Rafale: Two Defence Ministry officials relatives of a Reliance official- is there something fishy?

An investigation by The Quint and Brut India has found out that the relationship between two senior Defence Ministry officials, and a consultant/employee of Reliance’s defence companies, has given rise to a potential conflict of interest, especially in regard to the offset contracts under the Rafale deal.

According to the report published in The Quint Prashant Narain Sukul was appointed as Additional Controller General of Defence Accounts (Addl CGDA) on 9 June 2016. This post was related to auditing and making payments for defence contracts. Then Prashant Sukul’s wife Madhulika Sukul was appointed to head the office as Controller General of Defence Accounts (CGDA) on 1 February 2018. Both the husband and wife have been serving in the Indian Defence Accounts Service since 1982. After that Madhulika Sukul was appointed as Financial Adviser (Defence Services) with effect from 31 August 2018.

The report further says that Prashant’s brother, Shantanu Sukul, who had retired from the Navy and become a defence sector lobbyist happens to have been working for Anil Ambani’s Reliance defence group since 2015.

The Quint report says that even if we look at it on a very cursory level, the mere fact that Madhulika and Prashant Sukul hold offices in the government, and Shantanu Sukul works for a company/group that is attempting to work with the government (and on contracts related to government), could be said to imply a potential conflict of interest.

This argument is reaffirmed by Rule 4(2)(ii) of the Central Civil Service (Conduct) Rules 1964, under which a bureaucrat is required to inform the government whenever a member of their family accepts employment at any company or firm. This obligation applies regardless of which department the bureaucrat works in.

Going by this interpretation of the rule Prashant and Madhulika Sukul should have disclosed that Shantanu Sukul had joined Reliance (and even his previous employers for that matter) regardless of their own roles at the exact time. However, such an interpretation of the rule is not accepted by everyone.

The Quint had sought responses of Prashant Sukul, Madhulika Sukul, Shantanu Sukul and Reliance in this context. In his response Prashant Sukul had indicated that he has not told anything to the government about Shantanu’s job. He said that in the course of his and Madhulika’s careers, their jobs never had any connection to his work, and so there was no question of disclosing a conflict of interest.

Interestingly, even Prashant Sukul mentions in his response there was no question of Madhulika having to disclose anything about Shantanu “until February 2018”, as till then, her work had nothing to do with Rafale or Reliance. In February 2018, Madhulika was appointed as CGDA, and since the Rafale deal involves public money and expenditure for the Armed Forces, she could very well have been involved in aspects of it. Thus, in a way his own response appears to have acknowledged a possibility of conflict of interest.

The Quint has found out in its investigation that the CGDA does have something to do with the Rafale deal – more specifically, the offset obligations under the deal. The government itself has admitted it in its reply to the Supreme Court.

Although The Quint categorically says that the purpose of disclosing this information is not to say that Prashant Sukul or Madhulika Sukhal have been involved in some wrongdoing. Nor does it want to say that if they continue to hold their posts next year then there would be some fudging in the Audit reports of the offset contracts.

But The Quint has stressed on the need to have clarity on some points. It says that before Madhulika and Prashant were appointed in CGDA, they knew that Shantanu is associated with the Reliance. They should have probably given this information to the government. Why is there no clarity over such rules for our bureaucrats?