Anil Ambani and Rafale contract

The French newspaper, Le Monde (literally meaning 'The World'), has reported that a telecom company of Anil Ambani received the benefit of waiver of tax dues from the French government during the time the Indian government considered placing orders for Rafale jets.

It needs to be investigated if Anil Ambani was lobbying with the Indian government on behalf of Dassault and if the tax waiver is a reward for bagging the contract. Has Narendra Modi bent over backwards to help Anil Ambani?

If  Le Monde's version of linking the waiver and the Rafale contract is correct, it will be a big slur on Narendra Modi.

Contradictions / insinuations in N.Ram's 'exclusive'

Shri N.Ram continues to exercise his proprietorial liberty to foist his 'exclusive' Rafale reports on The Hindu readers, frontpaging his innuendoes and rehashing his exaggerated spins on confidential notes prepared in the Defence Ministry. He has mastered the art of contradicting one insinuation made by him and creating another hoping that if one does not stick, the other would.

I express my views with both anguish and anxiety, anguished by the fall of a reliable newspaper into a purveyor of partisan news and perverted views, anxious to know how the other family members (after all, The Hindu is family-owned despite the occasional veneer of professionalism) continue to allow the newspaper to be hijacked for political purposes.

In his 'exclusive' on April 9th, Ram points out the similarities between Rafale transaction and Bofors deal. He fails to point out the major dissimilarities, namely the absence of money trail in Rafale as against the bribery-based Bofors deal and Chitra Subramaniam-guided Bofors investigation as against sycophants-assisted misplaced investigation into Rafale agreement.

In one place, Ram discovers the 'discomfort' of Manohar Parikkar 'evidenced' by the latter's reference to the Cabinet Committee on Security (CCS) for approval of deviations from the Defence Procurement Procedure (DPP) instead of approving them himself. Ram does not utilise his 'investigative' skills to discover why P.Chidambaram arrogated to himself the Cabinet powers in Aircel-Maxis case. It is journalism turned on its head when investigations are avoided when they are needed and undertaken when there is no reason. These two instances bring out the difference between Modi and Manmohan as a leader. Ministers in Modi's ministry are not afraid of seeking the Cabinet approval when necessary whereas in Manmohan's ministry there was licence to do anything so long as Manmohan was not brought into the scene. Manmohan Singh explained this as coalition-dharma.

In another place, in sharp contrast, Ram insinuates as to why Parikkar did not refer to CCS for approval of deviations though they had earlier been approved by CCS in a different reference. Ram's incoherent and slanted investigation is amusing.

Ram is aware and has noted that 'offset' is usually rendered in French as 'contrepartie' (compensation). Yet his prejudiced mind forces Ram to cynically observe that an internal Dassault document revealed that "a senior executive of the French group told staff representatives that the joint venture with Reliance was agreed as a 'compensation' ".

I don't know how many people read these 'exclusive' reports. I am eager to know if even Ram is reading the reports which are possibly prepared by his assistants with the only objective of derailing Modi.

Rafale and 2019 elections

The Hindu CSDS-Lokniti pre-poll survey conducted in the last week of March brings out an interesting aspect about the impact of Rafale allegations on popular perception.

52% of the people who are aware of Rafale transaction desire that NDA should get another chance at government. This is against only 39% among those who are not aware of the transaction.

What does this mean? Either the people are convinced about the genuineness and integrity of the transaction or the critics have done a bad job of analysing the transaction.

Will The Hindu take note of this curious finding and stop misinterpreting the transaction? Or will the newspaper stop supporting CSDS-Lokniti?

N.Ram's miscalculation

As Mr.Ram continues his tirade against the Rafale contract, the chinks in his armour are becoming more transparent. He has repeatedly and vigorously argued that Modi's government is paying more for the aircraft than what Manmohan Singh's government wanted to pay but never paid. Comparison between an event and a non-event is ridiculous enough. On top of this, Mr.Ram has used an inappropriate figure to arrive at the conclusion he wanted to reach.

Under Table 2 : Comparison of Costs, the media baron points out that the aligned cost under the UPA's otiose proposal was 7488.58 million Euros including the cost of bank guarantee. In the actual contract under NDA, the comparable cost without bank guarantee is 7168.57 million Euros. So, the savings, the argument goes is only 320.01 million Euros. The learned journalist compares this savings with the cost of bank guarantee in terms of commission payable to guarantee-issuing banks which he reckons at 574 million Euros. This is where the miscalculation has occurred. (The allegation is savings to Dassault arising from avoidance of guarantee is not fully passed on to GOI.)

574 Million Euros is the cost if SBI issues the guarantee. But the guarantee was supposed to be issued by French banks and not by SBI. Commission on guarantees chargeable by the French banks was 143 million Euros which Mr.Ram has mercifully and hesitantly quoted, though with much less prominence. So, in effect, though the French company would have saved only 143 million Euros by avoiding the bank guarantees, GOI could extract cost reduction to the extent of 320.01 million Euros from the French.

It is said that if you torture the data enough, you can arrive at any conclusion. Apart from torturing the data, Mr.Ram uses the wrong data to suit his politically motivated conclusion. In the process he continues to mislead the reading public. As if this deviation from journalistic ethics is not enough, the Attorney General has now said that The Hindu is using 'stolen data'. N.Ram pleads that his exercise is in public interest. Is misleading the public in wily ways really in public interest?

There is another major problem arising from Mr.Ram's 'exclusive reports'. He has named the 'three dissenters' whom he calls the 'domain experts' in his reports. This jeopardises their security given the fact that the reports relate to competing players in arms and ammunition who because of their enormous reach are potentially capable of causing grave injury to person and reputation of bureaucrats. Mr.Ram has violated the right to privacy of these dissenters which includes the right to public anonymity of bureaucrats as far as their file notings are concerned.

This has another deleterious effect. If a newspaper chooses to publish names of officials who took a particular stand in an important issue, bureaucrats in future will opt to play safe by not articulating their views in the file. Any responsible newspaper will not indulge in this scandalous game. There are ways of presenting a report without causing possible hurt to officials. The Hindu chooses to hide 'Secret' from the face of an extract from a confidential Defence file, it chooses to publish deliberately truncated extracts, but feels free to give unnecessary publicity to names of 'dissenting officials'. Is this journalistic ethics?

N.Ram has accused a former Defence Secretary of being 'economical with the truth'. Mr.Ram is using wrong data and thereby distorts truth. I do not know which is a graver offence: an alleged economy with the truth or a deliberate distortion of data.

N.Ram 'exclusive' : "Government waived anti-corruption clauses in Rafale deal"

The Hindu has assured us that 'investigative reports' on Rafale will be released in dribs and drabs. It is the newspaper's prerogative to do so. However, prejudiced and one-sided reports deserve to be avoided.

The newspaper's headline on February 11 is "Government waived anti-corruption clauses in Rafale deal". The headline is sensational enough. But a more important step is awaited from The Hindu. How does it establish that the transaction was polluted by actual corruption.

A cursory reading of the day's report gives us the impression that modification of clauses is indicative of existence of unfair practices including bribery. It is significant to know whether there is any provision for deviation from standard clauses in IGA (Inter-Governmental Agreement) and contract documents. This is significant because The Hindu emphasises that  "DPP (Defence Procurement Policy) states explicitly that the Standard Document 'would be the guideline for all acquisitions' ". There is a convenient omission of any reference to para 71 of DPP-2013 governing the Rafale transaction.

Para 71 of DPP-2013 on Inter-Government Agreement (IGA) states that “there may be occasions when procurements would have. to be done from friendly foreign countries which may be necessitated due to geo-strategic advantages that are likely to accrue to the country. Such procurements would not classically follow the Standard Procurement Procedure and the. Standard Contract Document but would be based on mutually agreed provisions by the Governments of both the countries."

It is significant to note that DPP -2013 was not formulated by the present government. In all fairness, The Hindu ought to have mentioned this para in its report. 

The report also refers to the Letter of Comfort provided by the French government. What does the LoC say? The newspaper itself points out the following:

The letter of comfort issued by the French Prime Minister on September 8, 2016 (put out by ANI) states that “assuming that Dassault Aviation or MBDA France meet difficulties in execution of their respective supply protocols and would have to reimburse all or part of the intermediary payment to Government of the Republic of India, the Government of the French Republic will take appropriate measures so as to make sure that said payments or reimbursements will be made at the earliest.”

An assurance given by a government does not cease to be an assurance simply because it is not called a guarantee. 

Another sticking point, though not mentioned in this report is the government's refusal to accept Eurofighter Typhoon's reduced offer. The government has already responded as under:

"In another effort to twist facts, the Government is asked why it did not conduct negotiations with a particular company representing a competing fighter aircraft.  It seems to have been conveniently forgotten that the then Government itself had rejected that company’s unsolicited offer made days after closure of the bid process, declared Rafale (DA) as the L1 bidder and had commenced negotiations with it in February 2012."

If Ram presents all relevant details when he publishes 'exclusive' reports, a meaningful discussion will become possible. Else, 'dribs and drabs' will take us nowhere.

Misreading the leaders and misleading the readers

N.Ram continues his tirade against his bete noire, Narendra Modi and in the process belittles the intelligence of his readers. Caught with his pants down in his truncated presentation of a Defence Ministry note, he is now unleashing a fusillade of weak arguments from his fellow journalists in The Hindu.

Varghese K.George claims to present four reasons why the attacks on The Hindu story on Rafale are 'shallow' and 'self-incriminating'. Let us see how logical these four reasons are.

1) "Investigative stories come in drips." "No single report on the story is the last word on it." Nobody contests these motherhood statements. The criticism is not against reporting in instalments. What is questioned as duplicity is presentation of a part of a page and deliberate omission to include the minister's observation which is included in the same page. This omission is plain deception and not mere mischief. It is silly to conveniently modify the criticism and address the modified criticism. This is a subterfuge.
By quoting Carl Bernstein, "We are reporters. Not judges. Not legislators. What the government or citizens or judges do with the information we have developed is not our part of the process nor our objective" The Hindu is hoist with its own petard. N.Ram has failed to act as a reporter. He is blatantly judgmental. His objective of derailing the Rafale deal is as clear as daylight.

2) "Parikkar note implicates, not absolves, the PMO." So what? Is the journalist not giving the game away here? Has he not come to a judgment that Parikkar's note is implicatory? Is Carl Bernstein forgotten?
Interpretation of Parikkar's note is not the issue. The issue is why this observation of Parikkar was left out. If N.Ram accepts that the omission was a mistake, there is no need for further argument. But his hubris and narcissistic monomania will not let him accept his mistake. He makes other journalists in The Hindu to toe his line and further mislead the readers.

3) "PMO role in negotiations hidden from the SC." Words speak for themselves. A non-judgmental expression would be 'PMO role not disclosed'. Usage of the word 'hidden' gives the journalist's game away. The Hindu has decided that the PMO was an active player in negotiations. Therefore, the assertion that the PMO was only monitoring falls on deaf ears. How could these journalists forget the pain brought on the nation by Manmohan Singh's turning a blind eye to the shenanigans committed under his nose? Do these journalists want an ineffective prime minister who does not monitor what his ministers are doing?

4) "PMO role is not supervisory or of oversight; it is blindsiding the principal ministry." Again, is the journalist not judgmental? When a journalist is blind to a part of the note contained in the same page either by design or by negligence, he becomes delinquent and instead of informing the readers, he becomes a 'rogue journalist'.

Mr.Ram and his ilk have the freedom to misread the intentions and actions of national leaders, but they cannot arrogate to themselves any right to mislead the readers. Let them keep their coloured glasses to themselves and do the readers a favour by desisting from propagating misinterpreted and opportunistically truncated information.

In sum, Ram and The Hindu have first come to a conclusion that Narendra Modi  has not played fair and are now trying to fit half-truths and half-concealed faxes to suit their premature conclusions. This is not what Carl Bernstein advocated.

Investigative Journalism or motivated duplicity?

 N.Ram continues to write on a wing and a prayer. This time he has given up all pretences to his going after the truth. He has suppressed, ignorantly or maliciously, the concluding part of a confidential note of Ministry of Defence in an awkward attempt to bring disrepute to purchase of Rafale aircraft.

If Ram had access to the entire note and yet failed to disclose the Defence Minister's conclusive utterance, he is guilty of a journalistic fraud of misleading the readers. In case he could lay his partisan hands only on a part of the note, the conclusion would be that he is too amateurish and opinionated to seek what any reasonable journalist would have looked for: that is, what was the view of the then Defence Minister? If someone had favoured Ram with an incomplete note, he was probably taking Ram for a ride so that Ram would look foolish in readers' eyes. Whichever way you look at this sordid chapter in The Hindu's quest for truth (?), the conclusion is inescapable that Ram has jettisoned any idea of  preserving the newspaper's credibility.

The Hindu is a family-owned newspaper. The family needs to seriously introspect if they are ready to gamble away the newspaper's reputation garnered over decades just to satisfy Ram's egoistic political slant. When questioned as to why he published only a convenient part of the note, he replied that he would not rest till he reaches the goal. What could be the goal? As a journalist, he has every right and in fact duty too to try to unearth Bofors-like bribery, if any. Instead of doing that, if he keeps coming up with 'exclusives' containing truncated truths and fascinating falsehoods, readers will dismiss him as a discredited writer whose hobby is only to 'cry wolf'. At this rate, in the unlikely event of his noticing a real wolf, nobody will believe him.

The function of a journalist is to provide authentic news, not novate perceptions. Ram is desperately trying only to besmirch Modi's image. The Sinophile was awarded Padma Bhushan in the year 1990 in the field of Literature and Education. He may well be rewarded with Padma Vibhushan for Distortion and Misrepresentation if his political masters come to power.

N.Ram in The NewYork Times

The New York Times carries an article by N.Ram captioned "A Murky Arms Deal Haunts Modi". The gist as provided in the newspaper is "India's prime minister faces charges of bypassing procedures, causing loss in public funds, compromising national security and using the arms deal to offer a lucrative contract to an ally."

The article is a brief summary of the 'exclusive' report that had earlier appeared in The Hindu. The biased and non-exclusive nature of that report is now common knowledge.

Unsurprisingly, the NYTimes article makes no reference to the findings of the Supreme Court in the Rafale case. Either Ram does not read the Supreme Court judgements or he has scant regard for Supreme Court. Either of these ill behoves a journalist.

Times of India stated as follows on December 14, 2018:

" The Court gave the clean chit on  three aspects:

1)Decision-making process to purchase 36 Rafale jets instead of 126 by UPA

2)Pricing of Rafale jets

3)Selection of Indian offset partners including Anil Ambani- owned Reliance Defence by Dassault."

The Supreme Court has pronounced its judgment on three out of four factors highlighted in the gist given above. What remains is compromise of national security. Manmohan Singh could not take a decision even after seven years of negotiations with Rafale. Narendra Modi took only a year to come to a conclusion. Manmohan Singh could not place orders even for a single aircraft because his Defence Minister admitted, "We have no money." Narendra Modi placed orders for 36 planes by prioritising funds for defence of the country. Yet Ram claims that national security has been compromised. 

The New York Times introduces Ram in its byline as "the author of 'Why scams are here to stay: understanding political corruption in India.' " If a biography of Ram were ever to be written, it would fittingly be titled, "Why biased journalists are here to stay: Understanding media malaise in India."

It is said (it is not my 'exclusive' finding) that a lie if repeated over and over again is accepted as the truth. Ram is aiming at that truth.

Let us await Ram's next 'exclusive'.

Rafale and Chidambaram

P.Chidambaram has questioned the purchase of Rafale on two vital issues. 1) Why did the government settle for 36 fighter jets instead of 126 and thereby jeopardise our security and 2) Since payment is made over 3 years instead of 10 years the net present value of money received by Dassault is higher and therefore they are 'laughing all the way to the bank'.

Both are good questions, but not good enough to come from a former Finance Minister.

1) The relevant comparison is not between 36 jets and 126 jets. There was no contract for 126. The UPA government lost 10 years dillydallying on the proposal and never reached any finality. The government was comatose. So the comparison is between 36 jets and 0 jet. The answer is obvious.

2) Fixed cost incurred by the supplier has to be recovered through pricing. If more jets are bought, fixed cost per jet will obviously come down. One may argue that if we buy 252 jets instead of 126 jets, price per jet will come down further. But the moot question is how much money can we afford to pay. The trade-off between security needs and cost affordability has been struck at 36 aircraft. Chidambaram's argument is the present value of money given in the 10th year is less than the same money given in the third year. Up to this point the argument is genuine. But we also should take into account the fact that in one case we will receive the jet only in the 10th year whereas in the other case the product is received in the 3rd year itself. These are actually 'forward' transactions and money is paid when supply of jet is made. Comparison is not between money paid in the tenth year and the one paid in the third year. The composite comparison is between the jet received and money paid both in the tenth year on the one hand and the jet received and money paid both in the third year on the other. Obviously getting the jet in the third year is better than getting it in the tenth year. If we calculate the present value of price paid, we must also calculate the present value of the aircraft received. Going further, the risk of the product becoming obsolete is much more in the tenth year than in the third year. Therefore the 3-year contract is better than the 10-year contract.

The honourable former minister may also fallaciously argue that the forward price for a 10-year transaction is cheaper than the same forward price for a 3-year transaction assuming there is no further premium for the intervening 7 years. But actually there is a huge premium paid by the purchaser because of product obsolescence risk in the intervening 7 years.

Chidambaram is too smart to be ignorant of these simple principles. But he is under political compulsions to make unprincipled and dubious arguments. Intellectual integrity has never ever suffered such a sharp debasement..

Rafale and Ram

Only yesterday Arun Jaitley posted his highly readable "Compulsive Contrarians" in Facebook. As if to lend more credibility to Jaitley's view, N.Ram has written in his newspaper today on "Modi's decision to buy 36 Rafales shot the price of each jet up by 41%" in an accusatory tone. He has converted a simple Accounting Principle into an allegation.

Fixed cost incurred by Rafale to design and develop the jet for India is slated to be Euro 1.3 billion. As we all know, total fixed cost remains the same irrespective of levels of production. Fixed cost per unit is higher when sales are low and it is lower when sales are more. If 126 aircraft are purchased / made as per UPA's original plan, fixed cost per aircraft would be Euro 10.32 million (but shown as Euro 11.11 million in Ram's report). If 36 aircraft are bought as envisaged now, fixed cost per aircraft is Euro 36.11 million. Any seller has to recover its total fixed cost as well as variable cost. This is simple business logic. There is no scam in this.

Ram compares Rafale acquisition with Bofors purchase. He claims, "The process of decision-making on a vital defence acquisition in 2015-16 does bear an eerie resemblance to how decisions were made in 1985-86; but unlike Bofors, where journalistic investigation was able to uncover corruption disguised as 'commissions' paid secretly into Swiss bank accounts, no money trail has been discovered so far in the current case." Therefore, should not the likes of Ram wait till some money trails, if at all,  are spotted instead of jumping the gun and thus proving that they are 'compulsive contrarians'?

The basic difference between the Bofors journalism and Rafale journalism is that in the former case, evidence was painstakingly discovered bit by bit and then conclusions arrived at. In the case of Rafale, the compulsively contrarian journalists have concluded that there is corruption and are now desperately looking for evidence of possibly non-existent corruption.

Of course, we cannot blame Ram. In 1985, the spade work for him was done by Chitra Subramaniam, an analytical journalist who values objectivity. Now, Ram is probably assisted by his sycophants who feed him with whatever views he likes. However, as an experienced journalist, Ram is expected not to let his morbid dislike for Modi run riot and mislead his readers.