Modi Govt Waived Anti-Corruption Clauses Days Before Rafale Deal Was Signed, Reports The Hindu

| February 11 , 2019 , 14:35 IST

The central government waived off critical provisions for anti-corruption penalties as well as overruled financial advisers’ recommendations for making payments through an escrow account just days before it signed the inter-governmental agreement with France to acquire 36 Rafale jets, The Hindu reported on Monday.

A report by The Hindu said that as a result of the high-level political intervention, the 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.

While the IGA dropped crucial procurement safeguards, it stated, three members of the negotiating team had signed a dissent note on the moves, maintaining that “it was not advisable to sacrifice basic requirement of financial prudence.”

“This direct dealing with the commercial suppliers, under cover of an IGA, was highlighted in a detailed note of dissent signed by three members of the Indian Negotiating Team — M.P. Singh, Adviser (Cost), A.R. Sule, Financial Manager (Air), and Rajeev Verma, Joint Secretary and Acquisitions Manager (Air),” the report claimed.

It added, “The Defence Acquisition Council (DAC) chaired by the then Defence Minister, Manohar Parrikar, met in September 2016, and ‘ratified and approved’ eight changes in the IGA, supply protocols, offset contracts and offset schedules. This was done after the IGA and associated documents had been approved by the Cabinet Committee on Security (CCS), chaired by Prime Minister Modi on August 24, 2016.”

According to the report, the most significant among these eight changes, recorded in a note signed by Vice Admiral Ajit Kumar, who was the member-secretary of the DAC, stated: “Non-inclusion of the Standard DPP Clauses related to ‘Penalty for Undue Influence,’ ‘Agents/Agency Commission’ and ‘Access to Company Accounts’ in the Supply Protocols.”

“The Rafale deal was signed between India and France under the terms of DPP-2013. The Standard Clauses in Contract are mentioned in Enclosure 8 of DPP-2013,” it said and added: “Despite the DPP stating explicitly that the Standard Contract Document ‘would be the guideline for all acquisitions’, the Indian government chose to remove these clauses from the supply protocols with the two private defense suppliers.”

“The government also chose to do away with a sovereign or bank guarantee from France and settled for a letter of comfort, which is not legally binding, from the French Prime Minister,” it further disclosed.

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 reports.

Congress chief Rahul Gandhi, in his tweet, repeated his allegation of corruption in the 36-jet deal to benefit industrialist Anil Ambani. "NoMo anti-corruption clause. The Chowkidar himself opened the door to allow Anil Ambani to steal 30,000 Cr from the IAF," he tweeted.

Party leader P Chidambaram, in a series of tweets, said the Rafale deal "is unravelling faster" than the government thought.