LIES, DAMNED LIES AND POLITICAL SUBTERFUGE

A seminar titled “RAFALE & NATIONAL SECURITY” had been recently organized in Bengaluru. An elite, erudite panel of speakers spoke on various aspects of the acquisition of the fighter aircraft for the Indian Air Force.

The panel was unanimous in giving the central government a clean chit. The conclusion was that there was no corruption in the deal between India and France as it was a government-to-government contract. It was further pointed out that the “Offset Clause” in the contract will generate business for MSMEs in the country. 

It was also clarified that about 72 enterprises are likely to benefit from the roughly Rs. 30,000 crores of defense offsets. The detailed list of these enterprises selected for “Offset Partnerships”, is available in the public domain at this link. 

The schematic below also summarizes the deal structure vis-a-vis offsets.

Questions of Impropriety

A lady in the audience, who identified herself as a Congress-supporter, refuted the assertion and said that Reliance had orchestrated the scam. She claimed that Reliance had created numerous shell companies and that the deal was shrouded in corruption.

That prompted me to research the veracity of the lady and/or Congress’ claim of shell companies being used to engineer the scam through crony capitalism or otherwise.

The take in a nutshell on the lady’s accusations: ABSOLUTE HOGWASH!!

The Truth About Offset Partners

The details of my research and its findings are below:

1. There are about 60 partners— besides DRDO, the single largest beneficiary of offsets— that Dassault Aviation, Thales and Safran (the three main manufacturers) have contracted with for the offsets.
2. With the exception of one entity, the partners are all corporate entities. Many are listed companies; some are Indian subsidiaries of multinational corporations; and, a few are public sector undertakings and their subsidiaries.
3. With the exception of 3 offset partners, the other partners are all legitimate business entities, which have been in the aerospace and related fields from a time prior to the finalization of the Indo-French deal. The three in question, namely, Dassault Reliance Aerospace, Safran Electrical & Power India and Thales Reliance Defense Systems, are privately held joint ventures and/or multi-national companies.
4. NONE OF THE 60 ENTITIES IS A SHELL COMPANY. The list is provided in the tables below.

There are apparently 20+ other entities which are being considered for offset partnerships [Refer list below]. 

The award of offset contracts are expected to only commence from October 2019.

Scam or No Scam

So then, the moot question: WHERE IS THE SCAM?! Is it the figment of someone’s fertile (or, vile?) imagination??!!!

You be the judge!