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Thursday, December 27, 2018

WHY ARE WE QUESTIONING SUPREME COURT VGERDICT ON RAFAEL?

By on Thursday, December 27, 2018

We can question the judgements of the high court and the Supreme Court. Yes, there is no bar to this.
The Supreme Court, from time to time, even reviews its own judgements which are deemed it to be incorrect now. Some of the examples are: the State entry tax matter, and Bangalore water supply case, and many more.  In this way the Supreme Court, when satisfied about the flaw in the judgement, adjudicates under its power of review.
The Supreme Court delivered a judgement this month on Rafale fighter jet procurement giving a clean chit to the government. Let us understand what the apex court of a three-judge bench headed by Chief Justice of India has said in its judgement-
(1)    There is no occasion to doubt the process of decision making in the award of contract for the purchase of 36 Rafale jets. It is not the Court’s job to get into comparative pricing details.
(2)  The apex court said, “We don’t find any material to show that it’s commercial favoritism.” “We are satisfied that there is no occasion to doubt the process. A country cannot afford to be underprepared. It is not correct for the court to sit as an appellant authority and scrutinize all aspects”.
(3)  There is no reason for interference in the choice of offset partner and perception of individuals can’t be the basis for roving inquiry in sensitive issue of defense procurement. We can’t compel the government to purchase 126 aircrafts and it’s not proper for the court to examine each aspect of this case. It isn’t a job of the court to compare pricing details.
(4)  The top court also said, “There has been the necessity of fighter aircraft and the country cannot remain without fighter jets.” Nobody questioned procurement of Rafale jets when the deal was finalized in September 2016, it said. The court also noted there is a need for induction of fourth and fifth generation of fighter aircrafts like Rafale in Indian Air Force.

WHY SUPREME COURT COULD NOT COME UP TO THE ACID TEST 

This has been said by many legal brains in the country that Article 136 and Article 32 of the Indian Constitution limits the Supreme Court to decide the issues like pricing, the purchase process, the sovereign guarantee and the corruption in the Rafale contract and possibly having looked at it they (the judges) have again said in Para 15 that we are constricted by our power of judicial review.
They have again said in Para 34 that our judgment is purely from the standpoint of our power under Article 32. They have further added that “It was made clear that issue of pricing or matters relating to technical suitability of the equipment would not be gone into by the Court. They have again said in Para 15 that we are constricted by our power of judicial review. Therefore, the only two options seem to be possible and they are either JPC or CBI to find out and decide who are the persons who are accused and then the process of law must be set in motion. The central government presented “one-sided half-baked” information to the SC on “an unsigned affidavit” which was not available for scrutiny.
 
THE ISSUES IGNORED BY SUPREME COURT LET US EXAMINE 
The final judgment shows that there are a number of details, and arguments, that the court has either ignored, side-stepped or merely accepted at face-value without further questioning. I shall like to bring them up point wise-
 1  BENCHMARK PRICE WAS IGNORED
 The manner in which the benchmark price for the 36-Rafale-deal was changed in the last moment has been the central issue of difference. In particular, debate has centered on how a senior defense ministry official’s objections were overruled.
 And that the final decision to opt for a formula that delivered a higher benchmark price was taken not by the defense ministry or Minister Manohar Parrikar; but by the Cabinet Committee for Security.
The question also raises eyebrow about why Defense Acquisition Council, the top most institution to decide the pricing in any defense purchase and headed by Defense Minister is bypassed? A former senior defense ministry official Sudanshu Mohanty is reported to have expressed his surprise in which the change was approved as “strange, even queer”.
Further, as per the information available in public domain, the Defense Acquisition Council headed by the defense minister and consisting of all top MoD brasses didn’t recommend the case, instead left it to the Cabinet Committee on Security to take a call. Why? This needs to be looked into. Why this level jumping was structured? While this issue could technically fall under the ‘pricing’ aspect of the Rafale deal, which the Supreme Court has chosen not to examine, it clearly highlights that there were not-insignificant deviations in the procurement process.
(2) WHY 36 FIGHTER JETS INSTEAD OF 126
 “We cannot sit in judgment over the wisdom of deciding to go in for purchase of 36 aircrafts (sic) in place of 126”, the Supreme Court said, sidestepping the real issue at hand: the speed and manner in which the UPA-era, 126-aircraft deal was shelved and a new 36-aircraft contract was agreed upon without the procedures prescribed for this actually being followed. This has been a very strong point and SC should have considered it but it did not.
The apex court acknowledges that a “process of withdrawal” of request for purchase (RFP) for the 126-jets was initiated in March 2015 and a new Inter Governmental Agreement (IGA) was signed for 36 aircraft a few weeks later in April 2015. The apex court doesn’t see that following important issues have been raised by the petitioners which still remain unanswered till to this day by the Supreme Court. 
(a)   The government has not been able to present the requisite papers for this “process of withdrawal” in the court till today.
(b)  Why were defence minister Manohar Parrikar and foreign secretary S Jaishankar not kept in the loop about this process? 
(c)  Why did Dassault CEO Eric Trappier say that the 126-aircraft deal was “95% complete” on March 28, 2015, if the process for withdrawal of RFP had already been initiated by then? What was the process undertaken before the IGA was signed? Who was consulted?  By not even trying to take a look at these questions, or trying to obtain an answer during the court hearings, there appears to be a significant hole in the apex court’s assessment that there is no reason to doubt the procurement process.
(3) WHY IGNORED SOVEREIGN GUARANTEE
A sovereign guarantee is a reassurance that is commonly found in defense contracts that are signed between governments. The lack of such a guarantee was discussed during the court hearings and finds a brief acknowledgement in the judgment, as part of a summary of the petitioner’s arguments.
However, the verdict stops short of examining its significance or implication and does not discuss what it might mean for the manner in which the Rafale deal was negotiated by the Modi government.
The Supreme Court also ignored concerns raised about the government of India dropping India as a seat of arbitration in the event of any dispute arises with France.
(5)    WHY NOT EXAMINES PRICING
 When the Supreme Court took up the petitions, it made it clear that it would not go into the “issue of pricing” or “matters relating to technical suitability of the equipment”. Nevertheless, in the course of the hearings, it directed the Modi government to submit details “with regard to pricing and the advantages thereof” in a sealed cover. Here’s where things get confusing. The court notes that it has examined all the price details and item-wise costing carefully, but then merely states that the government has claimed “there is a commercial advantage in the purchase of 36 aircraft” and that there are “certain better terms” with regard to the weapons package. The SC further adds that “It is certainly not the job of this Court to carry out a comparison of the pricing details in matters like the present.  We say no more as the material has to be kept in a confidential domain”.
(6)    HOLLANDE’S STATEMENT DOWNPLAYED
The Supreme Court appears to place a great deal of emphasis on former French president Francois Hollande’s controversial remarks that Anil Ambani was foisted on the French side by India as an offset partner. However, the significance of Hollande’s remarks lie not in their content, but because of the controversy they triggered. Indeed, the judgement implies – wrongly – that suspicion over the Rafale deal began only after “certain newspapers reported a statement claimed to have been made by Hollande.
With regard to India pushing Anil Ambani’s Reliance forward as an offset partner, the verdict says: “There has been a categorical denial, from every side, of the interview given by the former French president seeking to suggest that it is the Indian government which had given no option to the French government in the matter.” 
There are two problems with this line of reasoning. 

Firstly, questions over potential irregularities in the Rafale deal happened as soon as the deal was announced and then started to build up a year later. The Hollande remark, which suggested potential cronyism, only exacerbated existing concerns and certainly did not spark them.
Secondly, there has not been a “categorical denial, from every side” with regard to Hollande’s remark. Essentially, the Supreme Court has accepted a number of weak denials, and believes these comprehensively remove the doubts Hollande’s sensational claim raised. 
(6) SUPREME COURT CONFUSED WITH MUKESH RELIANCE 

As was advertised by different NDA ministers over the past few months that it was UPA tenure when the offset was finalized and the implication will be that an impression will go across the masses that Dassault CEO Eric Trappier have tried to say that by choosing Anil Ambani’s Reliance Infrastructure as an offset partner for the 36-Rafale-deal, they are merely continuing a partnership that Mukesh Ambani’s Reliance Industries had with Dassault back in 2012. This also implies that this partnership was forged during the UPA era and has been carried over, thus providing a buffer to the NDA-II administration. This couldn’t be farther from the truth. The partnership that Mukesh Ambani had with Dassault in 2012 has nothing to do with the partnership between Anil Ambani and the same company in 2015.The Supreme Court also appears to be similarly confused or misled because on page  25 of the verdict, it gets it right by acknowledging that after Dassault became the lowest bidder for the 126-aircraft-deal in 2012, it partnered with Mukesh Ambani’s Reliance Industries, a company it differentiates from Anil Ambani’s Reliance Defence by calling the former “another business group”. On the very next page though, it quotes a Dassault press release that suggests that while Anil Ambani’s Reliance Aerostructure came into being in the “recent past”, there was “possibly an arrangement between the parent Reliance company and Dassault starting from the year 2012”.
These points are absolutely wrong and the Supreme Court’s verdict ignores, confuses and dangerously mixes up basic facts is a worrying sign.
It is by relying in part on an untruthful defense deployed by Dassault and the BJP party leaders that the apex court concludes there is no “substantial material on record to show that this is a case of commercial favouritism to any party”. 
(7)    WHY HAL IGNORED
One narrative put forth by the Modi government for the need to quickly shift to a smaller 36-aircraft-deal through an intergovernmental agreement is that the public sector Hindustan Aeronautics Ltd proved to be an obstacle in clearing the larger 126-jet-contract.
The Supreme Court verdict summarises the problems that HAL allegedly posed – higher man-hours, contractual obligations and delays – and notes that it was because of this stalemate that the process of RFP withdrawal began in March 2015. The problem with this is two-fold. First, public statements made by Dassault indicated that the problems with HAL had been largely resolved. Secondly, in September 2018, former HAL boss T. Suvarna Raju indicated that a work-share-agreement between the defense PSU and Dassault had actually been signed. This brings us to a larger point. If the Supreme Court summoned senior Indian Air force officials to verify the Modi government’s claim that the Rafale was urgently needed, why was Raju or other former HAL officials not asked to provide testimony on whether the 126-aircraft tender was essentially dead and over by March 2015? The evidence that Raju or others could have provided would have shed some light on the Modi government’s Rafale timeline.
(8)    IGA RULES NOT FOLLOWED
The court notes the contention of the petitioners that under the Defence Procurement Guidelines for 2013, the government is allowed to purchase weapons and weapons systems through the inter-governmental agreement (IGA) route under three conditions: 
(a) Proven technology and capabilities belonging to a friendly foreign country is identified by our Armed Forces while participating in joint international exercises;
(b) Large value weapon system/platform in service in a friendly foreign country is available for transfer or sale normally at a much lesser cost; or
(c) Requirement of procuring a specific state¬ of¬ the ¬art equipment/platform where the Government of the OEM’s country might have imposed restriction on its sale and thus the equipment cannot be evaluated on ‘No Cost No Commitment’ basis. (emphasis added)
The petitioners had contended that none of these conditions were met and the court appears to concede as much by noting that “minor deviations” in process may have occurred:“We have studied the material carefully. We have also had the benefit of interacting with senior Air Force officers who answered court queries in respect of different aspects, including that of the acquisition process and pricing. We are satisfied that there is no occasion to really doubt the process, and even if minor deviations have occurred, that would not result in either setting aside the contract or requiring a detailed scrutiny by the court.” Having said this, the court then weakens its own argument – the entire logic of which is built around the imperative of military necessity – by adding gratuitously: “We have been informed that joint exercises have taken place and that there is a financial advantage to our nation”. (emphasis added).After suggesting that the absence of the precondition for an IGA may be a minor deviation, the fact that the court felt compelled to clutch at the fig leaf of ‘joint exercises’ to justify the deal for an aircraft that had been in the IAF’s radar for more than a decade suggests the judges are not fully convinced by their own logic.
(9)    GOVERNMENT MISLED ON CAG REPORT ON RAFALE
Hours after the full-text of the Supreme Court verdict became available publicly; one paragraph on the CAG audit of the Rafale deal drew more attention than the rest. At one point, which addresses the pricing aspect of the 36-aircraft-contract, the judgement notes: The pricing details have, however, been shared with the Comptroller and Auditor General (hereinafter referred to as“CAG”), and the report of the CAG has been examined by the Public Accounts Committee (hereafter referred to as “PAC”). Only a redacted portion of the report was placed before the Parliament, and is in public domain. (Page 25)There has been no report on CAG published as yet and this is the problem area.
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