The Hindu accesses documents showing Govt waived anti-corruption clauses in Rafale deal

Rafale

Days after The Hindu expose stating that Defence Ministry officials had raised objections to the Prime Minister’s Office (PMO) holding parallel negotiations with the French side that had “weakened the negotiating position of MoD (Ministry of Defence) and Indian Negotiating Team,” regarding the Rafale deal, The Hindu has got hold of another important document which shows that the Prime Minister Narendra Modi-led NDA government had waived off critical provisions for anti-corruption penalties as well as had dropped making payments through an escrow account, as suggested by financial advisers.

According to The Hindu, “The high-level political intervention meant that standard Defence Procurement Procedure (DPP) clauses on “Penalty for use of Undue Influence, Agents/Agency Commission, and Access to Company accounts” of Dassault Aviation and MBDA France were dropped by the Indian government in the supply protocols.”

Dassault is the supplier of the  Rafale aircraft package while MBDA France is the supplier of the weapons package to the Indian Air Force (IAF), as per the terms of the inter-governmental agreement (IGA) signed between the Indian government and the French government in Delhi on September 23, 2016.

As many as eight changes in the IGA, including the one mentioned above, were “ratified and approved” by the Defence Acquisition Council (DAC) chaired by the then Defence Minister, Manohar Parrikar, in September 2016. This came after the IGA and related documents had been approved by PM Modi-led  Cabinet Committee on Security (CCS), on August 24, 2016.

The Hindu further reports that three members of the negotiating team — M.P. Singh, Adviser (Cost), A.R. Sule, Financial Manager (Air), and Rajeev Verma, Joint Secretary and Acquisitions Manager (Air) — had, in a note of dissent, had objected to dropping of the clauses.

“Notwithstanding the fact that the procurement is on Government-to-Government basis, the IGA involves ‘Transfer of Rights and Obligations’ relating to supplies of equipment and related industrial services by French Government to the French Industrial Suppliers, and the payment is also being made to the French Industrial Suppliers and not to the French Government; therefore, it is not advisable to sacrifice the basic requirement of financial prudence,” they had stated in the note.

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On January 14, 2016, Sudhansu Mohanty, Financial Adviser (DS), had recommended a proposal to have an escrow account operated by the French Government.

“In the absence of a sovereign/bank guarantee, in a case like this where an IGA is to be signed, it would be prudent to involve the French Govt. as far as releases are concerned. This possibly could be done through an Escrow account or a variant of the same where the money released by the buyer (Govt. of India) is paid to the Escrow account held under the charge of French Govt. to make further payments to the firm as per terms & conditions agreed to by the Indian and French Govt. through IGA. This would make French Govt. morally and materially responsible for the procurement so proposed. Since they are one of the parties to the IGA and also jointly and severally responsible for the execution of the supply protocol, they should not be having any reservation about it,” his note mentioned.

His suggestion came after the PMO and National Security Adviser Ajit Doval chose to waive the sovereign or bank guarantee from France. However, it’s clear by The Hindu report that this recommendation was never considered.

In response to The Hindu report, the Congress accused PM Modi of waving off anti-corruption clauses just days before signing the Rafale deal.

“After the PMO forced the waiver of a sovereign guarantee, it now turns out the PMO asked for the WAIVER of standard ANTI-CORRUPTION clauses. Who was the PMO trying to shield? There is no doubt that #ChowkidarChorHai,” the Congress tweeted.

“Throwing all good sense to the wind, the PMO also discarded the advice to create an escrow account under the control of the French Govt to release payments from India. Instead it chose to pay Dassault upfront in advance. Who was the PMO trying to benefit? #ChowkidarChorHai,” it wrote in another tweet.

Congress president Rahul Gandhi also took to Twitter and accused PM Modi of allowing Anil Ambani to steal Rs. 30,000 crores from the IAF.

“NoMo anti corruption clause. The Chowkidar himself opened the door to allow Anil Ambani to steal 30,000 Cr. from the IAF,” he tweeted.

Source: The Hindu

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