Wednesday, June 1, 2011

Hello? Who will bell this cat

Much bigger than the A Raja-Kalaignar TV kickback is the Rs 700 crore that the Maran brothers got from Maxis. Ashish Khetan traces the money trail with Raman Kirpal

Dayanidhi Maran
Photo: Reuters
IN CASES of corruption involving a nexus between public servants and private persons, investigating agencies always look for evidence of quid pro quo — the private player bribing the public servant, in cash or kind.
In January, the CBI traced out a money trail between real estate tycoon Shahid Usman Balwa and Kalaignar TV. After Balwa’s company Swan Telecom was granted precious 2G spectrum, he had transferred Rs 200 crore to the TV channel owned by Karunanidhi’s family. The agency thought it qualified as adequate evidence to nail Kanimozhi, Karunanidhi’s daughter and owner of 20 percent equity in the channel.
“It was not a genuine business transaction but in the nature of illegal gratification paid in lieu of the UASL (Unified Access Service Licences), valuable spectrum and other undue benefit given by accused public servants to Swan Telecom,” the CBI concluded in its supplementary chargesheet filed on 26 April.
According to sources, the CBI has now trained its guns on a strikingly similar deal — though the quantum is almost four times that of the Balwa-Kalaignar transaction — between Sun TV Group, owned by the family of Union Textiles Minister Dayanidhi Maran, and Malaysian business conglomerate Maxis Group and owner of 74 percent direct equity in Aircel Group, the country’s seventh biggest telecom operator.
In November 2006, then Telecom Minister Maran granted 14 (UASL) for Aircel. The licence, along with the startup 2G spectrum, was awarded at the same price at which later Raja gave away 2G licenses to Swan, Unitech and a host of other players in 2008 — Aircel paid Rs 1,399 crore for 14 telecom circles, the price was arrived at through an auction process in 2001 when the telecom industry was in its nascent stage.
The telecom licences to Aircel were awarded after about two years of ‘unwarranted’ delay on the part of the DoT headed by Maran at the time. Aircel’s applications for new circles were pending since Maran’s takeover as minister for communications and IT in May 2004. According to the report prepared by the one-man committee of Justice (retired) Shivraj Patil constituted to examine the appropriateness of procedures followed by DoT in issuing licences during the period 2001-2009, the DoT kept raising ‘irrelevant’, ‘vague’ and ‘unwarranted’ queries about different aspects related to Aircel and kept the applications pending (Patil submitted his report to present Telecom Minister Kapil Sibal on 31 January).
It was only after March 2006, when Malaysian business tycoon T Ananda Krishnan, whose parents were Sri Lankan Tamils, bought 74 percent stake in Aircel, that its file gained momentum. Until then the company was owned by C Sivasankaran, the chairman of Siva Group (earlier known as Sterling Infotech Group). Krishnan paid Rs 3,390.82 crore for 74 percent equity in Aircel. Today, Aircel is the seven biggest telecom operator in the country with its net worth valued in the range of $7.5-$8 billion.
Six months after Ananda Krishnan’s takeover of Aircel, the ministry granted Aircel the much-vaunted licences in 14 cash-rich circles. This took Aircel from a small regional player to a pan-India operator. If the CAG (Comptroller and Auditor General) valuation of 2G licences is taken as a yardstick, the value of Aircel licences cleared by Maran would amount to approximately Rs 22,000 crore. But Aircel paid just Rs 1,399 crore.

And in a curious coincidence, in February 2007, four months after the licences were granted to Aircel, Ananda Krishnan through one of his group companies, South Asia Entertainment Holding Ltd (SAEHL) invested $150 million (roughly Rs 600 crore) in a phased manner in Sun Direct TV Pvt Ltd by acquiring 20 percent equity in the company owned and run by Dayanidhi’s brother Kalanidhi and his wife Kaveri Maran. The equity investment was cleared by the Cabinet Committee on Economic Affairs.
Almost simultaneously, the Maran family was allotted about 12.6 crore additional equity shares in Sun Direct TV to maintain their total equity at 80 percent. But unlike the staggering rate at which the Maxis Group picked up the Sun Direct shares, the allotment to the Marans was made at par value of Rs 10 per share without charging any premium.

One could argue that either the Maxis investment was overvalued, in which case the Marans were the ultimate beneficiary as they were the majority stakeholders and the Maxis deal brought the much-needed cash for the expansion of Sun Direct TV’s business operations. Or the fresh equity allotment to the Marans was undervalued, which again makes them the real beneficiaries. Also, the DTH company was running in losses at the time of this deal. The annual report of Sun Direct TV for the year 2007- 08 showed their aggregate revenue as Rs 61.16 crore while its losses amounted to Rs 73.27 crore.
Between February 2008 and July 2009, the Maxis Group invested Rs 100 crore more in another Maran family-owned company named South Asia FM Ltd which owns Sun FM radio network. Maxis Group subsidiary South Asia Multimedia Technologies Limited (SAMT) invested Rs 50 crore in equity of South Asia FM Ltd and Rs 43.9 crore in preference shares of SAFL.
The million-dollar question is, do Maxis- Sun TV and Maxis-Sun FM deals qualify as quid pro quo on similar lines as the Rs 200 crore Balwa-Kalaignar deal? Both the deals materialised soon after the respective telecom companies were granted the UAS licences and with it the precious 2G spectrum. And in both the cases it’s the companies owned by the extended Karunanidhi family that benefited.
In fact, while A Raja and his family had zero stake in Kalaignar TV, Dayanidhi Maran’s brother Kalanidhi and his wife Kaveri owned 80 percent stake in Sun Direct TV. At first sight, as far as the suggestion of give-and-take is concerned, the dots connect clearer in the case of the Marans than they do in Raja’s.
Unmistakably, the chain of events preceding the grant of licences to Aircel raises a stink about Maran’s policies.
On 5 March 2004, when NDAwas in power and Arun Shourie was telecom minister, Dishnet Wireless Ltd (a sister concern of Aircel owned by the same parent group, Siva Ventures Ltd) applied for grant of UASL for eight areas including Madhya Pradesh. Until then Aircel had cellular operations in just two circles—Chennai and Tamil Nadu.
Just one month after the application, the DoT issued the letter of intent (LoI) for all the eight areas. But licences were signed for seven service areas, leaving out Madhya Pradesh. Aircel Ltd was the company holding the licence to operate in Tamil Nadu circle and was also the holding company of both Aircel Cellular Ltd, which held the licence for Chennai circle and Dishnet Wireless Ltd, which held the licence for the other circles. All three companies operated their telecom services under brand Aircel. Aircel Ltd was wholly owned by C Sivasankaran’s Sterling Infotech Group (now known as Siva Group).
On 21 April 2004, Dishnet made applications for UASLs for UP (East) and UP (West).
Though for Madhya Pradesh, LOI had already been issued, on 5 May 2004, for the first time, the DoT raised queries about the aspects of funding and Dishnet’s net worth. As a result, Dishnet’s licence for Madhya Pradesh and its applications for other service areas were withheld.
On 26 May 2004, Maran took over as telecom minister.
In June 2004, Dishnet sent a detailed submission clarifying all the issues raised by the DoT.
On 8 July 2004, Secretary, DoT endorsed a proposal for issuing LoI for UP (East) and UP (West) service areas and also for extending time for signing licence for Madhya Pradesh. The proposal was then put up before Maran for his approval.
On 24 August 2004, the personal secretary to Maran put up a note that he had been directed to seek clarification as to financial and equity holdings between Dishnet and its sister concerns holding licence elsewhere, particularly in Tamil Nadu and Chennai; status of newspapers reports regarding sale of Dishnet or its sister concerns; verification whether Dishnet or its sister concerns had sold licences to another company and legal implications of allegation of company having violated certain licence conditions. Based on the same a notice was issued to Dishnet, who submitted a detailed clarification.
For the next four months, different sections within DoT raised various legal issues. Subsequently, the file was submitted to the Legal Adviser but was withdrawn on 17 December 2004.
On 1 March 2005, Dishnet applied for licences in four more circles — Haryana, Kerala, Kolkata and Punjab.
On 30 March 2005, a note was put up by Secretary, DoT that “As discussed with the minister (read Dayanidhi Maran) the files of the applicant were being returned with a direction that Director should ascertain all the show-cause notices or advisory letters issued to the applicant or its group companies.”

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