It is known to all including the media that Sonia Gandhi is deeply involved in 2G and with out her the scam of this magnitude would not have taken place for nothing moves in the Government with out her nod and Manmohan Singh and Chidambaram being her Man Fridays.
It is Subramanian Swamy who is relentlessly pursuing the case and has the Nation stand up and notice.
Swamy has in a speech highlighted the division of spoils among the perpetrators and video of the is provided here.
He has also accused that about Rs.36,000 Crores have been siphoned off to Sonia’s sisters!
Media is conspicuously silent on Sonia.
The only noises that can be heard is in the Cyberspace.
“. Dr Swamy explains that the estimated loss in 2G spectrum scam is 1.76 lakh crore rupees. He is saying that he got information from his contacts from our country and World. He is saying that following was the money distribution. A Raja – 5000 Crore P Chidambaram – 5000 Crore M Karunanidhi – 14000 Crore Sonia Gandhi – 36000 Crore Dr Swamy says the Chidambram got 5000 crore which is just like pocket money for him. He has more than 50000 crore rupees deposited in tax heavens. He is saying that because of corruption many great civilization like egypt, Greece etc. Dr Swamy says that just 500 years back India was considered as most honest country. He says that we have approximately 70Lakh crore black money in tax heavens. He says that if this money comes back in India then all infrastructure projects can be supported, Indians dont need to pay any tax for next 10 years. Dr Swamy explains how Indian stock market is ruined by Black money in the form of “Participatory Notes”. Chidambaram introduced this participatory notes which is not allowed anywhere in the world. Dr Swamy also exposes the Electronic Voting Machine fraud. He says that EVM machines tempered in 2009 election and because of that congress won 90 extra seats by fraud. Dr Swamy says he supports Baba Ramdev and says that even if Media is not covering don’t underestimate him. ”
Now that the Supreme Court has cancelled the licences issued for 2 G , (122 Licences),which includes Telenor and Etisalat the other important Company -Sistema Telecom,MTS, which has Russian Government backing, is up in arms against the Indian Government for cancellation of the Licence.
The Company,backed by Indo-Soviet Bilateral Treaty is planning to go for international arbitration.
The outcome is yet to be known.
What is relevant is the fact that can a Government renege its contractual obligations because its Ministers have engaged in corrupt practices?
If that were to be so, any one can file a case and the case may drag on and if the verdict is that there were irregularities involved, will the transaction become null and void?( we may not like it;the fact is that every Major Contract is won by Corrupt practices)
Under these circumstances, what is the sanctity of the Government saigning a Contract?
Similar instance was witnessed in Antrix-Devas scam which involved ISRO Transponder sale.
Antrix threatened to go to Court as the Government cancelled the Deal( nothing was heard of thence).Telenor and Etisalat are also thinking on these lines- to go for International Arbitration.
(Telenor and Etisalat have announced quitting India).
I feel that they are right.
While the culpability remains with the Company, it does not warrant cancellation of Licences for fraud and manipulation by a few, both on the Government and the Company’s side.
At best the Companies may be asked to pay a hefty fine.
If the present cancellation of Licences for ‘manipulation and kick backs’, no organisation can do business with the Government as the Manipulation and Bribery is a part of market economy at the Operating Level.
This what the Government means when they say that the fall out of 2 G will affect international investment in India.
I shall blog separately how an International Contract is negotiated in India.
Those who have experience in the dealing with the government are aware of this. (and the Government as well).
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Russia-based Sistema JSFC, the majority shareholder in Sistema Shyam TeleServices Ltd (SSTL) that operates the MTS brand of mobile phone services, has sent a notice to the Union government invoking the right to protect its investment under a bilateral treaty, the first such challenge by an overseas company following the cancellation of 122 licences by the Supreme Court on 2 February.
Apart from using the provisions of the bilateral investments treaty (BIT) between India and Russia to move against the government, “the company also plans to contest the Supreme Court order by filing a review petition within this week”, Vsevolod Rozanov, president and chief executive officer of SSTL, said in an emailed statement.
One of Russia’s largest conglomerates, Sistema has a 56.68% stake in SSTL, which had 21 of its 22 licences cancelled. It has proposed, in the notice to the government, “to settle the dispute in an amicable way within six months (by 28 August). A copy of the letter has also been sent to the Indian embassy in Moscow”, the company said.
The India-Russia BIT allows a private investor to initiate dispute arbitration proceedings against the government, said Anuradha R.V., partner at Clarus Law Associates.
“The key question before the arbitral tribunal…would be whether the effect of the Supreme Court verdict amounts to a violation by the government of India of the rights of an investor from Russia under the BIT,” she said. “The defence of the government in such a case would need to be carefully articulated under the provisions of the BIT, to the effect that the Supreme Court ruling does not amount to an ‘expropriation’, or an action equivalent to expropriation as defined under the BIT.”
Sistema has invoked clause 9.1 of the BIT, which was signed on 23 December 1994 and came into force on 5 August 1996. If the dispute was not settled within six months, it “reserves the right to commence proceedings against India before an international arbitration tribunal set up in accordance with the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL) and/or in any other available forum”, the company said.
If a verdict over the dispute goes against the government, Sistema may have to be compensated for losses on its investment in India, Anuradha said. However, such bilateral pacts typically don’t contain a provision to impose a penalty that’s over and above such compensation”
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)
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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.
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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”
What is shocking is the people who have swindled get excuses, by hiring highly priced attorneys from the Law through the Provisions of Law meant to protect the innocent!
Balwa,Kalaignar TV,Kanimozhi, Ruias,Khaitans honchos of Reliance are scot free.
Now Etisalat is quitting.They will pass on the loss(if they have suffered at all) to their shareholders, the perpetrators,the executives will go scot-free.
The Government of India,read Congress and DMK,having swindled the exchequer now will make new set of guidelines to make more money.
I suggest that the affected subscribers file damages against Government of India which should in turn claim the damages from Etisalat for having obtained Licences illegally and leaving the subscribers in the lurch.
I am whistling in the dark of course.
( I know some smart-alec lawyer will call me an idiot and that there is no sense in what I am talking.)
Law is something , Natural Justice is something else.
“Etisalat, which holds the majority stake Etisalat DB, is the second foreign telecom company to exit India after Baharain Telecom which offloaded its 42.7 per cent stake in S Tel.
In an e-mailed statement Etisalat said, “As unanimously resolved by the Board this evening, Etisalat DB will be taking steps to reduce operating costs, including the suspension of its network and services, pursuant to the terms of its UAS licenses.”
“The decision has been taken in order to protect the interests of all stakeholders and to avoid incurring further costs at this time of rapid change and continued uncertainty in the Indian telecommunications sector,” Etisalat said.
Further information, including the official cessation date will be communicated shortly to customers through the appropriate channels, the statement added.
Apart from cancelling 122 Licences, the SC has confirmed that there has been a loss to the Government despite Kabil Sibal’s assertion to the contrary, the important fact is that the government has netted additional 13,740 crores.
The Customers numbering about 70 Millions may have to switch operators.
Real fall out is that the crime has been confirmed and consequently the perpetrators, hopefully, will be punished.
The Government has been trying to side track the issue by declaring that there was no loss and CAG’s figures were notional.
With Dr.Subramanian Swami breathing down the neck of P.Chidambaram, whose compliance in this scam is a certainty,the case is expected to turn the heat on the Congress and probably set in motion a new alignment at the centre and the next election may well be a water shed in IndiaPolitical History.
“The cancellation of licences held by nine telecom companies will straightaway bring Rs 13,740 crore to the Government apart from the expected bonanza from the spectrum auction.
The clauses 5(G) (xiii) and 6 of telecom licence guidelines empower the Government to confiscate the entry fee, Finance Bank Guarantee (FBG) and Performance Bank Guarantee (PBG) in the event of licence cancellation due to the fault and fraud committed by the telecom operators.
According to Thursday’s judgement given by Supreme Court judges Justices GS Singhvi and AK Ganguly, all the 122 licences were cancelled because they were awarded in “illegal, arbitrary and unconstitutional” ways. “Hence the entire amount paid by them would be deemed to be confiscated,” said a top DoT official.
These nine companies paid Rs 9,013.94 crore as entry fee, which is now non-refundable as the court has held that the companies violated norms. For the licences, these companies paid Rs 3,390 crore as FBG and Rs 1,316 crore as PBG. In total, these operators deposited Rs 13,719.94 when they obtained licence in the controversial 2G spectrum allocation.
“In case of not adhering to licence conditions envisaged in para 5.G, the licence(s) granted to the company shall be deemed as cancelled and the licensor (Department of Telecom) shall have the right to encash the performance/financial bank guarantee(s) and the licensor (Department of Telecom) shall not be liable for loss of any kind,” say the clause 5G(xiii) of the existing Guidelines for Unified Access Services License, which came into force in December 2005. The clause 6 specifically mentions that the entry fee is “non-refundable”.
The SC verdict is in line with the CAG report which found that entire licences were allotted in illegal ways. The CAG report specifically mentioned that out of the 122 licences, 85 licences owned by Swan Telecom, Unitech, Loop, Videocon and STel were totally “ineligible” and based on forged documents.
The confiscated figure of Rs 13,719.94 crore from the cancelled licences will be in addition to the Rs 20 crore in the form of fine these companies will have to pay as per court’s directive. The SC had imposed Rs 5 crore as fine each on three companies for offloading shares to foreign companies and Rs 50 lakh was imposed on four companies for other violations.
“Customers will not be impacted from the cancellation of licences, TRAI Chairman reportedly said..
Nearly 70 million subscribers may have to change their operators as a result of the Supreme Court’s ruling to cancel licences, according to reports.
The Telecom Regulatory Authority of India reportedly said that there will not be much impact on customers as around 95% subscribers belong to operators which got licences before January 2008.
“Customers will not be impacted from the cancellation of licences, TRAI Chairman reportedly said.
The Supreme Court has given a four-month window to the Government and the operators to implement its orders.
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