Not just a 'perception problem', Rafale deal could set a bad precedent

Whether it accepts it or not, the furore over the Rafale fighter jet with France's Dassault has become a problem, a big one, for the BJP-led NDA government. Defence Minister Nirmala Sitharaman has declared it to be a "perception problem" and in what seems like an eerie coincidence, the name of Robert Vadra, son-in-law of Congress leader Sonia Gandhi, has cropped up as "one who failed to get a cut" and therefore an interested party in the deal in which Congress president Rahul Gandhi accuses Prime Minister Narendra Modi of dubiously bringing in Anil Ambani-led Reliance Defence as Dassault's partner.

In this war of mostly noisy and pointless TV news show debates, it has become fashionable to throw cow dung in return for bull droppings. But we must learn to look beyond these to ask some hard questions:
   1.     Why was the public sector Hindustan Aeronautics Ltd (HAL) sidestepped by its sole shareholder, the government of India, all of a sudden? 
   2.     Since Anil Ambani publicly announced an Rs 30,000-crore revenue opportunity from the Dassault "offset" partnership, is there not a need to ask how his company there got in the first place without any bidding involved?
   3.     Why would a former president of a G-20 country, Francois Hollande, say the Indian government played a role in Dassault's choice of partner?
   4.     If Dassault added features to its fighters while cutting down the number of jets in the deal to 36 from 126, and it was indeed because of a secrecy clause linked to sweetheart features for India's added security, does that not set a secrecy precedent for any defence deal where any future government can escape the scrutiny of auditors, Parliament or media by citing a secrecy clause? How does that weigh in with a culture of transparency to cut corruption?

I would look for best practices to guide us in these matters. When the government is itself in the dock, it is best to look at global practices to arrive at an idea of fair play because the rule-makers cannot be judged on the basis of their own rules when they are themselves the purchasers.

In 2012, the European Court of Justice in a landmark ruling "significantly restricted the ability of EU governments to use sole-source or negotiated procedures with selected suppliers for purchases of defence and security equipment."

The ECJ ruled that procurement agencies "must" use competitive tendering procedures unless the supplies have been specially designed or modified for military use and the procurement involved an "essential national security interest."

Now, the NDA government is citing both modifications of supplies and essential national security interest among the reasons for the less-than-transparent Rafale deal, but it is pertinent to ask if a government in a democracy that runs under institutional supervision can be its own judge.

The fact of the matter is that "offset" deals forming part of defence purchases to aid local suppliers are a regular part of defence contracts. If the main purchase is an apple, the offset part is an orange. But the key point to note is that both the apple of the fighter jet and the orange of the offset components are paid for by the same taxpayer. If you follow the money, the Government of India has both the right and the duty to determine the offset partner. A public purchase cannot be subject to the same rules as a private purchase.

Therefore, a statement by the government made last week that it had no role in Dassault's choice of partner is in itself questionable. In coal linkages for power plants, the NDA government reversed the UPA's policies and set the tone for auctions. In the case of 2G spectrum , the Supreme Court supervised auctions even before the NDA came to power.

Should not the logic that was applied to 2G spectrum and coal applied to defence offsets as well? The Reliance Defence contract falls into the "sole source" category ECJ mentions above and goes against the principle of transparency. 

No wonder the Congress has been talking of either a parliamentary probe into the Rafale deal or a Comptroller and Auditor General report.

The Supreme Court is looking into a public interest litigation that is due for hearing on October 10. Don't expect a miracle there, but I do anticipate the honourable judges to ask some sharp questions on transparency -- enough to give the Congress ammunition in an election year. If national interest is monitored solely by a political leadership in power and kept outside other institutions, it does raise hard questions.

However, the fact is that Congress is not overly confident of getting Supreme Court support. A senior Congress source told me it was not keen on the PIL track as it did not "want to lose the narrative." Between the Congress party's 'narrative' and the BJP's 'perception problem' true insights may yet come from the CAG and/or the Supreme Court. 

(Madhavan Narayanan is a senior journalist who has covered politics, diplomacy, business, technology and other subjects in a long career that has spanned organisations including Reuters, Business Standard and Hindustan Times. He is currently an independent columnist, editor and commentator. He is listed among the top 200 Indian influencers on Twitter. He tweets as @madversity)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)