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Aircel-Maxis deal : More skeletons tumble out of PC’s closet

Author: J Gopikrishnan
Publication: The Pioneer
Date: January 5, 2015
URL:      http://www.dailypioneer.com/todays-newspaper/more-skeletons-tumble-out-of-pcs-closet.html

After CBI, the CAG has also found gross irregularities in the FIPB approval granted by the Finance Ministry during the tenure of P Chidambaram to the controversial Aircel-Maxis deal.

 Documents provided by Malaysian authorities to the auditor reveal that the Maxis, a Malaysian company, had acquired 99.3 per cent share of Aircel while the Indian laws permitted only 74 per cent FDI in the telecom sector. This alone makes FIPB approval granted by the Finance Ministry during the UPA tenure in 2006 illegal.The CAG’s P&T accounts division has sought response from Finance and Telecom Ministries about the findings.

 In more troubles for the then Finance Minister P Chidambaram, who is already facing a CBI probe in the case, the apex auditor found that the Finance Ministry did not put the value of investment in the Aircel-Maxis deal in any of the documents. Chidambaram did not seek the approval of the Cabinet Committee on Economic Affairs (CCEA) for granting FIPB clearance to the deal though the proposal needed to be cleared by the CCEA as it was above Rs600 crore of the takeover limit. The Maxis deal turned out to be more than Rs4,000 crore.

 “As against the prescribed FDI ceiling of 74 per cent in the telecom sector, Maxis group of Malaysia violated the intent of the DoT guidelines of 2005 by effectively having 99.3 per cent financial stake in March 2006 and deriving corresponding 99.3 per cent economic returns from their investment in the Aircel Ltd. However, DoT did not do any due diligence to ascertain the facts to ensure that the prescribed eligibility criterion for telecom licences was complied with and enforced.

 “Further, though MoF (Ministry of Finance) letter dated March 20, 2006 conveying the approval of FIPB for foreign investment in Aircel Ltd was silent on the quantum of foreign investment of Maxis Group of Malaysia approved for investment in Aircel Ltd. DoT did not ascertain the quantum of approved investment from Ministry of Finance, though the Maxis Group invested Rs 3,514.45 crore in Aircel Limited on March 21, 2006 as against powers of Ministry of Finance to approve the investment up to Rs 600 crore only,” said CAG in its eight-page communication to Ministry of Finance and DoT. The report is expected to be tabled in Parliament on the forthcoming Budget Session. The Aircel-Maxis deal is a chapter on the report on the working of the DoT and licence allotments.

 In a detailed chart, the apex auditor has found Rs 4,769 crore foreign fund flow into the takeover of Aircel by Maxis. The data received from the Malaysian counterparts have helped the CAG unearth the hidden fund flow and the secret shareholding pattern in the controversial deal, where then Telecom Minister Dayanidhi Maran was chargesheeted by CBI along with Maxis owner T Ananda Krishnan.

 The CAG’s findings provide information on the hidden flow of foreign fund from Maxis to Indian firms Deccan Digital and Sindhya Securities, the shareholders in Aircel. The DoT was also mandated to check in every six months about the shareholding pattern of telecom operators, said the CAG.

As per the CBI’s chargesheet on Maran, Chidambaram had violated the norms in granting FIPB approval. The CBI has already questioned the former Finance Minister on December 6 for three hours and is expected to summon him again.
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