Rafale deal: Offset contracts need to be studied, says N. Ram

Story of fighter aircraft not over yet, the Chairman of The Hindu Group says.

March 10, 2019 08:55 pm | Updated December 04, 2021 11:53 pm IST - MUMBAI

N. Ram, Chairman of The Hindu Group of Publications speaks at the inaugural session of “Mumbai Collective” as Magsaysay award winner P. Sainath looks on in Mumbai on March 10, 2019.

N. Ram, Chairman of The Hindu Group of Publications speaks at the inaugural session of “Mumbai Collective” as Magsaysay award winner P. Sainath looks on in Mumbai on March 10, 2019.

The Rafale deal story is not over yet as details of the offset contracts still need to be looked into, said Chairman of The Hindu Group N. Ram.

Speaking at a session on The Hindu ’s investigation into the Rafale deal at the day-long Mumbai Collective here, Mr. Ram said, “Usually, a supplier invests 30% of the contract value in the buyer country. In this case, Dassault has agreed to invest 50%, which is a bit surprising. But most of it is loaded in the back-end, over a seven year period,” he said.

“This is an area that is being investigated, especially the role of the joint venture of Mr. Anil Ambani with Dassault — what it will make and what other offset partners will do. What will HAL and DRDO do?” he asked.


When asked if the Rafale issue could be decisive in the upcoming elections, Mr Ram said the really decisive issues are livelihood issues. “You see the public opinion polls, now and earlier.. usually, the top issue is employment and livelihood related issues, price rise (if there is inflation at the time) and rural distress in a country like India. They will be top issues even now, followed by hypernationalism or Rafale deal... I can’t say ,” he said.

“In 2014, the BJP came to power after pillorying the Congress, painting it as corrupt, and offering Narendra Modi and the BJP as the clean alternative. Now the compliment is being returned (by the Opposition),” Mr. Ram said, referring to Opposition taking on the NDA government over its conduct in the procurement of the Rafale aircraft.

Hindustan Aeronautics Limited (HAL) has tremendous capabilities and the BJP’s 2014 manifesto had made a special mention that India’s indigenous defence manufacturing capabilities must be enhanced, the veteran journalist said.


“That has been completely abandoned and is one of the criticisms (of the Rafale deal). Delays were also caused by allegations of irregularities on how Dassault was selected as the lowest bidder and Eurocopter was second. That was the question raised by Subramanian Swamy, Yashwant Sinha, and even more importantly, three members of the contract negotiating committee,” Mr. Ram said.

Bofors vs Rafale

“In both cases, professional and technical standards were not applied to decision-making,” Mr. Ram said, when asked about the common strands between the Bofors gun deal and the Rafale case.

“In Bofors, for example, the rival French firm came first in all the military trials. But after political intervention, Bofors was preferred, and then you had bribes disguised as commissions. Every time something was supplied as part of the contract, money went into secret Swiss bank accounts. Of course, they were initially hidden.”

“In Rafale, the money trail has not been found yet, but decision making has been off, as I said. The integrity pact, the anti-corruption clauses were removed, making it easier to cover up corruption,” he said.


“The big difference,” Mr Ram asserted, “is nobody has found the money trail. The same is the case with 2G spectrum, by the way. It was said to be a huge scam. A. Raja, then Telecom Minister said there is no money trail in many interviews, including one to The Hindu . That’s exactly what the trial court found. So you can question decisions, but no bribes could be proved by the CBI.”

French inquiries

Responding to a query on whether something was amiss in the French government’s role in the Rafale contract, Mr Ram said there is plenty that is suspicious.

“Already, a complaint has been sent to the national prosecutor by an NGO about corruption in this deal. We don’t know the status. The French have anti-corruption laws and we hope that more will come to light. But certainly, the demands they made are very suspicious — Don’t have an integrity pact, We won’t give you bank guarantees — what does that mean, ” the veteran journalist asked.

“It’s an inter-government deal but the government won’t guarantee the deal. They only gave a letter of comfort by a French minister that is not worth the paper it is written on. There is no legal binding force,” Mr Ram said, pointing to France’s presidential system of government where prime ministers can change very fast.

“Dassault’s finances are stressed... there’s a backlog. They have not been able to deliver the aircraft that they were to deliver. And the three domain experts I mentioned, financial and procurement experts, doubt that delivery will be on time,” he said.

Mr Ram also questioned the dismissal of a practical alternative suggested by Sudhanshu Mohanty, who was the then financial adviser (defence services).

“If the French were not to give sovereign or bank guarantees, at least have an arrangement since you are going to make huge advance payments (60% of the value has to be paid 18 months after the contract is signed and well before the first aircraft that is set to reach in September). Mr Mohanty said: “let this escrow account be there, money will be paid into the escrow account and will be released to the commercial supplier only after both governments agree.”

“A very, reasonable, sensible arrangement was suggested that was also shot down. Why? Because the Prime Minister’s Office had agreed there was no need for it,” Mr Ram pointed out.

Undeterred by OSA

Terming the Official Secrets Act of 1923 ‘an obnoxious legislation’ from the British Raj, Mr. Ram said the Centre’s suggestion in the Supreme Court of invoking it against The Hindu for its investigations, was not a matter of concern.

“We are not concerned about it because we are well protected by Article 19(1)A of the Indian Constitution that bestows the fundamental right to freedom of speech and expression and also by the Right To Information Act provisions Section 8 (1) i and (2), which have overtaken the Official Secrets Act,” Mr. Ram said.

Referring to the government’s change of stance in the Supreme Court from its claim that the Rafale deal documents had been stolen, to arguing that photocopies of documents have been accessed, Mr Ram said this is a ‘kind of tragi-comedy’ that is a tad embarrassing for the government, as it should adopt a clear position, particularly in the apex court.

When asked about the Attorney General’s role in the matter, Mr Ram said: “I have respect for the AG of India (K.K. Venugopal). I have known him since the 1970s and he’s a good friend of mine. He’s been my lawyer also in Bofors.... so I am not going to say anything harsh about him. He is representing the government and now, I think he’s trying to clarify it. Let’s see what happens.

The Official Secrets Act, he pointed out, had been rarely used against publications though many secret documents have been published in the past.

“In 1981, I was a Washington correspondent for The Hindu and we published many secret papers where India was involved in negotiations with the International Monetary Fund, in what was then the largest multi-lateral line of credit in history. In Bofors, we published 250 documents including many government documents. Public spirited lawyer Prashant Bhushan has taken secret documents to the courts, for example in the coal block allocations scandal. The courts had no hesitation in looking at it,” he recalled, stressing that the law was not invoked in any of these instances.


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