In fresh revelations that are bound to further fuel the controversy around the Rafale deal, France’s Le Monde reported on Saturday that the French government waived tax liability worth 143.7 million euro for Anil Ambani’s French-based company, Reliance Atlantic Flag France, barely six months after Prime Minister Narendra Modi announced a government to government deal for 36 Rafale fighter jets in Paris.
In fresh revelations that are bound to further fuel the controversy around the Rafale deal, France’s Le Monde reported on Saturday that the French government waived tax liability worth 143.7 million euro for Anil Ambani’s French-based company, Reliance Atlantic Flag France, barely six months after Prime Minister Narendra Modi announced a government to government deal for 36 Rafale fighter jets in Paris.
According to the report, the French authorities had raised a demand of 151 million euros from Ambani’s company after tax audits for the period between 2007 and 2012, including default interest and penalties. Ambani’s firm had offered a settlement for 7.6 mn euro in 2013 which was rejected by the French tax authorities. However, on October 22, 2015, the French authorities accepted 7.3 million euros as a settlement from Ambani’s company for the period between 2008 and 2014.
Coincidentally, it was on April 10, 2015 that PM Modi had announced the deal for buying 36 Rafale aircraft from France during an official visit to Paris. Soon after the announcement, Anil Ambani’s Reliance Defence had emerged as the lead offset partner for the deal. The total offsets for the deal worth 7.87 bn euro to be discharged in India were valued at Rs 30,000 crore. Read in Bangla, Malayalam
Ambani’s Reliance group said in a statement that it “denies any favouritism or gain from settlement. Reliance Flag settled disputes as per legal framework in France available to all companies operating in France”.
In late April 2015, a few days after Modi’s announcement, Anil Ambani firm Reliance Aerostructures Limited formed a joint venture with Dassault. The production unit of the joint venture, called Dassault Reliance Aviation Limited was inaugurated in Nagpur in 2016 in the presence of top Indian and French ministers.
The MoU for the deal was signed between the Indian and French defence ministers in Delhi on January 25, 2016 and the deal was signed on September 23, 2016.
As reported by The Indian Express, days before the MoU was signed in Delhi, another of Ambani’s firms, Reliance Entertainment had invested in a French film produced by the then French President Francois Hollande’s partner, Julie Gayet. Hollande had subsequently denied any connection with the deal but told AFP that giving offsets to Ambani was part of a ‘new formula’ for buying 36 Rafale aircraft which was put forth after the BJP government under PM Modi assumed power in May 2014. The government has denied these charges.
The Indian Express has also reported that Anil Ambani had met the advisors to the then French Defence Minister in his office two weeks before the Rafale deal was announced by PM Modi. Dassault Aviation, the French company manufacturing Rafale jets, has repeatedly claimed Reliance Defence was chosen as an offset partner on its own merits.
Giving details of the case, Le Monde also reported that in early 2015, the French auditor firm AEG France had refused to certify Reliance Flag Atlantic France’s accounts as it was not sure if they were “straightforward and accurate,” according to French rules.
The tax administration had argued that Ambani’s company was “improperly documenting its transactions with other companies within the Reliance Group – a commonly used technique to move transfers to tax havens so that it can avoid a tax burden”. It also said that the parent company of the French company of Anil Ambani, Reliance Globalcom Limited, was domiciled in Bermuda, a territory that has been registered in March on a blacklist of tax havens of the European Union.
Reacting to the report, a Reliance Communications Limited spokesperson said Reliance FLAG Atlantic France SAS is a subsidiary of Reliance Communications, India and that FLAG France owns a terrestrial cable network and other telecom infrastructure in France.
“During the period under consideration by the French Tax Authorities—2008-2012—i.e. nearly 10 years ago, Flag France had an operating loss of Rs 20 crore (i.e. Euro 2.7 million). French tax authorities had raised a tax demand of over Rs 1,100 crore for the same period. As per the French tax settlement process as per law, a mutual settlement agreement was signed to pay ₹56 crore as a final settlement,” the spokesperson said.