The Rafale deal affair got muddier with reports raising further questions about Narendra Modi government’s actions.
A report by The Hindu said the Indian government made major and unprecedented concessions, waiving critical provisions for anti-corruption penalties and making payments through an escrow account dropped days before the signing of the inter-governmental agreement (IGA).
Modi has been claiming to be waging a relentless war against corruption and justifying cases against political rivals on this basis.
Also significant is the fact that this and other important information on the “parallel negotiations” conducted by the Prime Minister’s Office and the National Security Adviser seems to have found been withheld from the material submitted by the government to the Supreme Court of India, The Hindu reported.
Another report in India Legal mentioned the curious case of Modi government appointing an officer from the Indian Audit and Account Services (IA&AS) as financial advisor to the Ministry of Defence (MoD). The post is traditionally reserved for Indian Defence Accounts Service (IDAS) cadres.
The IA&AS officer in question, 1984 batch’s Gargi Kaul, is sister-in-law of Supreme Court judge, Justice Sanjay Kishan Kaul who was part of the three judge bench of the apex court, also comprising Chief Justice Ranjan Gogoi and Justice KM Joseph, which had, on December 14, dismissed a bunch of petitions demanding a court-monitored investigation into alleged irregularities committed by Prime Minister Narendra Modi’s government in finalising the Rafale deal.
A day after the Supreme Court verdict, on December 15, Gargi Kaul was empanelled by the Centre at the rank of Secretary, Government of India. Ten days later, on December 24, she was transferred to MoD. Prior to her transfer, Kaul was serving as Additional Secretary and Financial Advisor to the Ministry of Civil Aviation.
While this report has not yet drawn much attention or ruffled any feathers outside IDAS, The Hindu’s report had the Congress launch a fresh attack on Modi government.
Congress chief Rahul Gandhi Monday launched a fresh salvo at Prime Minister Narendra Modi. Quoting The Hindu report, the Congress chief said, “Every defence deal has an anti-corruption clause. Reports suggest that the PM removed the anti-corruption clause. It is clear that the PM facilitated loot.” Taking to Twitter, he wrote, “NoMo anti-corruption clause. The Chowkidar himself opened the door to allow Anil Ambani to steal 30,000 Cr. from the IAF.”
The Congress said the Rafale deal is “unravelling” faster than the government thought, with issues such as “parallel negotiations” by the PMO and changes in the standard defence procurement procedure coming to the fore.
Senior Congress leader and former finance minister P Chidambaram said in a series of tweets, “First, it was the loading of the India Specific Enhancement costs on 36 aircraft instead of 126 aircraft giving a bonanza to Dassault. Then it was the revelation that ‘parallel negotiations’ were being carried on by PMO undermining the efforts of the Indian Negotiating Team.”
Now it is revealed that crucial changes were made to the clauses in the standard Defence Procurement Procedure, he said. “No sovereign guarantee, no bank guarantee, no escrow account, yet a huge amount was paid as advance,” Chidambaram alleged.
Lashing out at the Modi government, he said, “No penalty clause for undue influence, no clause against agency commission, no clause for access to suppliers’ accounts, and Dassault goes laughing all the way to the bank.”
Citing the media report, Congress’ chief spokesperson Randeep Surjewala said, “Modiji, after waiving off sovereign guarantee in Rafale deal, you also waived off the ‘anti-corruption measure’ of a ‘safeguard Escrow A/c’! What is the corruption you wanted to hide?”
The whole country is abuzz that “chowkidar chor hai”, he said.
The Congress on its official Twitter handle, asked: “Throwing all good sense to the wind, the PMO also discarded the advice to create an escrow account under the control of the French Govt to release payments from India. Instead it chose to pay Dassault upfront in advance. Who was the PMO trying to benefit?”
“After the PMO forced the waiver of a sovereign guarantee, it now turns out the PMO asked for the WAIVER of standard ANTI-CORRUPTION clauses. Who was the PMO trying to shield? There is no doubt that #ChowkidarChorHai”
The Hindu report states that the government gave “major and unprecedented concessions” to the French side when the Rafale deal was signed between the two countries. This included dropping of “critical provisions for anti-corruption penalties and making payments through an escrow account”.
According to the media report, 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 Modi government.
The newspaper further cites official documents that reveal that 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. The agreement and the documents had been approved by the Cabinet Committee on Security chaired by Prime Minister Narendra Modi before that on August 24, the report adds.
The most significant among these eight changes, recorded in a note signed by Vice Admiral Ajit Kumar, DCIDS (PP&FD) who was the member-secretary of the DAC, is at sub-para (c). This states: “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 Hindu further quotes a dissent note by signed by three members of the Indian Negotiating Team that said: “…it is not advisable to sacrifice the basic requirement of financial prudence.”
The Rafale deal was signed between India and France under the terms of DPP-2013. Despite the procedure 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 report says.
The Hindu in its report says this was significant because 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.
After the introduction of a letter of comfort, another proposal that was turned down was one proposed by former defence bureaucrat Sudhanshu Mohanty
This came on the back of another turned-down proposal to have an escrow account operated by the French government. The Indian government would then release money to the account and France would make further payments to the firm as per terms agreed to by both governments as per the IGA.
“This would make French Govt. morally and materially responsible for the procurement so proposed,” Mohanty is quoted as saying in a separate note reported by The Hindu.
The newspaper had earlier reported on the defence ministry’s reservations to “parallel negotiations” conducted by the PMO in the deal.
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