2G scam: PM smelled something fishy but stayed away, says Arun Shourie

Source: ET

Former telecom minister A Raja's statements in court has opened a new political battlefront, withBJP demanding the resignation of the Prime Minister and P Chidambaram, who was finance minister when the 2G spectrum allocation was made. The telecom minister during the NDA regime, Arun Shourie , has been tracking developments on the 2G trial. In an interview to ET , Shourie discusses what he believes the PM knew, going by the file notings, Raja's defence that he inherited the policy, and other related issues. Excerpts:

Are you inclined to believe Raja's statements that he did everything with FM's and PM's knowledge?

Raja was very clever. He wrote about 18 letters to the PM during the 2G episode. And in each letter, he implicated somebody. For instance in his letter on 7 November, 2008, he says, "kindly recall my meeting with you on 4/11/2008 along with the honourable Finance Minister in connection with3G spectrum auction and one time spectrum charges for 2G. During the discussion, you advised me to meet the press, to explain the policy and rules.

Accordingly, I addressed the issues in the press conference today and explained the related issues including the dilution of shares as explained by the Finance Minister, of Swan and Unitech." The same day he issues a press release, in which he repeats that this issue has been explained by the Finance Minister. "This matter has been discussed and clarified with the Finance Minister," the press release says, in which this portion is in bold!

Then the FM himself has said, yes, the PM asked me to examine this particular matter. He says I examined it, I said it is dilution of equity and it was consistent with policy and procedure. If that is the case, how is it that now, the Enforcement Directorate, which is under the same ministry, has slapped a 7100 crore penalty on Etisalat? For violation of FEMA!

If everything was done as per policy and procedure, then how? It now transpires, according to ED, that Etisalat was given permission to bring in money from UAE. But it, instead, brought in money from an unknown unit in Mauritius. Secondly, on the same day, Syed Salauddin, a close associate of Mr Karunanidhi, brought in 380 crore. He was allowed to bring it in as a domestic investor and he brought the money from UAE. He has also been slapped with a Fema notice. Both things happened in Swan on the same day.

So, is Raja on firm ground?

All these statements these lawyers like Kapil Sibal are making now, saying everything was in order and there was zero gain to the companies, are statements that will be used by these companies to defend themselves in notices. Kapil Sibal is not the lawyer for the PM, he is the lawyer for Raja and the companies.

It is not Raja who is dragging in the PM now. You go back to Sibal's first press conference on this matter. There he said Raja kept the FM and the PM informed at every turn. I had said at that time that this is the sentence that Raja will use. That is exactly what has happened. Now you wait and see. When the Telecom Minister says the companies made no gain, that will be their defence.

The PM had said in Parliament in February that the then FM and Raja had agreed on a formula and this was communicated to him. Raja says the equity dilution inSwan Telecom and Unitech was discussed and cleared with the FM before the PM. FM says the PM wanted to know if it was a case of dilution of equity or divestment. This shows that the matter that has caused the most outrage, that these two companies benefitted from enormous valuation for a license they paid the government very little for, was known to the PM and he did nothing about the policy that allowed these companies to do this.

All this is in the public domain. Priority lists have been changed, the basis of first-come-first-served had been changed, cut off date had been advanced and 500 applicants were reduced for favoured companies. It now turns out from the CBI chargesheet that the license applications of three companies were approved even before the policy was announced.

You mean to say rivals would not have brought it to the attention of TKA Nair (Principal Secretary to the PM) and others in the PMO? Do you mean to say the Intelligence Bureau and CBI and others would not have brought this to their attention? I cannot believe that. Because our system is so structured that the PM and his office gets to know about every sparrow that moves in the government. That I can testify from personal knowledge.

This was all in public domain...

The notings on the file indicate that the PM was quite alarmed at what was happening. These licenses were given on 10 January, 2008. On 11 January, the Principal Secretary notes that the PM desires to take into account the developments concerning the issue of licenses. This means perhaps that he wanted to have a meeting about it. The file is submitted back to the PMO on 15 January. Now see what the Principal Secretary notes.

"Prime Minister wants this informally shared with the department. He does not want a formal communication and wants PMO to be at arms length". Why would he give this instruction to his officers unless he knew that there is murky stuff going on and it is better to stay away. I think he had full knowledge and I think he had deep apprehension that something terrible has happened and his only concern was let's stay away from the filth. That is not what a PM is supposed to do.

You mean, he knew but shied away from taking any action?

This particular sentence, at arms length, very well describes Dr Manmohan Singh's attitude in regard to CWG, defence acquisitions and every other major decision. Weapons purchases are not happening because Mr Antony (Defence Minister) also wants to stay at arms length on every decision. I think this will be an apt title for a book on Dr Singh's tenure as PM - At Arm's Length.

Raja has also said that if the policy was wrong, all former telecom ministers must be jailed.

Raja says that he was following earlier policies but he flouted them. Take first-come-first-served (FCFS): He says I will FCFS. Then he disregards pending applications. If you were following the policy, you should have dealt with them first. Then he says I will have this cut-off date of October 1. After the applications are received, he says no, I will advance deadline to 25 {+t}{+h} September.

Then he changes FCFS. First, it was time and date of application received. And suddenly it becomes time and date of fulfilling the conditions in the letter of intent. Where is LoI? People rushed for it. It says, within 40 minutes, bring a banker's draft of Rs1,650 crore. Companies he favoured already has those drafts from Mumbai and sitting in his office. How could they get it in 40 minutes?

When he could not find adequate spectrum for his favoured companies, he changes the priority list in the Punjab and Maharashtra circles. You show me one single, unique, solitary instance during my period or anybody else's period during NDA when any of this would have happened. So yes, people who do wrong should be in jail and continue to be in jail without bail.

The Weight of Love

Sun Jul 10 2011, 04:13 hrs

Arun Shourie writes about bringing up his son Aditya, afflicted with cerebral palsy for many years now, in his new book, Does He know a mother’s heart? (HarperCollins). Adit’s pain and that of the author’s wife Anita, who suffers from Parkinson’s disease, leads him to ask: how can there be extreme suffering if God exists? Suffering, he says, refutes religion. Exclusive excerpts:

Your neighbours have a son. He is now thirty-five years old. Going by his age you would think of him as a young man, and, on meeting his mother or father, would ask, almost out of habit, ‘And what does the young man do?’ That expression, ‘young man’, doesn’t sit well as he is but a child. He cannot walk. Indeed, he cannot stand. He cannot use his right arm. He can see only to his left. His hearing is sharp, as is his memory. But he speaks only syllable by syllable...

The father shouts at him. He curses him: ‘You are the one who brought misery into our home... We knew no trouble till you came. Look at you — weak, dependent, drooling, good for nothing...’ Nor does the father stop at shouting at the child, at pouring abuse at him, at cursing the child. He beats him. He thrashes him black and blue... As others in the family try to save the child from the father’s rage, he leaps at them. Curses them, hits out at them.

What would you think about that damned father? Wouldn’t you report him to the police or some such authority that can lock him up? Wouldn’t you try everything you can to remove the child from the reach of the father?

But what if the father is The Father — the ‘T’ and ‘F’ capital, both words italicised? That is, what if the ‘father’ in question is ‘God’?

Why does the perspective of so many of us change at once? Suddenly, they exclaim, ‘There must be some reason God has done this.’ Suddenly, they shift the blame to that poor child: ‘Must have done something terrible in his previous life to deserve such hardship . . .’

And yet the child loves. He laughs. He is filled with joy at the littlest things — a tape of Talat Mahmood, lunch at a restaurant, the visit of an aunt or a cousin... What are we to conclude? That the cruelties rained upon him by his father have ‘built his character’? That they have instilled forbearance? Are we to infer, ‘See, while to us the father seems cruel, in fact he never inflicts more hardship on the son than the son can bear’?

Were we to say and infer as much, that would be not just obnoxious, it would be perverse. And yet those are the exact things that, as we shall see, a revered religious text says about God: He inflicts hardship upon us to build our character; He never imposes more hardship on a person than the latter can bear.

But that child is our son — Aditya, our life. Adit is thirty-five now. He cannot walk or stand. He can see only from the left side of his eyes. He cannot use his right arm or hand. He speaks syllable by syllable. Yet he laughs — you can hear his laughter three houses away. He enjoys going out to restaurants. He loves the songs of Talat Mahmood, Mohammed Rafi and Kishore Kumar. There are some songs, though, the moment they commence, we have to rush and turn off the tape — he is so moved by them that he starts sobbing. There are others which he identifies with himself:Tu aake mujhe pehchaan zaraa Main dil hoon ik armaan bharaa . . .. . .Muskaan lutaataa chal Tu deep jalaataa chal Khud bhi sambhal Auron ko bhi raah dikhlaa...

‘Mere baare mein,’ he declares with joy — and laughs even more as in our rendering the last line has been altered to ‘Papa ko bhi raah dikhlaa...’

He loves these singers and their songs. He loves even more the tapes that his grandparents made for him, and the tapes that his uncles and cousins make for him now. He doesn’t watch television — moving images bother him. But he does listen to the news over the radio. The newspaper is read to him — among the things he calls himself is the ‘ghar kaa samvaad-daataa’. He loves poems being read to him. Seeing Adit’s spirit, and how many of his poems Adit knew by heart, Ashok Chakradhar has gifted him many of his books, and even dedicated one to him. Every time you read the books, you have to begin at the very first page, not just the title page, but the very first, blank page — for on them Ashok Chakradhar has written many an endearment —‘Pyaare, ati pyaare Aditya ke liye . . .’ And if, while reading the poems, you pronounce even a syllable wrong, he hoots with joy, ‘Galti’. That was one of my father’s favourite games with Adit. He would deliberately make a little mistake, and Adit would catch him out — hoot, and laugh, beaming with triumph... He loves everyone. Everyone in the family loves him. His maternal grandmother, Malti Shukla, was his life. He is ours.

And that God just does not stop pounding this helpless, defenceless child...

ADIT COMES

...A premature child. Barely four pounds. In distress. Placed in an incubator. As they could not locate a vein in his tiny arms, the doctors had stuck needles through his scalp... A horrible sight for us... His sugar level is not stabilising, some nurse came and said to us. ‘Will you please sign these forms for a blood transfusion?’...

Three days went by. A Pakistani lady doctor used to visit Anita to check up on her. I am not supposed to tell you, she said, and I will lose my job if they come to know I have told you, but something has happened. Insufficient supply of oxygen in the incubator...

Anita came back to our home in Alexandria. Adit stayed on in the incubator. For an entire month. A horrible month.

‘The child will finish your life as you have known it, may finish your life altogether,’ a senior at the World Bank said to me one day. He was a cheerful, warm-hearted person, but was speaking from first-hand knowledge as he had been bringing up a mentally handicapped son. ‘The doctors may well tell you, “We can do little more for the child.” And ask you, “Are you desperate that he lives?” When they do so, don’t let your emotions come in the way. Do you know what you will have to go on doing for the boy — not just now or for a few years but as long as the child lives?...’

That evening I reported the conversation to Anita and my mother-in-law. A person of iron-will, my mother-in-law said, ‘That is just not the case. Handicapped children live perfectly useful lives these days...’

Three months later we were advised to take the child to the head of paediatric neurology at the Georgetown University Hospital [in Washington]. We were exhausted, felled. The doctor was a kind, elderly gentleman. ‘I am going to use a word that you would have heard — it is used a lot these days to raise money. The word is cerebral palsy. It only means that the baby’s brain has suffered injury...’

We were too stunned to ask what exactly this was going to mean for our Adit’s future. I told the doctor, ‘We had planned to return to India. But if you feel that, for the sake of the child, we should stay on in Washington, of course we will. I will take back my resignation from the World Bank.’

‘I have not been to your country, young man,’ that kind doctor said. ‘If you are here, all that we will be able to do will be to tell you how your son is faring against the milestones. But as observant parents you will notice that yourselves...’

‘I have not been to your country, as I said,’ he continued. ‘But from what I have heard, you have strong, well-knit families there. That is what this child will need as he grows up — a net of love and security. So, if I were you, I would stick to your decision, return to your country, and bring him up in the embrace of your family.’

Among the wisest bits of advice we ever received.

We returned to India. We stayed with our parents. Soon, Anita’s mother came to stay with us...Adit became the centre of many lives.

THE SCHOOL

Adit was growing up. Shanti-amma, his maid, would sing to him, tell him stories, take him to the park. She was ever so possessive of him — always ticking off anyone who expressed the slightest doubt about Adit’s condition, or who uttered a word of pity or condescension. My mother-in-law would teach him — from news, to stories, to rhyming games, to poems, to arithmetic. ‘But why arithmetic, Mummy?’ I would remonstrate. ‘Why make him do sums? Why make him learn tables? He is never going to use them.’ ‘But just see his sense of achievement when he gets the answer right,’ she would teach me. ‘And he learns fast. He has excellent memory.’

….One day, as Anita was driving Adit and herself to school, a jeep coming in the opposite direction lost control. It rammed into Anita’s little Fiat. She and Adit were tossed inside the car. They were shaken, of course, but neither seemed to be badly hurt.

Soon after the accident, however, Anita began to feel peculiar sensations on her left side. We thought the problem was a ‘frozen shoulder’. But soon, the stiffness and pain developed into tremors... One doctor after another... Eventually she was diagnosed as having developed Parkinson’s disease. She was just about forty-two at the time — another one of those ‘one in ten million’ blows.

By now the tremors have spread to the right side also. Every time Anita does something with her hands — for instance, when she eats — her legs flail uncontrollably. That is dyskinesia, another one of those words with which our circumstances have enlarged our vocabulary. The symptoms became worse every winter. This winter — of 2009, in which I begin working on this book about Adit and her — Anita has fallen four times...

With my parents having passed away, with Maltiji also having gone, I am now the servant-in-chief, not just of Adit but of the two of them. The help of many friends and relatives sees us through the day. But more than anything, Anita’s strength and equanimity keep us afloat. ‘I had another toss today,’

I heard her tell her sister the other day, describing a fall so bad that we were lucky she had not fractured her skull. And so helpless and shocked was she that, while there was an alarm bell next to where she lay, she could not reach out to it. She now wears another alarm on her wrist... Even though this is her own condition, she manages the entire household; she husbands our savings; she runs everything so that every need of Adit is met — at once; and so that I am absolutely free to do my work.

‘We have to be thankful for an ordinary, boring, eventless day,’ Anita taught me long ago.

Her fortitude is a daily, ever-present example of another one of the lessons she taught me once: ‘You have to remember, there are many types of courage.’

My father’s courage as he evacuated Hindus in July-August 1947 out of Lahore — where he was City Magistrate at the time. The courage with which he settled, comforted and on occasion quelled the raging refugees in camps across Punjab. My mother’s courage as she comforted her mother and father when they lost a young son, as husbands deserted two of their daughters. My mother-in-law’s courage as she went on looking after all of us even as rheumatoid arthritis twisted and turned and crippled her hands and feet.

Malini’s courage, Veena’s courage evident in the dignity and fortitude with which they have borne blows of unimaginable severity, faced life, brought up their children single-handed, and, on top of it, continued working... Here we are: we get so puffed up just because we have stood up to some authority-of-the-moment. And here are these girls: they have stood up to life itself.

‘But I will never get over what God has done to Adit,’ Anita says. How true:Ghaayal ki gati ghaayal jaane Jauhar ki gati jauhar...

Copyright@Arun Shourie 2011

My publicity agent

Thu Mar 24 2011, 00:45 hrs

Another scam . . . Inquiry into disinvestment of VSNL” — the papers proclaim. The announcement has been preceded by stories along similar lines in two magazines, a planned build-up to the announcement.

The government does seem to have surrendered its judgment to a bully. And it will be sorry for it. But I will come to that in a moment. The charge is that as the minister of disinvestment in the NDA government, as part of disinvesting government equity in VSNL in 2002, I “gifted” 774 acres of prime land in four cities to the Tatas.

The facts are the exact opposite.

During due diligence of VSNL, it was discovered that the company had been buying land over the years. Technology had changed. It was now possible to provide the same services with infrastructure spread over significantly less land. VSNL, working with advisors, identified 774 acres of land as “surplus”, in the sense that it would not be needed in the future to provide the services for which VSNL had been constituted

Accordingly, in the agreements governing disinvestment, it was provided that whoever won the bid for the company would not get this land. The company was valued by excluding this land. Indeed, the article in the agreement was framed in such extreme terms that at one stage the potential bidders said that they would not go through with the bids at all. The officer who was handling the disinvestment — one of the strongest officers I had the good fortune to work with, P.K. Basu (now agriculture secretary) — told them to go home, and forget the disinvestment. The article would not be diluted one bit, he told them, disinvestment or no disinvestment.

Eventually, they came round and the disinvestment went through. It was one of the most hotly contested cases. On the one side was Reliance — Dhirubhai Ambani was still alive, and was calling the shots. On the other side were the Tatas. The Tatas won, by a whisker. That outcome firmly established the credibility of the disinvestment process. “Even Dhirubhai Ambani could not find out what was going on in your ministry,” observers told us.

The article that Basu and his colleagues incorporated is worth reading. It is a short one. It could have been accessed by anyone from half a dozen sources — but by now it is no surprise that sections of the media will deliberately not read!

Please read the article, and then I will set out its implications. Here it is:

4.7 LAND

(a) (i) The strategic partner confirms that it shall cause and procure the company to hive off or demerge the land into the resulting company pursuant to a scheme of arrangement in terms of the provisions of Section 391 to 394 of the act.

(ii) The strategic partner confirms its understanding that it will transfer all such shares in the resulting company to the government as it may acquire as a consequence of this transaction, that is a minimum of 25 per cent of the resulting company’s issued equity shares or a higher number which shall include shares in the resulting company that it may further acquire as a consequence of any further sale of the equity shares in the company by the government to the strategic partner, prior to the demerger, as part consideration of transfer of the transaction shares and any subsequent sale of the company’s shares by the government to the strategic partner, pursuant to this transaction.

(b) The strategic partner confirms that:

(i) it shall do and cause to be done all and any such acts, matters, deeds and things as are necessary, usual or expedient including voting in favour of the item of business relating to the approval of the scheme of arrangement to implement the hiving off or demerging of the land into the resulting company;

(ii) it shall not directly or indirectly do or cause to be done any acts, matters, deeds or things which may adversely affect or delay the hiving off or demerging of the land into the resulting company.

(c) (i) If for any reason the company cannot hive off or demerge the land into the resulting company then, subject to Article 5.6 (b) (iv) and (xiv) hereto at any time when the company sells or transfers the land or agrees to sell or transfer or otherwise develop the land, the strategic partner shall pay to the government within seven days of the sale or transfer of the land an amount equivalent of 25 per cent of the benefit accruing to the company pursuant to such sale or transfer or otherwise development of the land, as determined by the appraiser, after taking into account any impact under the Income Tax Act, 1961.

(ii) Subsequent to this agreement and the share purchase agreement, if the government sells more than 25 per cent of its equity shareholding in the company to the strategic partner, then the percentage of amount to be paid to the government by the strategic partner on account of sale or transfer or otherwise development of the land under Article 4.7(c)(i) shall increase in proportion to the percentage of such further sale of equity shareholding in the company by the government to the strategic partner. For the purpose of this article the term “transfer” shall include sale, lease, licence, grant of development rights or the parting of physical possession of the land or transfer of any interest, whatsoever, in the land.

The article provides, first of all, that whoever wins the bid — and there could have been no plan to pass on a favour to the Tatas, etc, for no one knew who would win the keenly contested bidding process — shall not get the surplus land. The excess land would be detached from VSNL. A new company would be formed, and the land would be transferred to it.

Second, that the shareholding of this new company would be what the shareholding of VSNL was before disinvestment. That is, the bidder who won would have no share in it at all. The government would have the proportion that it had before disinvestment — about 52 per cent. Employees would have the proportion they had. The rest — about 47 per cent — would be with the general public that held shares of VSNL, the company was listed in both India and the USA. In a word, a government company would be set up. And this government company would acquire the land.

Third, in case such a company could not be formed and the disinvested VSNL decided to part with the land, it would be able to do so only if the government agreed to the proposal. The reason for this was that, even after disinvestment, the government would continue to hold 26 per cent of VSNL’s equity. The sale of land, or disposal of any rights in an asset such as land, can only be done by a special resolution of the board and that resolution cannot go through unless the party that holds 26 per cent of its equity agrees.

Fourth, if that new company could not be formed for some reason, and if the government approved the proposal of VSNL to sell the land, the entire proceeds would be distributed in accordance with the pattern of shareholding that prevailed before disinvestment — that is, the winner would get absolutely nothing; the proceeds would be divided between government, employees and the general public in the proportions in which they held the shares before disinvestment.

There was a fifth factor which was especially important, as it caused the greatest heartburn among potential bidders. This is contained in clause (c) (ii) reproduced above. This clause provided that if government shed more than 25 per cent of the equity it was holding of VSNL, then the share of the proceeds that the disinvested VSNL and the winning bidder would have to pay to government out of any sale or transfer of land or rights in it would increase proportionately.

Sixth, the hands of the prospective bidders were tied tighter by incorporating a very comprehensive definition of “transfer”. The article had used the term “transfer” of land, etc. In the last sentence, it was provided that “for the purpose of this article the term “transfer” shall include sale, lease, licence, grant of development rights or the parting of physical possession of the land or transfer of any interest, whatsoever, in the land.” All proceeds from any form of transfer would go to the government and the original shareholders and not a penny would go to the successful bidder.

Finally, a series of interlocking clauses tied the prospective winner in perpetuity! Privatisation agreements have “call” and “put” options. That is, after a specified period — say, three years — the winner can “call” on the government to sell its residual shares. Similarly, the government has the right to “put” its shares for sale. But in the VSNL agreement, we provided that even if the government parted with all its shares through either option, it would always retain one share — known as “the golden share”; and that by virtue of this single share, all the rights it had in regard to the surplus land would remain with the government!

In other words, the agreement provided that neither the surplus 774 acres nor any right in them whatsoever shall go the bidder who succeeded in winning the contest. So, where does the minister get this notion, parroted by some magazines, that 774 acres were gifted to the Tatas?

“But why was the land not just taken out of VSNL before disinvestment?” the innocent ask. VSNL was a listed company — it was listed both in India and the US. If such a substantial asset was taken away, any shareholder could have gone to court and halted the whole process on the charge that his interests had been harmed. On the other hand, if it was not taken away, the government would be accused of making “priceless” land over to whoever succeeded in winning the bid. Hence a solution was devised: the land would be taken out of VSNL, but the interests of pre-disinvestment shareholders would not be impaired. The land would be turned over to a new company in which the shareholding pattern would be what it was before the disinvestment of VSNL. That was an excellent solution that Basu and his colleagues devised, and it has stood the test of time. The winner did not get the land. The shareholders did not go to court!

“But didn’t VSNL have enormous amounts of cash? Wasn’t this just handed over to the Tatas?” Yes, VSNL had a cash reserve. The fact is that this cash was drawn down before the company was disinvested. The government had VSNL declare a special dividend of 750 per cent! As a result, the winning bid along with this dividend secured for government a P/E ratio of 11 as against the measly 6 at which VSNL shares were trading before disinvestment.

When no other tack is left, critics are led to ask, “But why has the new company not been set up even though nine years have passed since VSNL was disinvested?” The fact is that the government and the winners — the Tatas in this case — tried to work out a solution. The attempts couldn’t get past disagreements. For instance, the Tatas said that as the land did not belong to them, and as it was to be transferred to a company that would in essence be a government company, the government should pay the stamp duty that would be incurred in such transfer. Similarly, as the monopoly of VSNL in regard to international calls had been curtailed by two years, a compensation package was announced by the government. They felt that this was inadequate. As the issues could not be resolved, they proposed that the matter be referred for arbitration. I had no problem with that proposal, but my colleagues in the ministry correctly counselled that as the proposal had revenue implications, we should send it to the finance ministry. That is what was done.

The government changed. Since then, I see from what has appeared in public that the Tatas kept writing to the government requesting the latter to settle the matter. They wrote that there were three alternatives, and that any one of the three would be acceptable to them. The government — the UPA government, that is — kept saying that it was examining the issues and would get back to them. It did not.

Kapil Sibal says this delay has been very costly to the people of India, and that is why he has ordered an inquiry. I say — “Bravo! Excellent!” He should institute an inquiry into the conduct of ministers whose negligence has cost the country so much.

The ministers? P. Chidambaram and Pranab Mukherjee, the finance ministers of the UPA governments! For, remember, the department of disinvestment has been under the finance ministry since the UPA formed its government in 2004. Maybe they are the real targets of this buccaneer? No?

Why else would Kapil this time round entrust the inquiry not just to a handpicked judge but to a handpicked officer working directly under him?! As for me, far from being my inquisitor, Sibal is my publicity agent! He keeps me in the news. And gratis!

The writer was Union minister for telecom and for disinvestment in the NDA government