Government overruled the anti-corruption clauses in Rafael deal

The agreement and the documents had been approved by the Cabinet Committee on Security (CCS) chaired by Prime Minister Narendra Modi

Key clauses for anti-corruption penalties and an escrow account for payments were overruled days before the Rafale deal was signed, according to a report by The Hindu newspaper.

The Rafale deal was signed between India and France under the terms of Defence Procurement Procedure(DPP) -2013. The Standard Clauses in Contract are mentioned in Enclosure 8 of DPP-2013. This has sections on penalties for the use of undue influence, an integrity pact, agents/agency commission and Access to book of accounts. Paragraph 37 of Request for Proposal (RFP) in DPP-2013 states that “the Standard Contract Document at Chapter V of DPP2013 [bit.ly/DPP-2013] indicates the general conditions of contract that would be the guideline for all acquisitions.”

Despite the DPP stating explicitly that the Standard Contract Document “would be the guideline for all acquisitions”, the Indian government chose to remove these clauses from the supply protocols with the two private defence suppliers according to the report by The Hindu. This assumes particular importance as the government also chose to do away with a sovereign or bank guarantee from France and settled for a letter of comfort, which is not legally binding, from the French Prime Minister.

The newspaper had earlier reported on defence ministry objections to “parallel negotiations” conducted by the Prime Minister’s Office.

The Hindu has cited official documents that reveal that the Defence Acquisition Council chaired by then Defence Minister Manohar Parrikar met in September 2016 and approved eight changes in the inter-governmental agreement, supply protocols, offset contracts and offset schedules.

The agreement and the documents had been approved by the Cabinet Committee on Security (CCS) chaired by Prime Minister Narendra Modi before that on August 24, the newspaper reports. 

The most significant among the eight changes, recorded in a note signed by Vice Admiral Ajit Kumar, the member-secretary of the Defence Acquisition Council, is at sub-para (c) that states: “Non-inclusion of the Standard DPP Clauses related to ‘Penalty for Undue Influence,’ ‘Agents/Agency Commission’ and ‘Access to Company Accounts’ in the Supply Protocols.”

Inputs: The Hindu,NDTV