PHILOSOPHER AND economic analyst Nassim Nicholas Taleb is famous for formulating the ‘black swan theory’: the disproportionate impact of a difficult-to-predict event. For the UPA 2 government, the telecom scandal may well provide evidence of Taleb’s thesis. A combination of CAG and judicial pronouncements, the turbulent politics of Tamil Nadu and the Congress’ smug belief that nothing could go wrong with its plans for 2014 have led to a first-class crisis. It has left the opposition smelling blood.
Yet, for the ruling coalition, ‘black swan’ has more connotations than the abstract. The case of Swan Telecom is at the core of the swindle. While many of the 122 companies that applied for 2G licences in former minister A Raja’s raj — and all of the 85 companies held ineligible by the CAG but still given licences — have questions to answer, few provide the perfect mix of political corruption and crony capitalism that Swan does.
According to the CAG, Swan Telecom was a front company for Reliance Telecom (part of the Anil Ambani group), which held 10 percent equity in Swan at the time it applied for licences. Who were the other shareholders, those presumably “fronting” for Reliance Telecom as per the CAG? The other 90 percent of Swan was owned by entities named Tiger, Parrot and Zebra!
Tiger Trustees was in turn 99.8 percent owned by Dynamix Balwas Infrastructure. Dynamix Balwas is a leading property developer in Mumbai and has in recent years won coveted urban redevelopment contracts from the Maharashtra government. It is half owned by the family behind Dynamix Dairy, a massive milk and milk products facility in Baramati.
Tiger Trustees had about 90 percent stake in Swan Telecom. The identity of those behind Parrot Consultants and Zebra Consultants — which between them owned 0.2 percent of Swan — is still a mystery. Who are these people? Was this the conduit for slush payments? Have shares from the promoter’s quota — sometimes chosen to be described as ‘sweat equity’, as India found out earlier this year — replaced straightforward bribes and suitcases?
For the past three years, there has been a growing buzz in New Delhi’s power circles about the joint venture between two junior allies of the Congress. Spearheaded by ambitious heiresses, these allies — operating through a matrix of proxy companies — have allegedly been winning contracts and otherwise benefiting from each other’s ministries. Is Swan part of this network? Is that why DMK MPs are going about saying other sections of the UPA are also involved?
THE SWAN sorority did not limit its operations to telecom. To some degree, to have the telecom (and other such) scandals exposed suits the Congress. It can find reason to dump the DMK just six months before the Tamil Nadu Assembly poll and attempt to evade anti-incumbency sentiment. Does the party have similar plans for other UPA allies? Perhaps it is being too clever by half. Why did it allow Swan to float? Why did it look the other way as the business consortium within the UPA resorted to smash-and-grab?
The Congress may believe this is not Bofors, that there is nothing to link its senior leadership — the prime minister and the Gandhi family — to acts of commission in the telecom, Commonwealth Games, Adarsh Housing Society or other swindles. This may be true. However, there is another template to consider. Other than the urea scandal — which came in the final months of his government (1991-96) — there was nothing to connect PV Narasimha Rao or his immediate family to any proven financial wrongdoing. Even so, the muck in individual ministries, the spectacle of a scandal a day (telecom, petrol pump, sugar, hawala, urban development) and the overall sense of amorality completely discredited the Congress. Will history repeat itself?