French investigative journal Mediapart has accessed an “internal document” of Dassault Aviation, the makers of the Rafale jets. It states the firm’s joint venture with Reliance group was “imperative and mandatory” to clinch the deal with India.

ThePrint asks: Is mandatory clause a smoking gun to make Rafale BJP’s Bofors or an opposition stretch?

Even if the government knew who the offset partner was, it is in line with the procurement policy

Ratna Viswanathan
Former Civil servant, Ministry of Defence

I am reasonably sure that such a clause saying ‘mandatory’ would not have been incorporated in writing. Technically, the vendor chooses their own offset partner, and the Indian government does not dictate this. None of the disclosures made so far, either by former President Francois Hollande or even the conversation cited above mention that the counterpart was specified as part of contract conditions. The opposition currently is clutching at a preponderance of probability because the paper trail is yet to be established. If one were to look at the DPP 2016, the terms and conditions for choosing an offset partner are stringent and there’s a clause that clearly states (7.1) that the Indian Offset Partner (IOP) will meet the conditions in line with the RFP as per Defence Offset Guidelines. Failure to comply with this may attract penalties or debar the vendor for participating in future contracts for upto 5 years.

There are several levels of the bidding process as per the procurement guidelines that are in place. So, even if one were to turn around and say that the government knew who the offset partner was, it is in line with the procurement policy. It still does not establish that the government had made anything mandatory as a part of RFP conditions. This analysis is based purely on facts. Speculation, of course, and the perceived lack of experience of the offset partner can lead to any number of corollaries. But there’s no hard evidence or paper trail of complicity at any point.

It looks more like a smoke and mirrors job than a smoking gun

Amit Cowshish
Former Financial Advisor (acquisition) and distinguished fellow, IDSA

The report by the French website Mediapart, saying that Dassault considered it ‘imperative and mandatory’ to partner with the Ambani group to win the contract for 36 Rafale aircraft, comes in the wake of an earlier report by the same website, which said that Indians had nudged the French to opt for this group, attributing it to former French President François Hollande who later chose not to substantiate it.

The website claims that an ‘internal document’, which it has accessed, shows that Dassault’s deputy chief executive officer (DCEO) had told staff representatives that partnering with the Ambani group was an inescapable trade-off to win the contract.

The Dassault-Reliance manufacturing facility, located in Nagpur, is possibly one of the more than 70-odd Indian offset partnerships of Dassault. It is a joint venture between Reliance Infrastructure (51 per cent) and Dassault Aviation (49 per cent).

Considering that only Indian companies can be offset partners, it is difficult to imagine what was so unusual about Dassault setting up a JV in India to discharge an unspecified portion of the offset obligation that the DCEO had to justify it to the staff representatives by claiming that the JV had been set up under compulsion. Apparently, the website did not talk to the staff representatives who would probably have been more forthcoming on this issue.

The website seems to have drawn a prejudicial and politically-sensitive inference from an ‘internal document’ without a convincing investigation. At this point, it looks more like a smoke and mirrors job than a smoking gun.

Every bit of information from France will be used to build a case against Rafale

Yusuf Unjhawala
Editor, Defence Forum India

The imperative and mandatory clause could be a reference to the defence procurement policy, which requires mandatory offsets. Reliance is one of the many offset partners for the Rafale deal.

Also, Reliance has announced several joint ventures (JVs) in the defence sector. Apart from Dassault and Thales from France, which are a part of the Rafale offsets, Reliance has JVs with Kamov and Almaz-Antey from Russia, Rafael from Israel and Antonov from Ukraine among others, targeting both offsets and production of weapons’ platforms. All these companies have a major presence in the Indian defence market.

However, given former French President François Hollande’s statement on France not having a choice in selecting Reliance as its offset partner, every bit of information coming out from France will be used to build a case against the Rafale deal.

Did Dassault charge India higher than it otherwise would to cover any payoff? Was there a payoff by Reliance to anyone in India to force Dassault to make it its offset partner? Answers to these questions are required to prove if there was corruption or a case of crony capitalism or not.

Dassault charged Qatar €7.4bn as against €7.8bn from India for its 36 jets, including weapons and training. So, India hasn’t paid much more than the usual, given the Indian deal has India-specific enhancements and additional clauses like performance guarantees.

Only a detailed investigation in both India and France will provide an answer to the second question.

Not exactly Bofors moment for India if we act on it now

Lt Gen P.R. Shankar (Retd)
Former director general of artillery

The disclosure of the mandatory clause that Reliance should be an offset partner of Dassault merely confirms the public perception and what Hollande also stated. It appears that Reliance Defence is being positioned as the prime offset partner to Dassault. In such a case, there is a possibility that Reliance acquires the middleman status with all the negative implications of being one. The Rafale deal will be dirty if after this disclosure Reliance Defence is allowed to continue as an offset partner or maintenance partner. Whether allowing Reliance to continue as an offset partner amounts to cronyism or syphoning conduit is a matter of conjecture.

It will also cast a shadow on further procurement of aircraft. It is not exactly the Bofors moment for India if we act on it now. The basic necessity is to take Reliance Defence out of the equation. Reliance Defence should also not be part of the maintenance contract since it will have a negative impact on the operational capability of the Rafale when inducted. As it stands, the deal is not yet dirty nor is it clean. If Reliance Defence is allowed to continue then India will have two competing narratives in future ‘Bofors’ and ‘Rafale’. Then the opposition will be justified.

Playing the victim or outraging in front of TV cameras on Rafale isn’t going to help the BJP

Maneesh Chhibber
Editor, Investigations and special initiatives 

With the latest revelations in the Rafale “scam”, the charge that the Narendra Modi government facilitated crony capitalism in the multi-billion dollar deal has gained more currency. A media report from France claims that a top functionary of the Rafale manufacturer had said that the joint venture between Dassault and Reliance for offsets was a “mandatory trade-off”, and a must if the company wanted to win the contract. With this, the heat is back on the government.
It has a lot of explaining to do, something that the government should have done more effectively from the beginning.
Politics is mostly about perception – good perception can get you votes, bad perception costs votes. And, nobody understands it more than the BJP under Amit Shah and Modi.
Having come to power on the back of a smartly created negative perception about the Manmohan Singh-led UPA-2 government of corruption and inefficiency in the run up to the 2014 elections, the BJP now can’t accuse the opposition of playing politics on Rafale.
While there are many in the country who still aren’t convinced by Congress president Rahul Gandhi’s repeated charge that Modi helped his “friend’s” company get the contract for the offsets, the latest revelation will certainly help build a case against this government.
The onus is now on the government to effectively counter what it terms to be “false opposition propaganda” on the Rafale deal and this can be done only with hard facts. Playing the victim or outraging in front of TV cameras isn’t going to help.
The public needs to be reassured that there’s no scam in the deal. Else, even before the BJP wakes up to the possibility that the voters are latching on Rahul Gandhi’s allegations, the damage would have been done. Rafale isn’t BJP’s Bofors, at least not yet.

By Fatima Khan, journalist at ThePrint. You can follow her on twitter @khanthefatima.

  • 1
    Share