A powerful French arms company is facing allegations that it used a secret and illicit system of paying middlemen to secure lucrative international contracts.

The claims against Thales, raised by a lawsuit filed in a commercial court near Paris, could jeopardise a much-needed French defence deal to India.

The French government is bracing itself for claims arising during court hearings based on a lawsuit by the Indian defence consultant Sanjay Bhandari, who says he was hired by Thales to secure a €2.4bn contract to upgrade Mirage 2000 military jets for the Indian Air Force. The contract was signed in 2011.

Mr Bhandari is asking the court to order Thales to pay him commissions that he says he is owed. The lawsuit is ongoing and a judgement is expected later this year.

The case comes with Thales and a French consortium currently negotiating with the Indian government to sell more Rafale military jets.

But talks are at a very delicate stage, because India could buy the F35 fighter jets from the US instead. If France loses out on another valuable defence deal after being frozen out by Australia on the submarine contract, that could be a catastrophic blow for President Macron.

Thales firmly denied Mr Bhandari’s allegations, saying it never signed a contract with him and that it complies with anti-corruption laws.

In his claim, seen by The Telegraph, Mr Bhandari alleges that from 2008 he helped Thales sell the upgrade of the Mirage jets by facilitating a meeting with the then Indian Defence Secretary, KP Singh. He claims that he was due a consultancy fee of €20m but was only paid €9m.

Mr Bhandari alleges this was due to political factors in 2016 when he was close to the Indian Congress Party. At this time the ruling BJP Party, which backs Prime Minister Modi, started persecuting him, he claims. He fled to the UK where he is currently fighting extradition on unrelated matters and is claiming political asylum.

Mr Bhandari is wanted in India for alleged tax evasion and money laundering. India is seeking his extradition from the UK and a hearing is due in London in the next few weeks. He claims that the charges against him are part of a plot by BJP supporters to discredit him because of his links with the previous Indian administration.

But it is the allegations that will emerge during Mr Bhandari’s case against Thales that could embarrass the French defence industry which has close ties to the government.

In his writ, Mr Bhandari states that he was told by François Dupont, then managing director of Thales India, about an elaborate financial covert scheme in India and Dubai which enabled the payment of secret commissions to intermediaries.

“This arrangement was presented as being a standard practice within the Thales group for the payment of commercial intermediation services, taking into account the regulations in force in France,” the claim states.

A special subsidiary called Thales Middle East & Africa is alleged to have been in charge of the deployment of these financial structures. The Thales executives included the president of Thales Air Systems, Guy Delevacque, and François Dupont, then managing director of Thales India.

Initially, it was agreed with India that as part of the Mirage 2000 modernisation contract, Thales would set up a technology transfer that would benefit local Indian industry. Part of the funds received were to be earmarked for this purpose. But these funds were in fact mainly used by Thales to make indirect payments to middlemen who were lobbying foreign governments, the lawsuit claims.

A Rafale jet flies and three Mirage 2000-N jets fly over the Arc de Triomphe in Paris on Bastille Day 2011

The claim alleges that in order to pay the commissions to Bhandari, Thales awarded offset contracts to two companies based in Bangalore, India. The companies would retain about 25pc of the price paid by Thales for services that could materialise in engineering or consulting.

In fact the remaining amount was paid to a Dubai-based company called UHY Saxena Consulting, the lawsuit says. But this company did not in fact provide any services to Thales other than the payment of the fees due to Bhandari on the designated accounts.

According to the claim: “This fictitious economic justification constructed by Thales also involved the conduct of an audit by the UK firm Ernst & Young. On February 14, 2019, Pierre-Marie Budin told Bhandari that the intermediary company involved in the financing package would be audited by Ernst and Young in order to ‘protect everyone’.

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”

A source close to Mr Bhandari said: “Bhandari helped Thales win the Mirage upgrade deal. But Thales – a powerful multi-national – sacrificed their former partner on the altar of Indian domestic politics and reneged on their side of the bargain. It’s a David versus Goliath but we know who won that fight in the end.”