The Hindu : Front Page : Dassault had middlemen, say court documents

Online edition of India's National Newspaper
Wednesday, Oct 27, 2004

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Dassault had middlemen, say court documents

By Vaiju Naravane

PARIS, OCT.26. According to court documents obtained by The Hindu , Dassault International and two other French armaments companies had in fact retained the services of a Panamanian company, Keyser Incorporated, to help them obtain contracts for the sale of Mirage 2000 jets to India. Dassault has always denied employing middlemen in prospecting for defence contracts with India.

The judgment, handed down on September 11, 2002, by the Tribunal de Commerce de Paris, also indicates that the Indian Government was not aware of the hiring of middlemen by Dassault.

The judgment pertains to a case filed by Keyser Inc against Dassault International for non-payment of commission. Dassault, in its arguments before the court, accused Keyser Inc. of threatening to blow the whistle and inform the Indian authorities of the existence of the agreement if the commission was not paid.

Contacted by The Hindu , Yves Robins, Vice-President of Dassault International, said his company did not normally comment on defence deals where confidentiality was vital. When pressed by this correspondent on the fact that although no commission had changed hands in this case, Dassault International had, in effect, prior to December 31, 1998, engaged the services of a company with the express motive of securing a contract for the sale of Mirage jets to India, Mr. Robins said, "No comment."

The judgment reveals that the services of Keyser for the express purpose of undertaking "promotion with a view to sell Mirages 2000 [aircraft] to the Government of India" were first contracted under an agreement signed on September 24, 1996, and subsequently renewed twice, on June 30, 1997, and July 10, 1998. The contract expired on December 31, 1998.

The judgment makes no allusion to any "market-related research in Asia" but speaks specifically of Keyser being hired to promote sales of Mirage 2000s to the Government of India.

In its suit Keyser contended that the agreement with Dassault had been renewed by a tacit, non-written understanding, and that the agreed commission was due. According to the judgment, Dassault and its partners promised Keyser a commission of 2.5 per cent of the total value of the contract (which was worth 346,913,300 euros) if it succeeded in brokering a deal. The commission was never paid because at the time that the deal finally materialised, on September 19, 2002, the contract between Dassault International and Keyser Inc. had lapsed. Dassault had failed to renew it in writing.

Keyser told to pay up

The court rejected Keyser's claim of a tacit renewal on the grounds that meetings, exchange of faxes and other correspondence between them continued as before. The court called upon Keyser to return to Dassault with interest the $100,000 advance it had received against an eventual commission, payable only if their agreement was still in force when the contract for the sale came through.

Asked to comment on reports alleging the use of middlemen by Dassault, India's Ambassador to Paris, Dilip Lahiri, told The Hindu : "The reports appearing in the Indian press are factually totally incorrect. The court has dismissed the claims of the Panamian company as being without basis and has asked it to return the advance of $100,000 it was paid."

However, these facts could be embarrassing and damaging to Dassault. The company has always denied it engaged middlemen to further its commercial interests in India. Dassault hopes to sell another 125 Mirage aircraft to India and although no commission appears to have been paid in this particular instance, these revelations about Dassault's practice of hiring middlemen (the court noted that Keyser has had close dealings with Dassault in the past as well) may jeopardise future sales.

In recent years, the norms in India for defence procurement contracts have been tightened to exclude middlemen and the payment of commissions. In the light of this, Dassault's hiring of middlemen, even for a fruitless, intermediary period, could jeopardise future offers.

These revelations come at an awkward time for the French Foreign Minister, Michel Barnier, who begins a two-day trip to India on Wednesday.

Keyser had decided to appeal the judgment of the Tribunal de Commerce de Paris. A week before the hearing on September 3, 2004, it withdrew its case, giving rise to speculation that an out-of-court deal had been struck with Dassault.

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An out-of-court settlement?

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