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Mainstream, VOL 61 No 5, January 21 & January 28, 2023

The Rafale Deal: A Chit on Our Conscience | Papri Sri Raman

Saturday 21 January 2023, by Papri Sri Raman

BOOK REVIEW

The Rafale Deal-Flying Lies:

The Role of Prime Minister Narendra Modi in India’s Biggest Defence Scandal

by Ravi Nair & Paranjoy Guha Thakurta

Publisher: Paranjoy
Pages:560
Price: Rs 795

 IN 1987, VP SINGH, the ruling party’s Rajya Sabha leader and a sitting minister (who had held powerful portfolios like finance and defence) in a popularly elected government went around pointing to a chit in his pocket. My parliament reporter friends used to tell me, the chit probably contained the secret bank account numbers of a payoff received abroad for a gun deal. Or the names of persons who received kickbacks on the deal. Or the telephone numbers of whistleblowers. Or there was no chit. Still a novice to the ways political power is captured in India, I thought it was highly unethical to target an elected prime minister in this corner tea-shop petty goon manner.

The prime minister being pilloried was the 43-year-old Rajiv Gandhi and his family. Meaning his Italy-born wife Sonia. A whistleblower on Swedish radio had accused Indian and Swedish politicians including Gandhi of receiving bribes from Bofors AB, in order to win a bid to supply the Indian army 410 155 mm calibre howitzer guns worth Rs 15 billion (then). The alleged bribe was to the tune of Rs 600 million and the middleman, Ottavio Quattrocchi. The newspaper that hounded the story was The Hindu. The net result of this was, Gandhi lost the 1989 elections and VP Singh became prime minister in 1989, with the help of the BJP; for the second time such an alliance provided legitimacy to the right wing after the 1974 JP movement.

Everyone tells me there was a money trail in the Bofors scam. Ravi Nair and Paranjoy Guha Thakurta’s book, The Rafale Deal-Flying Lies? says, the Rafale war plane purchase scam (2015) for the Indian Airforce is different in that there is no money trail. However, they too call it ‘the alleged irregularities in the Bofors howitzer purchase scam’ (page 316). The 560-page book attempts to discuss ‘the role of prime minister Narendra Modi in India’s biggest defence scandal’.

The charges against Modi are, he took a unilateral decision to buy 36 ready-to-fly-away condition Rafale war planes at an exorbitant price from France, contrary to established defence purchase protocols; ignored the Ministries of Defence, External Affairs, Finance, Law & Justice; without consulting the ministers and end user, the IAF and the Indian offset partner, the public sector organisation, Hindustan Aeronautics Limited (HAL). After this, the government went into overdrive to defend the PM, which his opposition called ‘a tissue of lies’ and went to court. Following the outcry in India and the resultant clean chit it helped Modi earn, the French media also began investigating corruption charges against its governments and Dassault, the seller (Rafale jets sale to India: Macron, Hollande and the blind eye of France’s anti-corruptionservices), with equally little success.*

Studying the anatomy of the Rafale deal is worse than deconstructing a Chinese Puzzle. I am making a brave attempt to figure out the chimera the two writers have set before the lay reader. And it all appears to me to be a game of thrones, just as the Bofors deal was. It was Machiavellian politics then as it is now. But Bofors was 1980s and Rafale is now, almost 40 years later if we take into account the 2024 general elections and a government tenure that is likely to take us to 2029.

Unlike in the time of VP Singh, the methodology of engineering a money heist has changed. Money does not move in hawala cloth bundles, as the Panama Papers and Paradise Papers leaks tell us, it moves offshore electronically. And one can delete a trail by the click of a computer button. So, naturally, there is no money trail. That does not mean, a scam did not take place. It is just that a smarter set of managers are laundering the money. Whose money? Then and now, of course the nation’s money. Unsettling is the thought, is white money being turned black instead of the other way? The Modi government’s attempts to invoke the secrecy agreement for non-disclosure on the Rafale deal is often described as, ‘The government’s decision was effectively an attempt to shield from public scrutiny details of the amount that was going to be spent from the Consolidated Fund of India.’ (Page 178 Plane Politics.)

It is remarkable that the Indian National Congress (INC) or the Congress party has been unable to cash in on the possible CFI spending projected for the Rafale deal, which it tried to do during the 2019 election. The scam made no impact at all on the electorate unlike in 1989, when the right-wing propaganda machine helping VP Singh could milk the alleged 600 million rupees bribery charge; or the Manmohan Singh government’s nemesis — the notional ‘Loss to the nation: Rs 17,66,45,00,00,000. This is what the Comptroller and Auditor General (CAG) report showed when India “gifted away an important national asset at throwaway prices”, instead of allocating the 2G spectrum to the highest bidder in 2008. The calculated loss stood at Rs 1.77 lakh crore.’ (As the FinancialExpress put it in March 2018.)

One thing this book definitely lays out is that a ‘scam’ is a political tool, the winner is the one who better uses it. Clearly, there was something about the Rafale deal that gave the ruling BJP the upper hand. Bofors is a gun sorely needed by the Indian army. It still buys Bofors guns and uses them, as it is reportedly the best gun the country has. If there were bribery charges, Bofors AB should have been barred long ago from selling guns to India. This scam, nevertheless, brought Rajiv Gandhi down. A special court acquitted all accused in the 2G scam as ‘the prosecution miserably failed to prove any of the charges’ against them. This scam ousted the Manmohan Singh government. The perception that there was a scam decided the vote. The Rafale Deal book tells us how this scam is different — how, step by step, the deal managed to paint a squeaky clean, action-packed, nationalist image of prime minister Modi.

Death of a Deal and a Dream

The book begins with telling us the story of fighter planes for India. The first imports were in 1948, with the English de-Havilland Vampire. But Europe did not want to sell to India that dreamt of empowerment and self-sufficiency. Exception were France and USSR (Mirage, Jaguar and MiG), which helped the IAF ramp up to ‘39.5 squadrons’ (a squadron is made of 21 planes), that is about 830 planes. The MiG-21 had been inducted by the IAF in the 1960s. And 39+ squadrons was the IAF’s strength in the mid-1980s. By the end of the 1990s, their service life was ending. The Kargil war happened in 1999 and the French Mirage had performed well.

The book tells us, on 18 December 2000, a report of the Parliamentary Standing Committee on Defence told parliament that the Defence Ministry had said that, ‘the Indian Air Force is likely to face a serious problem of depletion of fighter planes in a couple of years due to obsolescence. In terms of percentage the depletion is going to be of the order of 40 per cent. Any Air Force which loses at once as many as 40 per cent of its aircraft will be extremely vulnerable especially when the security scenario does not reassure the prospect of (a) prolonged period of peace.... The Government (has) been found wanting in responding to the urgent and essential needs of modernising the Air Force so as to make it a force which could effectively deter the adversaries from embarking on any misadventure. The lapses are inexcusable.’ No words were minced and this was during the Vajpayee government’s time, when the ruling BJP basked on the Kargil victory.

A proposal for acquiring a few squadrons of Mirage-2000-5 was then mooted for the 10th Plan period (2002-2007 years). In 2001, the IAF told the Defence Ministry that it needed 126 fighter planes (six squadrons) and meanwhile, asked for 50 Mirage planes (2+ squadrons); Dassault Aviation was the supplier. For India, Dassault was a long-known dealer, since 1983, and the HAL its trusted partner.

Come to 2002, when India had 42 squadrons. At the same time India was toying with the Light Combat Aircraft Tejas, built at HAL. To quote Air Marshal Raghunath Nambiar, who retired as the Deputy Chief of Air Staff, ‘In 2001, when (the) Bharatiya Janata Party was in power and Jaswant Singh was the defence minister, we finally obtained a sanction for (the purchase of) 126 aircraft. But the proposal for a repeat purchase of the Mirage 2000 was turned down (Dassault had by this time decided to stop making Mirages) and a multi-vendor tender was ordered, considering the large size of the order. The Raksha Mantri asked us to select a futuristic fighter jet that fulfils our future requirements in terms of advanced technical capabilities.’ From this we know that a multi-vendor tender was decided on by the NDA government which okayed the acquisition of 126 fighter aircraft for the IAF. Nothing more happened. By 2004, this government was out.

In India, since 1986, every defence deal has been looked at with suspicion. Stories coming out of Latin America and Africa do not ally fears of corruption. The book says, at the height of the Bofors scam, no less a person than the President of India, R Venkataraman, had told N Ram of The Hindu, ‘Don’t you know that the standard rate of commission in major defence deals is six per cent?’

Like any mature government, the Manmohan Singh government did not jettison the IAF request. Rather, it took seriously the previous defence minister’s assessment, ‘futuristic fighter jet that fulfils our future requirements in terms of advanced technical capabilities’. The IAF had great need. The Singh government took the process of fulfilling this need several notches up.

In the meantime, the consumer, the IAF’s tech teams came up with an ‘India-specific requirements’ dossier for its fighter planes. ‘This (Singh) government asked for a new Air Staff Qualitative Requirements (ASQR). The IAF took two years to put together the new detailed ASQR with 630 odd points that was submitted to the government.’ In 2007, the paperwork done, the UPA government began the process of acquiring of 126 Medium Multi Role Combat Aircraft (MMRCA) for the Indian Air Force and the RFP (Request for Proposal) was floated. The Ministry of Defence called for ‘multiparty tenders’ and trials of fighter aircraft from six different bidder companies were carried out.

Two planes were being actively considered, the EADSC’s Eurofighter Typhoon and Dassault’s Rafale (later identified as the most economic offer, L1). In 2007, the deal was estimated to be worth `Rs 42,000 crore (or US $10.25 billion) at the exchange rates prevailing at the time’. Defence experts globally touted the deal as ‘the most elaborate and detailed Request for Proposal in the history of (the) defence aviation businesses’. It was decided to offer a ‘term of purchase’ to the seller, with the first 18 aircraft to be bought in ‘fly away’ condition while the remaining 108 would be manufactured under ToT, by Indian manufacturer HAL, which was the only tried, tested and capable entity in India. The first five years of the UPA government, as it was called, went in achieving all this, meticulously, step by step. The hawks were watching.

Not aware of such high-security matters the common people in India were more clued into the MNREGA, the Mahatma Gandhi National Rural Employment Guarantee Act and gave the Singh government a second term, that is ten years in power. From various accounts in the book, one understands that the Rafale acquisition process was near completion in the next four years. Entre the BJP to throw a spanner in the process.

April 2011. The book tells us, ‘Subramanian Swamy, former Rajya Sabha MP who was then heading the Janata Party (which would merge with the BJP two years later) alleged that UPA Chairperson and President of the Congress party, Sonia Gandhi, was rigging the MMRCA deal to favour Rafale.’

Predictably, again, the target was this woman who had embraced India as Swamy’s ‘well-placed sources’ and ‘credible information’ could not come up with better options. Swamy wrote letters to then Prime Minister, Manmohan Singh and Defence Minister A K Antony, alleging, ‘My sources indicate that the pre-determined decision to favour the French aircraft was the outcome of several conversations between the wife of French President (Nicolas Sarkozy) Carla Bruni and the Chairperson of the National Advisory Council, Sonia Gandhi, and surprisingly also with two foreign nationals who are the sisters of Sonia Gandhi’. The plot now thickens to undermine this Rafale acquisition and reap a rich benefit from it, electoral and other as general elections loomed in 2014.

A political stalwart like Fernandes as Defence Minister had bitten dust in the Kargil coffin scam. Naturally, Antony was extra cautious, already the 2G scam was beginning to affect the Congress’ prospects. In good faith Antony ordered an investigation. Swamy added advice to the PM which appear disingenuous if not audacious. He told Singh, ‘This, if documented in the future, will be a major scandal which will haunt you and may lead to criminal prosecution for no fault of yours....’ Moreover, he argued that the American contenders who were no longer in the running were less likely to compromise the integrity of the MMRCA deal than the French, because, ‘... the US has a Foreign Corrupt Practices Act which makes it almost impossible to give bribes. The French, however, while dealing with a foreign country have a much more relaxed attitude to bribes paid abroad to secure contracts and this attitude has become a part of their mental makeup of contempt for the foreigner, especially us Indians’.

 The Harvard-returned Swamy’s subtle way of favouring the American was not very opaque. It reads like, as if the BJP leader was prescient that a time will soon come when the Americans will be on India’s ‘consideration radar’. President Obama was due to visit in November 2011. The resignation of ambassador Roemer just before that had many curious corners too. On hindsight, Swamy was a fortune teller. The book tells us, in 2015, Lockheed Martin, the American manufacturer of fighter aircraft, announced that it was ready to shift the entire manufacturing line of the F-16 aircraft to India if its offer (during the 2007-8 bidding for fighter planes for the IAF) was reconsidered.

The Rafale deal was not an issue in the 2014 elections. The provocative charges against Sonia Gandhi, if true, would have been an election issue, but it was not. The opposition had a stronger scam, the notional spectrum scam. It also had slogans like Make-in-India and Suraksha. Something very very curious, however, happened in the immediate years before the government changed. The book tells us, by March 2013, Dassault had signed the workshare agreement with HAL. This makes one wonder what happened between March 2013 and March 2014? Was Dassault approached not to play ball with the Singh government? It was a ‘mother of deals’, the biggest defence contract in the world! Many would benefit.

The Whitewash

The Make-in-India deal was killed by blaming the public sector organisation, HAL, for ‘not delivering’, not having the technological capability. To say to a PSU in a jugaad country like India that it does not have the technological capability is adding insult to injury. For more than two years, different clogs of the Modi government kept up the pretence of the ‘108-aricraft deal’ continuing. The Defence Ministers, the Finance Ministers, the then Foreign Secretary (now a minister), at least half a dozen air marshals and other officials. Then came the surprise inter-governmental agreement (IGA) of the 36-aircraft purchase during Narendra Modi’s visit to France in April 2015, through a completely new arrangement.

The same set of ministers and bureaucrats rose to defend the PM’s actions. (Union ministers even alleged that the then French President Hollande had been hand-in-glove with the Congress leadership to tarnish the reputation of Prime Minister Modi and the government of India. HAL chief T Suvarna Raju’s opinion was labelled ‘politically motivated’ to silence him.) After cancelling the RFP for 126 MMRCA planes, government officials involved with the Rafale processes let the media know, it was clear to the Indian government that Dassault was not too keen to transfer technology for the 108 planes to be made in India. The company was not ready to take responsibility for the planes they made at the HAL facility under ToT. They were also not ready to give any bank guarantees for the contract, nor ready to have New Delhi or Bangalore (where HAL was) as seat of arbitration.

 Air Marshal Nambiar’s detailed rebuttal of malpractice and wrong-doing on the part of the PM forms the most interesting read. In his interview to the authors, talking about the price of the 36 planes, he says, ‘This amount of Rs 690 crore is the average price of the aircraft (each plane). Because there are two prices for the (two types of) aircraft, one a two-seater and the other, a single seater. We ordered eight two-seaters also... If I remember correctly, this difference was nine per cent lower than the offer of 2008’, making it amply clear that the then Defence Minister, the Indian Negotiating Committee and all others were NOT kept in the dark and that the PM had NOT bypassed defence procurement protocols and had NOT taken a unilateral decision. Nambiar said, ‘No, no. The air force pushed the case. The air force was pushing for it, hard. The air force was the one (that)... mooted this idea. We said, get us at least 36 in (the form of)... an emergency procurement’. The IAF’s dream of six new squadrons of fighter aircraft by 2030 soon died.

In defence of the PM, he also said, ‘No. He did not announce a decision. All he did was that he announced just a statement of intent. That was the joint statement in Paris. In April 2015, he said, if I remember correctly, that India will buy 36 aircraft from France in the same configuration that IAF wanted and at a price better than that negotiated earlier. That is what his declaration was. This didn’t mean a contract. That was just a declaration of intent only. It took us another 16 months of negotiations to sign the IGA.’

In 2005, the United States had denied Narendra Modi a visa, for his involvement in the 2001 Gujarat riots. Yet, the BJP’s biggest supporters are NRI funders from the USA. In April 2014, the USA said, it would revoke the ban, if Modi became Prime Minister. What was the quid pro quo? Modi visited the USA in September 2015. Before this, by April, the 108 made-in-India Rafale deal was dead. How was Dassault and France assuaged? The Inter-government announcement in April 2015 to buy 36 ready-to-fly aircraft at Dassault-dictated price and terms.

And the invitation to French President Francois Hollande to be the chief guest for the Republic Day celebrations in January 2016, the same Hollande who had just before the Modi meeting on 10 April 2015 told the daily Le Figaro, published by the Dassault group, that to the best of his knowledge, no impending announcement on the purchase of Rafale fighter jets was on the table and that the deal for 126 Rafale will be signed soon. The book tells us, on the same evening,after his meeting with Hollande, Modi told journalists: ‘I have asked (the) President (of France) to supply 36 ready-to-fly Rafale jets to India.’ Not to forget what French President Emmanuel Macron said on his Twitter page, One Earth, One Family, One Future in December 2022. ‘India has assumed the presidency of G20. Meanwhile, my friend Narendra Modi has expressed his hope that he will help build peace and create a world of sustainable development.’ Not the USSR or the USA, the image builder became France, perhaps unwittingly.

At the cost of HAL, private offset partners were chosen and they were Mukesh and Anil Ambani and several others. They had not ever even made small plane parts, let alone fighter jet parts (with the exception of the Tatas). This is one of the biggest examples of crony capitalism at work, and there is nothing to say that the brothers are not in cohort. The book tells us, half a dozen companies were created abroad and the benefit accrued to the ‘Ambani’ name (ADAG) is said to be Rs 30,000 crore. In June 2015, The Hindu Businessline reported that ADAG will service offsets in the Rafale deal worth Rs 21,000 crore or 70 per cent of the total offset obligation. In July, in the ADAG’s annual report for 2016-17, a debt-ridden Anil Ambani states that Reliance Defence Limited would-be drawing offset investments worth ‘Rs 30,000 crore from the Rafale aircraft deal’.

The repercussions of an elected head of state behaving in this arbitrary manner was, activist citizens took the government to court. But there was the CAG and Chief Justice Ranjan Gogoi to lend their helping hands. Gogoi’s reward, a Rajya Sabha seat. Airforce’s senior leaders like RKS Bhadauria and several others on the Rafale negotiating table got promoted. The rewards for others may not be so visible.

The American Approval

For long, bureaucrats have been telling the media, India is reluctant to purchase defence material from the USA, because it keeps imposing sanctions. In February 2020, when President Donald Trump visited, India and the USA signed two deals (for 24 MH-60R helicopters for the Indian Navy and six AH-64E helicopters, that is Apache helicopters) worth $3 billion (then). In 2021 India and the USA signed the MK 54 Torpedo and Expendable (Chaff and Flares) deal, again for the Indian Navy. USA has agreed to sell India the state-of-the-art Guardian 22 unmanned drones (UAVs) in a deal estimated to be worth $2 to $3 billion. On the platter is another deal for six additional choppers at an estimated $930 million for the Indian Army. Then there is the purchase of a missile defence systems for the two wide-bodied B-777s, with their advanced missile approach warning sensors, electronic warfare systems, infra-red counter-measures, digital radio frequency jammers and other such contraptions under the overall SPS, a flying Modi office. All in all, the US defence business in India has been ramped up to as much as $15 billion in the Modi years. Their approval is crucial to Modi’s image makeover. The noise from the Rafale scam is something that was easily delt with, a small price to pay.

The takeaway from this book is that the 36-Rafale purchase decision was just the beginning of Narendra Modi’s ‘I can do no wrong’ kind of megalomania. It was the first imprint of the Modi-style of functioning — I am the one-point reference in a democracy. After this came the November 2016, 8 pm demonitisation announcement and the resultant economic loss. On the evening of 24 March 2020, the prime minister ordered a nationwide lockdown for 21 days, limiting movement of 1.4 billion people as a preventive measure against the COVID-19 pandemic, without any preparation. In the Rafale deal, the few voices of protest were sidestepped by a consenting coterie. In this case, the chits are on people’s conscience as they have chosen not to speak, and those who have spoken like Nambiar and now Finance Minister Nirmala Sitharaman; even people like Subramanian Swamy, who may no longer like to be known as a handle of the BJP.

* https://www.mediapart.fr/en/journal/mot-cle/parquet-national-financier
Mediapart details how the then head of the French public prosecution services’ financial crimes branch, Éliane Houlette, shelved investigations into evidence of corruption behind the Rafale deal. France’s current president, Emmanuel Macron, and his predecessor, François Hollande, are cited in the allegations levelled in the case. Houlette has since justified her decision as preserving ‘the interests of France, the workings of institutions’.

Emphasis, the reviewer’s.

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