Congress leaders meet CAG over Rafale fighter jet deal, demand time-bound probe

The Congress delegation demanded a time-bound probe into the Rafale jet deal between India and France.

Congress leaders meet CAG over Rafale fighter jet deal, demand time-bound probe
Image Credit: ANI

NEW DELHI: Amid an ongoing war of words with the Centre over the Rafale fighter deal, a delegation of senior Congress leaders on Wednesday met the Comptroller And Auditor General (CAG) seeking a detailed probe into the controversial defence deal between India and France.

Congress delegation included Ahmed Patel, Ghulam Nabi Azad, Mukul Vasnik, Anand Sharma, Jairam Ramesh, Randeep Surjewala, Rajeev Shukla and Vivek Tankha.

The also submitted a detailed memorandum to the CAG demanding a thorough probe into the Rafale jet deal between India and France.

Here is the Congress party's memorandum submitted to the CAG

MEMORANDUM

September 19, 2018

Attn: - Shri Rajiv Mehrishi,

Comptroller and Auditor General of India,

Pocket-9, Deen Dayal Upadhyaya Marg,

New Delhi, Delhi 110124

Subject: - Loss to Public Exchequer, endangering of National Security, by-passing Public Sector Undertaking- Hindustan Aeronautics Limited (HAL), benefitting Crony Friends, & Violating the Mandatory Provisions of ‘ Defence Procurement Procedure’ in the unilateral purchase of 36 Rafale Jets from Dassault Aviation.

Sir,

The Government of India is unforgivably guilty of compromising ‘National Interest’ & ‘National Security’. The manner in which the deal to buy Medium Multi-Role Combat Aircrafts was suddenly ‘shelved’, the ‘shoddy cover-up’, the ‘self-defeating assertions’ & the ‘deliberate lies’ have caused grave apprehensions in the minds of the Indian people vis-à-vis a major scandal in the purchase of 36 Rafale Fighter Jets. Insurmountable loss caused to public exchequer stands exposed as Government refuses to ‘state the truth’, as also place facts in public domain. Modi Government remains ‘opaque’, ‘intransient’, ‘obscure’ & ‘obstinate’ to cover up the ‘Rafale Scam’

Factual Matrix:-

1. On 20.08.2007, UPA Government floated a tender for purchase of 126 ‘Medium Multi Role Combat Aircrafts’ (MMRCA). Indian Air Force found two aircrafts technically equal i.e. ‘Rafale’ and ‘Eurofighter Typhoon. Incidentally, the ‘Request For Proposal’ (RFP) in the UPA tender had made it clear that the bids were to be inclusive of ‘cost of initial purchase, transfer of technology, licensed production, etc’ (Annexure A1).

2. Pursuant to the technical shortlisting, financial bids were invited. On 12.12.2012, Rafale emerged as L-1 vendor with a publically disclosed price of US$ 10.2 billion. (£6.3bn) [₹ 66.300 Cr i.e 526.1Cr per aircraft ] (Exchange Rate: ₹ 65 = 1US$ ) Out of 126 aircrafts, 18 aircrafts were to come from France in ‘fly away condition’ with remaining 108 aircrafts being manufactured in India by Public Sector Undertaking (PSU), Hindustan Aeronautics Limited (HAL) with transfer of technology. In addition, there was a 50% offset clause requiring the Dassault Aviation to invest 50% of the sale price by way of investment in India. (Annexure A2)

Even as per authoritative figures for Rafale pricing released by the French Senate in 2013-14, cost of Rafale aircraft comes to Rs 527 Cr per aircraft (Euro 68.8 Million) [Relevant extract from the ‘2014 Finance Bill: Defense: Equipment of the Forces and Technological Excellence of the Defense Industries’ from the French Senate is attached as Annexure 2A (French) and Annexure 2B (English). Link is - http://www.senat.fr/rap/a13-158-8/a13-158-814.html ]

3. On 13.03.2014, a ‘Work-share Agreement’ worth approximately ₹36,000 Cr was signed between HAL and Dassault Aviation. 70% work of 108 Aircrafts to be made in India was to be done by HAL and 30% by Dassault Aviation. (Annexure A3)

Even in the Annual Report, 2013 of Dassault Aviation, Mr. Eric Trappier, Chairman and CEO claimed that HAL was its partner in the Rafale Deal for manufacture of 108 aircrafts (Relevant Extract of the Annual Report is attached Annexure A4)

4. On 26th May 2014, Modi Government came to power. PM, Shri Narendra Modi visited France on 10th April, 2015. Two days before his visit, an official briefing by the Foreign Secretary, Shri S Jaishankar was held on 8th April, 2015. In his briefing, Foreign Secretary stated that “in terms of Rafale, my understanding is, discussions were underway between the French Company, our Ministry of Defence, the HAL which is involved in this. There are ongoing discussions. These are very technical, detailed discussions. We don’t not mix up leadership even in the security field.” (Annexure A5)

Two facts stand out:-

[i] There were ongoing negotiations between Defence Ministry, Dassault Aviation and HAL for the purchase of 126 Rafale, 108 out of which were to be manufactured by HAL. And;

[ii] That PM Shri Modi would not be involved in the purchase of Rafale aircrafts as the issue was of a technical nature.

5. Despite this public admission by the Foreign Secretary, Prime Minister, Shri Narendra Modi unilaterally announced ‘off-the-shelf’ purchase of 36 Rafale aircrafts in Paris on 10th April, 2015.

In fact the India-France joint statement dated April 10th, 2015 issued by French President, Mr Francois Hollande and PM Shri Narendra Modi clearly stated that the aircrafts would be cheaper as also that the aircrafts would have the same systems, i.e avionics and weapons as per the configuration that had been decided by Indian Air Force. These configurations were decided at the time of tender issued by the UPA-Congress Government. Relevant portion of the statement reads as follows:

“The two leaders agreed to conclude an Inter-Governmental Agreement for supply of the aircraft on terms that would be better than conveyed by Dassault Aviation as part of a separate process

underway; the delivery would be in time-frame that would be compatible with the operational requirement of IAF; and that the aircraft and associated systems and weapons would be delivered on the same configuration as had been tested and approved by Indian Air Force, and with a longer maintenance responsibility by France.”(Annexure A6)

Two implications of the joint statement were: [i] the price of the 36 Rafales would be cheaper than what had already been negotiated. In any event, as the aircrafts were being supplied in “fly-away condition”, they had to be cheaper than the 126 Rafales that Dassault had bid to supply in the MMRCA tender with Transfer of Technology. Moreover, [ii] the aircraft and systems were to be “on the same configuration as had been tested and approved by the IAF in the MMRCA evaluation.” That clear and emphatic affirmation in the joint statement nails the falsehood that has been spread since then – namely, that the price per aircraft is so much higher because of some novel “India specific enhancements” in the 36 Rafales now contracted.

On return of Prime Minister from France, Modi Govt proceeded to cancel the tender for purchase of 126 Rafale aircrafts on 24th June, 2015. Moreover in pursuance of the announcement dated 10th April, 2015 of PM Modi for purchase of 36 ‘off-the-shelf’ Rafale aircraft, a final agreement was signed on 23rd December 2016.

6. That, while announcing the ‘Rafale Deal’ on 10th April, 2015, PM Modi violated the mandatory ‘Defence Procurement Procedure’.

(i) No mandatory prior approval of ‘Cabinet Committee on Security’ was taken before announcing purchase of 36 Rafale aircrafts on 10th April, 2015.

(ii) Mandatory requirement of ‘Defense Procurement Procedure’ for ‘Price Discovery’ through the instrumentalities of ‘Contract Negotiation Committee’ (CNC) and ‘Price Negotiation Committee’ (PNC) were not followed by the PM.

(iii) ‘Transfer of Technology’ to PSU, HAL for manufacture of Rafale aircrafts in India was also sacrificed by PM, Shri Narendra Modi.

Not only this, the decision of the Prime Minister, Shri Narendra Modi in proceeding to announce purchase of 36 Rafale Aircrafts ‘off-the-shelf’ on 10th April, 2015, when an international tender was already under negotiation as also the subsequent cancellation of the international tender on 24th June, 2015, is clearly violative of the ‘Defence Procurement Procedure’.

7. That the price of ‘off-the-shelf’ purchase of 36 Rafale aircrafts announced by PM, Shri Narendra Modi on 10th April, 2015 in Paris, France is Euro 7.5 Billion (₹ 1670.70 Cr per aircraft). This price has been disclosed by Dassault Aviation in its Annual Report, 2016 (Annexure A7) as also Press Release dated 16.02.2017 of Reliance Defence Limited (Annexure A8)

That, as against the originally negotiated price of UPA deal, Modi Govt’s purchase price is over 300% higher, involving an extra outflow of money from public exchequer of ₹ 41,000 Cr approximately

8. Not only this, Rafale-Dassault Aviation also sold 48 Rafale aircrafts to two other countries i.e Egypt and Qatar (24 each) in 2015. Annual Report, 2016 of Dassault Aviation reflects the price of 48 aircrafts as Euro 7.9 billion as against the price of 36 Rafale aircrafts sold to India for Euro 7.5 Billion. Per aircraft price of Rafale aircraft sold to Egypt/Qatar comes to ₹ 1319.80 Cr as against the price per aircraft of ₹1670.70 Cr being paid by India. Even when compared with these two countries, India is paying an extra amount of ₹350.90 Cr per Rafale aircraft over the same price paid by Egypt/Qatar. Total extra payment by India would be ₹12,632 Cr approximately. (Annexure A7, referred to above)

9. In the originally invited tender for MMRCA by UPA-Congress Govt, Rafale and Eurofighter Typhoon were found equal on all technical fronts. Rafale became L1 in the financial bid. However, after the induction of Modi Govt, Eurofighter Typhoon admittedly wrote a letter dated 4th July, 2014 to the then Defence Minister, Shri Arun Jaitley offering to reduce the price by 20% (Annexure A9).

Once PM Modi had decided to make a fresh purchase of Rafale on 10th April, 2015, both companies i.e Rafale and Eurofighter Typhoon should have been asked to bid afresh through ‘Inter-Governmental Agreement’ (IGA) route so as to arrive at the lowest price in favour of public exchequer. This would have immensely benefitted India’s public treasury. Its negation and consequence financial loss itself creates serious doubts on the intent and action of Modi Govt.

10. That soon after the announcement for purchase of 36 Rafale aircrafts ‘off-the-shelf’ by PM, Shri Narendra Modi; the biggest body blow was dealt on the interest of Public Sector Undertaking, HAL, as they were by-passed without any reason or justification for the execution of the ‘offset contract’ worth over ₹30,000 Cr.

In a classic case of ‘crony capitalism’, Modi Govt ensured that a ₹30,000 Cr worth ‘offset contract’ was given to Reliance Defence Limited- a private company with zero experience of manufacturing fighter aircrafts. (Please See Press Release of Reliance Defence as Annexure A8,

Investor Presentation of R Infra as Annexure A10 and Annual Report, 2016 of Dassault Aviation as Annexure7)

Reliance Infra and Reliance Defence Ltd. now also claim to have secured an additional ₹1,00,000 Cr (1 Lakh Cr) of ‘Lifecycle Cost Contract’ over and above the ₹ 30,000 Cr ‘offset contract’, taking the total value to be an astounding ₹1,30,000 Cr (Please See Reliance Infra’s Investor Presentation as Annexure A10)

11. While Dassault Aviation and Reliance Defence Ltd. claim that a ₹30,000 Cr offset contract has been awarded (Annexures A7, A8 & A10, referred to above), Defence Minister, Smt. Nirmala Sitharaman in a press release dated 7.02.2018 claimed that no offset contract had been awarded (Annexure A11). These lies were being dished out to mislead the country despite the fact that French Defence Minister met Smt Nirmala Sitharaman in Delhi in the morning and then proceeded to lay the foundation stone of Reliance Defence Factory in Mihan, Nagpur accompanied by Union Minister, Shri Nitin Gadkari, Chief Minister, Shri Devendra Fadnavis and Shri Anil Ambani on 28.08.2015.

To the say the least, this apparent lack of knowledge of awarding of the ‘offset contract’ to a private company i.e Reliance group on part of the Defence Minister, Smt. Nirmala Sitharaman is intriguing and unexplainable.

12. The biggest shocker - Reliance Defence Ltd. (which got the offset contract from Rafale-Dassault Aviation for ₹ 30,000 Cr) was incorporated on 28th March, 2015 i.e 12 days before the announcement of purchase of 36 Rafale aircrafts by PM in France on 10th April, 2015. (Copy of incorporation proof is Annexure A12)

Not only this, Modi Govt gave the license to manufacture fighter aircrafts to another Reliance company called Reliance Aerostructure Ltd. Even Reliance Aerostructure Ltd was incorporated on 24th April, 2015 i.e 14 days after the announcement of purchase of 36 Rafale aircrafts by PM in France on 10th April, 2015. (Annexure A13)

This by itself tells a unique story.

13. ‘Defence Offset Contract Guidelines’ (Extract attached as Annexure A14) of Defence Ministry warrant that permission of Defence Minister is necessary for granting the ‘offset contract’. Guidelines also require that ‘offset contract’ has to be countersigned by the ‘Acquisition Manager’ of the Defence Ministry. (Para 8.6 of the Offset Guidelines) Every Offset Contract has to be audited on a six monthly basis by the Defence Ministry and a final report has to be submitted to the ‘Defence Acquisition Council’ (Para 8.17 of the Offset Guidelines)

In the present case, these guidelines have been violated with impunity as the Defence Minister claims that no ‘offset contract’ has been signed as on 12th February, 2018, while the press release of

Reliance Defence (Annexure 8), Investor Presentation of R Infra (Annexure10) and Annual Report, 2016 of Dassault Aviation (Annexure 7) establish otherwise.

14. During a discussion in Parliament on ‘No Confidence Motion’, Prime Minister, Shri Narendra Modi and Defence Minister, Smt. Nirmala Sitharaman refused to disclose the purchase price of 36 Rafale aircrafts by citing a ‘Secrecy Clause’ in terms of an Agreement between India and France dated January 25th, 2008.

The said agreement nowhere prohibits disclosure of ‘commercial cost’ of procurement of aircrafts. (Refer Pages 2416-2425 (document page 2266 to 2275) in https://mea.gov.in/Uploads/PublicationDocs/177_foreign-relations-2008.pdf - Relevant portion attached as Annexure A15)

The scope of the agreement only extends to tactical and technical details of weaponry relating to the capability of the platform in question, and its performance and tactics in combat and does not include commercial details and costs. It is clear that PM and Defence Minister misled the Nation.

This is in spite of a commitment to make full public disclosure of the price of the 36 Rafale aircrafts on 17th November, 2017 by the Defence Minister, Smt. Nirmala Sitharaman (Copy of the video link is - https://bit.ly/2vRmBF1 )

Outright refusal of Prime Minister and Defence Minister in not disclosing the purchase price of 36 Rafale aircrafts is even more intriguing when viewed in light of the fact, that both Dassault Aviation and Reliance Defence have disclosed the price in the Annual Report, 2016 and the press release dated February 16, 2017 (Annexure A7 & A8, referred to above)

15. While the PM, Shri Narendra Modi’s desperation in Parliament on 20th July, 2018 was apparent when he attempted to hide behind the statement of French Government for not disclosing the price, PM’s stand is belied by the fact that the French President, Mr. Emmanuel Macron gave a public interview on 8th March, 2018 to a prominent news channel stating that “if the Modi government wanted to disclose some of the details to be revealed to the opposition and Parliament, he won’t interfere in such a discussion (Annexure16 and https://bit.ly/2FB6DWl)

Despite all the above, refusal of Prime Minister and Defence Minister to disclose the price reeks of a ‘Huge Scam’.

16. Lies of PM and Defence Minister are simply exposed by the fact that UPA-Congress had disclosed the commercial purchase price of various defence deals including the French MIRAGE Aircraft and the Sukhoi aircraft on the floor of the Parliament (Annexure 17). To illustrate:-

a) Unstarred Question No: 2822 in the Lok Sabha, dated 15.03.2010 where the revised cost of USD 2330 million for acquiring INS Vikramaditya was made public by the then Defence Minister Shri A K Antony

b) Unstarred Question No: 941 in the Lok Sabha dated 04.03.2013, where the cost of upgradation of Mirage Aircraft is clearly mentioned.

c) Unstarred Question No: 2318 in the Lok Sabha dated 09.08.2010, where the estimated cost of procuring Sukhoi Aircrafts is mentioned.

d) A press release by the Ministry of Defence on Kaveri engine development project was revealed on February 23, 2011

What is significant to point out that despite the so-called ‘secrecy agreement’ dated 25th January, 2008, commercial price of the French fighter jet MIRAGE manufactured by Dassault Aviation was disclosed by the then Defence Minister, Shri A K Antony.

Hence the entire story weaved by Prime Minister and Defence Minister for non-disclosure of purchase price reeks of a ‘Huge Scam’

17. That as decided by Indian Air Force in the year 2000 (NDA Government’s Tenure), the minimum operational requirement of Indian Air Force was 126 fighter aircrafts in order to supplement and substitute it’s ageing fleet of MiG 21. Neither the Prime Minister, nor the Defence Minister has disclosed the justification for reducing the number of aircrafts to be purchased from 126 to just 36. No one knows as to how was this wholly arbitrary figure of 36 aircrafts arrived at by PM, Shri Narendra Modi on 10th April, 2015 in France. Neither was the Indian Air Force taken into confidence, nor was the requirement adjudged by Cabinet Committee on Security (CCS) or Defence Acquisition Council.

Not only this, Prime Minister, Shri Narendra Modi justified ‘off-the-shelf’ purchase of 36 Rafale aircrafts as ‘Emergency Purchase’. Yet, despite the expiry of our 3 years from 10th April, 2015; not a single aircraft has been delivered so far. It is now stated that the first aircraft will only be delivered by September 2019, with the final aircraft delivery going up to the year 2022. This 8-year delay by itself proves that the National Security and our Defence preparedness have been severely compromised by Modi Govt.

18. Claim of Modi Govt that cost is increased on account on additional technical specifications is blatantly false. In fact, the Rafale aircraft being purchased earlier (UPA-Congress Govt) and now (Modi Govt) including ‘its associated systems and weapons’ are the same as tested and approved by Indian Air Force during UPA-Congress Govt.

This is proved by a Joint Statement dated 10th April, 2015 issued by French President Mr. Francois Hollande and Prime Minister, Shri Narendra Modi which reads “…that the aircraft and

associated systems and weapons would be delivered on the same configuration as has been tested and approved by Indian Air Force…” (Please See Annexure A6, highlighted portion, paragraph 14)

19. That, as per law, the Government is bound to provide full information to the Comptroller and Auditor General (CAG). Entire deal, its contours, nature of contract, absence of favoritism and the principles of level playing field are part of CAG’s domain to examine and to return a finding.

Even otherwise, Government is bound to disclose the price of 36 aircrafts to scrutiny by CAG, in accordance with law. Besides, there has to be a similar disclosure to the Public Accounts Committee (PAC), Chief Vigilance Commission (CVC), and Parliamentary Standing Committee on Defence

20. The above facts reflect a clear-cut case of loss to public exchequer, deliberate by passing of Public Sector Undertaking, HAL, offset contract worth over ₹30,000 Cr and Life Cycle Cost Contract worth approximately ₹ 1 Lakh Cr being extended to a private entity with zero experience of manufacturing aircrafts and endangering our National Security apparatus.

We, therefore, request the CAG to undertake its constitutional duty by conducting a time-bound special and forensic audit by examining the record threadbare, so that the truth is told to the people of India in a comprehensive and transparent manner affixing the responsibility of Modi Government.

Warm Regards,

Yours Sincerely

The Congress has alleged blatant corruption in the deal by the Narendra Modi-led government to buy 36 Rafale fighter jets from France's Dassault Aviation.

The Congress party has alleged that the Modi government has caused a loss of over Rs 41,000 crore to the exchequer by paying a higher price for the aircraft than what was negotiated by the UPA.

Attacking the Centre on Tuesday, Congress chief spokesperson Randeep Surjewala said that the CAG and CVC are bound by their constitutional duty to look at the entire deal and all its papers - whether or not somebody moves them.

"Congress party at an appropriate time also intends to move an appropriate petition before CVC and CAG to expeditiously and quickly adhere to their constitutional duties," Surjewala said.

On behalf of his party, Surjewala also asked why the government was not setting up a joint parliamentary committee to probe the fighter jet deal.

Defence Minister Nirmala Sitharaman had earlier rejected the demand, saying all the details on it have already been placed before Parliament.

Sitharaman also said that info leak on Rafale weaponry can help China and Pakistan.

Refusing to reveal the exact full price of each Rafale aircraft fitted with weaponry, the Defence Minister said that "information leaked about the weapon systems can ultimately help Pakistan and China."

Sitharaman, who recently appeared in 'Aap Ki Adalat' programme on India TV, said that 36 Rafale fighter jets being purchased by the government from France were nine percent cheaper than the price negotiated by the previous UPA government.

She even reportedly described as "white lie" the allegation made by the Congress that the approval of Cabinet Committee on Security was not taken for the Rafale deal.

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