Complaint Cvc Teleco3_20101115

8/8/2019 Complaint Cvc Teleco3_20101115

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To

Chief Vigilance Commissioner A K Agrawal ( 09845097444)

New Delhi E 13/2 Vijaykiran Apartment32 Victoria Road

Bangalore 560047

13/05/09

Complaint to CVC on telecom scam resulting in a loss of

around of Rs 50,000 crores to the exchequer.

The complainant is the author of the book Reliance the Real Natwar and has

impeccable credentials in exposing financial scams with documentary evidence.

This complaint is being filed against the Minister and the government officials in

the Ministry of telecommunication and who were involved in the decision of giving

telecom license to Reliance Communication on 18/10/07 and to other companies on

10/1/08 under the first cum first serve policy. The licenses were given at a price that was

far below the market price and the booty of the difference was shared. Anil Ambani who

benefited from dictating the policy decision along with the real estate operators who were

given LOI are co conspirators in the offence.

The complaint desires that his identity be kept confidential and his concern is the

public interest in recovering the amount involved in the corruption.

The informant is aware that the Vigilance Commission is seized of the matter and has

sought repeated explanation from the concerned Ministries. However the conclusion of

the complainant based on documentary evidence will convince the Commission that there

is no other conclusion other than that the allotment of licenses were the outcome of

corrupt deals..

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 992 crore worth of Re1/- , 8% preference shares invested by Reliance

Communication in Swan Telecom by paying a hefty premium of Rs999, which was

overvalued by 99900%, is the actual owner of Swan Telecom. The company which

bought the investment of Reliance Communication at the fantastic overvalued price

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is reportedly registered in Mauritius and that cannot be unraveled, partly because

of the law relating to tax haven, and partly because of the pathetic track record of

cover up by the investigative authority, the Enforcement Directorate, on matters

relating to Reliance.

The documents of the scam are enclosed as various annexures. The facts can be

verified from the balance sheet of Reliance Communications, the electronic filings of

Swan Telecom Pvt Ltd and Tiger Trustee Pvt Ltd available on the web site of Department

of Company Affairs and the web site of DOT. ( Department of Telecommunication).

The ADAG group applied for two GSM licenses , one in the name of Reliance

Communication in 2006 and another in the name of Swan Telecom on 2/3/07. The

evidence of Swan Telecom being owned by the ADAG group is proved by the

Registration of the company, change of name, address of the company and the nominee

directors on the Board ( see Annexure A), the fact that GSM licenses were applied for in

circles where Reliance Communication did not have GSM license ( refer DOT website

for LOI issued for various circles ), and the investment that were made by Reliance

Communication ( Annexure B) and Tiger Trustee ( see Annexure C ) in Swan Telecom.

The fact of Tiger Trustee being a ADAG company is also proved by documents placed at

Annexure D. Of particular interest is the fact that Reliance Communication ( through its

subsidiary ) subscribed to preference shares of Re 1/-, on which 8% interest was to be

paid ( with no other benefit like dividend or bonus) at a unheard premium of Rs999

(Annexure E ). Preference shares are like fixed deposit which in this case had a fixed

return of 8%. The investment in the preference shares at a premium does not make

economic or commercial sense because why would any person pay Rs1000/- for

something valued at Re1/-. The amount invested by Reliance Telecom in the 8%

preference shares of Swan Telecom Pvt Ltd was a staggering 992 crores. While 90% of

the money was provided by Reliance Communication in Swan Telecom , 90% of the

equity was owned by Ambanis private company- Tiger Trustee. The fact of Tiger

Trustee being a ADAG company is proven by the nominee directors who were

employees of the group and the fact that it held the controlling interest in Swan Telecom,

in which Reliance Communication had invested over 1000 crores by way of preference

and ordinary shares.

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At the material time when the two licenses were applied for the government

neither invited application for fresh licenses nor was there a policy to issue any fresh

licenses.

Around September 2007, Anil Ambani and the decision makers in the DOT

Ministry came up with the ingenious plan of allotting fresh licenses at a huge discount to

the market price, under the first come first serve policy, so that both the licenses of

ADAG group could be granted licenses on a priority basis and the booty shared. The deal

was give one get one and it was set in motion by the government officials and the

ADAG group on 24/9/07 and completed on 10/1/08.

As the ADAG group could not get two licenses, one license, that of Swan

Telecom was traded , in all probability as a bribe, for obtaining the license and priority

allotment of GSM license and spectrum to Reliance Communication. While the bribe

would not cost much to the bribe giver, the receiver of the bribe by allotting a license to

Swan Telecom at a low price could increase the value of the company Rs10,000 crores.

As that is exactly what happened, it is the decision makers which knowingly overlooked

the change of ownership while giving Reliance Communication and Swan Telecom

license and allotting spectrum ahead of others that have to be the prime suspects.

The trading of Swan Telecom, by transfer of ownership of the holding company

owning 90% of the shares - Tiger Trustee- took place on the very day that the other

license application of the ADAG group -Reliance Communication- was given the license.

( See Annexure F). The fact that the Swan telecom with an asset of Rs1100 crores in paid

up capital was sold for a mere Rs4.99 crores ( see Annexure F and G) on the very day the

license was granted to Reliance Communication -18/10/07- establishes that the sale was a

bribe for giving the license and the consideration of Rs 4.99 crore was a token money

consideration to make the transaction look genuine. The fact that only 4.99 crores were

paid for a company having Rs1100 crores of capital and the value of which would

increase to 10,000 crores ( The valuation for which 45% was allotted to Etisalat) after the

license was granted is sufficient to establish bribe.

The front owners of Swan Telecom Goenka and Bhalwa- to whom the

company was transferred through the transfer of ownership of Tiger Trustee and also by

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being given control of Swan Telecom on 18/10/07, were nominees of the alleged corrupt

decision makers

The application of Swan telecom should have been rejected as both control and

ownership changed hands on 1/10/07 and 18/10/07 respectively after the cut off date for

applying -25/9/07- but was nevertheless treated as a valid one by the Ministry while

giving the license on 10/1/08, which further establishes that they were a party to the

bribe.

The documentary evidence clearly establish that the deal was a corrupt one in

which largesse of thousands of crores were given, is sufficient to file a FIR under the

PCA even after the deletion of section 13 (1) (a) (d)(iii) and the guilty charge-sheeted as

the offence has been committed under 13 (1) (a) and 13 (1) (a) (d)(ii).

In the case of Swan Telecom, the following facts are established from the filings

made by the concerned company and its holding company, Tiger Trustee :

The management of both the holding company and the company that it controlled,

that is Tiger Trustee Pvt Ltd and Swan Telecom Pvt Ltd, changes on the day DOT

notified the cut off date for issuing fresh telecom license-1/10/07. This was a

result of quid pro quo arrangement.

The ownership of the holding company which owned Swan Telecom Pvt Ltd-Tiger Trustee Pvt Ltd- changes on the day DOT doled out a GSM license to

Reliance Communication- 18/10/07.

Anil Ambani voluntarily gave up ownership of the holding company- Tiger

Trustee Pvt Ltd- which owned 90% of the company which had applied for the

license and was about to be allotted a telecom license- Swan Telecom Pvt Ltd

by reducing his ownership from 100% to a mere 0.2%.

Anil Ambani gives up ownership of Tiger Trustee Pvt Ltd for a meagre

investment of 4.99 crores, to proxies with whom he had struck the deal, when the

capital and reserve of the company it owned Swan Telecom Pvt. Ltd was over

1100 crores. The fact that both these events happened on 18/10/07 when Reliance

Communication was given a license shows that there was a quid pro

arrangement..

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The fact that both the management and the ownership of Swan Telecom had

changed and the change took place on 18/10/07 made Swan Telecom ineligible

for being considered for a license as the last date for application was 1/10/09. The

application became a new application on 18/10/07 as both the management and

the ownership changed by that day. The DOT has wrongly stated in their affidavit

before the Delhi High Court that the management and the ownership of Swan

Telecom had remained intact. This is not true according to the filings made with

the Registrar of Companies.

Reliance Communication ( through its subsidiary ) subscribed to preference

shares of Re 1/-, on which 8% interest was to be paid ( with no other benefit like

dividend or bonus) at a unheard premium of Rs999. Preference shares are like

fixed deposit which in this case had a fixed return of 8%.The preference shares

were overvalued by 999 times or 99900%. The amount invested by Reliance

Telecom in the 8% preference shares of Swan Telecom Pvt Ltd was a staggering

992 crores. This investment was made sometimes in on 23/03/07 at the time Swan

Telecom applied for the license. The application for the license was for the circles

in which Reliance Communication did not have GSM license. The investment

made by Reliance Communication, the persons on the Board of Swan Telecom

and the circles for which the license was applied for clearly establish that thelicense was for and behalf of Reliance Communication and its owner Anil

Ambani. ( refer ROC filings of the companies involved).

The first cum first serve policy was in violation of the judgment of the Delhi

Court and yet it was the policy adopted in handing over licenses to Reliance

Communication on 18/10/07 and to various other new applicants on 10/1/08. The

first come first procedure of allotmentwas the only manner in which massive

largesse could be given to the chosen few who had paid the quid pro quo.

As the last date of accepting application was announced on 24/09/07,

application prior to that date could not be given priority nor could the

application submitted till 25/9/07, and the application submitted till the last

day -1/08/07, could be treated as invalid on grounds of first cum first serve

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method of selection. One can only speculate the chaos that would ensue if the

same principle of selection was applied elsewhere.

.Though the cut of date for fresh application was 1/10/07 and the same was

announced on 24/9/07, only application that were submitted till 25/07/07 were

considered eligible for the purpose of issuing LOI- refer press release dated

10/108. The fact that most of the applicant did not have the prescribed net worth

( equity plus reserves) but had taken debt and were therefore ineligible for the

license further proves that the granting of the license was tainted with corruption.

It is not surprising that most of the successful applicants were builders, a trade

traditionally known for dealing in black money while purchasing land and

selling built up space only confirms the obvious that the LOI were issued for

monetary consideration..

. When the time period for submitting an application is only a week, and the grant

of license depends on first come first basis and massive formalities have to be

complied with before making an application, then the leak leading to early

application becomes the deciding factor in concluding corrupt deals with

certainty.

The two application of ADAG could only be placed ahead of all other application

by applying the first cum first serve and the procedure was adopted for illegalgratification.

The licenses were given at historical cost of Rs 1650 crores for all the circles

while the same were valued in the market at Rs 10,000 crores.

Te following illegal means have been adopted in obtaining for themselves and other

persons who were granted license for pecuniary advantage:

Applying the first cum first serve method for allotment which was declared illegal by

Delhi High Court to favour the select few, granting the license at a price far below the

market price and causing loss of Rs 50,000 crores, leaking the cut off date resulting in

most of the new players applying on the first or the second day of the announcement

24/09/07- ignoring the fact that most of the applicants did not have the required net worth

while giving them the license, ignoring the fact that Reliance had traded the ownership

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and control of Swan Telecom after the last day for application, filing a false affidavit in

Delhi high Court that the ownership and control of Swan Telecom was intact from the

time they applied-2/3/07- for a license, announcing on 10/1/08 that the license would be

given on first cum first serve basis to those who have applied till 25/09/07, and granting

the license on the same day so that the same could not be challenged in Court are all

evidence of wrongdoing by the decision makers for corrupt ends.

Other evidences relate to Anil Ambanis letter to PMO lobbying for allotment of

license to new players at historical cost after Reliance Communication was allotted the

license on 18/10/07 ( to benefit Swan Telecom) , Reliance Communication subscribing to

preference shares of Re1 at Rs1000 and investing 992 crores, change in control of Swan

Telecom and Tiger trustee on 1/10/07 when the cut off date for new license was

announced by DOT, change in ownership of Swan Telecom and thereby of Swan

Telecom on 18/10/07 when Reliance Communication was granted GSM license, the

giving up of control of Tiger trustee for a mere 4.99 crores when it controlled 1100 crores

( equity plus reserves ) in Swan Telecom, and finally the sale of preference shares by

Reliance Communication held in Swan Telecom. Who bought 992 crores of Re1/- 8%

preference shares at a over valued premium of 99900%? That is the million dollar

question to the billion dollar scam.

Relief prayed for:

1. All the LOI issued on 10/1/08 should be cancelled.

2. The LOI should be auctioned

3. Reliance Communication should be made to pay the highest price fetched at the

auction for the license allotted to it on 18/10/07.

4. All the conspirators should be arrested and taken into police custody for

questioning as is done with ordinary criminals.

Other Annexures: Swan Application dated 2/3/07, cut off date being 1/10/07 announced

on 24/7/07 by DOT, Press release dated 10/1/08 that application upto 25/7/07 will be

given license on first cum first serve process. Balance sheet of R Communication for

March 2008 showing sale of 992 crore preference shares.

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A K Agrawal

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Documents

Complaint Cvc Teleco3_20101115