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Updated: June 25, 2012 00:08 IST

As Chidambaram battles Opposition on Maxis, new questions arise

Shalini Singh
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Union Home Minister P. Chidambaram
Union Home Minister P. Chidambaram

NEWS ANALYSIS Why did Chidambaram, as Finance Minister and member of GoM, not protest when spectrum pricing was being dropped from terms of reference in 2006?

The spectrum mess is returning to haunt Home Minister P. Chidambaram, who is battling uncomfortable questions from Arun Jaitley, Leader of the Opposition in the Rajya Sabha, over his role in the Aircel-Maxis deal during the former Telecom Minister, Dayanidhi Maran's term, in addition to ongoing litigation in the Supreme Court over his role during the tenure of jailed ex-Telecom Minister, A. Raja.

Alleging a link between the Foreign Investment Protection Board clearances given to Aircel-Maxis and the business transactions of Ausbridge — a company he said was earlier owned by Mr. Chidambaram's son, Karti — Mr. Jaitley claimed that in 2006, the e-mail and web address of Ausbridge Holdings and Investments and Advantage Strategic Consulting, which has shareholding in Maxis-Aircel, were the same. Mr. Chidambaram, however, denied that either he or any member of his family owned any share in any telecom company.

The Opposition's attack has reopened lingering questions about Mr. Chidambaram's own contrasting conduct during 2006-07, when the Maxis' takeover of Aircel was under way, new applications were being submitted, and the Group of Ministers (GoM) was forced to drop spectrum pricing from its original Terms of Reference (ToRs).

The record shows the Finance Ministry under Mr. Chidambaram maintained a temporary silence on the issue of spectrum pricing being dropped from the GoM between February 2006 and February 2007. This was the same period in which Maxis received two sets of FIPB clearances in January-March and September-October 2006, followed by 14 licences between December 5 and 14, 2006, along with the promise of linked 2G spectrum at 2001 rates on a first come, first served basis. Aircel paid Rs. 1,399 crore for these 14 licences which the CAG, in 2010, valued at roughly Rs. 13,000 crore.

In an interesting, and now damning twist, once Aircel had secured its licences — making it a pan-India operator — and initial approvals were in place for the Sun-Maxis deal, the Finance Ministry suddenly went back to arguing that spectrum pricing be included in the ToRs of the GoM on spectrum.

Within months, the Maxis group companies announced a joint venture with Sun TV and received FIPB approvals between March 2 and 19, 2007 to acquire a 20 per cent interest in Sun Direct, which is owned by the Maran family. The transaction was completed in December 2007 and further investments were made during 2008 and 2009. The Enforcement Directorate has filed a money laundering case against Mr. Maran and his brother for allegedly receiving Rs. 550 crore in payoffs related to the Aircel-Maxis transaction.

It is well known that as soon as Maxis approached Aircel for a buyout, Mr. Dayanidhi Maran, on January 11, 2006, approached the Prime Minister seeking the vacation of additional spectrum. The next day, Aircel applied for 4 new licences. On January 30, Maxis, through Global Communication, sought FIPB approval to enhance its equity in Aircel from 26% to 73.99%. The PM agreed to Mr. Dayanidhi Maran's demand and a GoM on spectrum issues was announced on February 23, 2006. The ToRs of this GoM included a Section 3(e) on spectrum pricing policy. This unexpected inclusion was a big blow to Mr Maran's plans to grant spectrum to Aircel at 2001 rates. Within 5 days, Mr. Maran approached the Prime Minister, seeking the deletion of spectrum pricing from the ToRs and submitting fresh ToRs. There is no evidence that Mr. Chidambaram, responsible for protecting exchequer revenue as Finance Minister and a member of the GoM, offered any resistance.

On March 3, Aircel applied for 3 new licences. Within 4 days, Maxis' application for FDI enhancement to 74% was approved by the FIPB. Approval by the Finance Minister followed on March 13, 2006 and a formal letter issued on March 20, 2006. Soon after, on May 26, 2006, Maxis stated in a filing in the Malaysian stock exchange, Bursa, that “with equity interest of 74% in Aircel (comprising of 65% direct interest and 9% indirect interest) and 100% subscription of cumulative, redeemable, non-convertible preference shares in Deccan Digital Networks Pvt Ltd, the JV company incorporated in India, this effectively gives the group 99.3% economic returns from the investment in Aircel.”

Again, on September 1, 2006, Maxis filed a fresh application for downstream investment through Global Com. Its approval by Mr. Chidambaram was conveyed to the company on October 20, 2006.

Suddenly, the Cabinet Secretariat, after a wait of 8 months, moved an Office Memorandum on November 10, 2006 to begin the process of modifying the ToRs for the GoM on spectrum. Mr. Maran, on November 16, 2006, submitted another version of the ‘revised draft of ToR' to the Prime Minister. Within 4 days, Mr. Maran started issuing LoIs to Aircel. On December 7, the Prime Minister approved the modification of the ToRs, dropping spectrum pricing — as had been sought by the Telecom Minister. Simultaneously, Mr. Maran converted Aircel's 14 LoIs into licences between December 5-14, 2006. Even at this stage, neither Mr. Chidambaram nor the Finance Ministry protested.

Following this, in March 2007, after the Maxis-Sun TV transactions were initiated and FIPB approvals received, the Finance Ministry suddenly started pushing for the re-inclusion of spectrum pricing in the ToRs of the GoM on spectrum. Two Finance Secretaries, Ashok Jha and Dr. Subbarao, wrote multiple letters — to the DoT on March 28, 2007, to the Cabinet on April 19, 2007, again to the DoT on May 18 and June 6, 2007. The DoT refused to budge both during Mr. Maran's tenure through a letter of April 2, 2007, as well as during Mr. Raja's regime — through a letter of June 15, 2007.

Unanswered questions

1. Why did Mr. Chidambaram, as the Finance Minister and a Member of the GoM, not protest when spectrum pricing was being dropped from the ToRs in 2006? Is there any letter or evidence that he did?

2. If it was appropriate to keep silent during 2006 when it was granting FIPB clearances and the DoT was granting licences to Aircel, then what changed after March 2007 for the Finance Ministry to write multiple letters for the re-inclusion of spectrum pricing in the ToRs for the GoM?

3. When the Finance Minister approved the FIPB application in March 2006 and Maxis made an announcement in the Malaysian stock exchange of receiving 99.3% of economic returns from investments in Aircel, why was this not immediately investigated, especially when the second application for downstream investment was placed on September 1, 2006?

4. It is alleged by Mr. Jaitley that Maxis, at that time, had spent over Rs. 5,000 crore directly and indirectly for 73.99% equity. But the Reddy family (owners of Apollo Hospitals) invested just Rs. 34 crore for their 26% share. At Mr. Jaitley's valuation of Rs. 5,000 crore for 73.99%, the Reddy family's Rs. 34 crore translates into a mere 0.7% equity share, justifying perfectly Maxis' claim of 99.3% returns. Why has this not been investigated?

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Mr.P.Chidambaram the ex finance minister and now home minister instead of crying in Rajya sabha should resign accepting moral responsibility and provide answers to the questions raised by The Hindu with records of finance Ministry if he is honest as he purportedly claims. He is still clinging to his ministerial post which doesn't lend credibility.

from:  Ramamoorthi
Posted on: May 26, 2012 at 17:13 IST

Honorable Minister Mr. Chidambaram's role in the 2G scam became
apparent when he justified his ministry's approval of 'divesting'
shares by the fly-by-night operators who got the license but had no
tele-infrastructure. He even justified the overnight escalation in
evaluation of these operators from Rs 500 cr to 20,000 cr once they
got the licenses. I have a humble question to ask...how much does it
cost to have an 'infrastructure' of an office and few employees?
certainly not 500 cr. The entire evaluation of these companies and
the money paid by MNCs for shares of these operators was actually cost
of the licenses cashed out by the shady operators....now these MNCs
after having paid so much for the licenses are to give the poor Indian
low cost telephony...such baloney can go down smooth only in this
country filled with educated ignoramus...

from:  venkatapathi
Posted on: May 16, 2012 at 16:26 IST

Its a well planned loot by Karunanidhi's DMK and Chidambaram. Each and
every transaction has been done with maximum confusion so that it is not
understood by common man. Chidambaram was tumbling to answer Arun
Jaitley, which we could make out easily. His emotional speech clearly
exposes Chidambaram's role. We thank The Hindu and Dr. Swamy for their
contribution.Chidambaram's slide is started. No more cosmic dance boss!

from:  chandru mani iyer
Posted on: May 15, 2012 at 18:33 IST

SC should take suo moto notice & order for enquiry for disproportionate asset case by cbi against chidambaram & others involved 2 g case as it was done for mulayam singh & mayawati

from:  minoti roy
Posted on: May 15, 2012 at 17:36 IST

Resistance to frequent policy change could also have been offered by Dr.Manmohan Singh. He has greater responsibility in protecting national interest than the Finance Minister. If Chidambaram is culpable, Dr.Singh is equally so.

from:  Dr.Himanshu
Posted on: May 15, 2012 at 17:30 IST

It is a small number of individuals who are tirelessly working to unravel the mystery of 2g mega looting.Ms Shalini Singh is prominent among them.Her precision is unnerving the guilty. The emerging facts show the PM in bad colour.His personal conduct seems suspect,notwithstanding the irrelevant shield called 'coalition compulsions'.PM should be loyal to the nation. Pranabda is a 'Bhishma' in the company of 'Kauravas'.He is the only person knowing many facts relating to the scam,but not involved in the scam.He should not get involved in the cover up and shielding process,even if he does not come out openly to expose the guilty. Under the prevailing circumstances,CBI can not do justice if asked to probe.
Kudos to Shalini and the Hindu.

from:  S.Srinivasan
Posted on: May 15, 2012 at 17:25 IST

In ancient India, there was a clear distinction between the Government and the Business sector. Businessmen were not invited to join the Government and those in power did not own any businesses. However today there is no distinction whatsoever between those in Business and those in Power. It is quite easy for a wealthy person to become a member of the Rajya Sabha in order to increase their clout. Similarly politicians use their influence and newly acquired wealth to invest in various commercial establishments including engineering colleges and hospitals. This clearly leads to conflict of interest. Mr. Chidambaram and Mr. Dayanidhi Maran are not alone. There are many others in a similar position.

from:  Siddharth
Posted on: May 15, 2012 at 15:12 IST

This is called investigative journalism. Excellent work. Chidambaram is a well-educated and cunning politician. If at all he has done something wrong, normal wisdom can't uncover it; it needs extra-ordinary thinking. This article is a few steps closer to that

from:  Deepak
Posted on: May 15, 2012 at 15:05 IST

Chidambaram's backyard has many many more skeletons:
1. Harshad Mehtha
2. Manipulating stock markets to favour his son( My friend was a
broker to Karthik and vouches)
3. Manipulating his elecetion result
4. manipulating SEBI favouring Reliance
and many more.
We can call him the Chief Manipulator of UPA! But he will escabe
because he is too willy nilly and uses law to serve his crooked ways.

from:  RAVI KRISHNAMOORTY
Posted on: May 15, 2012 at 14:39 IST

I think why we have to ask these questions. Come on dont politicians have to make lot and lots and lots of momey? so they and the crooked business(?) men did all they did to circumvent the rules and stash as much money as possible.And i dont know why we have to ask these questions. Are we not to suppose to be a mere citizen and just dont listen to all the news reports.All got to do is -if possible -let the telecm sector earn as much as it can and we should give all our property and other belongings-if we have any in the first place- to the politicians and we should go to the streets to beg.Hey comme on once in 5 years the His Highness politician will come to ask for Vote -is it enough for us-we a mere stupid .waste people.

from:  saravanan
Posted on: May 15, 2012 at 14:36 IST

Loose rope to the accused must not be given any more by the highest court of the country.
Unless the complete puzzle of 2G is solved by the CBI and the Courts in the country,
corruption in high places will continue to flourish beyond limits.
High time Lokpal with independent CBI is passed by the parliament . But how it is possible
when those involved are the ones to pass the bill?
We are doomed to fail.

from:  Binod Kumar
Posted on: May 15, 2012 at 14:26 IST

Well written reflects facts. Chidambaran, Congress and DMK are very clever in doing corruption. They should be ashamed. Good work by Media and by few Lawyers like Mr.Subramania Swamy. Thanks Shalini Singh. I strongly one day we all get justice against these looters (Congress, & DMK mainly).

from:  SELVAM RAMAMURTHY
Posted on: May 15, 2012 at 14:17 IST

Well argued, but somewhat unfair! This article selectively recounts events and presents them as a logical sequence. By presumptuously imputing motives, one can easily tarnish reputations and accuse honest officers. For instance, it does not cite the arguments put forth by Dayanidhi Maran for removing spectrum pricing from the ToR. He may have presented reasonable arguments which were accepted by the PM and the FM.
Suppose Mr. Chidambaram was in cahoots with Mr. Maran, then why did the Finance Ministry press for inclusion of spectrum pricing at all? Did Mr. Chidambaram choose to be dishonest only to favour Maxis? Did he suddenly become honest afterwards?

from:  Ganesh R
Posted on: May 15, 2012 at 13:41 IST

Silence need to be broken by clear replies to these unanswered queries by PC or Pranab or MMS;Hopefully !

A meticulous research based report by Shalini Singh.Well done!!!

from:  omkumar muthusamy
Posted on: May 15, 2012 at 13:21 IST

Ms Shalini Singh, I have been reading your articles from few years, especially related with 2G, You are a role model for your fellow journalists for Courage, Sound Knowledge, In-depth analysis. Keep the good work

from:  Dipu
Posted on: May 15, 2012 at 12:05 IST

I donot understand the concept of two young men knowing each other and atarting a business and suddenly fortune smiles on them in terms of 100s of thousands of crores. It is laughable for Chidambaram to say Rs 5 crores was invested into his son's firm based on an agreement dated 2006. How is that my son who is young and much better e3ducated than Chidambaram's son as he is an electrical engineer from IIT and an MBA from a top university in the world does not have anybody to invest even Rs 10 lakhs. Chidambaram should stop fooling the public and stop the melo drama. All these fellows , on full investigation, should be sent to jail.

from:  Ram
Posted on: May 15, 2012 at 11:43 IST

While this covers some 5 or 10,000 crores what happens to the remaining
in the 1,76,000 cr scandal. Hope Ms Shalini Singh and The Hindu would do
further investigation

from:  R Raman
Posted on: May 15, 2012 at 10:49 IST

Very pertinent questions again by Shalini Singh after thorough research . Mr PC and the UPA has a moral obligation to the citizens of India, to answer these questions which have come out in the press . SILENCE WILL BE ACCEPTANCE OF GUILT AND SHOULD BE PUNISHABLE . If MR PC does not answer , then Mr Pranab or Mr MMS himself , who are defending Mr PC should come out with suitAble explanations . Merely stating he or his family has no links with telecom firms is not sufficient . We know there are hundreds of benami ways for ministers to have interests in corporate entitys .

from:  RALPH PAUL
Posted on: May 15, 2012 at 09:47 IST

Thank you Ms Shalini Singh, for doing such a superb research based job. Clever crooks will need a lot of hard work and integrity from others to nail them because they are used to having their way.

from:  abid
Posted on: May 15, 2012 at 09:18 IST

Mr Chidambaram's emotional response to the whole discussion in the Parliament does not answer all the questions raised. One doesnt prove his integrity by asking to be stabbed instead. It appears that his son has been in businesses in which his father could have had a role. The matter shpould be cleared once and for all by Mr Chidambaram.

from:  S.N.Iyer
Posted on: May 15, 2012 at 09:15 IST

I have been following Ms Shalini Singh's articles on Telecom mess and
more specifically the 2G imbroglio for the last two years, her earlier
stint being with other news group! The amount of research and depth in
understanding of what ever is happening is extraordinary. Her articles
help in educating the general public on issues that matter since these
have a bearing on Governance and Economy of the country. They also
help in understanding the Legal angle.
Trust she continues her good work till issues are resolved either at
Government level or in Judiciary!!

from:  PS Nath
Posted on: May 15, 2012 at 08:55 IST

These pertinent questions need convincing answers from Mr.Chidambaram. If he is not in a position to provide them,Pranab who has defended his predecessor's role in the entire episode, should come out with answers with supportive documents that must be accessible to him. He has a moral obligation to do so quickly, as it has widely been reported that he is a front runner for the post of the President. Without clearing the air, if he moves out of FINMIN to Rashtrapathi Bhawan, the spectrum ghost will also follow him for his act of strongly defending what is probably the most indefensible.

from:  Shekar
Posted on: May 15, 2012 at 08:45 IST

This investigation is a long one and certainly there are evidences for incriminating all the accused. If media and Mr.Swamy do not loose focus in this case, the result would be a historic one in the independent India.

from:  Senthil
Posted on: May 15, 2012 at 08:06 IST

Question number 4 is a bombshell. Numbers don't lie. Why the Apollo Reddy's were given 26% for for a meagre 34 Crores?

from:  Krishna S Bala
Posted on: May 15, 2012 at 06:57 IST

As for the news article Question No. 4, I would like to say, numbers don't lie! The Apollo connection is mind boggling. This makes imagine what sort of so called care is being given in that hospital. Mr. PC can quote the Holy Bible, Quran, The Bhagavad Gita and even Thirukural, but he can come as clean as his white shirt and dhoti if he opens the financial books of Ausbridge Holdings. This news article warrants a look into the books of Apollo Hospitals as well. While some Middle-eastern patients come with wands of US $ for payment, nothing is being reported in the IT returns by Apollo hospitals. But wait a second, only ten thousand dollars is permitted to be carried into the country by customs, but if it is for a payment to the Apollo hospitals any amount is ok? Is that right? Apollo connection to 2G is very fishy looks like a benami transaction for some other favor by a politico!

from:  Krishna S Bala
Posted on: May 15, 2012 at 06:25 IST

.. It still perplexes me the behaviour of these politicians who acquire
power first & then earn wealth which can feed their families for
generations to come . If there was truth in accusations PC is subjected
to ,he should be tried for. These politicians are worse than Kasab.

from:  Prof.R.Krishnamurthy
Posted on: May 15, 2012 at 05:50 IST

In the recent past, the Hindu has resorted to effective investigative reporting – which is a welcome obligation to uphold democratic traditions. I do extend my Salutations to the Editorial team and Shalini Singh for the well referenced and studied article which unwrap the spectrum mess, so that the citizens can make unambiguous conclusions.

from:  Dr. K.V.Mallan
Posted on: May 15, 2012 at 05:45 IST

Unanswered questions:
1. He did not want to;
2. Hidden Agenda;
3. It would have been inconvenient;
4. contingent cardiac problems.

from:  Soundararajan Srinivasa
Posted on: May 15, 2012 at 05:09 IST

Ms.Shalini Singh, I do not know what your feud is with the Home
Minister but I noticed that you are only writing against
Mr.Chidambaram since you joined the Hindu.

This is what is called trial by media and an unfair assessment of the
several false allegations thrown by some people with nefarious design
by the reputed media such as The Hindu.

I would like to know what is your motive behind the story.I would like
to ask if you can write stories like this about Mr.Narendra Modi who
is alleged to have masterminded the Gujarat Carnage of 2002 to where
thousands of people died.

I would like to see some articles by you about that incident.I am
appalled by this grotesque allegations targeting the Home Minister
when a well renowned judge Mr.O.P.Saini himself has gone thru all the
facts and documents and dismissed all allegations against
Mr.Chidambaram.

As a Citizen I am concerned about the Country by reading such articles
trying change perception of the public and running a trial in media

from:  Prem
Posted on: May 15, 2012 at 04:48 IST

P.Chidambaram is defintitely a very intelligent culprit. These kind of leaders are not required for this country. Let's throw him and same kind of leaders out and punish them! Then we can realize the real value of democracy!

from:  Manoj
Posted on: May 15, 2012 at 04:06 IST

Systematic robbing of the country's resources. If MMS is claiming innocence based on ignorance is a white lie. Coalition dharma forced him to keep quiet, otherwise he would have lost his primeministerial throne.

from:  Krishna S Bala
Posted on: May 15, 2012 at 03:00 IST

This is journalism at its best. Simply beautiful. Detailed reporting followed by hard hitting questions.

from:  loganathan
Posted on: May 15, 2012 at 02:42 IST

PC's poition is becoming more and more untenable in the cabinet; question is why Manmohan singh still keeps him in the cabinet?

from:  Chandra
Posted on: May 15, 2012 at 02:10 IST

I am shocked but not entirely surprised by the fast but surely decaying indian society in
general and politicians/judiciary/law and order machinery in particular. I was forced to leave
chennai in the late eighties due to mks beloved policies but am closely involved in indian
affairs. I am very worried that the country is collapsing from within. Can an organisation like
the Hindu get together some luminaries like Kalam and this group take over the country for a
set no of years before handing over to untainted politicians. This may be a simplistic
unconstitutional solution but I like many of my friends feel totally lost. I have done extremely
well in the west both academically and financially for which I have to personally thank MK
can the hindu also investigate whether some of this money is being laundered thru Vasan
Eye Care hospitals? I pray for a successful tolerant secure India - but don't know how this is
going to happen. I cannot submit my children to the current money education

from:  Gopi
Posted on: May 15, 2012 at 02:09 IST
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