The move has been revived following the Comptroller & Auditor General’s critical remarks about unfulfilled offset obligations in the Rs 59,000 crore purchase of Rafale multirole combat aircraft for the Indian Air Force not being fulfilled and the sensational deposition to the High Court of London by Anil Ambani, confirming his precarious financial state as a businessman.

French anti-corruption activists were under pressure from the French government not to pursue the case. The French naturally do not wish to jeopardise a valuable contract for a struggling Dassault Aviation, a public sector company. But the question the lobby is asking is how the French government and its flagship defence firm could have chosen Ambani, who had no experience in air force hardware production and was veering towards bankruptcy, as an offset partner? 

On 13 March 2014 Dassault and Hindustan Aeronautical Limited (HAL) had signed a work share agreement to produce most of the 126 planes in India. Even after Narendra Modi took over as PM, Dassault and HAL continued to finalise arrangements.

A complaint filed on 4 October 2018 with the Central Bureau of Investigation (CBI) by lawyer Prashant Bhushan and former Union Ministers Yashwant Sinha and Arun Shourie held that on 3 March 2015 Ambani had met PM Modi.

The complainants submitted that Anil Ambani was a “longtime friend and close associate” of Modi and that his companies were “at the point of insolvency” and “buried under a mountain of debt”. They went on to allege, “On Modi’s suggestion, Mr Ambani promptly forayed into a highly technical, sensitive, and government dependent sector such as defence, confident of Mr Modi’s authority to swing any deal in his favour”. On 28 March 2015, Ambani incorporated Reliance Defence Limited.

On 8 April 2015, Subrahmanyam Jaishankar, now external affairs minister, then foreign secretary, emphasised in Paris to journalists: “In terms of Rafale, my understanding is that there are discussions underway between the French company, our Ministry of Defence and HAL.”

Two days later at his meeting with the then French president, Francois Hollande, the complaint added, Modi discarded the agreement for 126 aircraft. The complainants stressed, “it was solely in order to secure an undue advantage for Mr. Ambani, that Mr. Modi abused his office”.

They charged: “It is crystal clear that this was Mr Modi’s unilateral decision…Mr. Modi himself changed the deal and presented a ‘take it or leave it’ scenario to Dassault and the French.” 

Regarding award of offset contracts in the deal, in September 2018 Hollande told the French online investigative publication Mediapart: “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.”

Reliance Aerostructure Limited (in which Reliance Defence Limited was nearly a 100% shareholder) was formed on 24 April 2015 – in other words a fortnight after the 10 April 2015 meeting between Modi and Hollande – and in October 2016 Dassault Reliance Aerospace Limited (DRAL) was set up as a joint venture between Dassault and Reliance.

It is another matter that the CBI did not or were not permitted to take up the trio’s concerns. And the Supreme Court of India did not see any merit in the application citing violation of India’s Prevention of Corruption Act by Modi either. 

It is surmised that among those present at the talks were National Security Adviser Ajit Doval, Jaishankar and Indian ambassador, Arun Singh. Present on the French side was the Secretaire General Cabinet du president de la Republique Francaise, Jean-Pierre Jouyet.

Hollande, Singh and Jouyet (who thereafter became the French ambassador to Britain), when approached, refused to discuss the exchange between the leaders or the delegations. Thierry Mathou, head of the India desk at the French foreign office, stonewalled as well. But minutes of the meeting reportedly exist with both the Elysee Palace and the French foreign ministry.

The allegations have been denied by Dassault, Ambani and the Modi government. Dassault chief Eric Trappier claimed DRAL, which was constructing a manufacturing facility near Nagpur, would make components for the Legacy Falcon 2000 series of civil jets.

On 23 September 2020, the CAG sternly noted in respect of the offset arrangements connected with Rafale, the vendors were “not earnest about fulfilling these commitments”. Its reference, though, was to transfer of technology to the Defence Research and Development Organisation (DRDO) and to the tune of 30% of the value of the contract, whereas the agreement mentioned 50%.

The CAG report also revealed that Dassault was given exemption from naming an offset partner when it formally signed the Rafale agreement in 2016. In 2005, the UPA government introduced the offset requirement as a matter of policy. Now the Modi regime has further amended this clause by doing away with it altogether in “government-to-government, inter-government and single vendor defence” deals. 

The CAG report and Ministry of Defence amendment are nothing but attempts to distract attention from the incredible selection of Ambani as an offset partner (that, too, at the expense of HAL).

On 24 September 2020, Ambani appeared virtually in the High Court of London to be grilled on his failure to repay loans amounting to $717 million plus legal costs of £750,000 to Chinese banks. He stated he owned “nothing meaningful”.

Dassault’s choice of a patently wholly unqualified Ambani as an offset partner is seen by the French anti-corruption lobby as one of considerable reputational damage to the firm and to France. So, it believes the French people have a right to full disclosure 

Since the 2017 elections, the French Socialist Party – to which Hollande belongs – is thinly represented in both houses and would consequently not be able to put up much resistance, if the right-wing Gaullists pursue committee inquests. At the same time, President Emmanuel Macron, currently in office, was a cabinet minister in Hollande’s government and is said to be in good terms with his former boss. Since his statement to Mediapart, Hollande has been notably silent. This is interpreted as a conscious effort not to jeopardise the Rafale India deal. In lieu of the silence, Macron could protect Hollande with his party En Marche!’s parliamentary strength.