which are between October 2008 and September 2009, a pattern the CBI points to in a chart.

But Elisra is only one of the many companies that worked with Sushen. The Mauritian documents show Interstellar receiving money from Elbit, Elisra’s parent company, and its subsidiary ELOP. In February 2010, the Indian Navy reportedly signed a deal for 11 ELOP CoMPASS sensors to be fitted onto its Dornier Do 228-211 reconnaissance aircrafts. Three years later, the navy inked a much larger deal, worth a reported $33 million—about Rs 160 crore—to attach similar CoMPASS sensors to 56 naval helicopters. It is clear that, during this period, Sushen was heavily lobbying for the company to win contracts. His spreadsheets show that ELOP paid him $160,000 on 1 November 2011 and $109,000, four months later.

Elbit was also undertaking major projects in India since 2007, when the state-owned Bharat Electronics Limited and the Defence Research and Development Organisation began developing artillery command-and-control communication systems with computers from Elbit. Alongside the ACCCS, BEL developed several other systems for command information decision, air defence control, battle strategy and battle surveillance. Sushen’s diary specifically notes the battle surveillance system—or Project Sanjay—and that its status is known to RKB, possibly referencing Ranjan Bhattacharya. The BSS deal alone initially cost Rs 1,035 crore, though, like most deals, it could have risen further. The BSS and ACCCS systems, however, were stuck in the doldrums for years, with the BSS finally deployed only in 2023. In the “Total Accs” spreadsheet, which lists all the other Israeli payments, Elbit is mentioned only once, as sending $30,000 in 2011. However, appended to the same payment is one from somebody called “Yanovich,” who apparently paid Sushen $35,075 in 2010–11. Elisra, Elbit, ELOP and Bhattacharya did not respond to questions.

Under Modi, Indian defence imports from Israel went into overdrive. In the first nine months of 2014, bilateral trade, primarily in arms, was worth $3.4 billion. With a staff of six, Israel’s military delegation in India is second only to the United States. Modi has since closed deals to buy 262 Barak-1 as well as Barak-8 missiles, Spike anti-tank guided missiles and some of the world’s most sophisticated military drones, even buying from companies that were still blacklisted. These alone have cost the national exchequer nearly $3.5 billion. In 2018, Adani Defence signed its first large joint venture, to make drones, with Elbit. The ED and CBI have sufficient evidence of companies involved in some of these deals providing kickbacks to Sushen, with many of the documents I have cited being included in their charge sheets. At a time when India’s position on Israel was seeing a tectonic shift and Sushen himself was helping orchestrate it, it is no wonder that he told Dassault to underline Israeli partnerships to win the Rafale deal.

AMID THE WORLD’S LARGEST ELECTION and a worsening security crisis along the Pakistani border following the Pulwama attack, on 10 May 2019, an unidentified Antonov AN-12 aircraft crossed into Indian airspace in north Gujarat. After ignoring multiple orders from the two IAF jets monitoring it, the AN-12 finally landed in Jaipur airport. After a brief search, the aircraft was allowed to continue on to Delhi, reportedly on a mission bringing cargo for a Ukrainian company called Motor Sich, which was helping build engines for India’s AN-32s—the backbone of the IAF’s transport fleet. A lot about the story made little sense. The AN-12 was flying from Georgia, not Ukraine, where Motor Sich’s factories were. It was unscheduled and had taken an unauthorised route across a border when tensions were at boiling point between two nuclear-armed rivals. The defence ministry dismissed the few press queries relating to the incident and gave no satisfactory explanation for whom the plane belonged to or what its mission was.

The Modi government had good reason to avoid any coverage of its dealings with Motor Sich and SpetsTechnoExport, the Ukrainian company, commonly called STE, whose group manufactures the Antonov aircraft. Before March 2018, the Ukrainian anti-corruption bureau had started a pre-trial investigation into alleged kickbacks of $2.6 million in connection with a November 2014 deal to supply spare parts for the AN-32. Ukrainian investigators pointed to the kickbacks being routed through a Dubai-based company called Global Marketing, which signed a sham contract to “provide services that would help the Ukranians fulfil their contract with India.” When news of the investigation reached India, the defence minister, Nirmala Sitharaman, denied the involvement of any private company or kickback, saying that “there was no scam of any type in the deal.” The Gupta Papers now show this is untrue. Sushen’s material and the Mauritian documents show not only that STE had been paying kickbacks to Sushen during the AN-32 deal but that STE was probably Sushen’s single largest partner, with consistent, numerous and voluminous payments for a decade.

The Soviet Union was India’s oldest and closest defence partner. After its dissolution, Ukraine inherited more than thirty percent of the country’s vast defence production facilities. Since the early 2000s, STE started beating established Russian companies in winning Indian contracts, a feat in which the Guptas played no small part. By December 2012, Ukraine’s annual defence sales to India, Sushen notes, had grown to over $100 million. Some of these deals, though, have been for equipment that has proven to be a detriment to Indian defence capabilities.

This would mean that Sushen had information on the movement of confidential files within the defence ministry, then headed by Arun Jaitley.

Take, for example, the Kamov Ka-25 helicopters that India bought from a Soviet company in 1980. In 2005, the headquarters of the Goa Naval Area proposed that two of the helicopters needed to be overhauled, with STE being the only possible partner as the original manufacturer had shut shop. The naval high command advised against this, pointing out that the helicopters were too old and that overhauling them would be difficult, not fully effective and economically unviable. It also raised concerns about the deterioration of STE’s quality standards. Despite this, the defence ministry, under Pranab Mukherjee, went ahead with the proposal at a cost of Rs 10.38 crore. An agreement for additional works was concluded, in January 2007, for another Rs 2.73 crore. Within a month of STE delivering the refurbished helicopters, parts of the engine exhaust of one helicopter shroud blew off. STE replaced both the engines, but one of them soon developed defects and was repaired again. Within a year, the engine of one helicopter caught fire and, soon, the flying operations of the Kamov fleet were discontinued. A CAG report notes that the projects had been a waste of Rs 13.11 crore.

Between October 2005 to August 2006, STE entered into several agreements with Interstellar, according to documents shared by the Mauritian authorities. The agreements stipulated the payment of consultancy fees for services provided in India and followed up on a contract to provide assistance to increase the volume of STE’s sales to the military and HAL. Soon after, STE expressed interest in the repair, overhaul and upgradation of helicopters and fighters for the IAF—including the repair and overhaul of the MiG-21 and the installation of new engines for the Mi-17 and Su-30 aircraft. The contract with Interstellar clearly spells out that Interstellar is supposed to help in “commercial and technical negotiations, organising payments and arranging stay for the delegations of STE” for these deals. STE agreed to pay a commission ranging from nine to twenty percent of the total value of the contracts and gave Interstellar exclusive rights to providing advice and assistance for STE’s deals in India. Sushen’s documents have draft letters he drafted to be sent by STE to AK Antony, complaining that the company should be granted the upgradation contracts because its Russian competitors were using unfair means to win contracts, going so far as to say that if STE would not get the contract, it would be a “miscarriage of justice.” The Mauritian documents even have work fulfilled certificates for these deals—three from April to July 2006, where STE paid Interstellar a total of $5718.8, though it is clear STE was making many payments of relatively low amounts.

STE’s work on the AN-32 followed a similar arrangement. India had signed an agreement with STE for the overhaul of the AN-32 aircraft in June 2007, and another two years later. The 2009 contract was massive, involving the overhaul of 104 of the IAF’s largest planes and costing $400 million. The next major deal, regarding spare parts for the AN-32, came under the Modi government. Sushen’s influence in the proceedings seems to have changed little during Modi’s tenure as prime minister. Material in the ED’s possession suggests that Sushen had the defence ministry’s minutes of meetings between the IAF and STE, held in April 2015 to discuss the AN-32 project, as well as copies of correspondence between STE and HAL.

A draft document in his possession pertains to the “repair of No-19 units,” likely a reference to the IAF’s Number 19 Squadron, which operates the AN-32 aircraft. According to this document, STE was unable to “quote against the initial enquiry” from IAF regarding the tender. Another document says that the request for proposal is “lying with MoD Finance for clearance. Expected to be released in 4 weeks after clearance.” This would mean that Sushen had information on the movement of confidential files within the defence ministry, then headed by Arun Jaitley.

“On our persuasion you had written a letter to Air Headquarters to re-consider issuing enquiry to you,” the draft adds. “Even though customer was willing to release order on RAC, however; we were able to convince the customer and decision was taken to re-tender … We expect customer to release a fresh RFQ soon.” The customer here is the IAF, making this a clear indication of lobbying to influence the tender process in favour of STE. Sushen admits as much himself, writing, “It is only due to our efforts that 410 plant”—a Ukrainian competitor to STE—“is not getting AHQ contracts.” In a response to STE’s queries, Sushen claims that he can change clauses in the defence ministry’s requests for proposals to allow the company to enter deals that would have been reserved for other companies, such as the Russian firm Rosoboron, the original manufacturer of the Mi-17 helicopter. “We have been working on release of RFP to STE,” he writes. “Due to our efforts Rosoboron RfP is under foreclosure. New RfP is being drafted with a diluted OEM certificate requirement. Possibly requiring only your MoD approval. RfP is likely to be re issued with the diluted clause in 2-3 months.”

In 2012, the defence ministry signed a supplementary agreement to the 2009 Antonov contract for transfer of technology, to set up a repair facility. However, Ukraine refused to part with the technology, since it now held a monopoly on AN-32 spare parts. Sushen makes frequent references to this in his diary. “Risk of leakage of spares for O/H”—overhaul—“if HAL does the O/H,” he writes. Both the Mauritian documents and Sushen’s files show how he managed state-run units for STE, working to limit them as a mere workforce for STE and not as organisations that could possess the same production and technology capabilities as their foreign competitors.

Other STE-related contracts tied in public-sector units, including BDL manufacturing units in Kanchanbag and Medhak, and HAL’s Koraput and Nasik divisions, were clearly managed by Sushen. STE had an earlier agreement with Interstellar for marketing and consultancy services for “BDL Kanchanbag.” Interstellar raised an invoice of $32,025 as payment against this agreement. Similarly, Interstellar billed STE $21,600 in December 2004 for consultancy services pertaining to the Medhak factory. Sushen’s material are replete with references to Koraput. The tender processes of various contracts associated with projects carried out in HAL Koraput, and payments against these, are mentioned at several places. There are also frequent references to STE’s contracts with the Nasik division, which is the licensed manufacturer of MiG aircrafts and the Su-30. These entries reveal that Gupta was lobbying on behalf of STE and had inside information on the tender process from the IAF, HAL and defence ministry throughout the UPA and Modi years.

The ED and CBI have now been investigating the AgustaWestland case for ten years, and yet more can be understood from what they seemingly missed in their investigation than from what they included in the 14 charge sheets filed in that time. Their filings seem more influenced by political motivations than the weight of evidence they uncovered.

For the sheer amount of work Sushen did for STE, winning it over a dozen contracts, pushing out its competitors and weakening its Indian partners, he was rewarded handsomely through various routes. The Mauritian documents show more than a Rs 15 crore paid to Interstellar from 2007 and 2012. A loose sheet in Cyrillic shows transactions of $79.26 million between 2007 and 2010 alone. A spreadsheet in his material notes that, between 2005 and 2013, Sushen received $3.45 million—about Rs 29 crore. There are over 300 payments from STE in Interstellar’s bank records. STE did not respond to questions.

Given the Indian government soon got access to all of this information, including evidence of Sushen’s specific lobbying for the AN-32 contract, the defence minister seemed to have jumped to the conclusion that there was no lobbying behind the deal too early. Of course, other considerations could have played a part. The revelation of Sushen’s centrality in winning defence contracts would have doubtless led to the exploration of his role in the Rafale deal. Other factors also tied Antonov to the Rafale deal. In 2016, STE’s parent company started a strategic partnership to “collaborate for assembly, manufacture and maintenance, repair and overhaul (MRO) of Antonov series of aircraft” with a major Indian conglomerate. Its new partner was the company that gained most from the Rafale deal, the Reliance Group.

THE ED AND CBI have now been investigating the AgustaWestland case for ten years, and yet more can be understood from what they seemingly missed in their investigation than from what they included in the 14 charge sheets filed in that time. Their filings seem more influenced by political motivations than the weight of evidence they uncovered. The CBI case was filed in March 2013. It then raided Gautam Khaitan’s office that month, while the ED did so the following year. Nevertheless, both agencies stuck to the suspects named in the Italian investigation. The ED’s first supplementary prosecution complaint, filed after the furore over the Italian court finding evidence of kickbacks, only added a few of Christian Michel’s accomplices as the accused.

Five days later, the ED raided Sushen’s office, unearthing more evidence of his centrality to not just the AgustaWestland deal but to a saga of defence corruption more than fifteen years long. But the ED seemingly sat on this evidence. Its next two prosecution complaints, filed in 2017 and 2018, adroitly ignored Sushen, despite charging Saxena and mentioning money going to DM South and American Hotels. This is despite a wealth of the evidence showing that Saxena was merely moving funds for Sushen and despite the mentioned companies, where the money finally ended up, being directly owned by the Guptas. In both charge sheets, Sushen is mentioned only twice, in passing.

The case heated up before the 2019 general election, becoming a stain that could again be affixed to the Congress and its ruling family. This is a charge Michel has maintained. The Telegraph quoted him as saying that Modi “proposed to the Italian PM that in return for any evidence that the key adviser to Finmeccanica or AgustaWestland had about any relationship to any member of the Gandhi family, the honourable PM would assist in solving the case against the two Italian marines.” In December 2018, Michel was rushed onto a special Gulfstream jet in Dubai and extradited to India, reportedly as a returned favour from the emirate for India’s apprehending and return of Sheikha Latifa, the daughter of Dubai’s current ruler. Michel was the twentieth man India extradited from the United Arab Emirates. His predecessors, including infamous financiers of the Indian Mujahideen, had been brought in commercial airlines. The day after Michel landed in Delhi, Modi said in a Rajasthan campaign rally, “Under the regime of the UPA, a VVIP chopper scam took place. After we came to power, an investigation was conducted into it and one person from Dubai was found guilty for his involvement in the case … Now this raazdaar”—custodian of secrets—“will reveal all the secrets.”

The following month, Saxena was extradited too. Meanwhile, Cobrapost published its investigation—using the same material The Caravan has—pointing to Sushen as the main “kingpin” of both the AgustaWestland and Rafale deals. However, two other parts promised in their series were never released and Sushen’s role was never elaborated on. Saxena tendered these documents to the ED, and Sushen was briefly arrested. Despite this, in the next ED charge sheet, filed on 4 April, a week before the first phase of polling, Sushen’s role was not explored. Instead, it focussed on various Congress leaders, including Ahmed Patel, Sonia Gandhi and mentioned Manmohan Singh, Pranab Mukherjee and Veerappa Moily. Following this charge sheet, media whispers abounded about whether the “SG” in Sushen’s diary was a reference to Sonia and the “RG” to Rahul Gandhi, a controversy the ED allowed to fester for several months before finally asserting that they stood for Sushen Gupta and Rajat Gupta—an old business associate of Sushen’s family.

Two days following the polls, when every news outlet was covering exit polls and the celebration of BJP cadre, the ED filed another charge sheet, which finally stated that Sushen had played a role in the AgustaWestland deal. The conclusion the ED drew, however, was that he had merely helped in the financial layering of the kickbacks, ignoring the wealth of evidence implicating him in managing the deal, collecting confidential documents or being the ultimate beneficiary. It also chose not to probe Sushen’s dealings with Dassault, Thales, STE, Elisra, Elbit or ELOP.

Over the next two years, the ED filed four more supplementary charge sheets, in which it targeted a few Saudi nationals who had received money from Interstellar and Ratul Puri. Mentions of Sushen become increasingly scarce from these. The CBI too filed its only supplementary charge sheet during this period. Despite its annexures running over twelve thousand pages, the vast majority of which included the Mauritian documents detailing Sushen’s control of Interstellar, he was not named even once in the main body of the charge sheet.

The ED, CBI, IAF, ministry of defence and the prime minister’s office did not respond to detailed questionnaires emailed to them. Neither did Sushen, the DMG group, IA or Munot.

The totality of the investigation has left the main actors of the AgustaWestland case in very different places. Khaitan, the lawyer of the Guptas, is stuck at the centre of the CBI and ED’s case, and was arrested again, in 2022, by the CBI in relation to the Embraer case. This case involves kickbacks paid for the DRDO’s 2008 purchase of three aircrafts from the Brazilian manufacturer for $210 million. The key accused in the case is Arvind Khanna, an old business partner of the Gupta family. Khanna’s companies TSL Defence and ASAS Investment were shareholders in two defence companies of the Guptas, including Defsys Solutions. Some of the Khanna’s companies were also co-directed by Khaitan. The CBI arraigned Khanna as an accused in its 2023 charge sheet for the payment of kickbacks worth $5.76 million. Khanna also has vast political connections. He was a close confidant of Amarinder Singh and the general secretary of the Punjab Pradesh Congress Committee. He jumped ship to the BJP, however, and was made vice-president of the party’s state unit months before being charged. Khanna did not respond to questions.

Going after the company, or Sushen himself, would doubtless point to dozens of major defence deals in which kickbacks were paid during the UPA years. But they would also point to the many deals Sushen has worked on since and the morass of illegalities that was the Rafale deal.

Both the CBI and ED claim the kickbacks in the Embraer case were routed through Interdev, a company that they had already concluded belonged to Sushen. And yet, while Bhalla and Khaitan were named in the case, Sushen again escaped scrutiny. Like Khaitan, Saxena, too, remains at the centre of the investigations of both agencies. Michel is probably the biggest loser in the case, being stuck in jail since his extradition, for nearly five years now, and unable to leave until the case is actually tried. Sushen, meanwhile, was in jail for hardly two months. The court even granted him permission to travel abroad last year to various countries including USA, Canada, France, Germany, Italy, Spain, Austria, Thailand, Maldives, Sweden, Switzerland and the UK. The ED, which has a penchant for attaching the property of those it accuses—even when it cannot prove that the property was bought with proceeds of a crime—does not seem to have touched any of Sushen’s vast holdings, despite having overwhelming evidence of those properties being the ultimate beneficiary of the kickbacks Interstellar received.

For just a small illustration of this, we need to explore Sushen’s 52,466 square feet farmhouse in Delhi’s elite West End Greens neighbourhood. A good quarter of the files in his material document the meticulous study Sushen has taken for the decorations, accessories and beautification of his farmhouse. He has 27 pages listing just the bespoke designer toilets, taps and showers his house will have. He has the brochures of some of the world’s most renowned landscape designers—who designed the gardens of some of the most famous five-star hotels in the world. It is a house out of a hotelier’s dream, with a single bathtub costing more than thirty-five thousand euros and its door locks costing more than Rs 20 lakh. In Sushen’s profligate spending, what makes matters easiest for the ED is that many of the contractors for his farmhouse and the luxuries within were paid directly from the Interstellar account. The furniture company Italprogram, for example, charged Sushen a whopping €49.62 million for some of the furniture in the house, and these bills were paid from Interstellar’s accounts.

Sushen’s companies seem untrammelled too. Interstellar, now Fibreline Technologies, appears to be functioning, despite the ED pointing to it as the main throughfare for funds in the deal. Going after the company, or Sushen himself, would doubtless point to dozens of major defence deals in which kickbacks were paid during the UPA years. But they would also point to the many deals Sushen has worked on since, the many companies that ought to be blacklisted and the morass of illegalities that was the Rafale deal.

NILEENA MS is a staff writer at The Caravan. She can be reached at nileenams@protonmail.com.

https://caravanmagazine.in/reportage/gupta-papers-rafale-deal-agusta-westland-sushen-gupta.

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LONG READ: THE GUPTA PAPERS: HOW THE MODI GOVERNMENT IS COVERING UP TWO DECADES OF DEFENCE CORRUPTION TO SAVE THE RAFALE DEAL

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