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Reliance Infrastructure Ltd on Friday, 2 October, hit back at the Congress for resorting to "blatant lies and distorted facts" over the Rafale deal and its partnership with Dassault Aviation.
Earlier in the day, Congress President Rahul Gandhi had hit out at PM Modi over the Rafale deal and asked why Dassault Aviation had invested Rs 284 crore in Anil Ambani’s “loss making company”.
“Rafale is an open and shut case. It is simply a PM Modi-Anil Ambani partnership,” news agency ANI quoted the Congress President as saying.
Gandhi’s statements come a day after media reports said that Dassault Aviation had invested approximately 40 million euros in another Anil Ambani venture in 2017.
Alleging that Prime Minister Narendra Modi will not be able to withstand an investigation into the matter, Gandhi said that the CBI Director was removed from his post because he was looking into the Rafale deal.
The Opposition has attacked the PM Modi-led government after CBI Director Alok Verma was sent on leave last month, pending investigation into allegations of bribery made by his deputy.
Unfortunate that Anil Ambani is Being Dragged Into a Political Battle: Reliance
Responding to the Congress' allegations, a Reliance Infrastructure Ltd spokesperson said on Friday:
"“It is deeply unfortunate that the Reliance Group and its Chairman, Anil Ambani, are continuously being dragged into a political battle in view of the impending state and general elections in the country.”" - Reliance Infrastructure spokesperson
The company denied any link between Dassault's investment in Reliance Airport Developers Limited (RADL) and the Rafale contract, pointing out that the "investment is an independent arms-length transaction".
"“The RADL transaction was completed in full compliance with applicable FDI and all other rules and regulations and the information has been disclosed in the public domain since December 2017 onwards, nearly a year ago.”" - Reliance Infrastructure spokesperson
Reliance also denied the Congress' allegation that the funds invested in RADL have been used for the purchase of land in Nagpur's Mihan for the joint venture between Dassault and Reliance.
"“The payment for the land at MIHAN, Nagpur, Maharashtra was made from 2015 to 2017, much before the investment by Dassault in RADL.”" - Reliance Infrastructure spokesperson
Countering the Congress’ allegations, the Reliance statement asserted that "Anil Ambani has not entered into any transactions personally with Dassault nor has he derived any personal benefit from any transactions.”
Dassault’s 40 Million Euro Investment in Ambani Venture
Regulatory filings in France and India have brought to light striking details on the Dassault-Anil Ambani-led Reliance partnership, which is already facing allegations of having entered a joint venture on Rafale for “extra-commercial considerations”.
An exclusive report by The Wire revealed that Dassault had made another investment of approximately 40 million euros in another Anil Ambani venture in 2017, which according to the records is a loss-making enterprise.
This investment by Dassault in the Anil Ambani-owned venture roughly translated into a Rs 284 crore profit for the Ambani group company, Reliance Infrastructure, which then sold shares in a subsidiary, Reliance Airport Developers Limited (RADL), at a premium, the report added.
According to the filings made by Reliance Infrastructure, a 34.7 percent stake in the wholly owned subsidiary, RADL, was sold to Dassault Aviation in FY 2017-18.
This was backed by Dassault Aviation’s annual report for 2017, which mentions the firm’s acquisition of “non listed securities, including a 34.7 percent equity participation in Reliance Airport Developers”, the report added.
While the terms marking the sale were not clear, Reliance claimed to have made a profit of Rs 284.19 crore on the sale of 24,83,923 shares to Dassault, with each share having a face value of Rs 10, the report added.
RADL had stakes in several subsidiaries owned by the group, most of which were loss-making, and airport projects that had been awarded by the Maharashtra government back in 2009.
In 2015, due to the company making little progress in developing these airport projects, the state government had decided that the Maharashtra Airport Development Council (MADC) would assume charge of the projects again.
However, as the government body was preparing to take back the control from RADL on these projects, it “speedily allotted” 289 acres of its land to another company under the group – shortly after – the report added.
The interesting part, according to the report, which quoted Dassault’s filings in France, is that other than the Rs 22 crore that the company pumped in as equity, it had also given a 4 million euro loan to the joint venture, roughly converting to Rs 32 crore in Indian rupees.
Speaking anonymously to The Wire, a source in the Anil Ambani group said that this money was used by Dassault Reliance Aerospace Limited (DRAL) to pay for the land allotted to it by the MADC in Nagpur- for the ‘hangar’ at Mihan (The Multi-modal International Cargo Hub and Airport at Nagpur).
Did Reliance Infrastructure Use Money From Dassault to Settle MADC Amount?
Fourteen days after Prime Minister Narendra Modi officially announced the new Rafale deal on 10 April 2015, Reliance Aerostructure was incorporated. Three months later, it applied to the MADC for land in its Mihan SEZ in Nagpur, following which it was allotted 289 acres in August 2015, for Rs 63 crore, the report claimed.
However, the company soon requested to be allotted only 109 acres of the plot and was only able to clear its existing dues to the MADC on 13 July 2017. Meanwhile, the Defence Ministry in 2016 had granted it a license to manufacture fighter aircraft, which according to the Opposition is a violation of government guidelines.
According to the filings for the FY 2017, quoted by The Wire, Reliance Aerostructure received an inter-corporate deposit of Rs 89.45 crore from Reliance Infrastructure, which is also the same year that Dassault aviation bought 34.79 percent of Reliance Infrastructure’s stake in Reliance Airport Developers.
Going by these filings, it would appear that Reliance Aerostructure used the money that Reliance Infrastructure had received from Dassault, when the latter bought the stake in RAD, to pay off the Rs 38 crore it owed the MADC for the allotted land in Nagpur, the report stated.
Adding to this, at the end of the financial year 2017, Reliance Aerostructure posted a loss of Rs 13 crore and a loss of Rs 27 crore, at the end of financial year 2016.
Talks on Dassault-Reliance Rafale JV Dated Back to 2015
Furthrmore, Dassault CEO Eric Trappier had earlier claimed in an interview that the company had picked Reliance ADAG as its offset partner because it “had land available next to an airport”.
However, the state government had only given this land to Reliance after it had started talks with Dassault to collaborate on a joint venture on Rafale. Although Dassault claimed that its joint venture with Reliance was incorporated in 2017, the proceedings for the same dated all the way back to 2015, according to the filings quoted by The Wire.
According to the report: “The land contribution agreement filed by DRAL with the Registrar of Companies dated 12 July 2018, talks of a sub-lease agreement between Reliance Aerostructure, DRAL and Dassault Aviation. According to this agreement, DRAL, the joint venture partner, would pay Rs 22.8 crore to Reliance as premium for 31 acres of leased property to the joint venture. This debt was converted into “non cash consideration” for 22.8 lakh equity shares of the company.”
On the basis of this statement, it would appear that Reliance used the land allotted by the Maharashtra government to pay for Reliance’s equity stake in the joint venture company, while Dassault gave Rs 21.09 crore cash for its equity stake in the firm, the report claimed.
(With inputs from The Wire)
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