HW English
Sanjay Jha

Rafale scam: The mystery deepens

defence

By now, most Indian households are as familiar with French company Dassault Aviation’s Rafale jets as they are with popular heartthrob with ripping muscles, Salman Khan.  A circuitous defence deal worth Rs 59,000 crores is centrifugal to the controversy. The Congress party led by a resolute Congress President Rahul Gandhi has relentlessly questioned the government on what appears to be a palpable case of crony capitalism gone horribly rogue. Mr Gandhi has held several press conferences on the alleged humongous corruption in the Rafale jet purchase, tweeted frequently and even brought up the matter in a much televised Lok Sabha address which culminated in the now celebrated hug of a flabbergasted Prime Minister Modi.

defence

Strangely, Modi has not uttered a single word in his defence; for a man otherwise known to have a fragile ego and never short of making virulent counterattacks, it has flummoxed many. The strategy of sending a smorgasbord of cabinet ministers ranging from an ill-prepared Defense Minister, a Finance Minister indulging in extravagant verbosity in his sketchy blogs, to would you believe it, Agriculture and Sports ministers has completely backfired.  The government is in a tangled mess of its own contradictory lies.

defence

 

Former BJP senior leaders Yashwant Sinha and Arun Shourie, now having openly rebelled against their party leadership have called it “the biggest defence scam in India’s history”. But Modi refuses to budge even as damning revelations have sporadically surfaced which corroborate Gandhi’s accusations; especially after former French President Francois Hollande stated that Reliance Defense was part of a “ new formula”, a fait accompli as an offsets partner recommended on a no-choice basis by PM Modi during his visit to Paris in April 2015. Subsequently, it has been leaked that Deputy CEO, Dassault told his staff that the Reliance contract was a “ trade-off”, “ compensation” for bagging the 36 aircraft deal. Modi ’s stubborn defiance of the call to order a JPC inquiry is therefore intriguing.  The government is now in a deep quicksand.

defence

While there are several doubtful inferences and coincidences that have already been raised, it is pertinent to point out five inconsistencies that have been cursorily overlooked.

  • Prime Minister Modi unilaterally overrode the recommendations of previous Indian Air Force chiefs who felt that India needed 7 squadrons; this after nearly eight long years of inspections, trials and negotiations with several competitive bidders. How did Modi arbitrarily decide on squadron size most apposite for national security during war-time, in the process dumbing down the opinions of air force veterans? From 126 to 36 is a significant downsizing of 72%; this was a major policy decision. Why was the transaction redacted? Is there a written document suggesting the altered position of the government with compelling reasons approved prior to Modi’s decision? Does Modi have the core competence to make this strategic call or was it another decision borne out of political authoritarianism, like the infamous GSPC investment that went kaput costing India Rs 20,000 crores?
  • The government says that this was a government-to-government transaction, but therein lies a catch. The total budget size is Rs 59,000 crore for 36 jets, but the offsets contract at 50% is a staggering Rs 30,000 crore, with a life-cycle business valued at Rs 1,30,000 crores. So is Modi government telling us that for a respectable volume of offsets business it was nonchalant about who got the deal? Really? And that too when Dassault Aviation and Hindustan Aeronautics, the original contender had already a work-share agreement that was 95% in place and was awaiting a formal sign-off announced publicly by the CEO Eric Trappier himself to IAF and HAL officers?
  • The explanation given that the purchased Rafale aircraft has more advanced weaponry systems etc appears specious, disingenuous to justify the 300 % price escalation ( from Rs 526 cr per aircraft to Rs 1670 cr ). Is the Modi government insinuating that the former Air Chiefs were buying a bare-skeletal body without the sophisticated equipment and accessories mandatory for a victorious air-combat? It is a bizarre charge, an outrageous twist with no commercial rationale. In fact, “ the same configuration” featured in the joint statement of Modi-Hollande in Paris; what was it referring to?  It insults the collective intelligence of the Air Force chiefs who scrupulously scrutinized the selection project. India is one of the largest defence importers and thus should normally have stronger negotiating clout. So why the dramatic surrender; no transfer of technology, a 300 % price hike, and the “ emergency purchase” concluding 7 years later in 2022 !!!!!! It is a conundrum and does not add up.
  • HAL is a profit-making public sector defence manufacturing company. It has declared a dividend of Rs 7940 crore over the last 10 years, a proof of its operating resilience and manufacturing capabilities. Why would the government shoot itself in its own feet by forsaking potential earnings when the life-cycle costs would have been Rs 130,000 crores? Besides, by giving the contract to Reliance, a tyro in defence offsets industry, wasn’t national security being compromised?
  • The purpose of offsets contract is to give the buyer-country the advantage of the local business, a creation of new logistics, reinvestment of profits, and help from a supply chain infrastructure. But surprisingly, the Reliance-Dassault joint venture was 51: 49, meaning Dassault would yet get a substantive 49% of the equity/earnings.  Does that not conflict with the very principle of offsets policy?

There are several questions, but all we have heard so far is convoluted spins. A biopsy of the deal is in the interest of the nation. One thing appears clear though; the Rafale jet is riding a gravy train.

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