2G,Chidambaram justifies Swan and Unitech Swindle.

The Government of India must be either idiotic or criminally inclined when they decided on fixing the allotment of 2 G licences.

They entered the market knowing well that there is a huge market out there and they decided to call for tenders.

This process has been initiated after TRAI‘s observation on the estimated market value of 2 G.

They floated the tender(to know how they fixed the tender read my blog under corruption2G scam origin and Growth)

Concurrently there were discussion about the possibility,nay the probability of the Companies participating in the Tendering process ,selling the licences.((now, Chidambaram and Co call it by different names,mergers, acquisitions).

And they deliberated as to what percentage the government should share out of the proceeds in that event as early as in 2008.

Now the process is long over and the Companies have sold these Licences(let Chidambaram,in his infinite wisdom may call it in any way he likes),the Government has not bothered to fix the percentage of sharing the revenue thus raked in,let alone recover it.

One of the best methods to escape responsibility and prosecution is to deny there is no crime involved.

First the statement that ‘the 2 G loss is notional’

Then ‘tender procedures were followed’

‘Note has been sent’

‘The authority determining the loss,CAG, has exceeded its brief’

My questions.

If the Government knew and was intent in earning why these norms were not implemented till date?

It is evident even to an idiot like me that the Companies have made enormous profit, simply by paying bribe ,get the Licence and sell it at a premium.

Look at the price the companies sold the 2 G licences

“Asked by The Hindu why the Swan and Unitech transactions — in which the two firms offloaded 45% and 60% of their stake to Etisalat and Telenor — were not finally subjected to the government’s share of the premium as had apparently been envisaged in the January 30, 2008 discussions, Mr. Chidambaram said in an emailed reply that these were neither mergers nor acquisitions. “Merger and Acquisition (M&A) policy is relevant when two companies merge with each other (merger) or one company acquires another company (acquisition). In the cases of Swan–Etisalat and Unitech-Telenor, the Indian company issued new shares to the foreign investor. These cases were governed by the FDI policy. I have already clarified that these two cases of FDI fell under the ‘automatic route’ and no permission was required and no permission was given by the Ministry of Finance.”

And how much they have offloaded?

Next to nothing?

( one should note that there was a ‘paperless meeting among Raja,Chidambaram and Manmohan Singh’ in 2008-read my blog on this)

”

When is an acquisition not an acquisition? On that question rests the latest twist in the ongoing 2G case, with the Supreme Court’s recent finding on the “offloading” of Swan Telecom and Unitech shares turning the spotlight back on the UPA government for its failure to check what was clearly the veiled purchase of spectrum by Etisalat and Telenor.

Finance Ministry and Department of Telecom documents from January 2008 onwards establish the government was aware that the low 2001 entry fee for 2G licences awarded in 2008 would lead to “speculative” transactions by firms seeking to unlock a huge premium on spectrum.

In a meeting on January 30, 2008 — just 20 days after 122 Letters of Intent were granted to various firms — P. Chidambaram, who was Finance Minister at the time, and A. Raja, then Telecom Minister, discussed “getting part of the valuation for Government as premium for spectrum, to avoid hoarding as well as spectrum trading” in case of mergers and acquisitions (M&As) involving spectrum holders. The meeting, which took place a month ahead of either the grant of licences or allocation of spectrum, was also attended by D. Subbarao and S. Behura, Finance and Telecom Secretaries respectively at the time.

An account of the January 30, 2008 meeting was first provided by Dr. Subbarao, who confirmed the existence and details of a four-page “discussion between the Finance Minister and Minister of Communication” to the CBI during his deposition on March 5, 2011.

The document, a copy of which is with The Hindu, shows that Mr. Chidambaram and Mr. Raja had fully anticipated the possibility that some of the licence holders would engage in transactions which “trade in spectrum” purely for profits, and also acknowledged that “premiums” for spectrum would be generated on account of spectrum held by them.

“In view of large number of operators it is expected that some of these companies might have obtained licenses as ‘speculative’ venture,” the official discussion paper noted. “Hence, some ‘mergers and acquisitions (M&As)’ are likely to take place after some time which de facto, would amount to spectrum trading, as large part of such companies valuation may be on account of spectrum held by them. This spectrum trading is not desirable and needs to be regulated.”

“Beside the general conditions in service license, … the other guidelines for M&As, clear… and detailed ‘Guidelines’ need to be evolved and announced regarding M&As, especially the amount of spectrum which the merged entity would be allowed to retain along with the criteria and other details in this regard, companies valuation by consultants, valuers, appointed by Govt’s approval/consent/concurrence; and then payment of a part of the valuation to the Government as premium for spectrum, etc”. [Emphasis added].

With the Central Bureau of Investigation alleging — and the Supreme Court concurring — that the high prices Etisalat and Telenor paid to acquire stakes in Swan and Unitech were on account of the spectrum held by them, the Finance Ministry’s silence in the face of transactions it appears to have anticipated has fuelled the litigiousness of Mr. Chidambaram’s critics. His alleged role in the 2G matter was examined by the special CBI court which ruled earlier this month that the former Finance Minister could not be treated as a “co-accused.” But both the Centre for Public Interest Litigation and Janata Party leader Subramanian Swamy have cited the go-ahead…Mr. Chidambaram gave for Swan and Unitech in 2008, as well as other decisions he allegedly took on pricing, as grounds for criminal investigation and have taken the matter on appeal to the Supreme Court.

”

Mr. Chidambaram, who is now Union Home Minister, added that Swan and Unitech were not the only companies that issued new shares. “I gather that several telecom companies issued new shares to foreign/Indian investors in the past.” He also noted that the minutes of the January 30, 2008 meeting “simply record that certain aspects ‘need to be studied further’ and one among them was ‘merger and acquisition’.”

Four years on from those discussions in 2008, the government is yet to unveil any policy on how its share from transactions that involve the offloading of shares and spectrum trade is to be secured.

The Competition Act 2002, a statute which specifically deals with M&As, describes ‘acquisition’ unambiguously. In Section 2, it says ‘acquisition’ means “directly or indirectly, acquiring or agreeing to acquire shares, voting rights or assets of any enterprise.” By this definition, at least, the Swan and Unitech transactions would appear to qualify. Not only did Etisalat and Telenor acquire shares in the two telecom companies, but also voting rights proportionate to their holdings. Ironically, Swan and Unitech’s own description of their transactions as well as a government press release of October 31, 2008 admits that “assets” were very much a part of the valuation”

http://www.thehindu.com/news/national/article2935800.ece

Related articles

• Chidambaram may not be out of 2G thicket yet (thehindu.com)
• 2G: DoT examining legal implications of SC order (ibnlive.in.com)
• 2G: Raja acted on PC’s instructions, says Swamy (ibnlive.in.com)