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

The defence ministry, however, has said that the report is "being verified" and reiterated that "neither GoI nor French Govt had any say in the commercial decision".

New Delhi: The Indian government is the one that suggested Anil Ambani’s Reliance Defence as a service provider for the Rafale deal, former French president Francois Hollande has said in remarks made to Mediapart, a Paris-based investigative news website.

Hollande’s statement sharply contradicts the line taken by the Modi government over the 36-aircraft contract and is likely to boost the opposition’s demand that a joint parliamentary committee of parliament probe the controversial deal for 36 fighter aircraft.

In the face of opposition criticism over the selection of Anil Ambani’s company, senior Modi government ministers have maintained that the process of choosing Reliance Defence as an offset partner for the Rafale deal was a purely commercial decision that was driven by Dassault Aviation.

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

Responding to the Hollande bombshell, the Indian Ministry of Defence put out a statement on Friday evening saying that the Mediapart report was “being verified” and that “it is reiterated that neither the Government of India nor the French Governmentt had any say in the commercial decision”.

Within hours of the story breaking on Friday evening, commentators on social media were comparing Mediapart’s scoop to the 1986 report on Swedish Radio about the Bofors deal with India that finally cost Rajiv Gandhi his prime ministership three years later.

Mediapart, which published its story on Friday on the Rafale controversy, asked Hollande about the arrangement between Dassault Aviation and Reliance. The context for the question was the news site’s interest in examining whether there was any conflict of interest involved in an Anil Ambani-owned company financing a film featuring Hollande’s partner and Dassault’s deal with the businessman.

Hollande was the French president when the intergovernmental agreement between France and India for 36 aircraft was announced by Modi in April 2015. According to Mediapart’s English translation of  the French article, republished exclusively in The Wire, the interviewer asks Hollande: “How and by whom was the latter [Reliance] selected? (Comment et par qui ce dernier a-t-il été sélectionné?)”

The former president replies: “We didn’t have any say in this matter. It is the Indian government which had proposed this service group, and Dassault who negotiated with Ambani. We didn’t have the choice, we took the interlocutor who was given to us. That’s why, also, this group had no reason to give me any grace [favour] of any sort. I could not even imagine that there was any link with Julie Gayet’s film.” [emphasis added by The Wire]

Also read: Modi Should Explain How Rafale Deal Went From ‘95% Complete’ to Zero in Two Weeks

The French version is:

Nous n’avions pas notre mot à dire à ce sujet. C’est le gouvernement indien qui a proposé ce groupe de service, et Dassault qui a négocié avec Ambani. Nous n’avons pas eu le choix, nous avons pris l’interlocuteur qui nous a été donné. C’est pourquoi, par ailleurs, ce groupe n’avait pas à me faire quelque grâce de quoi que ce soit. Je ne pouvais même pas imaginer qu’il y avait un quelconque lien avec un film de Julie Gayet .

One persistent strain of criticism in the Rafale controversy over the last few months has been the inclusion of Reliance Defence – which at the time of its selection as an offset partner was a fledgling company, having been incorporated just a little before the defence contract was announced by Prime Minister Narendra Modi in April 2015. Opposition parties like the Congress in particular have used this point to raise allegations of crony capitalism.

The decision to go with a smaller purchase and the selection of Anil Ambani’s Reliance, presumably by Dassault Aviation, has also sparked criticism because its inclusion came with the dropping of Hindustan Aeronautics Ltd (HAL) as a co-production partner for a larger 126-jet deal.

Also read: Fact Check: BJP’s Claim on Why HAL Was Dropped From Rafale Deal Just Doesn’t Fly

The Modi government has staunchly maintained that it had nothing to do with Dassault Aviation choosing Reliance. A month ago, finance minister Arun Jaitley specifically laid this out, noting that under the offset policy, any original equipment manufacturer can “select any number of Indian partners”.

“This has nothing to do with the Government of India and, therefore, any private industry having benefitted from the Government of India is a complete lie. Can Shri Gandhi and his Party deny this?” Jaitley said.

For her part, defence minister Nirmala Sitharaman has maintained that she doesn’t officially know who Dassault Aviation’s offset partner is. “I have not got to know who is Dassault’s offset partner… It is a commercial decision. There are laid down procedure to check the process of fulfilment of offset obligations. Neither I can accept, nor I can suggest, nor I can reject anybody from going with anybody,” she said last week.

Hollande’s new remarks, therefore, cast a shadow of doubt on this line of defence.

Update (September 22, 2018 @ 01:08 AM): The French foreign ministry issued a brief statement on Friday night in which it stopped short of directly contradicting Hollande’s claim that the Indian government had essentially foisted Reliance on the French side but noted that the “French government is in no way involved in the choice of Indian industrial partners that have been, are or will be selected by French manufacturers.” (emphasis added)

“In accordance with the Indian procurement procedure, French industrialists are free to choose the Indian industrial partners they consider the most relevant and then submit for approval to the Indian government the offsets projects they want to achieve in India with these companies to fulfill their obligations in this regard,” it said.

Update (September 22, 2018 @ 01:50 AM): Dassault Aviation issued  on Friday night what it called a set of “clarifications regarding the contract signed in 2016 for 36 Rafale aircraft”. The defence major noted that the offset contract is being delivered in compliance with India’s “Defence Procurement Procedure 2016 guidelines” and that the Reliance partnership was “Dassault Aviation’s choice”.

“… In accordance with the policy of Make-in-India, Dassault Aviation has decided to make a parntership with India’s Reliance Group. This is Dassault Aviation’s choice, as CEO Eric Trappier had explained in an interview published in Mint newspaper on April 17, 2018,” the statement notes. The Mint interview that Dassault refers to is actually a press conference that was held in New Delhi, in which the company affirms that it would continue the partnership with Anil Ambani despite its litigation issues in the country

Dassault’s statement also then goes to to note that  it has signed partnerships with firms other than Reliance. This includes “companies such as BTSL, DEFSYS, Kinetic, Mahindra, Maini, SAMTEL…”

“Other negotiations are ongoing with a hundred-odd other potential partners,” the company concludes.