THE LAWFILE

Raja names PM, Chidambaram, says ‘I should be rewarded’

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Manmohan Singh, current prime minister of India.

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NEHA KHANNA in the NDTV

In the Supreme Court today, A Raja presented a spirited defence of the decisions that have landed him in Tihar Jail. One of the more controversial consequences of his decisions was that two Indian companies were able to sell the licences Mr Raja granted very cheaply to them at a massive profit to foreign investors. Mr Raja said in court that the Prime Minister and then Finance Minister P Chidambaram were aware of this. “The Finance Minister approved the sale in the presence of the PM. Let the Prime Minister deny it,” said Mr Raja in court today.

Mr Raja was arrested in November for selling mobile network licences and 2G spectrum while he was Telecom Minister in 2008 to companies that were ineligible. A spin-off from the alleged scam is that two of those companies – Unitech Wireless and DB Realty – then sold equity to foreign companies – Telenor in the case of Unitech and Etisalat in the case of DB Realty. The Indian companies made huge profits – they had been sold the licences at throwaway rates, but were able to sell them at huge mark-ups, leading to the conclusion that they had profited at the cost of the government.

In court today, he said, “Where is the crime? Where is the conspiracy? Telenor buying a stake in Unitech Wireless and Etisalat buying a stake in DB Realty was totally legal as per the corporate law. The Finance Minister approved the sale in the presence of the PM. Let the Prime Minister deny it.” And added, “What the telecom companies do after I give them spectrum is not my domain.”

Mr Raja has been questioned about why he decided against auctioning spectrum instead of awarding licences on a first-come-first-serve basis. “If the policy pursued by me was wrong, then all former Telecom Ministers since 1993 should also be jail with me,” said Mr Raja in a Delhi court this morning. “If I had auctioned spectrum, that would have been a crime, as it was a Union Cabinet decision,” he said.  The government and the PM have said that it’s not the policy but Mr Raja’s twisted implementation that saw companies like Unitech and DB Realty allegedly jumping to the head of the queue to get licences out of turn.

Like his party, the DMK, Mr Raja has stressed that he followed the policies introduced by his predecessors in the NDA government that was in power till 2004, when the UPA coalition was elected.

Mr Raja said, “As Telecom Minster Arun Shourie distributed 26 licences while Dayanidhi Maran distributed 25 and I (Raja) distributed 122 licences. Numbers make no difference, however, it is to be noted that none of them auctioned the spectrum. If they had done no wrong, why am I being questioned? Let them deny that they have not done what I did. I was just following the 2003 Cabinet decision that is not to auction 2G spectrum. If I am following the law, I am not liable to be prosecuted. In fact, I should be rewarded.”

CHIDAMBARAM ON SWAN, UNITECH

P Chidambaram, who was Finance Minister when India’s telecom scam played out in 2008, refused to comment on Mr Raja saying that he (Mr Raja) could not be held responsible for the foreign partners who were roped in by two Indian companies after he awarded them mobile network licenses while he was Telecom Minister. And that the Prime Minister and Mr Chidambaram were aware that Unitech Wireless and Swan Telecom tied up with foreign firms Telenor and Etisalat respectively after they received 2G licences.

But, answering questions, Mr Chidambaram told PTI that there was no sale of spectrum by Unitech and Swan Telecom to foreign partners; instead, they were issued fresh shares by promoters. And that this was discussed in the presence of Prime Minister Manmohan Singh(Read: Shares divested or diluted was the only issue discussed, says Chidambaram)

Mr Chidambaram also said that his ministry’s examination of the matter was limited to whether Swan Telecom and Unitech were divesting stake or diluting shares through fresh equity.

If an investor buys existing shares off the owner of a company, the money goes directly to the owner.  If fresh shares are issued for the investor, the money is pumped into the company. But in this case too, the owner of the company benefits because the value of the company shoots up, in turn increasing the value of the shares held by the owner.

The legality of the deals with Telenor and Etisalat has not been challenged by the CBI, which is investigating the scam.  Experts have referred to the transactions involving them to point out the extent of the telecom scam allegedly conducted by Mr Raja.  While he gave licenses to companies like Unitech Wireless and Swan at hefty bargains, they were able to attract enormous investments from foreign companies for the same licenses.  This is seen as an indication of how Mr Raja cost the government thousands of crores by under-valuing the licenses he awarded as Telecom Minister.

http://www.ndtv.com/article/india/raja-names-pm-chidambaram-says-i-should-be-rewarded-121878
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Written by THE LAWFILE

July 25, 2011 at 4:40 pm

One Response

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