“Biggest Defence Scam Ever”: Yashwant, Shourie & Bhushan On Rafale Deal

The Logical Indian Crew

August 10th, 2018 / 6:38 PM

Credits: The Wire, Scroll | Image credits: Wikimedia, Vijayakarnataka

On August 8, activist and advocate Prashant Bhushan along with former BJP leaders Yashwant Sinha and Arun Shourie held a press conference. This press conference was to talk about the Rafale deal, which is probably one of the biggest controversies surrounding the present government. 

They have alleged that not only has this deal has caused a huge loss to the exchequer, it has, in fact, may have compromised national security. Calling it the biggest defence scam, they said that its unfolding bears a similarity to the Bofors scam in the 1980s in which the then UPA-government, in a similar way tried to hide facts behind the veil of confidentiality.

What is Rafale Deal?

The UPA government floated a tender on 20 August 2007, for the purchase of 126 Medium Multi-Role Combat Aircraft (MMRCA) for the Air Force. Rafale and the Eurofighter Typhoon were shortlisted after the primary process.

Rafale was declared L1 vendor as the bidder with lowest price quotation (with a base price of $10.20 billion, amounting to Rs. 54000 crores at that time). 180 out of the 126 aircraft were supposed to come in flyaway condition and the rest were to be manufactured in India by HAL with the help of Dassault.

On September 23, 2016, the current Indian government concluded an Inter-Governmental Agreement (IGA) with France for the purchase of 36 Rafale fighter jets at a cost of Rs 58,000 crore which is different to an earlier deal signed at Rs 90,000 crore for 126 Rafale jets. This is the first fighter aircraft deal since the purchase of Sukhois from Russia in the late 90’s.

This is what the trio said:

Overlooking of a much cheaper deal by PM Modi        

The trio drew attention to the fact that as per the previous deal struck by the then UPA government after an official bidding process, it was decided that Dassault Aviation would be handing over 18 of these MMRCAs at a price of Rs 42,000 crore which included Dassault assisting Hindustan Aeronautics Limited (HAL), a public sector company to manufacture 108 such aircraft.             

They mentioned about PM Modi’s 2015 visit to France where he announced that India would be purchasing 36 Medium Multi-Role Combat Aircraft (MMRCA) Rafale aircraft in fly-away conditions. Following this, it was decided that Rs 60,000 crore would be paid for this purchase, according to the documents by Dassault and Reliance.

The trio in the press conference called this new deal “embarrassing for the government” under which now each of these aircraft would cost a whopping Rs 1,660 crore.

Defence Minister might have been kept out of loop       

Bhushan, Shourie and Sinha also said that the then defence minister Manohar Parrikar in an interview to Doordarshan in 2015 had said that the UPA government was planning to purchase 126 planes at an estimated cost of Rs 90,000 crore, which means that each aircraft, in that case, would have cost Rs 715 crore.

This is what is embarrassing for the government for it works out to Rs 1,660 crores per plane. This is more than double the price of the aircraft under the earlier 126 Medium Multi-Role Combat Aircrafts deal. And almost Rupees One thousand crore higher per plane than the price that was furnished by the government itself to Parliament on November 18, 2016,” they said.

They also said that this interview was taken just days before PM Modi had struck the new deal, pointing to the possibility that Parrikar might not have been kept in the loop before the deal was struck.

Also, just two days prior to Modi’s visit to France, S Jaishankar, the then foreign secretary had briefed the press about Rafale, wherein he said that PM’s visit was more on a leadership-level and that the defence contracts were a different topic.

Inflated costs      

Bhushan, Sinha and Shourie also spoke about the inflated cost at which now the aircraft will be bought. The government has attributed the higher cost to the add-ons (spares, parts, etc.). However, the trio said that as per the Request for Proposal (RFP) put forth by the UPA government on August 28, 2007, for 126 MMRCA, the price decided upon was inclusive of all these factors.

The Request for Proposal made clear that the bids were to be inclusive of cost of initial purchase, transfer of technology, licensed production, etc. Please glance at the italicised portion once again as it gives the lie to the government’s repeated assertion that a higher price is being paid to Dassault now because of “add-ons”,” the trio said.    

Contract transferred from HAL to Reliance    

The most severe charge they levied was that government decided to transfer the contract from state-owned aerospace and defence organisation, HAL to Reliance Defence Limited, a subsidiary of RIL. It is to be noted that Reliance Defence Limited was formed just 10 days prior to the deal was signed, which means that it has no previous experience of aerospace manufacturing and no factory unit.

They said, “The United Progressive Alliance government steered the negotiations to fulfil three interrelated objectives:

  1. First, the Air Force should get some aircraft at the earliest possible, since the MiG-21 and the MiG-27 fleet had completed their service lives and were being retired from service.
  2. Second, India’s aerospace industry has to be rejuvenated: for this to happen, the country must acquire access to advanced technologies; an order of such a large magnitude – buying 126 fighters – ought to be leveraged to obtain advanced technologies from the foreign vendor.
  3. Third, the one Indian company that had decades of experience in building aircraft – HAL – should build the fighter in India so that it would be in a position to maintain, service and overhaul the Rafale through its service life of 30-40 years. In the process, HAL would also acquire advanced manufacturing capabilities to become self-reliant in producing state-of-the-art fighter aircraft.”        

They further added that not only does HAL have over 60 years experience of aircraft manufacture and maintenance, Reliance Defence has no such experience. “Its Pipavav Shipyard is facing serious difficulties in building Offshore Patrol Vessels (OPVs) for the Navy – a long-delayed order that is impacting the Navy’s operational effectiveness.”

Secrecy around the deal

Defence minister Nirmala Sitharaman has refused to reveal the cost and the reason for denying HAL the offset contract stating that these issues were of national security and hence confidentiality around it was required.      

However, Bhushan, Sinha and Shourie pointed out several contradictions in this explanation. They said on the previous occasion, the government had disclosed the details of the deal. “In fact, on November 18, 2016, in response to a question asked in the Lok Sabha on the acquisition of fighter aircraft, the MoS, Defence stated that Inter-Governmental Agreement with the government of French Republic has been signed on September 23, 2016 for purchase of 36 Rafale aircraft along with requisite equipment, services and weapons. Cost of each Rafale aircraft is approximately Rs 670 crore and all the aircraft will be delivered by April 2022,” they said.    

They further added, “In fact, French President Emmanuel Macron himself stated explicitly in March in an interview to India Today that how much is to be disclosed in this regard is entirely up to the Indian government.”

In the end, they said, “The entire transaction is thus a textbook case of criminal misconduct, or misuse of public office, and of enriching parties at the expense of the national interest and national security.”     

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Written by : Shraddha Goled

Edited by : Bharat Nayak

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