Rafale deal: Modi government waived anti-corruption clauses, reports The Hindu

After reporting “parallel parleys” conducted by the Prime Minister's Office in the controversial Rafale jet deal, The Hindu on Monday has come out with another exclusive story, claiming that Modi government also “overruled Financial Advisers’ recommendation for an escrow account after PMO forced a waiver of sovereign or bank guarantee.”

In his third investigative report on the controversial multi-billion dollar Rafale jets deal between India and France, veteran journalist and the Hindu publishing group chairman, N Ram has disclosed that the Rafale deal, “involved major and unprecedented concessions from the Indian government, with critical provisions for anti-corruption penalties and making payments through an escrow account dropped days before the signing of the inter-governmental agreement (IGA).”

While the IGA dropped crucial procurement safeguards, it stated, three members of the negotiating team had signed a dissent note on the moves, maintaining that “it was not advisable to sacrifice basic requirement of financial prudence.”

“This direct dealing with the commercial suppliers, under cover of an IGA, was highlighted in a detailed note of dissent signed by three members of the Indian Negotiating Team — M.P. Singh, Adviser (Cost), A.R. Sule, Financial Manager (Air), and Rajeev Verma, Joint Secretary and Acquisitions Manager (Air),” the report claimed.

It explained that “the high-level political intervention meant that standard Defence Procurement Procedure (DPP) clauses on ‘Penalty for use of Undue Influence, Agents/Agency Commission, and Access to Company accounts’ of Dassault Aviation and MBDA France were dropped by the Indian government in the supply protocols. Under the terms of the IGA signed between India and France in Delhi on September 23, 2016, Dassault is the supplier of the Rafale aircraft package while MBDA France is the supplier of the weapons package to the Indian Air Force.”

It added: “the Defence Acquisition Council (DAC) chaired by the then Defence Minister, Manohar Parrikar, met in September 2016, and ‘ratified and approved’ eight changes in the IGA, supply protocols, offset contracts and offset schedules. This was done after the IGA and associated documents had been approved by the Cabinet Committee on Security (CCS), chaired by Prime Minister Modi on August 24, 2016.”

According to the report, the most significant among these eight changes, recorded in a note signed by Vice Admiral Ajit Kumar, who was the member-secretary of the DAC, stated: “Non-inclusion of the Standard DPP Clauses related to ‘Penalty for Undue Influence,’ ‘Agents/Agency Commission’ and ‘Access to Company Accounts’ in the Supply Protocols.”

“The Rafale deal was signed between India and France under the terms of DPP-2013. The Standard Clauses in Contract are mentioned in Enclosure 8 of DPP-2013,” it said and added: “Despite the DPP stating explicitly that the Standard Contract Document ‘would be the guideline for all acquisitions’, the Indian government chose to remove these clauses from the supply protocols with the two private defence suppliers.”

“The government also chose to do away with a sovereign or bank guarantee from France and settled for a letter of comfort, which is not legally binding, from the French Prime Minister,” it further disclosed.

It also stated that the then Defence Secretary, G. Mohan Kumar had in fact endorsed a protest note in his own hand on November 24, 2015.

The need for a sovereign or a bank guarantee was also highlighted by the Ministry of Law and Justice in its communications to the Defence Ministry, it added.

Remarkably, the report said that neither the information regarding “parallel negotiations” conducted by the PMO nor the National Security Adviser seems to have found a place in the material submitted by the government to the Supreme Court of India.

While the Supreme Court is yet to hear an application filed by the government on December 15, 2018, for a correction in the Rafale judgment, clamour has already started growing with Opposition parties demanding that the verdict on the Rafale deal should be recalled.

Former editor and former Union Minister Arun Shourie, who had moved apex court over the controversial deal, on Friday had said that that the Supreme Court judgment on the plea on Rafale deal, had only diminished judiciary’s credibility.

Similarly, former additional solicitor general and senior advocate Indira Jaising has pointed out that “When there is an error in something which goes to the heart of the matter, the judgement has to be recalled. The judgement cannot be considered to be a judgement in the eye of law. It is simply not a judgement.”

The government in its application had claimed that the apex court judgment erred in English grammar to “misinterpret” information submitted to it in a sealed cover note about the pricing of the deal for 36 Rafale jets.

The original report in The Hindu can be read here.