Aircel-Maxis Scam : All knew, Chidambaram didn’t

All knew, Chidambaram didn’t

J Gopikrishnan / Pioneer - OpED/ Feb 27, 2017

Former Finance Minister P Chidambaram was economical with the truth when he told the Central Bureau of Investigation (CBI) that he was not aware that Malaysian company Maxis’ investment in Aircel was above Rs 600 crore, when he approved the Foreign Investment Promotion Board’s (FIPB) recommendation on March 7, 2006. Chidambaram stated to this to the CBI when he was questioned on December 6, 2014. Certain senior Finance Ministry officials made similar statements to the probe agency.

This writer recently paid a visit to the Parliament library to check newspaper archives in a bid to understand what had been reported in the media during those days about Maxis’ takeover of Aircel. Every major newspaper in India had, on December 31, 2005, reported in a big way that Maxis was going to invest one billion dollars in Aircel. Some newspapers reported the exact value at $I.08 billion in headlines; some even converted the value in rupees (those days, a dollar was equivalent to Rs 45), saying that the foreign investment was Rs 4,700 crore. Business dailies splashed it on the front page and other newspapers reported prominently in their business section. They appeared on the same day after Maxis and Aircel conducted a joint Press conference in Mumbai on December 30, 2005, about the billion-dollar acquisition plan.

The photo montage of the main newspapers reports on December 31, 2005 is placed along with this article. Apart from Indian and Malaysian newspapers, international newspapers such as the Financial Times and the Wall Street Journal reported this deal in detail. An Internet search shows that television channels too widely reported the deal.

In January and February 2006 too, most newspapers were reporting regularly on the acquisition details and on the file movements at the FIPB. What was the basic illegality in the Aircel-Maxis scam? Those days, the FIPB could approve foreign investments up to Rs 600 crore. As per Rule (Finance Ministry Order dated February 18, 2003), the Finance Minister had to send the proposals above Rs 600 crore to the Cabinet Committee on Economic Affairs (CCEA). Then Finance Minister was the Chairman of CCEA too. The subsequent Maxis investment of Rs 675 crore in Maran family-run Sun TV group details had been sent by Chidambaram to the CCEA.

Why did Chidambaram did not send the proposal of Maxis’ investment in Aircel to the CCEA? Those days, Saudi Telecom had more than 25 per cent shares in Maxis. Saudi Telecom also has major shareholding in Pakistan Tele Communication Limited (PTCL) and our security agencies would have definitely objected Maxis’ entry in India, if the file reached the CCEA.

Newspapers had reported that Maxis was going to invest Rs 4,700 crore on December 31, 2005. But Maxis, in its application to the FIPB on January 25, 2006, stated only $800 million (Rs 3,600 crore) of investment in Aircel. Now, the  Comptroller and Auditor-General’s P&T Audit wing found that the actual money which had come to India was Rs 4,769 crore from Maxis. Where did the balance of Rs 1,200 crore disappear?

What is the CBI doing with these open-and-shut findings? The CBI was trying limit the case to former Telecom Minister Dayanidhi Maran, based on a doubtful complaint by Aircel promoter C Sivasankaran, who alleged that Maran arm-twisted him into selling Aircel to Maxis. The December 31, 2005, news reports in the media exposes that both Sivasankaran and the Maxis owners conducted Press conferences in Mumbai to announce the billion-dollar acquisition deal. This shows that everyone in the Finance and the Telecom Ministries was aware of the deal’s amount. The question then is: Why had the CBI believed in Sivasankaran’s theory of arm-twisting in April 2011. The Congress was enjoying the diminishing profile of alliance partner DMK, when A Raja and Kanimozhi were allegedly involved  in the 2G scam.

But the Aircel-Maxis scam took a different turn, when BJP leader Subramanian Swamy, in April 2012, came out with money trail of Rs 26 lakh to companies linked to Chidambaram’s son Karti, and blatant FIPB violations. Apart from the violation of not sending the file to CCEA, Maxis also lied to the Indian authorities. Those days, a maximum of 74 per cent was the limit of foreign investment in telecom companies. But after the illegal FIPB clearance, Maxis declared to the Malaysian Stock Exchange that it had acquired 99.3 per cent shares in Aircel by striking an alliance with a Chennai-based hospital group of companies. This shows that Sivasankaran was perhaps illegally offloading his entire shares to Maxis. It’s astonishing that the country’s premier probe agency believed his story of arm-twisting.

Another big fraud was the stark variation in the valuation of shares. 74 per cent of Aircel was valued at around Rs 3,600 crore and the rest 26 per cent was valued at a pittance of around Rs 30 crore! The CAG’s finding in 2015 of the actual money flow of Maxis of Rs 4,769 crore shows that around Rs 1,200 crore came to India was nothing but black money or kickbacks as part of the deal.

 In a nutshell, all, including Chidambaram, Maran, Sivasankaran and Maxis owner T Ananda Krishnan, were allegedly part and parcel of a dubious deal to mislead Government of India, violating provisions of the Prevention of Corruption Act and the Prevention of Money Laundering Act.   

After Chidambaram and son Karti’s names cropped up, the CBI went into silent mode, leading to Maran’s discharge from ‘arm-twisting’ charges, by the 2G court. While declaring Chidambaram’s ‘illegalities’ in the deal in the chargesheet in August 2014, the CBI never provided proof to the court.  The joint raid of the Enforcement Directorate (ED) and the Income Tax department unearthed two-lakh-dollar money flow from Maxis’ three subsidiary companies to Karti’s company, Chess Management Services Private Limited. The raid also exposed 21 secret foreign bank accounts of Karti Chidambaram and companies linked to him, and their huge assets, hotels, vineyards and farm houses in 14 countries. The question is: What has prevented our agencies to act on these stunning details of black money allegedly stashed by Chidambaram’s family? 

The Central Bureau of Investigation is now acting as a mute spectator in Subramanian Swamy’s case in the Supreme Court. The apex court’s main question to Swamy is: Was Chidambaram aware that the deal was above secret 600 crore when he illegally approved it in March 2006? Newspaper reports detailed it on December 31, 2005, and subsequent reports in January and February 2006 wrote of it. The entire world was aware of this billion-dollar deal. It cannot be believed that Chidambaram was unaware of of the fact that the amount exceeded the limit for approval at his end.  

(The writer is Special Correspondent, The Pioneer)