Thursday, January 13, 2011
Public Sector Banks' Rs.26000 Crore Bonanza to Spectrum Scam Tainted Companies
The Pioneer November 29, 2010
5 dodgy firms received Rs 26,000-cr bank loan
The loans provided by public sector banks to 2G scam-tainted companies are not limited to Unitech and STel. Investigations carried out by The Pioneer show that many more companies were liberally funded by these banks even when the Central Bureau of Investigation (CBI) was probing criminal conspiracy in allotment of telecom licences to these firms.
Records available at the Registrar of Companies show that public sector banks provided loans worth more than Rs 26,000 crore to five companies involved in the 2G spectrum scandal.
Most of these loans were disbursed by these banks after the CVC and Central Bureau of Investigation had started investigating the spectrum scandal in mid-2009. The CAG has since then recommended cancellation of the “illegal licences” of all these five companies — Swan Telecom, Unitech, Loop, Datacom (Videocon) and STel.
According to the documents available with The Pioneer, Swan Telecom got Rs1,917 crore from the Punjab National Bank and the Bank of Baroda. Shockingly, Swan — currently known as Etisalat DB India — managed to get around Rs 2,000 crore in loans even before it was awarded the telecom licence. The company’s statements to the Registrar of Companies show that the SBI provided to it the maximum loan of Rs 747 crore, followed by Punjab National Bank (`500 crore), Bank of Baroda (Rs 400 crore), IDFC (Rs 200 crore) and IL&FS (Rs 70 crore).
In a clear indication that strings were pulled to manage these loans, records show that when the banks funded Swan between October 20 and October 24, 2007, the company had not even received the licence and spectrum.
The final allotment of spectrum and licence came three months after last instalment of the loan amount was disbursed.
Incidentally, these loans were granted within days of the DB Reality owners, Shahid Balwa and Vinod Goenka, taking control of Swan from Anil Ambani’s Reliance Telecom.
In the ongoing investigation of loan-for-bribery scam, the CBI is also probing into the loans provided to DB Reality. The agency has not yet linked this case with the huge loans to the spectrum-tainted companies by the public sector banks.
The Pioneer had on Sunday reported that Unitech got a loan of Rs 10,000 crore from various pubic sector banks, including the SBI which doled out more than Rs 8,000 crore.
The Unitech also made hypothecation agreement with SBI Cap Trustee Company, a Government of India company, for Rs 2,500 crore in November 2009. Another company, STel, got the loan from IDBI and its associates for Rs 1,538 crore.
Videocon, which got the licence in the name of Datacom, got a loan of more than Rs 8,000 crore, of which SBI provided Rs 1,000 crore and the SBI Cap Trustees Rs 7,150 crore.
Another scam-tainted company, Loop Telecom, got Rs 400 crore from SBI.
It is still a mystery how these public sector banks granted loans to these tainted companies when investigations were being conducted under the provisions of criminal conspiracy (Section 120 B of IPC) and Section 13 D of the Prevention of Corruption Act, besides several court cases going on for the past two years on the validity of these telecom licences.
The banks had provided huge loans to these companies based only on the telecom licence paper.
The Department of Telecom is a party to most of these loans and controversial officers AK Srivastava and PK Mittal, who are under the CBI radar, are the signatories to these high-volume deals. “Without the consent of political masters, these officials won’t become signatories to such high-volume loans,” said a top DoT official.
According to the CAG report, the telecom licences and spectrum allotted to Swan (15), Unitech (22), Datacom (21), Loop (21) and STel (six) are illegal and require immediate cancellation as per the Department of Telecom guidelines.
The Pioneer, November 28, 2010
Ignoring risk, banks funded 2G scam
With CVC case already registered and CBI probe on, these banks lent over Rs 11,500 cr to 2G-scam tainted companies
In the midst of the loan-for-bribery scam, the role of major public sector banks in providing finance to two 2G spectrum scam-linked real estate companies has now come to the fore. The banks provided loans, worth over Rs 11,500 crore, to Unitech and STel by completely ignoring the risk factors — given that the Central Vigilance Commission (CVC) had already registered a case in the 2G scam and the CBI had begun its probe.
According to the documents available with The Pioneer, the public sector banks allotted Rs 10,000 crore to Unitech and Rs 1,538 crore to STel, based just on the licence papers issued by the Department of Telecom (DoT). The licences to the two are among the 85 licences declared illegal by the Comptroller and Auditor General (CAG).
Shockingly, the loans were disbursed by the public sector banks after the CVC registered the case in the 2G spectrum scam in May 2009. It clearly showed that the public sector banks brazenly ignored the risk factors, which are the main basis of all loan disbursements.
Further, it is also a million dollar question as to why the public sector banks granted loans to these companies even after the CBI registered an FIR in connection with the 2G scam and searched the premises of these companies in October 2009.
Out of the Rs 10, 000-crore loan to the Unitech, the major portion was disbursed by the State Bank of India (SBI). The SBI made available a whopping Rs 8,050 crore to the Unitech during 2009-2010.
According to the records of Registrar of Companies, the other banks which lent to the Unitech are: Corporation Bank (Rs 500 crore), Allahabad Bank (Rs 500 crore), South Indian Bank (Rs 400 crore), Canara Bank (Rs120 crore), Oriental Bank (Rs 70 crore), Central Bank of India (Rs 70 crore), Punjab National Bank (Rs 120 crore), Standard Chartered Bank (Rs 100 crore) and Yes Bank (Rs 70 crore).
Unitech also made hypothecation agreement with SBI Cap Trustee Company, a Government of India entity for Rs 2,500 crore in November 2009. All these high volume banking deals were through tripartite agreements, where DoT is a party. DoT officials AK Srivastava and PK Mittal are signatories to these loan agreements. These two officers are on the CBI's radar in the spectrum scam.
According to the CAG report, the Unitech licences and spectrum allotment are totally illegal and calls for immediate cancellation according to the DoT guidelines.
On its part, STel got the Rs 1538-crore loan from IDBI and IDBI Trusteeship Services Limited, during the period between July to November 2009. The licences and spectrum allotted to STel were also found illegal by CAG.
“The entire loan granted to Unitech and STel by these banks was based on the DoT licence papers. No other security was obtained by the banks,” a top official of a bank said.
“Why were no major private sector banks ready to give them even a penny? The entire world knows about the spectrum scam. How can then the public sector banks disburse loans to the companies involved in the scam? The reasons are obvious, now that the loan-for-bribery scam is before all of us,” said the official.
The Pioneer has learned that the CBI is aware of these huge loan disbursements by the public sector banks to these dubious companies. But the probe agency has so far shown no inclination in looking into these angles.
[The writer is Special Correspondent of The Pioneer daily]