Yahoo Finance How chic Parisian lunches led to a court case and a threat to France-India arms deals
Laurent restaurant in Paris’s chic eighth arrondissement has long been a draw for the Parisian establishment.
Nestled behind the Champs-Élysées in what was once Louis XIV’s hunting lodge, the Michelin-starred restaurant is a few minute’s walk from the Élysée Palace, official home of the French president.
It was here that in the summer of 2011 key figures from France’s multi-billion euro defence industry are alleged to have met to try and push forward a lucrative defence deal that would help their company and strengthen France’s ties with a fast-growing economic power in the east.
Sanjay Bhandari, a self-described “well-known commercial intermediary” in the defence sector, claims he was invited here in 2011 to meet with Francois Dupont, managing director in India of Thales, the French defence giant which makes parts for Dassault Aviation's Rafale fighter jet, and Guy Delevacque, formerly senior vice president of global sales at Thales.
Bhandari and Dupont had earlier met at the nearby five-star Plaza Athénée Hotel, Bhandari says.
In court papers, he claims he had “a longstanding commercial relationship [with Thales] since 1996” and the company now needed his help to win a €1.5bn (£1.2bn) deal with India to modernise the Mirage 2000 fleet of fighter jets that India had bought from France in 1982.
Bhandari says he set up a meeting in Paris between Delevacque, Dupont and KP Singh, India’s then defence secretary, who was visiting Paris. On July 29, 2011, the Indian government announced it had handed the £1.25bn deal to Thales and Dassault.
Reports trumpeted the “long-tradition” of co-operation between the Indian and French forces, and France’s “pride in contributing to India’s defence for over half a century”. More than 10 years later, however, questions are being raised that may take the shine off the deal.
In a commercial court in the Parisian suburb of Nanterre, Mr Bhandari, who now lives in Britain where he is seeking political asylum, is suing Thales.
He claims he was promised €20m to help Thales secure the contract, but has only been paid €9m. A source close to Mr Bhandari told The Telegraph he was in a “David versus Goliath” fight and “we know who won that fight in the end”.
Defensive manoeuvres
The claim - strongly rejected by Thales - comes at a sensitive time for France and its defence industry. President Emmanuel Macron is still smarting from Australia’s abrupt cancellation in September of a $90bn [£66bn] dollar deal with Paris to build a fleet of submarines, opting for a deal with the US and Britain instead.
It caused a major diplomatic rift, with France recalling its ambassadors from Australia and the US, and French president Emmanuel Macron accusing Scott Morrison, Australia’s prime minister, of lying.
Mr Morrison retorted that “we did not steal an island. We didn’t deface the Eiffel Tower”.
France has been trying to deepen its defence ties with India in the meantime.
In September, France’s foreign affairs minister, Jean-Yves Le Drian, and his Indian counterpart, Subrahmanyam Jaishankar, agreed to promote "a truly multilateral international order", highlighting the "relationship of political trust between two great sovereign nations of the Indo-Pacific".
France is keen to sell India more of its Rafale jets, having delivered almost all of the 36 Rafales that India ordered in 2016 - a $9.3 billion deal itself mired in controversy.
On a visit in December, Florence Parly, France’s defence minister, stressed that using the same aircraft was a “real asset and strength”, adding: “I am sure that there is room for new developments.”
India is an “incredibly ripe” market for France, says Francis Tusa, the leading defence analyst. "Can you see France selling submarines to India? Yes, absolutely. Will they sell more Rafales? I would be astounded if they didn't."
Le Drian had, Tusa added, "made the Indians believe and understand that France could offer things which India wanted without the sort of overbearing nature of the relationship with the US".
Fighter jet's future
Things have been looking up for the Rafale, following years of questions over its success and a blow in June when Switzerland plumped for the US’s F-35 instead.
The UAE went in the opposite direction, ordering 80 Rafale jets along with 12 military helicopters from France in December, and suspending discussions to buy the US's F-35s, citing technical requirements, operational restrictions, and the costs.
The $20bn deal with France was struck despite concerns over human rights in Yemen, and Abu Dhabi’s dismissal in 2011 of France's offer of 60 Rafale jets as “uncompetitive and unworkable”.
Overall in 2021, France struck $28bn worth of export defence deals, amounting to an "amazing year", says Tusa. “The UAE deal is fascinating because it's actually partly the UAE's rejection of the United States,” he adds.
What impact Bhandari’s case will have remains to be seen. The case is ongoing, with a judgment expected this year.
Bhandari left India for London in 2016. He is seeking asylum in Britain and fighting extradition to India, where he is wanted on tax evasion and money laundering charges, unrelated to the Thales suit.
He claims the charges are a plot by supporters of India’s ruling Bharatiya Janata Party to discredit him due his closeness with the previous Indian administration under the Indian Congress Party, which was ousted in elections in 2014.
In court papers, he describes himself as a "well-known commercial intermediary involved in arms and defence in India". He adds: "In this capacity, he has worked with major international defence companies to assist them in negotiating arms contracts with the Indian Ministry of Defence."
A spokesman for Thales said: "Thales firmly denies the claims by Sanjay Bhandari regarding the sums allegedly due or any other payments to him by Thales SA.
“Thales never signed a contract with Mr Bhandari or his companies in connection with this project.
“Thales complies with the law and applies a zero tolerance policy on corruption and influence peddling. The Group's integrity programme is regularly evaluated and amended to reflect changes in applicable legislation and best practices."
