Rafale Deal: Cong Takes Aim As Report Says France Waived Off $162 Mn Taxes for Anil Ambani's Firm

New Delhi: The Congress on Saturday hit out at the BJP-led government led by Prime Minister Narendra Modi after French newspaper Le Monde reported that the country waived off taxes worth 143.7 million euros or $162.6 million in favour of businessman Anil Ambani's France-based telecom company called ‘Reliance Atlantic Flag France’.

Anil Ambani's tax debt, the result of disputed tax litigation, was cleared a few months after Modi announced the Rafale deal with France, the newspaper reported.

Referring to the findings of the news report as a clear indication that there were “layers of corruption” in the Rafale deal negotiated by Modi, Congress spokesperson Randeep Surjewala called Ambani’s company a “zero sum choice” which benefited and flourished as a result of “Modi kripa”.

Turning the BJP’s campaign slogan into a jibe, Surjewala also said corruption in the multi-crore deal was made possible due to Modi’s patronage. “Modi hai to mumkin hai,” he said.

"PM Modi is acting as middleman for Anil Ambani. How many other companies in France have got a tax benefit? Is this not a quid pro quo for the purchase of aircraft? It is clear only one watchman is the thief," Surjewala said.

At an election rally in Chitradurga in Karnataka, Congress president Rahul Gandhi said the Lok Sabha election is a fight between Anil Ambani and ordinary people, thieves and honest people and false promises and the truth.

"This election is between Anil Ambani and the common citizens, five years of 'Anyay' (injustice) and NYAY (justice/minimum income scheme), thieves and honest people and false promises and truth," he said.

Reliance Communication has, however, said that the tax demands of the French tax authorities were "unsustainable and illegal". It also said that a settlement with the French authorities was reached as per the country's laws.

Ambani's company was reportedly investigated by the French tax authorities and found liable to pay 60 million euros in taxes for the period 2007 to 2010. Reliance Atlantic Flag France had offered to pay 7.6 million euros as taxes but the French authorities refused and conducted another investigation, the report said.

In April 2015, Modi announced the Rafale deal with France-based Dassault. By the time the prime minister announced India's deal to buy 36 Rafale combat aircraft, the total amount owed by Reliance to the French state in taxes was at least 151 million euros, the report said.

However, just six months after PM Modi's Rafale announcement, the French tax authorities reportedly settled Ambani's 143.7 million euros tax dispute litigation and accepted 7.3 million euros from Reliance as a settlement, instead of the original tax debt of 151 million euros.

The French government sought to play down speculation that the tax waiver was influenced by political interference.

"A global settlement was reached between the French tax authorities and Reliance Flag, a telecom company, in a tax dispute pertaining to the period 2008-2012. This settlement was conducted in full adherence with the legislative and regulatory framework governing this common practice of the tax administration. It was not subject to any political interference whatsoever," the French embassy said in a statement.

Reliance Flag also denied "any favouritism or gain from the settlement", terming the tax demands as "completely unsustainable and illegal". It also said that the tax disputes were settled "as per legal framework in France available to all companies operating in France".

"During the period under consideration by the French tax authorities — 2008 to 2012 i.e. nearly 10 years ago, Reliance Atlantic Flag France had an operating loss of Rs 20 crore [i.e. 2.7 million euros]. The 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 and law, a mutual settlement agreement was signed to pay Rs 56 crore as a final settlement," it said.

Reacting later to the development, the Ministry of Defence said the report had drawn "conjectural connection" between tax exemption to a private company and the procurement of the jets by the government. "Neither the period of tax concession nor the subject matter of concession relate to Rafale procurement, concluded in the present government's tenure," the ministry said in a statement.

"Any connections drawn between the tax issue and the Rafale matter is totally inaccurate, tendentious and is a mischievous attempt to disinform," it added.

Meanwhile, the Communist Party of India (Marxist) alleged that the Modi government misused public funds to pay an "exorbitant" price for the Rafale jets to benefit a "crony businessman" such as Ambani through offset deal and French tax benefit.

"So, our public money is used by Modi government to pay exorbitantly more for far fewer Rafale fighters than required, to benefit a crony businessman through the defence deal and French tax benefit. No wonder BJP introduced secret Electoral Bonds for party funding, legalising corruption," CPI(M) general secretary Sitaram Yechury said.