Modi Govt Waived Anti-Corruption Clauses in Rafale Deal: Report

These changes are crucial given that supply protocols involved two private companies Dassault and MBDA.

A French Dassault Rafale fighter plane. 

(Photo: Reuters)

Yet another revelation in the Rafale deal came to the fore on Monday, 11 February, after a report said that the Centre had waived crucial provisions for anti-corruption penalties just days ahead of signing the inter-governmental agreement (IGA) with France.

A report by The Hindu said that as a result of the high-level political intervention, the 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.

This assumes significance given the Narendra Modi government’s anti-corruption poll plank, which is often invoked by the prime minister to attack the erstwhile UPA regime ahead of Lok Sabha elections.

Official documents accessed by the national daily also revealed that the Defence Acquisition Council (DAC), chaired by the then Defence Minister Manohar Parrikar, had “ratified and approved” eight changes in the agreement (IGA), supply protocols, offset contracts and offset schedules in September 2016.

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 24 August 2016, the report added.

These changes are significant given that the supply protocols were to be executed by two private companies Dassault and MBDA.

Anti-Corruption Clauses

The government had signed the Rafale deal as per DPP 2013 terms. However, it chose to remove/alter certain sections of standard clauses “on penalties for the use of undue influence, an integrity pact, agents/agency commission and Access to book of accounts,” The Hindu report said.

The government also did away with a clause requiring that an escrow account be operated by the French government to make payments to the two companies.

The Quint had reported in December last year that France had not provided a sovereign guarantee to India for the delivery of 36 Rafale aircraft, but had only provided a letter of comfort, which is not legally binding.

PMO Conducted ‘Parallel Negotiations’

The expose’ comes days after a report published by The Hindu quoted an internal Defence Ministry note suggesting there were “parallel negotiations” conducted by the Prime Minister’s Office with the French team over Rafale deal.

According to the report, the MoD had objected to these negotiations, which had purportedly “weakened” India’s negotiating position in the Rafale deal.

The note, dated 24 November 2015, was undersigned by the then Defence Secretary G Mohan Kumar, and Deputy Secretary SK Sharma, and was also brought to the attention of Parrikar.

“We may advise PMO that any Officers who are not part of Indian Negotiating Team may refrain from having parallel parlays (parleys) with the officers of French Government,” the Defence Ministry note cited by The Hindu said.

It further said that if PMO was not confident about the deal’s outcome, then a revised “modality of negotiations” could be adopted at an “appropriate level.”

Speaking to The Quint about the significance of the revelations, the report’s author, former Editor-in-Chief of The Hindu N Ram, said it was proof that the Modi government had actively misled the Supreme Court in the Rafale case.

“It’s highly improper, it’s misconduct. It’s not just parallel conversations or negotiations, it’s also done behind your back, without informing you,” Ram said.

“What this shows is that the government not only failed to give the information it should have given to the Supreme Court, but it actively misled the Supreme Court – because it made out that the Indian Negotiating Team was involved in this and the government certainly suppressed information regarding the role of the PMO in this case, in relation to the sovereign guarantee and the arbitration agreement and some of the other terms,” Ram said.

(With inputs from The Hindu)