Modi government waived Anti-Corruption conditions in Rafale deal

Written by Sabrangindia | Published on: February 11, 2019

In a report, The Hindu claimed that the Indian government allowed "major and unprecedented concessions" in the Rafale deal.


A report by The Hindu on Monday caused further unravelling of the Rafale deal as it said that "critical provisions for anti-corruption penalties and making payments through an escrow account" were dropped just days before the Narendra Modi led government of India and France inked the inter-governmental agreement (IGA) on the Rafale fighter jet purchase.
In a report, The Hindu claimed that the Indian government allowed "major and unprecedented concessions" in the Rafale deal.
The news comes days after the newspaper published a report claiming that Prime Minister Modi had carried out “parallel negotiations” with France on the deal and that the Ministry of Defence had expressed its objections. Neither of the details were reportedly part of the material submitted by the Bharatiya Janata Party-led central government to the Supreme Court.
The party has repeatedly stressed on fighting corruption in defence deals.
According to The Hindu, the high-level political intervention meant that standard Defence Procurement Procedure clauses on "Penalty for use of Undue Influence, Agents/Agency Commission, and Access to Company Accounts" of Rafale jet-maker Dassault Aviation and missile-maker MBDA France were dropped by the government in the supply protocols.
Under the Inter-Governmental Agreement signed between India and France in Delhi on September 23, 2016, Dassault is the supplier of the Rafale aircraft package and MBDA France is the supplier of the weapons package to the Indian Air Force.
"Changes were made at the last minute. What is the interest behind the changes? Why would the Indian Air Force benefit from anti-corruption clauses being dropped and no escrow account?" N Ram, Chairman of The Hindu Publishing Group, said to NDTV on his exclusive report. NDTV was sued for Rs. 10,000 crore by Anil Ambanis Reliance Group for its coverage of the Rafale deal.
The Hindu reported that the government also chose to do away with a sovereign or bank guarantee from France and settled for a letter of comfort, from the French Prime Minister, which is not legally binding.
The letter of comfort came after another last-minute intervention by the government in September, when the Cabinet Committee on Security issued a corrigendum to the note forwarded by the Defence Ministry for the CCS, doing away with the requirement for an escrow account operated by the French government to make payments to the two companies, The Hindu reported.

As for Manohar Parrikar’s role in the deal, the report said from a stance of being non-committal, as evidenced by his hand-written notation of January 11, 2016, he shifted later that year to actively pushing for the changes, giving the financial experts little time to study the proposals.
He chaired the September 2016 meeting of the Defence Acquisition Council that “ratified and approved” the eight changes, including the decision to drop the provision of penalties for corruption in the supply protocols with the private companies. In his official capacity, he also directed the issue of a proposal that led to doing away with the provision for an escrow account as a financial safeguard.
The Congress alleges that the government finalised an overpriced deal for 36 Rafale fighter jets at an inflated price to benefit Anil Ambani, whose rookie defence firm was recommended as an offset partner for Dassault, the company manufacturing the aircraft. Both Dassault and the government have denied the allegations, NDTV reported.