Rafale fighter jet deal is a Rs 1.30 trillion defence scam, says Congress

The Congress on Friday kept up the pressure on the Narendra Modi government over the alleged irregularities in the Rafale fighter jet deal, and has finally taken to calling it a Rs 1.30 trillion scam.

The Congress asked fresh questions about the manner in which the deal was awarded to a private entity that had no experience in manufacturing of aircrafts.

Bharatiya Janata Party (BJP) spokesperson Sudhanshu Trivedi rejected the allegations. It said the Congress was frustrated after its allegations were "proved" wrong by Modi Defence Minister Nirmala Sitharaman and Law Minister Ravi Shankar Prasad and also the French government.

The Congress accused the Modi government of "deceiving" the country and promoting crony capitalism in awarding a private entity the contract for the multi-billion Rafale aircraft deal, while robbing public sector undertaking Hindustan Aeronautics Limited (HAL) of the deal.

The Congress leadership hopes that alleged irregularities in the “Rs 1.30 trillion Rafale scam” could be the undoing of the Modi government, just as the “Bofors scam” had led to the unravelling of the Rajiv Gandhi government in the late 1980s.

Congress party’s chief spokesperson Randeep Singh Surjewala demanded answers from the PM in Parliament during the ongoing monsoon session. Surjewala said entire deal consisted of Rs 300 billion of offset contract and Rs 1 trillion of lifecycle contract to the private company.

He said the HAL had signed Rs 360 billion offset contract in the shape of a ‘workshare agreement’ in March 2014. But when the PM “unilaterally announced” an ‘off-the-shelf’ purchase of 36 Rafale fighter jets on April 10, 2015, HAL was denied the biggest ever ‘defence offset contract’, Surjewala said.

The ‘defence offset contract’ went to a private company, Reliance Defence Limited, which had zero experience of manufacturing fighter aircrafts, Surjewala said. The Congress furnished several documents, including Reliance Defence Limited’s annual report of 2015-16, a defence ministry press release of February, 2018, Dassault Aviation’s annual report of 2016, among others.

Business Standard reached out to Reliance Group after the Congress press conference, but was yet to receive a reply at the time of filing of this report. In December 2017, Reliance Defence chairman Anil Ambani had written to Congress chief Rahul Gandhi pointing to his family’s “respectful relationship” with the Gandhi family over generations, and had disputed that his company had no experience in defence manufacture. 

Ambani had also said Dassault, the manufacturer of Rafale jets, chose Reliance Group as its joint venture partner to meet the ‘offset’ or export obligation component of the deal. He said this was “an independent agreement between two corporate private sector entities and governments had no role to play in this matter.”

Surjewala said Reliance Defence Limited was constituted on March 28, 2015, a mere 12-days before the PM announced the purchase of 36 Rafale aircrafts in France on April 10, 2015. He said Reliance Defence Limited did not have the license to manufacture fighter aircrafts.

Surjewala said the Defence Ministry gave Reliance Aerostructure Limited the license to manufacture fighter jets, but at the time it did not own any land or building on the date of the grant of the license on February 22, 2016.

“What is even more surprising is that even Reliance Aerostructure Limited was incorporated on April 24, 2015 – a mere 14 days after the announcement of purchase of 36 Rafale aircrafts by the PM in France,” Surjewala said.

The Congress spokesperson accused Defence Minister Sitharaman of misleading the nation regarding the award of Rs 300 billion (Rs 30,000 crore) ‘defence offset contract’ to Reliance Defence Limited. He said the government did not follow its own ‘defence offset contract’ guidelines in awarding the contract. The guidelines were violated as there was the absence of approvals for the contract from the defence minister, acquisition manager of defence ministry and Defence Acquisition Council, Surjewala said.

Furnishing Reliance press statements and other documents, Surjewala said Reliance Defence Limited claims to have secured the ‘offset contract’ from ‘Dassault Aviation’ for Rs 300 billion and a consequent ‘Lifecycle Cost Contract’ of Rs 1 trillion. Even Dassault Aviation in its Annual Report 2016-17 has claimed that ‘offset contract’ is being executed by ‘Reliance’, he said.

Surjewala said that on the contrary, Defence Minister Sitharaman has claimed in a PIB (Press Information Bureau) press release of February 7, 2018 that the ‘offset contract has not been awarded’ by Dassault Aviation. Surjewala said: “Simple question is, who is lying – Defence Minister Sitharaman or Reliance/Dassault Aviation?”

Surjewala said the PM should answer whether Reliance and Dassault Aviation can sign an ‘offset contract’ of Rs 300 billion without the approval of the defence minister? He asked whether the ‘offset contract’ was countersigned by the ‘acquisition manager’ of the Defence Ministry and why have the six monthly audits by the DOMW (Defence Offsets Management Wing) not been conducted?

Surjewala asked whether the ‘acquisition wing’ has submitted an annual report to the ‘Defence Acquisition Council’? He asked if a private corporate entity and supplier of the Defence equipment in the largest defence deal of the country be permitted to wholly gloss over the ‘Defence Offset Contract guidelines/instructions’?

He said Reliance was granted industrial license for category A high security defence production in absence of a land or building. Surjewala said Reliance Aerostructure Limited was incorporated on April 24, 2015, applied for an industrial license to manufacture fighter aircrafts in 2015 and was granted this by then Commerce Minister Sitharaman on February 22, 2016.

Surjewala said in its license application for manufacturing fighter aircrafts, Reliance Aerostructure Limited gave its address and location as in Amreli, Gujarat. “At that time, the premises were not owned by Reliance Aerostructure Limited. The aforesaid address belonged to ‘Pipavav Defence and Offshore Engineering Company Limited. Even on the date of license, Reliance Aerostructure Limited did not own the land or building at the address,” he said.

The Congress spokesperson said Reliance Defence Limited acquired the company only on January 18, 2016 and its name was then changed to Reliance Defence and Engineering Limited. The Congress furnished the company’s annual report 2015-16 as evidence.

Reliance Aerostructure Limited was allotted 104 acres in Mihan SEZ, Nagpur, Maharashtra on August 28, 2015 for Rs 630 million but even this amount was eventually paid in July, 2017.

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