The Rafale Deal: All those unanswered questions

A fascinating book uncovers the details of the biggest, most opaque defence deal India has seen

The Rafale Deal: All those unanswered questions

Avay Shukla

Given our robust ecosystem of corruption and the still lingering memories of Bofors, it is inevitable that our increasing purchase of defence equipment and arms would attract public scrutiny. India is the third largest spender on the military (2021) and the world’s third largest importer of arms; I might also add for context that we are ranked 85th out of 180 countries in Transparency International’s corruption perception index.

This is the background against which we must assess this monumental book by Parnajoy Guha Thakurta and Ravi Nair, two of our finest investigative journalists at a time when most of their colleagues (and posturing TV anchors) have either crawled into the widening cracks of the ‘fourth pillar of democracy’ or have donned the attire of cheerleaders of the present dispensation.

The writing of this book required not only meticulous research, dogged persistence, careful analysis but also plenty of courage.

The subject was always going to be a formidable challenge, spanning as it does eight years, two governments, national security, obsessive secrecy, bureaucratic obfuscation, judicial ambivalence and political manoeuvrings.

The Rafale deal consists of two parts: Rafale 1 relates to the first RPF floated in 2007 by the UPA (Manmohan Singh) government, and Rafale 2 (which scrapped the 2007 RPF and substituted it for a ‘flyaway’ order in 2015) belongs to the NDA (Modi) era. There are questions concerning both and the authors raise these questions, not lightly or with any obvious bias, but armed with documentation, authentic references, interviews and plain logic. It makes for engrossing, if disturbing, reading.

The authors reveal that Rafale 1 (18 jets in fly-away condition and 108 to be manufactured by HAL over 11 years) apparently lacked clarity on certain points, the main ones being the final cost, Dassault’s reluctance to stand guarantee for the jets manufactured by HAL, the India-specific modifications/additions. But the records show that these were not deal breakers—just grey areas—and there were no questions about its probity and rectitude, or whether it served the national interest.

In fact, the deal was even put on hold for a few months by the then defence minister, A.K. Antony. An investigation was carried out by the Central Vigilance Commission (CVC) and Rafale was declared the successful bidder only after the CVC found no fault with the decision-making process. In sharp contrast, the Modi era Rafale 2 is riddled with more holes than Emmentaler cheese, and is shown to be as transparent as a block of granite.

The book follows the trail of this deal from the date of its precipitate announcement in April 2015 by Prime Minister Narendra Modi in France, through the ‘selection’ of an Anil Ambani company as the default partner, the various stages of ex post-facto approvals (the government admitted in the Supreme Court that all approvals were obtained after Modi’s announcement), the public uproar, the questions in Parliament, the accusations by Opposition leaders, particularly Rahul Gandhi, the midnight coup in CBI when it appeared that its then chief (Alok Verma) might start investigating the case, to the farcical ‘clean chit’ delivered by the Supreme Court and the equally risible report of the CAG.

The authors point out in a responsible manner the violations, inconsistencies, contradictions and even illegalities that permeate this contract. In the best traditions of investigative journalism, every point is analysed with the help of documents, media reports and articles, official statements, Parliamentary records, interviews with important players in the transaction (some off the record/unnamed for obvious reasons but reliable nonetheless). They raise many questions, which are yet to be satisfactorily answered by this government even after seven years. The most important of them are:

  • What were the reasons for scrapping the 2008 deal for the purchase of 108 + 18 Rafale fighters seven years later, even though 95 per cent of the issues had been resolved and it was almost ready for signing

  • Given that the IAF was short of 12 squadrons and needed at least six squadrons urgently, did the reduction of number of aircraft from 126 to 36 not jeopardise the country’s defence capability? How does this jell with the government’s claim that this was an ‘emergency’ purchase, considering that under the new deal all 36 aircraft would be delivered in phases only by the end of the seventh year, whereas under the older RPF the IAF would have received 18 fighters by the fourth year itself?

  • What were the compelling reasons for side-stepping the comprehensive protocol for purchases as laid down in the DPP (Defence Procurement Policy) and for amending it in 2016 to favour a particular party?

  • What were the reasons for overruling three official members of the INT (Indian Negotiating Team) in the matter of pricing, and the law ministry on issues relating to lack of a sovereign guarantee, escrow account and venue of arbitration? Why were these three dissenting officers transferred out of the ministry within months?

  • Was there a connection between the midnight sacking of the then CBI director Alok Verma on the intervening night of 23-24 October 2018 and the complaint submitted to him by Prashant Bhushan, Arun Shourie and Yashwant Sinha?

  • Has the government been less than honest in steadfastly refusing to reveal the price of the aircraft, quoting a secrecy clause in the 2008 RFP which expired in January 2018? Is this clause even attracted in this matter since it relates to technical and operational parameters and not to pure commercial aspects?

  • All available evidence (including some intelligent reading of the CAG report) suggests that the price of 36 aircraft under Modi’s new deal was Rs 61,892 crore, which works out to Rs 1,719 crore per aircraft; the price tag for 126 fighters under the old UPA era deal was Rs 1,27,000 crore or Rs 1,000 crore per fighter plane. How is this 40 per cent escalation explained when all parameters and configurations were the same?

  • If the 2016 deal was a new transaction (after scrapping of the old one) why were fresh tenders/ RFP not floated as prescribed by the DPP? If, on the other hand, it was considered an extension of the old one, then why was the far cheaper offer of EADS (the European consortium manufacturing the Eurofighter Typhoon) not considered (it was already shortlisted, along with Dassault)?

  • If an agreement for 126 MMRCA had already been hammered out with Dassault in 2014, why were fresh tenders floated for 110 MMRCA again in 2018, involving as they would higher prices and another waiting period of 8-10 years? Would this not further compromise the operational effectiveness of the IAF?

  • Why was HAL (Hindustan Aeronautics Limited) removed as the offset partner of Dassault even though it had already signed a workshare agreement with Dassault in March 2014? Even more mystifying, how was the new offset partner (Anil Ambani’s Reliance Defence Limited / Reliance Aerostructure, a two week old company with zero experience in defence manufacturing) deemed to be more suitable than HAL, the largest defence PSU in the country with 20 production divisions and experience of having manufactured 29 different types of aircraft/ helicopters, including the Sukhoi 30?

  • Did Prime Minister Modi not violate the sanctity of the DPP by making a unilateral announcement of the 36 Rafale purchase in France in April 2015, without consulting either the defence ministry or the IAF, and obtaining the consent of the Defence Acquisition Council or the Cabinet Committee on Security, as mandated?

  • Why was Dassault exempted from providing either a sovereign guarantee or a bank guarantee, and allowed to get away with a simple ‘letter of comfort’ which, according to the objections of our law ministry, offered no legal protection?

  • The law ministry had also objected to the venue of arbitration proceedings being kept at Geneva, instead of the usual practice of locating it in New Delhi: it was overruled on this too. Why? • What were the compelling reasons for deleting from the final agreement the ‘Integrity Pact’ or anti-corruption clause, a standard provision which had been incorporated into all defence purchase contracts after the experience of Bofors?

  • Did the Prime Minister’s Office (PMO) conduct clandestine parallel negotiations with Dassault even while the IMT was holding regular talks within the MoD with the company? This was the charge made by three senior officers of the IMT in a note dated 24 November 2015 submitted to the minister. Did this weaken the IMT’s negotiating position and leverage? .

The book devotes a whole chapter to the controversial selection of Anil Ambani’s Reliance Aerostructure as the offset partner. The authors subject this decision to intense interrogation on the basis of facts in the public domain and extensive interviews with people in the know.

There is also the public statement of the former French President François Hollande who has affirmed that Ambani’s firm had been suggested by India, that he had no choice in the matter and that it was a business trade-off! That Ambani was conferred a huge favour and that HAL had been knifed in the back by its own government—of this the authors’ findings leave no doubt at all.

The case ends up in the Supreme Court, as most government decisions do these days. The book analyses the SC judgment of 14 December 2018 which dismissed all petitions against the deal and refused to order any CBI investigation into it.

Strangely, the apex court limited itself to examining only the procedural aspects of the deal and did not go into the merits. But even in this the court, according to the authors’ analysis, chose not to look at the procedural violations of the DPP or the issue of pricing. The judgment is laced with factual inaccuracies, contradictions, assumptions; it relies heavily on unsigned notes submitted by the government in sealed covers which were never shared with the petitioners, and some of which were subsequently proved to be fallacious.

The most shocking error in the order was the finding that the deal had been examined by the Comptroller & Auditor General (CAG), who had found it be in order, and had forwarded it to the Public Accounts Committee (PAC) of Parliament. In fact, this had never happened (!), but it was made an important reason for dismissing the petitions. The ‘clean chit’ to the government was totally opaque and unconvincing, but it served the purpose of taking the heat off Modi and his government.

The authors go on to examine the CAG report which was laid in Parliament on 13 February 2019, heavily redacted in the pricing portions (a first in the history of India). The authors find that the report is essentially an effort to ‘justify the government’s arguments and its decision for the withdrawal of the [earlier] RFP and cancellation of the negotiations’.

It did, however, confirm some of the charges, mainly that no sovereign guarantee or bank guarantee was taken from Dassault. As a cover up exercise, it was successful but it does not cover the office of the CAG with glory.

The unanswered questions persist, notwithstanding the whitewashing by the government, CAG and the Supreme Court, and the issue appears to have reached a dead end in India.

An investigation of sorts has been started in France by PNF, the public prosecution service, on a complaint by Sherpa, an NGO. But governments across countries are the same everywhere, and it is not likely to result in any revelations: the French law and defence ministries have already refused to declassify/ release any documents relating to the deal.

This is a fascinating book, full of details and annexures, and not an easy read. But then, it is tackling an extremely complex and labyrinthine subject, the biggest defence deal in India’s history and perhaps also the most opaque; it investigates an establishment that covers up and dissembles at every step. It is the most comprehensive and complete account of the purchase contract so far, and will, in time, become important archival material.

It may also provide invaluable inputs if ever an independent and fair enquiry is allowed to be carried out into this display of the arrogance of power. For the moment, all one can do is repeat the words with which the authors hopefully conclude this book: Satyamev Jayate (the truth triumphs).

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