Delhi HC heard PIL arguments; judgement reserved Ananda Krishnan selling scam- tainted spectrum?

Aircel Maxis scandal clock

April-May 2011: The Aircel-Maxis deal comes under the scanner after Aircel owner C Sivasankaran lodges a complaint with the CBI alleging that he was pressurised to sell his stakes to Maxis.

September 2011: The Arbitral Tribunal rejects Sivasankaran’s allegation regarding breach of obligation on the part of buyers in undertaking an IPO of Aircel. The tribunal directs him to pay Maxis’s legal costs of $7.9 million, of which at least $1.4 million was paid. The award was not challenged.

October 2011: The CBI files a case alleging that Sivasankaran, who had applied for spectrum licence, was coerced into selling his company to Maxis. It is later alleged that the Maxis Group, which bought 74 per cent stakes in Aircel in March 2006, invested Rs. 742 crore in Sun Direct between 2007 and 2009.

May 2014: The CBI tells the Supreme Court that there was difference of opinion between the CBI Director and the prosecution regarding filing of the chargesheet. On reference, the Attorney General opines that there was enough prosecutable evidence.

July 2014: Maxis Communications Berhad, on July 25, urges Finance Minister Arun Jaitley that it be treated in a fair manner, citing a contrary opinion by two retired Chief Justices of India.

August 2014: The CBI on August 29 files a chargesheet against former Telecom Minister Dayanidhi Maran and his brother Kalanithi Maran, T Ananda Krishnan, owner of Malaysian company Maxis, Ralph Marshall, a senior executive of the Maxis Group, and four companies, including the Sun Direct TV Pvt Ltd.

February 5, 2015: The Marans move the Supreme Court, challenging the 2G Special Court’s decision to summon them in the Aircel-Maxis case.

February 6, 2015: The Supreme Court recalls its order refusing to entertain petitions of the Dayanidhi Maran and Kalanithi Maran, to quash summons in the Aircel-Maxis case issued by the 2G Special Court.

February 9, 2015: The Supreme Court refuses to intervene with a summons order issued by the 2G Special Court to the Maran brothers.

March 16, 2015: Marans challenge the jurisdiction of the Special CBI Court over the Aircel-Maxis deal case.

April 1, 2015: ED attaches assets estimated at Rs. 742.58 crore held by Dayanidhi Maran and Kalanithi Maran and wife Kaveri Kalanithi.

August 3, 2015: The CBI tells a Special Court that Malaysian authorities were not “cooperating” in the service of summons against four accused in the Aircel-Maxis deal case after which the judge issues fresh summons.

August 21, 2015: The Supreme Court stays ED move to attach Sun TV assets

August 25, 2015: ED summons two directors of the private firm, Advantage Strategic Consulting.

September 9, 2015: CBI files status report.

January 8, 2016: ED names the Maran brothers, Kalanithi Maran’s wife Kaveri Maran and three others, including two companies as accused in its chargesheet.

January 23, 2016: ED summons Ralph Marshall, former non-executive director of Maxis Communications Bhd in Malaysia.

February 1, 2016: Dayanidhi Maran illegally generated Rs. 742.58 cr and Kaveri Kalanithi participated in money laundering, says ED.

30 Indian companies identified for scrutiny

THE Enforcement Directorate is said to have identified over 30 Indian companies for scrutiny of transactions in connection with the ongoing investigation in the Aircel-Maxis deal case. The agency has zeroed in on these entities after searches conducted last December, in coordination with the Income-Tax Department, against Vasan Health Care and Advantage Strategic Consulting Private Limited. Vasan Health Care and Advantage Strategic belong to the associates of former Finance Minister P Chidambaram’s son Karti.

The ED had also carried out searches on the premises of Karti’s company, Chess Global Advisory Services, in his presence. He told the media that his businesses were fully compliant with laws and regulations. According to a senior official, most of the companies currently under the ED scanner are based in Chennai. Karti has a stake in some companies.

The over 30 entities identified by the agency are into legal, tax and investment consultancies, healthcare solutions, logistics, estate development activities, household goods, textiles and fast-moving customer goods. Some companies are into tourism services, including running hotels and resorts and providing car rentals.

ED has received details of the bank accounts of some companies, which are being examined. Suspected overseas financial transactions in over a dozen countries, including the United Kingdom, Spain, Singapore and Sri Lanka are also being probed as part of the Aircel-Maxis deal case. The ED had recently issued two summons to seek some clarifications from Karti in connection with the investigations.

Whodunnit?

IN a bid to bring the spectrum scam guilty to justice and prevent further fraud on the Indian people, the Society for Consumers’ & Investors’ Protection (SCIP) filed a PIL in the Supreme Court against the following persons, government authorities and regulatory bodies in India and abroad:
• The principal respondent is the Union of India, through the Secretary, Department of Telecommunications (DOT) in the Ministry of Communication and Information Technology.
• The Indian companies involved are Mumbai company Aircel Ltd, five Chennai-based companies Aircel Tele Ventures Ltd, Aircel Cellular Ltd, Dishnet Wireless Ltd, Sun Direct TV Pvt Ltd and Sindya Securities and Investments Pvt Ltd and two New Delhi based companies South Asia Communications Pvt Ltd and Deccan Digital Networks Pvt Ltd besides Reliance Communications Ltd and Bharti Airtel Ltd.
• The foreign companies are the London and Kuala Lumpur-based Astro All Asia Networks Plc; Maxis Communications Berhad based in Kuala Lumpur; and two companies based in Port Louis, Mauritius—South Asia Entertainment Holdings Ltd. and Global Communication Services Holdings Ltd.
• The individual respondents are former Union Telecom Minister Dayanidhi Maran and his brother Kalanithi Maran, Ralph Marshall of Kuala Lumpur, T Ananda Krishnan of Kuala Lumpur and Suneeta Reddy and Dwarkanath Reddy of Chennai.
• The multiplicity of government authorities invoked, apart from the Secretary, DOT, are the Central Bureau of Investigation and the Enforcement Directorate and the Secretaries of the Ministry of Corporate Affairs, Ministry of Finance, Ministry of Home Affairs and Ministry of Personnel, PG and Pensions besides the two regulators, Telecom Regulatory Authority of India and the Securities and Exchange Board of India. All these authorities stand accused by the petitioners of negligence or, worse, in prosecuting the scamsters and permitting sale/alienation of company shares and assets including valuable spectrum.

Augustus Ralph Marshall

AUGUSTUS Ralph Marshall served as the Chief Executive Officer of Astro All Asia Networks Limited since September 2003. He was the Chief Executive Officer of MEASAT Broadcast Network Systems Sdn, a wholly owned subsidiary of Astro All Asia Networks Ltd, since 1995 and its Deputy Chairman. He served as the Chief Executive Officer of Astro Group from 1994 to May 2006. Marshall has the responsibility for Tanjong group’s financial management and plays a key role in the development and implementation of its corporate objectives. He has more than 30 years experience in Financial and General Management in UK and Malaysia. He has been the Chairman of Powertek Berhad since February 2007. He serves as a Non-Independent Non-Executive Deputy Chairman of Astro Malaysia Holdings Berhad. He has been Executive Deputy Chairman of ASTRO Overseas Limited since April 2011. He serves as the Non-Independent Non-Executive Deputy Chairman of Astro Malaysia Holdings Berhad. He served as Deputy Chairman of Astro All Asia Networks Ltd since August 2003 and its Director since July 2003. He has been a Director of Astro Malaysia Holdings Berhad since March 21, 2011. He has been a Non-Executive Director of Johnston Press PLC. He has been an Executive Director of Tanjong Public Limited Company since February 21, 1992, and Usaha Tegas Sdn Bhd since 1992, and primarily responsible for providing strategic direction and investment policy decisions. He has been an active member of the management group responsible for developing and implementing the financial and corporate strategies of the UT Group and its affiliates He serves as Non-Executive Director at Powertek Berhad since April 1, 1999, Measat Global Berhad since May 8, 2002, and Maxis Communications Berhad since June 30, 1993. Marshall has been an Independent Non-Executive Director of KLCC Property Holdings Bhd since September 1, 2005. He has been a Director of Kuala Lumpur Convention Centre Sdn Bhd, Suria KLCC Sdn Bhd and Asas Klasik Sdn Bhd. He has been an Independent Non-Executive Director of KLCC Reit Management Sdn Bhd, Manager of KLCC Real Estate Investment Trust since December 5, 2012. He has been a Director of London Stock Exchange PLC since August 1991. Marshall has been Director of MEASAT Broadcast Network Systems Sdn Bhd since 1994 and London International Exhibition Centre Holdings PLC. He served as Maxis Berhad from August 7, 2009, to July 14, 2015. He served as a Director of Tanjong Energy Holdings Sdn Bhd. He served as a Non-Executive Director of OUE Limited (Alternate Name: Overseas Union Enterprise Ltd) from September 21, 2006, to March 9, 2010. He served as a Non-Executive Director of Summit Ascent Holdings Limited since February 8, 2002. Marshall is an Associate of Institute of Chartered Accountants in England and Wales, post qualifying in the UK and a Member of Malaysian Institute of Certified Public Accountants.

Maran brothers

A Delhi court on August 27 reserved order on applications by former Telecom Minister Dayanidhi Maran, his brother Kalanithi Maran and others challenging its jurisdiction to hear a money-laundering case against them connected with the Aircel-Maxis deal, arguing that the court was designated only to hear the 2G cases.

The court had summoned them in the case in February after taking cognizance of a complaint filed by the Enforcement Directorate in January. Special Judge OP Saini reserved the order for September 6. Since this issue goes to the press before this date, we are unable to state what the order said.

The Maran brothers have also moved bail applications in the case. The agency has opposed their bail pleas. Opposing their bail applications, the Directorate through its Assistant Director Kamal Singh said that “possibility of hampering the investigation and tampering with the evidence by the applicants may not be ruled out…The bail applications deserve to be rejected and the question of imposition of conditions does not even arise,’’ the ED said.

Taking cognizance of the complaint, the Judge had said that he was satisfied on perusal of the material on record that there was enough material to proceed against the accused persons. The complaint is a spin-off of the corruption case lodged by the CBI in the Aircel-Maxis deal.

The complaint alleged that Rs. 742.85 crore was paid to Dayanidhi Maran by two Mauritius-based companies through Sun Direct TV Pvt Ltd (SDTPL) and South Asia FM Ltd (SAFL). The two companies are owned and controlled by Kalanithi Maran, and the money was utilised by these companies for their business, the complaint alleged.

K Shanmugam, MD of SAFL, SDTPL, and SAFL, has also been named as accused in the complaint. He has also moved for bail.

Anil Ambani

ANIL Ambani’s Reliance Communications (R-Com) and Aircel are said to be preparing the ground for signing an agreement for a merger of their businesses by September first week. Terms for the merger are said to have been finalised. The merger, if it materialises, would lead to the formation of the third-largest telecom operator in the country with a subscriber base of over 196 million. At present, no regulatory approvals are said to be required. The process for regulatory approval will begin after R-Com and Aircel sign a definitive agreement. It may take around 4-6 month for the merger and the combined entity may be re-branded.

The new entity will hold spectrum across all allocated bands for 2G, 3G and 4G services. On the other hand, R-Com and Sistema (MTS) are in process of merger. Sistema will hold 10 per cent stake in the new entity that will be formed post its merger with R-Com. In December last, the two firms announced a 90-day ‘exclusivity period’ for the merger deal that will exclude R-Com’s tower and optical fibre assets for which a separate sale process is ongoing. The talks were later extended twice.

The merged entity is expected to have Rs. 25,000-crore business from the first day of its operation and is estimated to have Ebitda (earnings before interest, taxes, depreciation and amortization) of Rs. 7,000 crore and finance cost of about Rs. 3,000 crore. R-Com and Aircel have had nil free cash flow for a long time but the resultant entity is being structured in a manner to have R. 4,000 crore free cash flow, which it can use for investments in network, according to a telecom analysts.

Ananda Krishnan

ACCORDING to Forbes, Tatparanandam Ananda Krishnan’s net worth is estimated at RM44 billion, or US$10 billion, as on May 2015 and he is the sixth richest man in Asia.

In the global financial world, everyone knows how Dr Mahathir Mohamad helped make Krishnan rich by milking Petronas. What many do not know is that he transferred billions of his wealth to India to finance a shady Maxis-Aircel deal.

But then he got caught and now the Indian government wants him arrested and charged and most likely jailed. And the only person who can save him is Malaysian Prime Minister Najib Tun Razak.

And that is why Krishnan gave 1Malaysia Development Berhad (1MDB) a loan of RM2 billion a year ago, much to the chagrin of Dr Mahathir. The old man wanted 1MDB to default on its loan repayments. Krishnan, however, wanted to curry favour (pun intended) with the Malaysian government. And this did not quite fit into Dr Mahathir’s plans.

There are some who say that Dr Mahathir is the main wayang and is pretending he is not pleased that Krishnan gave 1MDB an RM2 billion loan. And this is because Krishnan would never do anything that Dr Mahathir does not want him to do—especially to help save 1MDB. But then Dr Mahathir also could not afford for Krishnan to be extradited to India and eventually put in jail. So giving 1MDB a loan of RM2 billion is a small price to pay to save Krishnan.

CBI is investigating Krishnan, Augustus Ralph Marshall and their companies—Maxis Communication Berhad, South Asia Entertainment Holding and Astro All Asia Network PLC—for their alleged role in the Maxis-Aircel scam. Maxis Communications Berhad, between 2007 and 2009, bought 20 per cent Kalanithi Maran–owned Sun TV Network Ltd through its subsidiaries Astro All Asia Network and South Asia Entertainment Network for Rs. 599.01 crore.

CBI had filed the chargesheet in the case containing the names of 151 prosecution witnesses and a set of 655 documents, on which it has relied upon during its probe. The case involves investigation in foreign countries and in its submission in court stated that there were sufficient grounds to proceed against the accused named in the chargesheet.

So far, the Centre through its diplomatic channels has not been able to convince the Malaysian government—even though both countries have signed a Mutual Legal Assistance Treaty (MLAT)—to cooperate with the Indian government in these serious allegations of corruption.

For months, the CBI have not been able to issue summons to the accused in Malaysia. Compare that to the cooperation extended by the Mauritius government on investigating the Global Communications Services Holdings Limited (GCSHL)—a Maxis Communication Berhad company—under which the entire intricate buy-out of Aircel took place.

Sunil Bharti Mittal–Airtel’s connection with Aircel

IN July this year, the Telecom Ministry cleared the Rs. 3,500-crore 4G spectrum trading deal between service providers Bharti Airtel and Aircel. “The spectrum trading deal between Bharti Airtel and Aircel was cleared by the telecom minister on July 4,” an official source told PTI. As on July 4, Law and IT Minister Ravi Shankar Prasad was in charge of the Telecom Ministry as well.

Airtel has entered into an agreement with Aircel to acquire rights to use 4G spectrum of Aircel in eight telecom circles of Tamil Nadu, including Chennai, Bihar, Jammu and Kashmir, West Bengal, Assam, the North-East, Andhra Pradesh and Odisha. “Airtel was asked to surrender 1.2 Mhz spectrum in Odisha circle for approval as it breached the spectrum cap limit (after taking into account Aircel’s spectrum). The company has surrendered 1.2 Mhz spectrum in 1800 Mhz before the deal was cleared,” the source said.

In a circle, no player can hold more than 25 per cent of the total spectrum allocated in that particular service area. Activist lawyer Prashant Bhushan, in a letter on July 8, had demanded that CBI and ED immediately freeze spectrum held by Aircel, alleging that its Malaysian parent Maxis will “abscond” if the proposed deals with Airtel and RCom are allowed to go through. CBI has filed a detailed chargesheet against Aircel-Maxis and its Malaysian owner T Ananda Krishnan. Even ED has filed cases against them and attached properties of former telecom minister Dayanidhi Maran, but not that of Maxis, the letter said.

The Malaysia-based Maxis Communications holds 74 per cent in Aircel while the rest is with Sindya Securities and Investments. In August 2014, CBI had filed the chargesheet with the 2G Special Court, alleging Maran had entered into a criminal conspiracy with Krishnan and “forced” Chennai-based telecom promoter C Sivasankaran to sell his stake in Aircel to Krishnan in lieu of investments by Maxis Group in Sun Direct TV (owned by Maran brothers).

The chargesheet has been filed against Dayanidhi Maran, his brother Kalanithi Maran, Krishnan, Ralph Marshall (executive of the Maxis group) and four firms—Maxis Communication Berhad, Astro All Asia Network, Sun Direct TV Pvt, South Asia Entertainment Holdings in Mauritius. Bhushan cited various occasions when courts issued summons to Krishnan, Marshall, Maxis Communications Berhad, and Astro All Asia Network, but there was no compliance. “For a telecom operating company, spectrum is the main asset. Maxis should not be allowed to sell spectrum and equity unless all the accused, Krishnan and firm Maxis comply with summons issued by the 2G special court,” Bhushan said.

What is spectrum? Why is it important for mobile telephony?
Spectrum is basically airwaves. In mobile telephony, spectrum, a natural resource, acts as a medium for transmission of voice and data signals. There are different bands of spectrum that are allotted for different usages. Hence, one can say that spectrum is the backbone of mobile telephony.

What was the 2G scam?
The Department of Telecom (DOT), with A Raja as the Telecom Minister, decided in 2008 to give spectrum to new players on first-come-first-served basis on the prices decided in 2001. In this auction, the price of 4.4 MHz of spectrum for providing pan-India services came out to be about Rs. 1,400 crore. The government allotted licences to new operators who had no established credentials in mobile telephony. Some of the companies were accused of divesting equity at significantly higher prices. Telecom firms, mainly Unitech and DB Reality, were allegedly awarded licences arbitrarily and granted 2G spectrum on January 10, 2008, at extremely cheap rates, thus robbing the government of revenues.

When did the 2G scam assumed significance?
2G scam came to the notice of the public when the Comptroller and Auditor General CAG came out with its findings that the scam caused a loss of revenue of Rs. 1.76 lakh crore to the national exchequer.

How did CAG arrive at the presumptive revenue loss figure?
The CAG based its estimates on three primary parameters to arrive at the loss figure of Rs. 1.76 lakh crore. These factors are inclusive of the following: the market price determined in an auction of 3G spectrum in 2010, the price offered by S Tel to DOT and the valuations at which at which the investors bought stakes in these companies.

What is the Supreme Court ruling?
The Supreme Court, in a judgment on February 2, 2011, cancelled 122 2G spectrum licences granted on January 10, 2008, on the ground that they were issued in a “totally arbitrary and unconstitutional” manner. The Supreme Court also came down heavily on the FCFS policy and termed it fundamentally flawed.