2G probe: Is CBI shielding Anil Ambani?

BY ARUN AGRAWAL

CBI, while defending itself against the allegation that it had not been honest in not charging Mr Anil Ambani, had justified its actions through a written submission. As author of the complaint annexed in the PIL before the Supreme Court, the allegation of the CBI being partisan is being leveled for the following reasons:

1. The facts referred to by CBI while concluding that neither Anil Ambani nor Tina Ambani were shareholders or were responsible for providing the funds to Swan Telecom on the day it applied for a license may be technically true because they were careful in complying with the legal requirement as holder of a license in Reliance Communication and therefore deliberately severed their links with Swan Telecom at the time it applied for a license. However, it is also a fact that all the companies – Swan, Tiger, Parrot etc –  were incorporated with ADAG addresses and had ADAG employees as their directors.

What was a giveaway of Swan Telecom being a  Ambani benami outfit was the fact that it did not apply for a pan India GSM license but applied for licenses in only those circles in which Reliance Communication did not have GSM licenses. This fact has been ignored by the CBI in its response to the Supreme Court and should have been sufficient to convince the CBI of a criminal conspiracy. In all, in the thirteen circles that Swan Telecom applied for GSM license, Reliance did not have a license and in the remainder circles it had. This coincidence defies probability and for some reason was not considered a significant factor by the CBI, apart from the fact that almost 90 percent of the investment – Rs 1100 crore – was made by Reliance Communication subsidiary, Reliance Telecom, in Swan Telecom and not by promoter companies of Swan Telecom.

2.The CBI states: As preparatory to achieve the eligibility….M/s Reliance Telecom Ltd purchased…. and 2.8 lac Non Convertible Redeemable Preference shares for Rs 28 crores. On 2/3/07 M/s Reliance Telecom Ltd further purchased…..96.4 lakh Non Convertible Redeemable Preferance Shares for Rs 964 crore of Swan Telecom Pvt Ltd.

Though the number and the amount of the preference shares has been correctly stated by the CBI before the Supreme Court, the fact that the preference shares were subscribed for a premium of Rs 999 and were of the face value of Re1 has been deliberately concealed. The CBI has also not disclosed that the preference shares were bearing a yield of only 8 percent on the face value of Re1 and hence the entire Rs 999 premium was a bogus premium. No investor would pay a paisa more than Re1 for the preference shares which gives a yield of 8 percent interest or only 0.8 paise per annum.

3. CBI’s contention that Anil Ambani was not responsible for the investments of Rs 994 crore from the subsidiary of Reliance Communication in Swan Telecom, and that Dilip Doshi was responsible for the investment to whom powers were delegated, and that the employees in their statements have said that that they acted on the instructions of Dilip Doshi, amounts to acceptance of the statement of the accused without the CBI applying its mind. One wonders what would be the consequence if CBI were to accept the statements of other accused in the 2G scam!

Rs 994 crore is not some small change, even for a Ambani, for the amount to be withdrawn without his knowledge and consent and approval. However, there is documentary proof of knowledge and consent which was annexed by the author in his complaint.

The consolidated balance sheet of the of  Reliance Communication for 07-08 shows the following entry as investment:
Nil                            8% Redeemable Preference Shares of         –                    992.00 (99,20,000)     Swan Telecom Private Limited of Re. 1 each

The fact of Rs 992 crore being invested for something that was worth Rs 99.2 lakh is in the balance sheet of Reliance Communication. Could this fact escape the notice of Anil Ambani? Does it not conclusively prove knowledge and approval and being a party to the transaction?

4. Was not the investment a fraud on the company? Were powers delegated to Mr Doshi to commit a fraud of Rs 1000 crore?

5. Further proof of the transaction being in the knowledge and having the approval of Mr Anil Ambani is from his signature on the balance sheet for 2006-2007 and 2007-2008. Three  other directors too have signed it.

Is the balance-sheet not proof that the investment were within the knowledge of Mr Ambani and the directors? In fact, the CBI should have questioned the entire board for the corporate fraud committed on the shareholders. Why did they spend company’s fund of Rs 994 crore for buying something that was worth Rs 99.4 lakh?

6. The only explanation is that the investment was permitted by the Chairman and the Board  because Swan Telecom was a proxy company of Anil Ambani/Reliance Communication, formed to apply for another GSM license in case the dual technology license was not granted to the parent company. In that case Anil Ambani is guilty of criminal conspiracy!

The fact that the two Ambani promoters were authorized signatories for Swan Telecom and Tiger Trustee earlier, is significant for their links to the companies. The fact that they severed their connection at a later date to ensure that they were in compliance with the law at the time of applying for the license is not so significant in light of the fact that almost 90 percent of the investment was made in Swan Telecom by Ambani controlled company.

7. CBI’s averment on page six in response to point no 7 and 8 states “Being majority …However, before any benefit was made to Swan Telecom Pvt Ltd on account of grant of license, it was taken over by DB group. Therefore, DB group and not Reliance ADA group has benefited by issue of UAS license to M/s Swan Telecom Pvt Ltd….”

While it is true that the DB group did benefit from the UAS license but it was the dubious transfer of Swan Telecom by ADAG group that led them to benefit. And the dubious transfer of Swan Telecom was the result of fulfilling the pre-condition of granting Reliance Communication a GSM license.

8. The CBI has deliberately not revealed that the license was granted to Reliance Communication on 18/10/2007. The notification for dual technology license was issued the next day. That in itself was a criminal conspiracy. Swan Telecom was transferred to DB group also on 18/10/07, by expanding the equity of the holding company Tiger Trustee from 1 lakh to 5 crore.

It appears that the significance of the date 18/10/07 has not dawned on the CBI.

It was a barter arrangement of two illegal acts – one to benefit Anil Ambani (grant of license to Reliance Communication without any notification on dual technology license) and the other to benefit the nominee – the DB group – of the decision makers by the transfer of Swan Telecom which was pregnant with the pending application of GSM license.

Once the license was allotted to RCOM, the allotment of another license to their benami nominees in Swan Telecom had become redundant. If the application of Swan Telecom was a genuine one then it would not have been sold or given away to a third party. The very fact that it was sold shows that there was a quid pro quo and that Swan Telecom was the bribe paid to the person who facilitated the license for Reliance Communication.

9. The question for the CBI to ask and answer is this: Is it not a fact that on 18/10/2007, Rs 994 crore of money of Reliance Communication was lying in the books of Swan Telecom with a face value of Rs 99.4 lakh?

Swan Telecom was transferred to the DB group by expanding the capital of the holding company, Tiger Trustee, from Rs 1 lakh to Rs 5 crore on 18/10/07. Who in his wildest act of irrationality will gift away Rs 993 crore (Rs 994 crore – Rs 99.4 lakh) by allowing the transfer of Swan Telecom for no consideration? The fact of the matter is that it was a criminal conspiracy between Anil Ambani, decision makers at the Ministry and DB group, for mutual benefit, in which it was agreed that the license would be allotted to Swan Telecom and that the premium money of Rs 993 crore would be refunded at a later date.

10. The manner in which Swan Telecom was sold, the date on which it was sold, the considerations for which it was sold and the assets that were on the books of Swan Telecom at the time of the sale, clearly establish that it was not a genuine sale but a gift to the future owner to make massive money out of the grant of the impending 2G license.

11. Point no. 9 regarding Reliance being given GSM spectrum approval for 20 circles at 2001 prices even before dual-tech policy was made public on 19/10/2007 has deliberately not been answered by the CBI.

12. However, CBI has stated that it is investigating  into the sale of shares of  Swan at Rs 15  by Reliance Communication to Delphi Investment, compared to the Rs 285 paid by Etisalat. It ignores the fact that the first sale was made before the LOI/license was granted on 10/1/10  and the second sale to Etisalat was made after the license/LOI was granted. The 19 times higher price was justified though the persons behind the second sale need to be probed. The premium of Rs 275 was the consequence of the underselling of the license for Rs 1650 crore. It is incidental that the investigation involves foreign trips!

13. What is surprising is while the CBI is chasing the trail of a genuine premium (27.5 times on face value) paid for the shares after the issue of license to Swan, it does not find it either odd or worth investigating the unwarranted and exaggerated premium of 999 times paid on the investment of Re1 preference share to Reliance Communication  (subsidiary company Reliance Telecom). Who was the person who bought the preference shares of Re1 for Rs 1000? Also, when and why did he do it? The amount involved in the sale of preference shares is Rs 994 crore.

14. As for the explanation given by CBI regarding the testimony of various accused officials of the company, involved in the deal, saying that they acted on the instruction of Doshi, it appears that the CBI is unaware that very often the driver takes the blame for the accident caused by the master or his juvenile son. Suitable compensation is paid by the owner.

15. Questions relating to motive and beneficiary has been totally ignored by the CBI. The arrested employees were not the beneficiaries, had no motives, did not invest their own money while Mr Ambani did.

16. CBI has been very unfair in arresting the employees of Reliance and exposed itself to accusation of being partisan in doing so.

17. Swan Telecom was by, for, and of the Ambanis. It was plan B, the alternative in case the dual technology policy did not result in a GSM license. The fact that virgin license were called for on 24/9/07 and dual technology policy was announced on 19/10/07 only proves that point. Anil Ambani had two licenses in contention and when one materialized he did not allow the other to lapse but chose to allow it to be encashed – as a bribe. The premium amount paid by Etisalat for the shares of Swan Telecom is proof of the encashing the market value of the license.

The chain of events is complete and is unbroken. It is worthwhile reminding the CBI of the concluding part of the author’s complaint:

As for the mystery as to who owns Swan Telecom, which even the Ministry of Company Affairs is not able to solve, the answer is: it is the company/person which bought Rs 992 crore worth of Re1, 8 percent preference shares invested by Reliance Communication in Swan Telecom by paying a hefty premium of Rs 999 which was overvalued by 99900 percent. The company which bought the investment of Reliance Communication at the fantastic overvalued price is reportedly registered in Mauritius.

However, the solution to the mystery is not relevant to prove the direct involvement of Mr Anil Ambani as the deal for the sale of preference share did go through at a  premium of Rs 999 and Reliance did get back the Rs 992 crore.

The above facts show that CBI has been unprofessional in its investigations and by giving Anil Ambani a clean chit inspite of overwhelming evidence against him has reinforced the belief that some people are too big for the law to hold them accountable. CBI has been unfair in making scapegoats out of the employees of the company by arresting them and opposing their bail and would do well to undo the wrong.

The fact that the CBI has chosen to rely on the oral evidence of the accused – while giving a clean chit to Ambani – and ignored the documentary evidence totally suggests that it is either incompetent, partisan or corrupt. Or all three?

(Arun Agrawal is the author of the book Reliance: The Real Natwar. The opinions expressed by the author and those providing comments are theirs alone, and do not reflect the opinions of Canary Trap)