The Ministry of Defence on Saturday countered reports that alleged France waived taxes worth €143.7 million (Rs 1,125 crore) owed by a local subsidiary of Anil Ambani’s Reliance Communications in 2015, around the same time India was negotiating the Rafale jet deal. The Indian ministry claimed that this matter had nothing to do with the agreement the two countries signed.

“We have seen reports drawing conjectural connection between tax exemption to a private company and procurement of Rafale fighter jets by Government of India,” the ministry said in a press release. “Neither the period of the tax concession nor the subject matter of the concession relate even remotely to the Rafale procurement concluded during the tenure of the present government.”

The ministry claimed that any connection drawn between the tax waiver and the Rafale deal “is totally inaccurate, tendentious and is a mischievous attempt to disinform”.

French newspaper Le Monde had reported earlier on Saturday that the country’s government auditor had found unpaid taxes worth €60 million and then €91 million by Reliance Flag Atlantic France, which is owned by Ambani. The tax liability had been pending for years, but the French government accepted a settlement of €7.3-million (Rs 57 crore) between February and October 2015, the report said.

In early 2015, the French government’s auditor refused to certify the company’s accounts as it was not sure if they were “straightforward and accurate”. At that time, the government had refused an offer from the Reliance firm for a €8-million settlement. However, a new auditor took charge later that year, and on September 29, said that the company is “about to arrive at a settlement of between €7.5 million to €8 million”, according to the newspaper.

Reliance Communications confirmed in a statement following the report that it had paid around €7 million as settlement to French tax authorities but denied allegations that there was any “favouritism or gain” from this settlement.

No political interference, says France

France on Saturday also said there was no political interference in the tax settlement. “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,” French Ambassador to India Alexandre Ziegler said. “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.”

Narendra Modi acted as the ‘middleman’, Congress claims

Meanwhile, the Congress claimed that Prime Minister Narendra Modi had acted as a “middleman” for Ambani, and it was due to his “blessings” that the businessman got the tax waiver, PTI reported. “This is called zero sum choices, startling tax concession and Modi ‘kripa’ [blessings],” Congress chief spokesperson Randeep Surjewala told reporters. “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 chowkidar [watchman] is the thief.”

Rafale deal

Ambani’s newly-formed company Reliance Defence was in October 2016 chosen as a partner to fulfil the offset obligations in the Rafale deal. Indian Opposition parties have questioned the choice of a new company over the state-owned Hindustan Aeronautics Limited.

The Rafale deal was announced in April 2015 during a visit by Modi to Paris, and was signed in September 2016 after months of negotiations. Two weeks before Modi’s visit, Ambani had visited France and met the then defence minister and his top advisors, according to a report by The Indian Express in February.

Opposition parties in India claim that Ambani’s company was favoured for the deal because of his closeness with Modi. In September 2018, a French media outlet had quoted former President François Hollande as saying that his government “did not have a say” in choosing Ambani’s company for the deal. He had claimed the Indian government had proposed Reliance Defence’s name for the pact. However, Dassault Aviation, the manufacturer of Rafale jets, has repeatedly claimed that its choice of Reliance Defence was its own.