Will Serge Dassault’s Questionable Ethics Impact His Company’s Defense Business?

Serge Dassault, who heads Dassault Aviation, was taken into custody Wednesday for allegedly buying votes in Corbeil-Essonnes where he was formerly mayor.

Dassault in 1998 received a two-year suspended prison sentence in Belgium for bribing members of the Socialist Party to win a helicopter deal.

 Dassault’s Rafale aircraft won the Indian MMRCA contract in 2012, its first foreign fighter aircraft sale and the company is currently vying to supply jets to the UAE.  It will be interesting to see how India will view Dassault’s latest trouble with the law.

 While there is no direct link between Serge Dassault’s present and past brushes with the law and bids for military and civilian aircraft contracts abroad, it could be hugely embarrassing for India if Serge Dassault’s questionable ethics dominate world headlines.

 New Delhi maintains zero tolerance to corruption in defence procurement and recently disbanded a helicopter contract with AgustaWestland merely on allegations of bribery without the outcome an investigation in India and Italy.

Speculation was rife in the past year that the future of the defense side of Dassault could form part of a bigger consolidation with either Thales or Safran. However, the current status of this proposal remains unclear.

According to reports, the 88-year-old Dassault is “accused of running the suburb like a mafia don” and is currently is being questioned in the western Paris suburb of Nanterre.

The move comes a week after Dassault's parliamentary immunity was lifted, according to the Associated Press.

Dassault is suspected of “operating an extensive system of vote buying which influenced the outcome of three mayoral elections in Corbeil in 2008, 2009 and 2010, which were won either by Dassault or by his successor and close associate Jean-Pierre Bechter,” the report adds.

The vote-buying inquiry is connected to two shootings (considered to be attempted murder by the police) which took place is Corbeil.

As well as the alleged vote buying, Dassault could be charged with money laundering and misuse of public assets -- sufficiently serious crimes to raise the possibility of a prison term, the report said.

"I can prove my total innocence in these so-called buying of votes, accusations that have been invented by my political adversaries," Dassault was quoted as saying. "I am ready to cross this step".

Investigating judges are focusing on huge sums of money transferred between France and Lebanon, including one totalling €18m, which they suspect could have been used to buy votes. Of this sum, about €3m was sent back to France, according to The Guardian.