The curious case of the Rafale deal

It should not come as a surprise that neither the Indian nor the French Government is too keen to investigate corruption charges into the Rafale fighter plane deal. Both governments have publicly stated that it is in the interests of the respective countries to ignore the allegations.

While the interests have not been spelled out, the French indeed suggested that they were browbeaten by the Indian government into accepting Anil Ambani as its principal offset partner in India and drop the public sector undertaking Hindustan Aeronautics Ltd. The then French President Francois Hollande is on record saying that Ambani was foisted by the Indian government.

That the Indian Government led by the PM Narendra Modi opted for Anil Ambani’s two-week old company with no experience in aviation was only a part of the scandal that was brushed under the carpet. Even six years after the Indian Prime Minister dramatically and unilaterally scrapped the earlier deal, negotiated over a period of three years by defence officials and experts, questions remain unanswered.

The most important one is the basis of reducing the indent for 126 fighter jets to just 36. Nor has been explained why the Modi Government scrapped the indigenization clause in the deal under which as many as 108 fighter jets were to be manufactured in India under license from the French manufacturer.

It would have created employment in India and developed HAL’s expertise. The then Indian defence minister Manohar Parrikar was also on record saying that he was not aware of the new deal. But rather than clearing the air and answering these questions, the Indian government fell back on a laboured CAG report and a Supreme Court order on technicalities.

Its reluctance to allow even a Joint Parliamentary Committee (JPC) to look into the details, which would have allowed the Parliament to summon and question officials involved, is in sharp contrast to its conduct on the AgustaWestland Helicopter deal. While ‘Choppergate’ worth Rupees three and a half thousand Crore and 12 helicopters continues to be investigated for the past seven years, the Indian government’s conduct in stonewalling investigation into the Rs 59,000 Crore worth Rafale deal is both glaring and inexplicable.

New disclosures made by French portal Mediapart have raised fresh questions. In the second part of its investigation, the portal drew attention to President Emmanuel Macron, then the Economy minister under President Hollande, approving a tax adjustment for a French subsidiary of Ambanis. The approval reportedly reduced the subsidiary’s tax liability from 156 million Euros to just 7.6 million Euros.

The portal also pointed to what was already known, that an Anil Ambani company invested 1.6 million Euros in a film produced by French actress Julie Gayet, who was President Hollande’s partner at the time. It also revealed that the French manufacturer of Rafale, Dassault, failed to explain to French investigators why it paid an Indian middleman a million Euros to make 50 large replicas of Rafale, each the size of a small car, as ‘gift for clients’.

The portal pointed out that under French law, giving an expensive watch or hosting an expensive meal worth a few hundred Euros are deemed to be a corrupt practice. Above all, Dassault failed to explain why the replicas had to be made in India since the planes themselves were being manufactured in France. India was clearly the loser but ironically it is the French media which is pursuing the curious case of Rafale fighter jets.