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Rafale: Contract of HAL given to Reliance who never made a paper plane

IndiaRafale: Contract of HAL given to Reliance who never made a paper plane

A French judge has been appointed to lead a criminal investigation into alleged corruption in the 7.8 billion Euro Rafale Deal.

This probe will be led by an independent magistrate and an investigating judge. Recently, a new stunning report in the website Mediapart says Dassault Aviation signed its first MoU with the Anil Ambani group on March 26, 2015, two weeks before Prime Minister Modi went public in Paris on his decision to buy 36 Rafale jets and scrap the earlier contract for 126 aircraft.

The French anti-corruption NGO filed a complaint with the tribunal of Paris, citing “corruption”, “influence peddling”, “money laundering”, “favoritism” and undue tax waivers surrounding the deal.  According to Mediapart, the PNF has confirmed that the newly opened investigation will focus on all four of the alleged crimes.

Hindustan Aeronautics Limited Replaced by Reliance:

When HAL was replaced by Reliance in the deal, it had many thinking something was strange because Reliance never even made a paper plane!  Hindustan Aeronautics Limited (HAL) is an Indian state-owned aerospace and defense company, headquartered in Bangalore (Bengaluru), India. Established on 23 December 1940, with 79 years of experience, HAL is one of the oldest and biggest aerospace and defense manufacturers in the world today.

HAL began aircraft manufacturing as early as 1942 with licensed production of Harlow PC-5, Curtiss P-36 Hawk, and Vultee A-31 Vengeance for the Royal Indian Air Force.  HAL currently has 11 dedicated research and development (R&D) centers and 21 manufacturing divisions under 4 production units spread across India. HAL is managed by a Board of Directors appointed by the President of India through the Ministry of Defence Government of India. HAL is currently involved in designing and manufacturing fighter jets, helicopters, jet engines, and marine gas turbine engines, avionics, software development, spare supply, overhauling, and upgrading of Indian military aircraft.

The HAL HF-24 Marut fighter-bomber was the first indigenous fighter aircraft made in India.  The Company has a comprehensive design and development capability in the field of aerospace. Out of 31 types of Aircraft produced so far, 17 have been of indigenous design. The Company has long experience in design and manufacture of a diversified range of aircraft and its systems.

Sadly without support from the government today, huge competition in an open market and political interference has shattered the structure of HAL making it weak. Perhaps this deal is also endangering the national security of India with too much interference from politicians who have no idea how to build up the security forces and boost up their bases. Shockingly, HAL with their expertise was removed through political propaganda, and Reliance, who never made a paper plane was given this national contract.

The History of the Rafale Deal:

On 31 January 2012, under the Congress government, the Indian Ministry of Defence announced that Dassault Rafale had won the MMRCA competition to supply the Indian Air Force with 126 aircraft, along with an option for 63 additional aircraft. The first 18 aircraft were to be supplied by Dassault Aviation fully built and the remaining 108 aircraft were to be produced under license by Hindustan Aeronautics Limited (HAL) with a transfer of technology from Dassault.

Rafale was chosen as the lowest bidder based on life-cycle cost, which is a combination of cost of acquisition, operating cost over a duration of 40 years, and cost of transfer of technology.  The negotiations with Dassault were long drawn due to disagreements on the warranty for aircraft produced by HAL. India wanted Dassault to ensure the quality of aircraft produced by HAL, but Dassault declined to do so.  In January 2014, it was reported that the cost of the deal had escalated to $30 billion (₹1,86,000 crore), with each aircraft costing $120 million (₹746 crores).  In February 2014, defense minister A. K. Antony said that the procedure of calculation of life-cycle cost was being re-examined and the contract could not be signed in the fiscal year 2013-14 due to budgetary constraints. In March 2014, HAL and Dassault signed a work-share agreement to manage licensed manufacturing.  After the Indian general election in April–May 2014, the National Democratic Alliance led by Bharatiya Janata Party took control of the government from the United Progressive Alliance led by the Indian National Congress.

As disagreements over cost and warranty for aircraft produced by HAL continued, defense minister Manohar Parrikar said that the Sukhoi Su-30MKI could be acquired as an alternative to Rafale. Air Chief Marshal Arup Raha disagreed, saying that the Su-30MKI and Rafale had different capabilities, they were not interchangeable. In February 2015, it was reported that the Rafale purchase was headed for cancellation as it had been misjudged to be the lowest bidder due to deficiencies in Dassault’s bid.  On 25 March 2015, Dassault’s CEO Éric Trappier said that although the deal was taking time, it was “95 percent completed”

Suddenly, a new turn of events transpired when on an official visit to France in April 2015, Indian Prime Minister Narendra Modi announced that India would acquire 36 fully built Rafales citing “critical operational necessity”.  In July 2015, defense minister Manohar Parrikar informed the Rajya Sabha that the tender for 126 aircraft had been withdrawn and negotiations for 36 aircraft had begun. In January 2016, India and France signed a memorandum of understanding (MoU) for the acquisition of 36 aircraft without finalizing the financial terms of the acquisition. In May 2016, the two sides agreed on a figure of €7.87 billion (₹58,891 crores), compared to €11.8 billion quoted in April 2015 and €8.6 billion quoted in January 2016.  Sources from the government quoted by Press Trust of India said that the price decrease was due to a change in escalation formula from a fixed 3.9% to a floating rate linked to European inflation indices along with a cap of 3.5%.

Jean-Yves Le Drian and Manohar Parrikar signing the Rafale inter-governmental agreement in September 2016 for the acquisition of 36 aircraft following clearance from the Indian Cabinet Committee on Security, citing defense sources, they claimed that the agreement provided for many components superior to those in the original deal.

State-owned licensed fighter jets manufacturer HAL was bypassed in the Rafale contract ditched by the Indian government under Narendra Modi to favor privately owned Reliance Defence Limited, who never made a paper plane, and obtained an offset contract from Dassault.

The confidential documents obtained by Mediapart reveal how Dassault had in fact no interest in forming a partnership with Reliance other than for political reasons. And its primary expectation from Reliance was “marketing for programs and services with the GOI” and one part of the document says, “While Reliance brought neither funds nor know-how of any significance to the joint venture, it did bring to it its capacity for political influence. In an extract from one of the documents obtained by Mediapart detailing the agreements between Reliance and Dassault, Anil Ambani’s group was handed the mission of “marketing for programs and services with the GOI”  “government of India”.

Four Points Why Rafale Is a Scam:

  1.  Contract to HAL removed and given to Reliance for personal benefits:  All this transpired in hunger for personal and political benefit, not for the benefit of the state-owned brilliant aeronautical manufactures of fighter jets with a history going back to the 1940s, oldest and biggest aerospace and defense manufacturers in the world today.  In fact, if HAL who knows how to make aircraft was given the deal, it would have generated jobs for Indians, and given HAL better expertise in making aircraft especially for the younger generation.  However, India and Dassault had officially been negotiating terms for the purchase and manufacture of 126 Rafale jets right up to Prime Minister Narendra Modi’s publicly announced decision – on April 10, 2015 – to scrap that deal and replace it with the outright purchase of 36 fighters. It is said that even Manohar Parrikar, India’s defense minister at the time, was unaware of Narendra Modi’s decision until the very end, and, it appeared Anil Ambani knew about it, but shockingly, not the defense minister of India. The government would also get a commission out of the shady deal and has no qualms about bypassing HAL
  2. Middleman Paid in Secret Commission:  Something has to be “fishy” if there is a middleman in a national deal because this is an agreement between two nations.  Never a middleman in a national deal.   The  “middleman” Sushen Gupta got several million euros in “secret commissions” in connection with the 59,000 crore deal for 36 jets for the Indian Air Force (IAF).
  3. 126 Jets Replaced with Only 36 and Still Paying More:  The Congress government’s original deal was to get 126 jets, with the first 18 made by France and the rest by Indian HAL, which would benefit Indians all around.  The Prime Minister of India scrapped this deal and in his new arrangement would get only 36 fighter jets, but still is to pay more.  Though the Prime Minister claims he has a superior deal, there is nothing really to substantiate these claims but paper words.
  4. ‘Funds gifted to Reliance by Dassault’The intergovernmental agreement concluding the sale of 36 Rafales was signed on September 20.  Two months later, on November 28, 2016, Dassault and Reliance signed a “shareholders’ agreement” which set out their relationship with the future joint venture company. But, says Mediapart, the financial details of this were so sensitive that they did not figure in the contract, and instead were contained in a confidential “side letter” which was signed that same day:  “It is that “side letter” that contained the funds gifted to Reliance by Dassault.  “The two partners agreed to a maximum investment in the subsidiary of 169 million euros. Of that sum, Dassault, which held a 49% stake in DRAL, pledged to provide up to 159 million euros, representing 94% of the total, while Reliance would provide just the remaining 10 million euros.  “This meant that Reliance was given the majority 51% stake in the joint venture in return for a relatively very modest sum.
  5. And now a French judge has been appointed to lead a criminal investigation into alleged corruption in the 7.8 billion Euro Rafale Deal.  Something was inconsistent, and while the Supreme Court in 2018 declared there was no scam, big players involved with silencing of voices and a compromised court shows leanings of a massive scam leading to the case being reopened.

It would be obvious that the government under Narendra Modi is not innocent in this deal and they too will be gaining a massive commission out of it, which is why they were so anxious to oust HAL out of the contract.

Congress spokesperson Randeep Surjewala has urged Prime Minister Narendra Modi to order a Joint Parliamentary Committee (JPC) probe into the Rafale deal. The statement came in the wake of a French judge being appointed. However, as in the past when Congress asked for a JCP probe, the Modi government outright rejected it claiming there was no scam.

Randeep Surjewala said to reporters at a press conference, “Corruption in the Rafale deal has come out clearly now. The stand of the Congress party and Rahul Gandhi has been vindicated today after the French government has ordered a probe.”

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