Top Rafale Negotiator’s Defence of PMO Raises Even More Questions

Air Marshal SBP Sinha insists there was no government interference in Rafale negotiations. Do his claims check out?

PM Modi (L) never interfered in the Rafale deal negotiations, says Air Marshal SBP Sinha (C).

(Photo: Kamran Akhter/The Quint)

The Hindu’s article about the Prime Minister’s Office’s “parallel negotiations” for the Rafale deal has kicked up quite a storm, even by modern standards. Rahul Gandhi and Nirmala Sitharaman have traded blows, while N Ram stands solidly behind his expose. Letters from French prime ministers are being hurriedly pulled out to justify aspects of the deal, and we’ve learned that the article doesn’t include Manohar Parrikar’s response to the claims of undermining.

In the midst of all the confusion, we finally heard from someone who should have been able to clarify things and definitively end the debate: Air Marshal SBP Sinha, leader of the Indian Negotiating Team (INT). The INT was the team of seven officials tasked with negotiating the commercial aspects of the Rafale deal, including the benchmark price and the general terms and conditions.

Speaking to ANI, Air Marshal Sinha said the note had nothing to do with the Indian Negotiating Team, and questioned the motives of Deputy Secretary (Air II) SK Sharma, who had written the note.

The Quint reached out to Sinha to follow up on this statement, but unfortunately, we are left with more questions than answers after speaking to him.

Question 1: What About the INT Member Who Signed the Note?

Sinha initially told The Quint that the note has “no connection or relevance to the Indian Negotiating Team.” When this was clarified to ask if any members of the INT had signed off on the note, he said “No, the person who has originated it is Deputy Secretary (Air II), who was neither part of the negotiating team, nor has any relevance to it.”

However, the note does bear the signature of the Joint Secretary and Acquisition Manager (Air) – who we knew to be part of the negotiating team, thanks to the government’s affidavit to the Supreme Court last year.

When this was put to Sinha, he just tried to brush it under the carpet, saying “it is surprising that he is party to a note on an issue which he has not brought out in the negotiating team.”

It is strange that the leader of the INT would have no clue whatsoever about a note signed by one of his team members, and that one of them did sign the letter does make his initial, categorical statement, untrue. Moreover, even if Sinha had no idea that the JS & AM (Air) – Rajeev Verma – had signed the note, this doesn’t mean the note wasn’t true.

Question 2: Was Manohar Parrikar Wrong About Degree of PMO Involvement?

Sinha has also inadvertently contradicted the much-touted response of then-Defence Minister Manohar Parrikar to the protest note. Current Raksha Mantri Nirmala Sitharaman had attacked N Ram’s article for selectively quoting the note and cropping Parrikar’s response from its photo of the last page of the note.

The full page was released by ANI, which shows Parrikar responded to the note on 1 January 2016, a month after the note was forwarded to him, saying:

“It appears that PMO and French presidents office are monitoring the progress of the issue which was an outcome of the summit meeting. Para 5 appears to be an over reaction.

Def sec may resolve Issue/matter in consultation with pr. sec to PM” (sic, emphasis added)

As can be seen in bold, Parrikar seemed to believe that the involvement of the PMO and the French president’s office at this juncture was just to monitor issues in the negotiation. Monitoring would not imply active involvement, meaning there was no interference or undermining.

But Air Marshal Sinha has a very different story to tell. According to him, the INT asked for a bank guarantee, but the French negotiators didn’t agree. As a result, the INT told them to “find out a solution and come back to us.”

When the leader of the French negotiators, General Reb, went back to France, he wrote back to Sinha that “his government has discussed with our government at Prime Minister’s Office level. So he said that they have discussed that they will give a comfort letter.”

Sinha has openly admitted that the PMO and its equivalent in France made the decision about dropping a sovereign/bank guarantee requirement, and accepting a comfort letter instead.

As is evident to anyone, this goes well beyond mere “monitoring”. If this is true, this would mean that Parrikar’s knowledge of the degree of the PMO’s involvement – which actually renders his response to the protest note irrelevant. Moreover, Sinha insists that nobody even discussed the note with the negotiating team – and confirmed that Parrikar didn’t consult the negotiating team before terming the note an “over reaction.”

Question 3: Why Did the PMO Not Consult With the MoD or Negotiating Team Before Agreeing to No Guarantee?

Let us assume that there was nothing untoward about the defence minister having no clue that the PMO and the French president’s office were sorting out negotiation points, without the INT being at the table.

The Defence Acquisition Council had mandated the INT to negotiate the terms and conditions, including “the responsibility and obligations of French Government, pricing, delivery schedule, maintenance terms, offsets, IGA terms, etc.” (see the government affidavit on the procedure followed for the Rafale acquisition). The question of guarantees versus letters of comfort clearly falls within this mandate, so one would imagine the INT needed to have a say in making this decision.

But according to Air Marshal Sinha, the PMO dealt directly with their French counterparts, and arrived at a decision which the INT had no clue about till they were informed of it by French lead negotiator General Reb in a letter.

According to Sinha,

“We decided since there is a reference to PMO in General Reb’s letter, we must inform the PMO. I wrote a letter on behalf of the negotiating team to the PMO saying that this is the letter that we have received, and annexed a copy of that letter for reference of PMO.”

This means the PMO did not consult the INT when it agreed to drop the requirement for a sovereign guarantee or a bank guarantee. It may well be that the INT would have not objected to settling for a letter of comfort, but it was imperative for the PMO to ask the question.

What makes this even more pertinent is that, as The Quint revealed in November 2018, three of the seven members of the INT had specifically objected to the lack of bank guarantees.

According to a note from the Defence Ministry, this objection was referred by the INT to the Defence Acquisition Council (DAC) and the Cabinet Committee on Security (CCS). According to that note, the DAC and CCS said the issue would be resolved because a “sovereign guarantee provided by the French President is adequate.”

This directly contradicts what Sinha says – that the matter was taken up by the French with the PMO.

Question 4: How Could Air Marshal Sinha Have No Knowledge of the ‘Note of Concerns’ by Rajeev Verma, AR Sule, and MP Singh?

The Quint and the Economic Times have both done stories relating to a ‘Note of Concerns’ by three members of the INT, in which they had raised 10 objections to the deal. These ranged from the determination of the benchmark price to concerns over the financial health of Dassault, and the Defence Ministry produced a detailed note explaining how each of these issues was resolved.

Air Marshal Sinha denied any knowledge of the objections in it being raised by those three members with the rest of the INT:

“I am not aware of any such objections being raised”

This is interesting because the Defence Ministry note specifically states that several of these objections, including those on the benchmark price, were resolved by a 4:3 vote among members of the INT. The most prominent example of this was of course the increase in the benchmark price from EUR 5.2 billion to EUR 8.2 billion, which was necessary for the deal to be commercially viable.

If the INT voted on these issues, how is it possible that the leader of the INT had no knowledge about the objections raised? Is this merely a question of Air Marshal Sinha momentarily forgetting what happened back then, or is this a deliberate obfuscation? This clear contradiction is also why one could have reservations over whether or not the JS & AM (Air) actually failed to inform Sinha about the protest note (see Question 1).

Question 5: What About the Arbitration Issue?

A final point to note is that the sovereign guarantee issue is only cited in the MoD protest note as one of the examples of how the PMO was undermining their negotiating position.

And yet, when asked about the note, Air Marshal Sinha focused only on the sovereign guarantee issue, for which he had his explanation.

He had nothing to say about the other issue specifically flagged in the note – the decision to accept arbitration of disputes outside India – which was a key concern for the Defence and Law Ministries (see for example this article in the Caravan).

That Sinha seemed to think the note was only about sovereign guarantees is interesting. He was very articulate on how sovereign guarantees weren’t the norm, and that India had never had a government-to-government agreement with a sovereign guarantee in it. But a similar argument is tougher when it comes to the arbitration issue, especially since all India was getting was a letter of comfort. It will be important to ask these follow-up questions to the Air Marshal and others who have defended the PMO’s actions, and see what responses we get.