After publishing a cropped note from the defence ministry to show that the ministry was against the Rafale deal, today The Hindu has come with another story in an attempt to derail the purchase of much-needed fighter jets by Indian Air Force.
In a story titled Government waived anti-corruption clauses in Rafale deal, veteran journalist N Ram alleges that Modi government bypassed standard procedures in inking the Rafale deal. It has come up with another note from the defence ministry, where the Financial Advisor (DS) was opposing the waiver of sovereign/bank guarantee in the deal signed with France. The not also says that in the absence of sovereign/bank guarantee, the French government should be involved in the deal, and the payments should be made to an Escrow account controlled by the French government, from where the payments should be released to the vendors as per terms and conditions.
N Ram writes that 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. This goes against the ongoing narrative that defence ministry was kept out of the loop in the deal and everything was handled by PMO. He says that change of these terms is a violation of the Defence Procurement Procedure (DPP), 2013, under which the deal was signed.
The article also says that provisions for anti-corruption penalties and making payments through an escrow account.
But it seems N Ram missed the section in DPP 2013 which is crucial for this deal. The Rafale deal is an Inter-Governmental Agreement (IGA) between the governments of India and France, and the section about the IGA in the DPP has been completely ignored in the Hindu report.
Section 71 of the DPP states that:
There may be occasions when procurements would have to be done from friendly foreign countries which may be necessitated due to geo-strategic advantages that are likely to accrue to our country. Such procurements would not classically follow the Standard Procurement Procedure and the Standard Contract Document but would be based on mutually agreed provisions by the Governments of both the countries. Such procurements will be done based on an Inter Governmental Agreement after clearance from CFA.
The DPP 2013, which was prepared during the UPA government, clearly states that in case of Inter-Governmental Agreements, Standard Procurement Procedure and Standard Contract Document will not apply and such deals will be done on mutually agreed terms of both the countries. Therefore, the government to government deal of the Rafale jet also involved changes in certain provisions of DPP, which was duly approved by the Defence Acquisition Council, the highest body supervising defence acquisitions in the country.
Section 72 of the DPP 2013 says that when an Inter Government Agreement is signed with a foreign nation, this agreement will safeguard the interests of the Govt of India. This implies that a separate sovereign/bank guarantee may not be required in the case of an IGA.
Section 75 of the DPP 2013 says that “any deviation from the prescribed procedure will be put up to DAC through DPB for approval”. This means in the interest of a particular deal, the deviation from the standard procedure is possible, provided it approved by the DAC. The Hindu article itself says that the deviations from the standard procedure was duly approved, so this means provisions of DPP 2013 was followed in signing the Rafale deal.
N Ram says that “the DPP stating explicitly that the Standard Contract Document would be the guideline for all acquisitions”, but the fact is that the same DPP allows diversion from Standard Contract Document in case of Inter Governmental Agreements in section 71, which makes the Rafale deal eligible for such diversion.
Now let’s come to the specific note The Hindu has published this time. At the first it must be noted that like the earlier note, this dissent note is also written by someone who was not part of the Indian Negotiation Team (INT) for the Rafale deal. Therefore, the officer may not be aware of the all details about the deals. Second, only the note without what was the response to it means nothing. This is same as N Ram publishing the earlier cropping the vital response of Defence minister.
When negotiations and discussions take place, lots of ideas are exchanged. Many points are raised, many of them are rejected by some, and ultimately a final decision is taken. After a final decision is taken with the consensus of all, the disagreements during the discussion phase cease to matter. Many of such disagreements or doubts may have been resolved or clarified already. Therefore, such dissent notes during the discussion phase of the Rafale deal does not mean that there was some major scam in the deal. It just means that healthy democratic discussion process took place while finalising the deal.
Air Marshal SBP Sinha,who headed Rafale negotiations from Indian side:Some notes being selectively picked up to prove a point.Fact is none of them are linked to Indian negotiating team. Indian negotiating team has forwarded its final report signed by all 7 members without dissent pic.twitter.com/OkynTx2355
— ANI (@ANI) February 11, 2019
Air Marshal SBP Sinha headed the INT for the Rafale deal, and he has already clarified that the final report was submitted by the team with signature of all the seven members, without any dissent. He has also pointed out that the notes being selectively published are from such persons who were not part of the negotiation team.
Coming to the anti-corruption clause, that is applicable for a direct deal with private companies only, where there are possibilities of bribes and middleman. In Inter Governmental Agreements, such clauses are waived as per the provisions of DPP, and hence there are no illegalities in that as N Ram wants to suggest.
Rafale is not the first Inter Governmental Agreement India has signed, before this such deals were signed with Russia and USA. And similar waivers were granted in those agreements too. The deal for Sukhoi jet that India signed with Russia had also waived the bank guarantee and anti-corruption clause, which was signed by Congress government.
Air Marshal SBP Sinha,who headed Rafale negotiations from Indian side,on anti-corruption clause in govt to govt contract:Till now,we had ‘govt to govt’ contract with America&Russia. It’s the 3rd ‘govt to govt’ contract, which is with France. Such clause isn’t there in any of them pic.twitter.com/0BKnCZLYpP
— ANI (@ANI) February 11, 2019
Air Marshal SBP Sinha has further clarified that anti-corruption clause was not there in any of the Inter Governmental Agreements that India had signed earlier, and Rafale is not the first deal to have such an exemption. To claim that such routine exemption for a government to government is nothing by a lie to derail the Rafale deal.
Coming to the allegation that Modi government discarded suggestion for payment to an Escrow account managed by France government and is making payments directly to Dassault, this completely wrong. The Indian government has signed the deal with the French government, and hence the payments are also being made to the French government only. In December last year, the government of India had announced that it was making a payment of 25% of the deal value to the government of France.
According to reports, the French government has set up a treasury account in their national bank to receive proceeds from India, and payments will be released to vendors only after verification of the progress of the deal. There is no direct payment to Dassault or MBDA, and all payments are made to French government-controlled bank account only. This means that the allegations that the government of India is making payments directly to vendors are incorrect. It also shows that the official raising the objection was perhaps not aware of the detail of the deal.
