There is a Rs. 100 crore trail that is worrying India’s sixth richest man. Ashish Khetan exposes how this links Anil Ambani, a Delhi realtor, Shahid Balwa and an influential Maharashtra politician
THE 2G spectrum scam is getting murkier by the day. A well-known Maharashtra politician and a Delhi- based real estate group have now come under the probe agencies’ scanner for their suspected role in the scam.
This new revelation takes the probe to the doorsteps of political parties other than the Dravida Munnetra Kazhagam (DMK). Over the past week, the Central Bureau of Investigation (CBI) has interrogated at length senior officials of the Anil Dhirubhai Ambani Group (ADAG) and Amit Sarin, the Delhi-based billionaire and real estate tycoon, asking them to explain a string of suspicious transactions, particularly one where Rs. 100 crore was transferred to Mumbai billionaire Shahid Balwa a day after he applied for a telecom licence.
The CBI has unearthed a money trail of Rs. 100 crore that starts from the Anil Dhirubhai Ambani Group, goes through the Delhi-based real estate company Anant Raj Group and Balwa, and finally ends with a company associated with the influential Maharashtra politician.
This lends credence to the belief that 37-year-old Balwa was not the only beneficiary from the windfall gains made by Swan Telecom — one of the nine new companies to which former telecom minister A Raja had allocated precious 2G spectrum at dirt-cheap rates.
It is now alleged that Reliance Telecom and a stalwart in Maharashtra politics, who is often touted as a prime ministerial candidate by his supporters, have also made stupendous illegal gains from Swan Telecom.
Delhi-based realtor Sarin is ready to spill the beans on ADAG’s dubious transactions
This startling disclosure has come within a week of the Supreme Court instructing the CBI to go after the real beneficiaries of the scam “even if they are millionaires or feature in the Forbes rich list, and find out their role in the conspiracy”.
The CBI has already uncovered a fund transfer of 209.25 crore from Balwa to Kalaignar TV — a Chennai-based media house owned by DMK chief M Karunanidhi’s family — which the agency now claims was a kickback paid by Balwa to the DMK.
In addition, the CBI has sent a letter rogatory to the government of Mauritius asking for details of a dubious company to which Reliance Telecom had sold the 9.81 percent stake it held in Swan Telecom in December 2008, two weeks after Raja gave ADAG the dual technology licence.
According to CBI sources, Reliance Telecom had sold its stake to Mauritius-based Delphi Investments for Rs. 35 crore, which was a pittance considering Balwa sold his 44.7 percent stake to Etisalat for a staggering Rs. 3,218 crore. The agency suspects the undervalued Delphi deal was a pay-off.
The two deals — with Sarin and Delphi Investments — have together put the ADA Group in a tight spot. Besides, the CBI is also looking into over a dozen banking transactions between different ADAG companies on 18 October 2007 — the day Reliance Telecom was granted 2G spectrum under the dual technology policy. ADAG chairman Anil Ambani even presented himself before the CBI to “clarify ongoing issues”, according to a statement from Reliance Communications.
TEHELKA sent a detailed questionnaire to ADAG asking specifically, among other things, about its deal with Delphi and the Rs. 100 crore transaction with the Anant Raj Group. ADAG chose to not respond to these specific queries.
However, Sarin, director and CEO of the Anant Raj Group, while speaking to this reporter, admitted to having received 100 crore from ADAG and having transferred it to Sidhartha Consultancy — a company originally owned by ADAG and whose ownership was transferred to Balwa on 25 February 2007.
Sarin had promised to meet this reporter again after checking his books so he could explain the transactions. But he did not respond to repeated SMSes seeking a formal response in the matter. The CBI in the meantime interrogated both Sarin and ADAG Company Secretary Hari Nair.
The CAG report raised doubts about Reliance Telecom’s intentions and its control of Swan
The Rs.100 crore transaction between ADAG and the Anant Raj Group happened on 2 March 2007 — the same day that Balwa applied for a telecom licence. Both the timing and the nature of the transaction are extremely suspicious, say CBI sources.
This is only one among hundreds of complex banking transactions that lie at the core of the 2G scam, which both the CBI and the Enforcement Directorate have been trying to crack to conclusively establish the beneficiaries of the scam, including the kickbacks that were allegedly paid to Raja and senior officials in the Department of Telecommunications (DoT).
The dizzying multitude of banking transactions stretches across dozens of banks in different cities of India and over half-a-dozen offshore tax havens and involve not just Swan Telecom but also other big companies, both domestic and international. Like the Unitech Group, ADAG, Datacom Solutions (owned by the Videocon Group), Loop Telecom (owned by the Essar Group), the Tata Group and Dubaibased Etisalat Telecom.
In January 2008, Raja gave away 122 unified access service (UAS) licences and 35 dual technology licences, and with it the precious 2G spectrum at 2001 prices, thus causing a loss of Rs.1,76,645 crore to the national exchequer, according to the Comptroller and Auditor General.
The 122 new UAS licences went to nine telecom companies including Swan and Unitech, while a majority of the dual technology licences went to Tata Teleservices and Reliance Telecom.
The bid to pump in massive funds into Swan to meet the DoT criterion has exposed ADAG
ADAG transferred 100 crore to Balwa through Anant Raj Agencies for no apparent reason
On 3 March 2007, an ADAG company named Sonata Investments transferred 100 crore to Oriental Buildtech, which is owned and controlled by the Anant Raj Group.
Within a few hours, another Anant Raj Group company — Anant Raj Agencies — transferred 100 crore to Sidhartha Consultancy, which was at the time owned by the Balwa-led DBRealty Group. So, in effect, Rs. 100 crore that originated from an ADAG company landed with Balwa.
What is even more intriguing is that ADAG owned Sidhartha Consultancy (earlier called Giraffe Consultancy), the company in which the money was parked till 24 February 2007. On 25 February, the company was taken over by Balwa’s DB Group. And just days later, on 2 March, Balwa applied for the 2G licence.
CBI sleuths believe that the last-minute change in the shareholding pattern of Sidhartha Consultancy and the massive transaction that was carried out on the day Balwa was applying for the licence, suggest how the conspiracy was scripted and an agreement allegedly reached between ADAG, Balwa and Raja. The CBI believes that the Balwa Group in turn passed this money on to a company associated with a senior Maharashtra politician.
The big picture that emerges is that Balwa was not the only player behind Swan Telecom, as ADAG has been insisting. It appears that, seizing upon the opportunity to make a killing in the ongoing 2G spectrum loot, many influential politicians and corporate houses made money through proxies.
Swan is just one of the many companies that allegedly acted as a proxy for big corporate houses
On 11 January, Ramesh Rathod, Telugu Desam Party MP from Adilabad, wrote to Prime Minister Manmohan Singh furnishing documentary evidence that the Tata Group funded the entire amount of Rs.1,700 crore paid by the Unitech group for acquiring the UAS licence.
The agencies are also trying to lift the veil from companies like Datacom (which was set up by HFCL Group along with Videocon) and Loop Telecom (backed by Essar) and find out who the real beneficiaries were.
Swan, Tiger, Parrot, Zebra, Penguin, Giraffe: A corporate menagerie
The CBI believes that the conspiracy behind the Swan Telecom was hatched in early 2006 when ADAG created a web of newly formed companies named after animals.
The following six companies were incorporated between March and July 2006:
1. Swan Infonet (later renamed Parrot Contelesultants); incorporated on 17 March 2006
2. Penguin International Ventures Pvt Ltd (later renamed Reliance Utility Engineers) on 26 June 2006
3. Swan Advisory Services Pvt Ltd (later renamed Zebra Consultants Pvt Ltd) on 21 March 2006
4. Giraffe Consultancy Pvt Ltd (later renamed Sidhartha Consultancy) on 27 June 2006
5. Tiger Traders on 20 March 2006, and
6. Swan Capital Pvt Ltd (later renamed as Swan Telecom) on 13 July 2006
All these companies were incorporated with an initial share capital of 1 lakh each. Even these few lakhs allegedly came from the bank accounts of top ADAG officials. Besides, either an ADAG company or directors of ADAG owned equity in these companies. The addresses provided in the incorporation documents were those of the registered office of ADAG.
These companies had no substantial business activity except for changing their shareholding pattern frequently till January 2007 (see graphic).
Of these six companies, Parrot, Zebra and Tiger had inter-collapsible shareholding. That is, Parrot and Tiger owned Zebra, Zebra and Tiger owned Parrot, and Parrot and Zebra owned Tiger.
The shareholding pattern of Swan Capital Pvt Ltd, which was owned by ADAG companies, was suddenly changed on 20 January 2007, with Tiger Traders taking over all of Swan Capital’s 10,000 shares. The January-February 2007 period was extremely crucial as Swan Capital was about to apply for the much-coveted telecom licence.
Under DoT rules, an existing telecom player could not have more than 10 percent equity in a new telecom company. Hence, Swan and its holding companies were gradually transferred to Balwa’s DB Realty Group so he could successfully procure the UAS licence in his name.
But there was a problem. To be eligible, Swan Capital (later Swan Telecom) had to ratchet up the required paid-up equity and net worth in conformity with DoT guidelines. When Swan Capital and its holding companies were transferred to Balwa, they had paid-up equity of Rs. 1 lakh each.
ADAG finances Swan Telecom to the tune of over Rs. 1,000 crore
In a bid to pump in massive funds into Swan (which was required to meet the application criterion), Ambani left behind the money trail that connects him to Balwa and the alleged illegal gains he made.
As explained above, ADAG transferred Swan Capital/Telecom to Tiger Traders on 20 January 2007. Two days later, on 22 January, the share capital of Swan was increased from Rs. 1 lakh to Rs. 4 crore. But even this was not sufficient.
Swan wanted to apply for licences across 13 circles (the DoT had divided the country into 22 telecom circles). To become eligible, Swan needed a paid-up equity of Rs. 103 crore and a net worth of Rs. 1,030 crore (these figures were calculated as per DoT guidelines). Additionally, Swan needed to amend its memorandum and articles of association stating telecom as its core business.
On 15 February, Swan Capital was changed to Swan Telecom. And on 1 March, the company’s paid-up equity was increased toRs. 110 crore, divided into 10.9 crore equity shares of Rs. 10 each and 99.2 lakh preference shares of Rs. 1 each.
The 10.9 crore shares of Rs. 10 each were divided between Tiger Traders and Reliance Telecom, with the former taking 90.1 percent of the shares and Reliance Telecom taking 9.9 percent, in conformity with the DoT guideline of an existing telesultants com player not holding more than 10 percent equity in a new telecom company.
So now Swan’s paid-up equity was Rs. 109 crore, a little more than the required Rs. 103 crore. But the net worth was still to be taken up to Rs. 1,030 crore. To do that, Reliance Telecom bought the 99.2 lakh preference shares of Rs. 1 at Rs. 1,000 each, paying a boggling premium of Rs. 999 per preference share, with each share overvalued by 99,900 percent.
All this was done on 1 March and a day later, on 2 March, Swan Telecom moved its application before the DoT for the telecom licence. But in this last-minute scramble, ADAG left its fingerprints behind.
When Swan Telecom applied for the licence, on paper Tiger Traders was the majority stakeholder and Reliance Telecom a minor shareholder. And Tiger Traders in turn was owned by ADAG-owned Parrot and Zebra. It was only a month after the application that Balwa officially took over Tiger Traders.
On 25 February 2007, the DB Realty Group took over ADAG’s Giraffe Consultancy. On 26 March 2007, Giraffe was renamed Sidhartha Consultancy. And on 4 April 2007, Sidhartha Consultancy bought the stakes of Parrot and Zebra in Tiger Traders. Thus, Tiger Traders, the majority stake holder in Swan Telecom, finally came under Balwa’s control.
This bewildering web of cross shareholdings lies at the core of the 2G scam.
The CAG in its report tabled in Parliament in November 2010 had stated: “Total stake of RTL (Reliance Telecom) in Swan Telecom was of 1,002.79 crore as against equity holding of 98.22 crore by the majority shareholder Tiger Traders Private Ltd. This raises doubts about the intention of RTL and the control it would exercise in a new company incorporated barely few months ago. Hence the application of such company to enter the telecom sector goes against the intent and spirit behind the UAS guidelines.”
TEHELKA asked ADAG pointed questions on the specific issues of changing shareholding pattern and the staggering investment done by it in the shape of preference shares as explained above. But ADAG chose to give vague replies, avoiding giving details.
In a statement emailed to TEHELKA, ADAG stated: “Neither Reliance Telecom, nor RCOM, nor any Reliance ADAG individual, company or affiliate held even a single share in Swan Telecom Ltd., at the time of grant of the 2G licence to them in January 2008, or at any time thereafter.”
Further, it claimed that “Reliance Communications has not violated any of its licence conditions at any stage, on account of cross-holdings of 10 percent or above in any another licensee, and is in full compliance with all applicable DoT guidelines, rules and regulations.”
The CAG report had not minced words while calling Swan a front company of ADAG. It had said: “Swan Telecom did not meet the eligibility criteria on the date of application, its application should have been rejected by the DoT and the company should have been directed to apply afresh. Even if it was to be considered eligible on the basis of its old application, the date of priority based on FCFS (first come, first served) basis should have been revised from March 2007 to December 2007 in order to ensure fairness. Had it been so, the company would have been out of the race as the department processed only those applications which were received up to 25 September 2007.”
Reliance routes Rs. 100 crore to Sidhartha Consultancy
By 25 February, Sidhartha (erstwhile Giraffe Consultancy) was already taken over by Balwa’s DB Realty. The investigators are trying to crack the intent behind the dubious 100 crore that ADAG routed to Sidhartha Consultancy through Delhibased realtor Sarin. Around the same time, another 100 crore was transferred from DB Realty to a company associated with the Maharashtra politician. The CBI is now trying to connect the dots.
Sources told TEHELKA that Sarin is ready to sing. He has already provided the CBI email exchanges with ADAG officials. The CBI has grilled at least five senior ADAG officials over the past month, Company Secretary Hair Nair among them. Among other ADAG officials examined so far are Gautam Doshi and Madhu Kela.
Besides, senior executives from half-adozen other companies have also been interrogated. Chief among them are Vinod Goenka, chairman of Dynamix Balwa Group; Sanjay Chandra, managing director of Unitech; Sandeep Basu, Loop Mobile CEO; Arun Mandhana, S Tel’s chief financial officer, and Rupendra Kumar Sikka, its chief regulatory officer; Sanjay Ubale, Tata Realty and Infrastructure Ltd CEO, and its CFO Kishore Saletore.
The CBI is trying to crack a maze of complex shareholding patterns and hundreds of banking transactions to identify the kickbacks allegedly paid to Raja.
A month before Swan is granted the UAS licence, Reliance Telecom sells its 9.8 percent stake in Swan to a dubious Mauritius company
On 5 December 2007, Reliance Telecom sold its 9.8 percent stake to Mauritiusbased Delphi Investments for just Rs. 35 crore. It had paid a phenomenal 99,900 percent premium just a few months ago while buying preference shares in the company. When the company was all set to get 2G spectrum, the 9.8 percent paidup equity was sold for a song. The market valuation of the stake was around Rs. 800 crore. Investigators believe that the Ambani-Delphi deal was a payoff to Raja.
Ambani knew that Swan would get the precious licence as Raja had already made it clear to the prime minister he would go ahead with his first come first served policy in which all those who had applied for a licence till 25 September 2007 were eligible. Swan had applied on 2 March.
The CBI is now trying to unlock the mystery behind Delphi. In the second week of January this year, the CBI had sent a letter rogatory to Mauritius seeking the identity of the people who control Delphi. According to initial inputs available with the sleuths, Delphi is connected to bank accounts in Switzerland and a few other tax havens in Europe. The alibi peddled by ADAG officials is that they don’t know the real owners of Delphi because they dealt with merchant bankers.
Balwa and Vinod Goenka, his partner in the DB Group, made a stupendous profit of Rs. 3,217 crore when they sold their 44.7 percent stake to Dubai-based Etisalat. Intriguingly, Etisalat also routed its payment through Mauritius. The CBI has asked for the bank details of Etisalat Mauritius.
The point is: Will the CBI be able to join the dots and book all those who made illegal gains, disregarding the high positions in government they may hold? Can it break the vice-like grip that big corporates like ADAG have over the government?