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Rafale controversy

Limits of credibility

Published : Sep 26, 2018 12:30 IST

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Defence Minister Nirmala Sitharaman addresses a press conference, in New Delhi on September 18.

Defence Minister Nirmala Sitharaman addresses a press conference, in New Delhi on September 18.

Congress leaders (left to right) Mukul Wasnik, Ghulam Nabi Azad, Anand Sharma, Randeep Singh Surjewala, Ahmed Patel and others after submitting a memorandum on the Rafale deal at the Comptroller and Auditor General of India office on September 19.

Congress leaders (left to right) Mukul Wasnik, Ghulam Nabi Azad, Anand Sharma, Randeep Singh Surjewala, Ahmed Patel and others after submitting a memorandum on the Rafale deal at the Comptroller and Auditor General of India office on September 19.

The government faces questions on its claims of ignorance about the working details of the Rafale deal and the bypassing of due process in finalising it.

The opposition insists that what the Bofors scandal was for the Congress party, the Rafale deal will prove to be for the Bharatiya Janata Party (BJP). The BJP’s apologists in the media are trying to airbrush the alleged scam as resulting from “stupidity” and other character flaws of the BJP government. Anil Ambani’s Reliance is trying to muzzle any reportage or discussion around it by sending “cease and desist” notices to Congress leaders and the media. Ministers in the BJP government are coming up with new explanations every day to defend the deal. So far, the procurement of Rafale fighter jets has kicked up a political storm that refuses to go away.

On September 11, Advocate Prashant Bhushan, along with Yashwant Sinha and Arun Shourie, Ministers in the earlier National Democratic Alliance (NDA) governments, met the media to explain how the deal compromised India’s national security while bypassing established norms. They accused Prime Minister Narendra Modi of unilaterally striking a deal disregarding the Indian Air Force’s (IAF) requirements in a “totally arbitrary and illegal manner”. After the Bofors scandal had exposed the loopholes in procurement policies, an elaborate defence procurement mechanism had been formulated to prevent scams, Bhushan said. According to the Defence Procurement Procedures (DPP), all capital acquisitions should be determined by the relevant Services Head Quarters (SHQ). In the Rafale case, the IAF should have been the authority to determine and initiate proposals on how many aircraft were to be acquired and decide the specifications. The Prime Minister, the Defence Minister, the National Security Adviser (NSA), the IAF chief, the Cabinet Committee on Security, and even the Defence Acquisition Council (DAC) cannot initiate any new deal, said Bhushan. By announcing a deal unilaterally, the Prime Minister had bypassed the procedures and “kept the IAF, the Defence Ministry, and the External Affairs Ministry in the dark about the new deal until the very last moment,” he said.

Terming it the largest defence scam that the country had seen, several times larger than Bofors in its magnitude, Bhushan, Shourie and Sinha accused the government of hiding behind the veil of secrecy because it knew that the Prime Minister himself was guilty of criminal misconduct as defined in the Prevention of Corruption Act. They claimed that all this made it clear that “the obfuscation of truth and all the lies being told are to protect the Prime Minister himself”.

The original plan was to procure 126 fighter jets based on the IAF’s requirements and specifications. The second United Progressive Alliance (UPA) government signed a deal in March 2014 for the procurement of that many jets. Eighteen of these were to be manufactured in France and procured in a ready-to-fly condition. The rest were to be manufactured by Hindustan Aeronautics Ltd (HAL) in India through a transfer of technology arrangement that Dassault Aviation, the maker of Rafale, had agreed to. A work-share agreement was signed with HAL. Barely a year later, a fortnight before the new deal was announced, Eric Trappier, CEO of Dassault, stated in the presence of the IAF chief and the HAL Chairman that he was more than delighted with HAL as a partner and expected the deal to be signed in a few days.

Bhushan said: “This means that just 17 days before the announcement of the new deal, the IAF chief, HAL chief, and Dassault’s CEO were clueless about any new deal.” Just two days before the new deal was announced, India’s Foreign Secretary stated that the original deal was under process and HAL was very much part of it. “This means that even two days before the new deal, the original deal was under process with HAL as a part of it and the Foreign Ministry too was clueless about the new deal. In fact on the morning of April 10, 2015, the day the deal was announced, the then French President, Francois Hollande, is on record as stating that discussions were ongoing about the old 126 aircraft deal and that discussions were in an advanced stage… In effect even the French had no clue about any new deal and were totally taken by surprise by Mr Modi’s unilateral decision to summarily junk the old deal. President Hollande even states ‘that any hasty announcements would go against the goal desired’. It is absolutely remarkable that when the IAF chief was unaware, when the Foreign Secretary was unaware, when even the French President was unaware, Mr Ambani had the most exceptional of foresights to incorporate the firm that would eventually benefit out of the deal, just 12 days prior to the announcement of the deal,” he said.

It later came to light that a couple of days before Hollande came to Delhi as the Republic Day chief guest and signed a memorandum of understanding with Modi for delivering 36 Rafale aircraft on January 26, 2016, Anil Ambani’s Reliance Entertainment entered into a deal to produce a film with the actor Julie Gayet, Hollande’s partner. “This is only the latest in a series of ‘coincidences’ to tumble out. The first was Mr Ambani’s fortuitous foresight to incorporate his firm merely 12 days before the old deal was killed and the new one announced when even the IAF Chief did not know about the new deal. While the government pleads cluelessness about all the facts of the deal, Mr Ambani seems to always know what the government is going to do next. As this deal is further investigated it wouldn’t surprise us if many such ‘coincidences’ come to light,” said Bhushan.

Pointing to Finance Minister Arun Jaitley’s Facebook post, Shourie said, “It is evident from Mr Jaitley’s statement that approval of the Defence Acquisition Council was given only on May 13, 2015, that is, more than a month after the Prime Minister had already announced the new deal. As per the procedure, approval of DAC is a condition precedent. Government has put out that the Prime Minister took a ‘political decision’ to acquire 36 planes in a fly-away condition. And this he did exercising the discretion available to him under the Defence Procurement Procedure. This is absolutely false. No such discretion exists. On the contrary, the well-thought-out Defence Procurement Procedure curbs the discretion available to politicians and bureaucrats to prevent the sort of defence scandals that have consistently plagued the country. The entire object of the procedures adopted was to prevent the nexus of politicians, businessmen, and babus from thrusting decisions on our armed forces disregarding their requirements and specifications for extraneous considerations and illegal gratification. Prime Minister and his government have turned the entire DPP on its head. As we will show, the ‘political decision’ under governmental ‘discretion’ is to be exercised after due recommendations from the IAF, Ministry of Defence, Ministry of Finance, DRDO [Defence Research and Development Organisation], and various other institutions and after approval from the DAC. In this case, it was exercised before the due recommendations were made and approvals given. A ‘political’ decision was taken and presented as fait accompli and ex post facto approval was sought from the DAC. The sanctity of the entire process stands vitiated. The helplessness of the entire Ministry of Defence can be gauged from then Defence Minister Manohar Parrikar’s statement just three days after the deal. He said, ‘Modi ji took the decision; I back it up.’ The problem is that Modi ji did not have the authority to exercise the discretion that he did. He had no authority to usurp the powers of various institutional authorities.”

The government earlier courted controversy when it said the price of the deal could not be revealed on account of some secrecy agreement of 2008. But Parrikar had disclosed the price to the Lok Sabha in November 2016 as Rs.670 crore an aircraft. Under the new deal, the price per aircraft is about Rs.1,660 crore, as stated by Dassault Reliance Aerospace Limited and reflected in Dassault’s financial statement. At the press conference, the two former Ministers and Bhushan questioned the financial wisdom of the new deal. The government has explained that the increase in price was because of India-specific enhancements or weapons upgrade.

But Shourie rebuffed the claim and said there were no India-specific enhancements other than the ones that were already part of the earlier deal.

“The total cost of Rs.90,000 crore disclosed by Parrikar, just three days after the original deal was signed, included not only the manufacture of planes but also the setting up of infrastructure, establishing of supply chains, and developing of vendors. Even after all these processes, the cost per plane would have been less than Rs.715 crore. In the current deal, we get 36 aircraft in fly-away condition, that is, fully produced in France, at a cost of Rs.60,000 crore. This makes the cost of the same plane with same specifications rise up to a whopping Rs.1,667 crore. If there is such a cash crunch, what justifies this increase in up to Rs.1,000 crore per aircraft? Considering that the IAF still needs the rest of the planes to maintain an optimum requirement of 42 squadrons, what would be the eventual final cost of procuring the rest of the planes to ensure that the strength of IAF remains around 42 squadrons?” Shourie asked.

Through separate statements, Anil Ambani and Arun Jaitley have maintained that the Indian government has no role in the selection of the offset partner and Dassault is free to choose any partner for the discharge of its offset obligations. Defence Minister Nirmala Sitharaman has also asserted that she does not know which company Dassault Aviation was partnering with to execute the offset obligations as the government had no role in selecting an offset partner of Dassault.

Shourie, Sinha and Bhushan rubbished such claims and said that the clauses under Offset Guidelines required Dassault to provide the details, including the breakdown of Indian Offset Partner’s (IOP) work share, to the Defence Minister at the time of execution of the offset contract, which in turn had to be executed simultaneously with the main procurement contract. They said that for the government and Ambani to now claim that they were not, and under the regulations were not required to be, aware of the details of the IOPs was a falsehood that just could not be maintained in the face of mandatory requirements of the Guidelines.

Meanwhile, Nirmala Sitharaman has defended the Rafale deal and refuted the charges against her Ministry. She said that the deal could not be equated with the Bofors gun purchase as she had rid the Defence Ministry of middlemen entirely. She reportedly said that the people of the country had put a closure on this “non-issue” as they had trust in Modi. Bhushan said that while there was no evidence or even accusation of kickbacks, the infrastructure for corruption to thrive had been put in place through the inclusion of a private player, the Ambanis, in the deal.

Anil Ambani’s move to gag the press and the opposition has come under flak. On August 2, three companies owned by him, Reliance Infrastructure Ltd., Reliance Defence Ltd. and Reliance Aerostructure Ltd., served a cease and desist notice on The Hindu and Newsclick against publishing “unverified and speculative” reports relating to the offset contract that was part of the Rafale deal. The notice was served on The Hindu’s Editor Mukund Padmanabhan and its publisher, N. Ravi, and Newsclick Editor Prabir Purkayastha and journalist Gautam Navlakha and served through their legal counsel Mulla & Mulla and Craigie Blunt & Caroe.

According to Newsclick, the letter it received said that a “vilification campaign at the instance of corporate rivals and some political parties is being undertaken to deliberately besmirch their clients which will adversely affect their shareholders”.

Soon after, in an unrelated case, Gautam Navlakha’s house was raided and the Pune Police arrested him under the stringent Unlawful Activities (Prevention) Act. The Reliance Group also sent notices to nine Congress leaders asking them to “avoid, cease and desist” from making what it called “false and defamatory statements” on the Rafale deal. The wording of the notice was similar to what was sent to the media houses and named senior Congress leaders Randeep Surjewala, Ashok Chavan, Sanjay Nirupam, Anurag Singh, Oommen Chandy, Shaktisinh Gohil, Abhishek Singh, Sunil Jakhar and Priyanka Chaturvedi.

(This story was published in the print edition of Frontline magazine dated Oct 12, 2018.)

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