In Damage Control Mode on Rafale, Modi Govt Speaks of 'Unnecessary Controversies'

While the MoD said François Hollande's remarks should be seen in the context of "conflict of interests issues" raised by the French media, Ravi Shankar Prasad cited a 2012 MoU signed by a Mukesh Ambani company to argue Dassault chose 'Reliance' before BJP came to power.

New Delhi:  Former French president Francois Hollande’s remarks on the Rafale deal need to be seen “in its full context”, India’s defence ministry said in a full statement on Saturday evening that marked its first attempt to directly address the charge of cronyism in the agreement to buy 36 aircraft from France.

And on a day when Congress president Rahul Gandhi said Hollande’s disclosure was tantamount to accusing Prime Minister Narendra Modi of looting the Indian taxpayer, the Bharatiya Janata Party fielded senior minister Ravi Shankar Prasad to try and tamp down the escalating controversy.

On Friday, Hollande stirred up a storm by saying that the Indian government had been the one to propose Anil Ambani’s Reliance Defence as a partner for the 36-aircraft deal – a statement that directly contradicted the Modi government’s line so far on the matter.

The defence ministry, however, says that “unnecessary controversies are being sought to be created regarding a statement purportedly made by Hollande”.

Curiously, the ministry states that the French politician’s remarks need to be seen in light of the “conflict of interest” issues that had been raised by Paris-based investigative website Mediapart.

As The Wire reported yesterday, Mediapart’s story takes off on the issue of Reliance Entertainment indirectly funding a film production headed by Julie Gayet, the partner of Francois Hollande.

“The reported statement perhaps needs to be seen in its full context – where the French media has raised issues of conflict of interest involving persons close to the former President.  His subsequent statements are also relevant in this regard,” the defence ministry statement notes.

Also read: Indian Govt Suggested Reliance as Partner in Rafale Deal, Hollande Tells French Website

The Nirmala Sitharaman-headed ministry doesn’t go into further detail and doesn’t elaborate on what “subsequent statements are relevant in this regard”.

Hollande’s reaction to the controversy

Hollande himself has directly and indirectly made two statements in the last 24 hours since his initial remarks that kicked off the controversy. To NDTV, the office of Hollande noted that the French leader “stood by his remarks”. In a story published by news agency AFP, the former president notes that while France “did not choose Reliance in any way”, only “Dassault can comment” on whether India put pressure on the Anil Ambani-led company and the French defence major to work together.

The Indian defence ministry rounded off its statement with two more points. It noted, as it did on Friday as well, that it “had no role in the selection of Reliance Defence as the offset partner”.

“It has been reported that a JV between Reliance Defence and Dassault Aviation came into being in February, 2017.  This is a purely commercial arrangement between two private companies.In view of above, it is once again reiterated that the Government of India has no role in the selection of Indian Offset partner which is a commercial decision of the OEM,” the statement reads.

Secondly, it slips in one sentence on how Dassault Aviation in 2012 had entered into a partnership with Reliance Industries for the defence sector – this is the Mukesh Ambani-led group of companies and not Anil Ambani.

“Incidentally, media reports of February, 2012 suggest that Dassault Aviation, within two weeks of being declared the lowest bidder for procurement of 126 aircraft by the previous Government, had entered into a pact for partnership with Reliance Industries in Defence sector,” the statement notes.

Also read: Full Text of French Report on How Modi Govt Pushed Anil Ambani as Rafale Deal Partner

In his press conference, Ravi Shankar Prasad also emphasised this 2012 MoU to make the case that Dassault’s selection of “Reliance” as a partner predated the 2014 elections which brought the BJP to power.

What Prasad chose not to point out was that the partnership he and the defence ministry referred to was with the Mukesh Ambani-led Reliance Aerospace Technologies Ltd (RATL), which was set up in 2008. As multiple media reports from that time have noted, RATL started hiring key staff to form a roadmap “that included discussions on the role that would be played by Hindustan Aeronautics Ltd (HAL)”.

However, by 2014, this partnership petered out, never going effectively beyond the memorandum of understanding stage.

The two Ambani brothers had by then gone their separate ways and it is not clear what point Prasad was trying to make by mentioning the 2012 MoU since it had nothing to do with the Anil Ambani group, which also uses the word “Reliance”.

Prasad also repeated earlier accusations levelled by Sitharaman – and refuted by the Congress – that  the erstwhile UPA government had effectively scuttled the earlier deal for 126 aircraft. Prasad added a new charge on Saturday – that the UPA put the deal with Dassault on hold because it had wanted bribes which the company had refused to pay.