Untold stories of the Rafale deal and a fact check of the allegations

A timeline of the Rafale deal and what transpired during the UPA and then the NDA regimes

A timeline of the Rafale deal and what transpired during the UPA and then the NDA regimes
A timeline of the Rafale deal and what transpired during the UPA and then the NDA regimes

The Narendra Modi Government is now facing heat over the allegations in Rafale deal, spearheaded by the Congress President Rahul Gandhi. What is this Rafale deal and how did this come about? Here are the facts…

UPA’s Rafale deal

The Indian Air Force usually buys its planes from either the Soviet Union or France. India has to avoid the ones Pakistan and China used and historically India preferred to deal with either the Soviets or the French and the French got the upper hand after Soviet disintegration. In 2006, the United Progressive Alliance (UPA) floats the World’s biggest tender to purchase 126 fighter jets. France’s Dassault company’s Rafale and Eurofighter’s Typhoon were the main competitors and Rafale has the blessings of the then Congress President Sonia Gandhi. BJP leader Subramanian Swamy has alleged several times that the deal was made between the then France President Nicolas Sarkozy’s gorgeous Italian-origin wife Carla Bruni and Sonia Gandhi, also of Italian-origin. Anyway, the decision to buy 126 fighter jets from Dassault’s Rafale was officially announced during the French President’s Indian visit in early 2008[1].

The number 126 fighter jets is still a mystery and originally the deal was to buy 18 directly from France and for the remaining 108 to be assembled in India at Hindustan Aeronautics Limited (HAL).  This deal, termed as the World’s biggest tender was worth around $7.7 billion. Swamy accused that Sonia and her two sisters, and Carla Bruni were going to get 20% commission from this deal by falsely making Rafale as the lowest bidder. Why 126 fighter jets? The more the quantity, the greater the commission. Ignore the cooked up reports that wrote of the need for more fighters.

Figure 1. Rafale timeline under UPA
Figure 1. Rafale timeline under UPA

There was little transparency in the deal, and the actual price was never reached. There were allegations of rules and conditions being bent to make Rafale the lowest bidder and to kick out Eurofighter. At last, by 2012, when the deal was about to be declared, the country was witnessing a huge anti-corruption wave and Sonia Gandhi and her son-in-law Robert Vadra were being dragged into every nut and bolt purchase in the country. At that time, Vadra’s benami defence dealer Sanjay Bhandari’s Offset India Solutions (OIS) was also trying to get offset contracts from Dassault but it got rejected. And Dassault’s major Indian agent was Mukesh Ambani’s Reliance Group and they announced a Joint Venture in February 2012.

In 2012, BJP leader Subramanian Swamy filed a detailed complaint to the Defence Minister pointing out the irregularities in the selection of Rafale accusing Sonia Gandhi[2]. This complaint became a death knell to UPA’s Rafale deal and Anthony slowed down the process. He never signed or approved any crucial papers and also put many queries in the files. In the end, by early 2013, the UPA”s Rafale deal became dead.

NDA’s Rafale deal

By end of 2013, the warring brothers Mukesh and Anil Ambani patched up and as per the settlement, Mukesh gave his Defence Sector to bankrupt brother Anil Ambani, whose businesses were collapsing, be it telecom or infrastructure. There were allegations of the involvement of Anil Ambani’s Reliance Group (ADAG) in the 2G Scam and the Coal Scam. ADAG earned a bad name after withdrawing from the Delhi’s Airport Metro operation. The public too was angry at him due to the inflated power bills by his companies. At one time, the Central Bureau of Investigation (CBI) even time declared him as a Hostile Witness for not answering properly or lying!

Anil Ambani who got Defence Sector from his brother Mukesh became very happy when NDA’s first Defence Minister Arun Jaitley decided to look into the UPA’s aborted Rafale deal. Within months, in 2015, Prime Minister (PM) Narendra Modi on his France visit declared the purchase of 36 Rafale Jets directly in a Government to Government agreement. As per this deal, the cost of the purchase is expected to be $7.5 billion dollars and 36 planes would be totally made in France and will be dispatched from 2019 to 2022. As per our information, the Government of India has given around 25 percent of the total cost to Dassault.

Anil Ambani bagged Dassault’s main offset deal because of the Ambani family agreement while sharing assets. The offset deals worth 3.8 billion dollars are mainly related to Falcon, one of Dassault’s commercial jet manufacturers. Many Indian private players also got offset contracts.  Vadra’s benami Sanjay Bhandari, tried once again to get Dassault’s offset contracts and got rebuffed yet again. Now Bhandari is a fugitive, having escaped from India via Nepal and is believed to be in London. The place he is staying in London appears to be Vadra’s benami asset, from the email conversations between them.

So what is RaGa alleging?

Recently Rahul Gandhi has started alleging of a scam in Rafale and questioning the role of Anil Ambani in the deal. The allegations are basically on the role of Anil Ambani, whose credibility in running businesses is low. He has a tainted past in so many sectors that he involved himself with – Telecom, Power, Coal or Infrastructure to state a few. The question then arises as to why Narendra Modi entertained such a person who is mired in so many controversies.

BJP leaders argue that it was Dassault who decided to partner with Anil Ambani. Yes. That is the technical answer. But one must remember that there is morality in politics. The government of India should not allow a business group having a tainted past to enter into the Defence Sector. For instance, will the Government of India allow Dassault to partner with Vijay Mallya’s firms or Mehul Choksi/ Nirav Modi’s firms? The Modi Government should not have entertained Anil Ambani firms which occupied the front and center stage in the 2G scam-era of UPA. Modi should not have taken Anil with him to France when the Rafale deal was announced in 2015.

Why did Modi re-open a bad deal?

Another question that comes to mind is why Modi dusted off and re-worked the aborted Rafale deal. The government could have called a new tender in a transparent way. Only Narendra Modi and the then Defence Minister  Arun Jaitley can tell us why they preferred to re-work the UPA’s corrupt Rafale deal instead of coming up with a fresh tender. It is learnt that many officers have noted on file that during UPA’s tenure Rafale was selected as the lowest bidder in dubious ways. It would have been better for the NDA Government to go for a fresh tender. With a quarter of the money paid to Rafale, the only option before the Government is to check the credibility of the private firms engaged in Defence Sector and bring more transparency to the sector.  Non-credible players, bankrupt groups should not be allowed to play in the Defence Sector.

Note:
1. The conversion rate used in this article is 1 USD = 50 Rupees.

References:

[1] Sarkozy’s visit to IndiaJan 29, 2008, IDSA.in

[2] The Rafale Deal Should Be Scrapped And RenegotiatedAug 18, 2014, Outlook Magazine

Team PGurus

14 COMMENTS

  1. This is the result of Mr Modi and Shakunis softhandling the various cases against Gandu and Chiddu families.A poisonous Snake has to be killed and if you keep it as a Pet one day be sure it will bite you.
    Hope now atleast Mr Modi wakes up from his slumber and take the help of Dr Swamy Pgurus to stamp on these Snakes.

  2. Moral of the story: Involve AJ in your party at your own Peril. Modi has been doing it again and again. AJ, go and recuperate with our money. Do not interfere in political matters. India was better when you were away.

  3. whatever may have been the reasons for choosing rafale,etc… what is worrying is trust-deficit our polity suffers from which in turn could affect all major procurements,specially in defence purchase

  4. This article is very clear. I am sure this and much more information is ought to be available with the government.

    Why don’t the government put a full stop by giving a official explanation? Why reply to Congress’s and media’s daily imaginative stories and allegations?

    The social media is filled with rubbish badly affecting Modi government’s credibility.

    Modi government is yet to realize
    that the very significant amount of fringe votes will be lost by such social media rumblings.

    2019 is not far. It is high time that the government istened to Dr. Swamy and give meaning to the authentic and responsible efforts of Pgurus.

  5. Rookie author. Easy to figure that out.

    Once in power, BJP should have stopped talking about corruption. That talk has now boomeranged. Indian people have a fair idea about corruption. Tell them you are the only clean prince around and they instantly figure you out.

    • If you have proof of BJP corruption, counter the author with facts. Which talk has boomeranged and on Whom ? Are you suggesting you have no clean ethics to prove you have ethics ?

      • No Sir, I don’t have any such proof. On the contrary, I think BJP is as clean as the water around a lotus. Very pure. Very divine.

  6. This deal was made for Ambani and Adani not for India.
    Modi smartly scrapped the UPA deal and favored his buddies Adanis and Ambanis and compromised on the Indian Security.
    Though I like many efforts by Modi but I am disappointed with this. Mr Modi can no more say there is no Corruption in PMO or cabinet.
    1. Anil Ambani –
    Sequence of Events:
    Feb15 – Anil Ambani group purchased a Tiny defence equipment company and entered in Defence.
    Apr15 – Modi visted France along with Ambani in delegation and scrapped UPA deal and made a New Deal.
    Sep16 – Raffale deal agreement done in France by Modi.
    Oct16 – Ambani and Dasult company agreement done.

    Oct16, one day before Modi’s arrival to France, France Foreign Secratary as a customary gave a press conference and told the deal is good and no changes are made HAL will be doing the mfg. This means even Foreign secratry doesnt know about the changes. [because Modi added this surprise Ambani’s inclusion upon his arrival later].

    Even French compamy Dussalt doesnt know abt the partnership with Ambani, 3 days before Modi’s Arrival in Apr15, Dassult CEO, Indian Ambassdor and HAL cheif did PressConfrence in Paris , Dassult CEO praised the HAL capabilities, their company officials visited HAL Bangalore office, we didnt expect HAL has such a good infrastructure and capabilities and said 95% deal is done and just 5% PM level agreements are left. check in google [French dussalt CEO Press Confrence 2015]

    Raised the cost 300% (studip reasons givin on Currency, Inflation raise by Jaitly)
    2G scam and his 2 Lakhs loans due to Indian PSU Banks leading to NPAs.
    why would Dassult would get into agreement with this partner by leaving HAL expertise

    20K contract given to Ambani. And the joke is Ambani says it includes onlyy Non Defence equipment mfg in this deal (In reponse to RAGA by Ambani)

    2. Gautham Adani
    IAF initially raised 126 Aircrafts, Modi made deal for only 36. what happed to 90 more Aircrafts.
    $10 Billon tender raised for single Engine fighter Jets from Saab Gripen, Swidesh company and guess who is the Indian Partner. Adani.

    This is going to be another Bofors, Both parties make noise and slowly everyone forgets.
    What happens to self reliance – Make In India – Technology Transfer lost.

    Where is our James Bond Swamy on this issue. I want to listen to him.

    • Your post is full of inaccuracies and vicious propaganda against Modi.

      1)Modi did not scrap the deal, it was UPA. Pl read the article and understand facts before blurting.

      2)By promoting Make in India, naturally private parties are involved. In what way country security is involved ? In fact delaying the purchase involved natural security.

      3)For a first timer in defence, it is prudent you buy a small Co and expand further.

      4)HAL has been eliminated by UPA in 2012 by PC and Jairam Ramesh.Visit HAL and check their history.

      5) Raised the cost by 300% . If you know the price, share it with RAGA, as he is unaware of this.

      6) Any small businessman will make trial purchase, and then go for bulk deal.

      7)Do you have any idea what Bofors is? It was proven Q ,the agent took money. In Rafael deal, it is between governments and if any bribe is involved, it is the Indian citizens who got bribe.

      8) While bad mouthing Modi, you asked one intelligent question——- What happens to ,Make In India ? So far as per your view, no Indian is eligible for this role, then how to achieve Make in India ? Why don’t you start a venture and help Modi ?

      9) it doesn’t, require J Bond IQ to understand what Modi is doing. All that one requires, is human instinct and not that of any other species.

  7. Modi saw that Airforce was in a bad shape and wanted to acquire the aircraft as soon as possible. Here was a fighter, which completed field tests and other checks and all India wanted was to make a purchase decision, which Modi did by eliminating middle men. Here Hollandes wife lost money.

    When the product is good, why to float a new tender and waste another 5 years to complete the formality. Indian airforce was getting into ICU. National security is most important.

    HAl record is pathetic and rejected by UPA. Regarding Anils entry, he was already in the picture and Govnt didn’t interfere. As defence sector was opened upto private sector, every party will be a virgin, even if it is TATA or Birla. In such a case, which private party in India is eligible ? Check the other 10 parties who entered agreements and verify who has experience in defence field. D. Ambani was a oil dealer and how did his business flourish ?
    Who gains if the deal is cancelled ? Pak, China and middlemen. Who is the biggest looser, India. Discussing price in open means, we are opening to the world the secret weaponery fixed to the aircraft and opposition parties will start discussing on tyre sizes and fuel tank capacity and our EXPERTS in MSM will have a field day. This episode proves how dangerous is Congress party to the nation and what clout they have with international mafia, to humiliate India.

  8. Here also there is a procedural fault. Understand the stand of pour us on jaitely which can be right. But the depleting fleet was the main reason ancient it is a fact.

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