PC explained how to tackle Unitech FDI with media: Raja

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PC explained how to tackle Unitech FDI with media: Raja

Post by Rohit » Wed Jun 22, 2011 6:43 pm

PC explained how to tackle Unitech FDI with media: Raja

A. Raja’s letter to PM

Home Minister P. Chidambaram in 2008 advised [or, to quote the exact word, "explained" to] former Telecom Minister A. Raja on how to brief the press over the controversial sale of shares to foreign companies by two new licensees of 2G spectrum, Unitech and Swan.

Both telecom companies were named in the CBI chargesheet filed in April this year. It was found that besides being unduly favoured in the issuing of licences, these companies also allegedly benefited from the policy allowing 74% FDI in the telecom sector.

Chidambaram's assistance to Raja in explaining the dilution of shares of these two companies is at variance with his stand distancing himself from issues related to the 2G case.

These facts form part of a letter written by Raja to Prime Minister Manmohan Singh in November 2008. Raja had put many facts on record in a series of letters to the Prime Minister that are being examined by the Public Accounts Committee and many of which will form the mainstay of Raja's defence that he had not acted alone in the 2G spectrum allocation and related decisions.

Raja wrote this letter, D.O.No.450/M(C&IT)/VIP/2008, to the Prime Minister on 7 November 2008 (picture given). He also enclosed a brief press note that Raja issued at the press conference the same day. The letter was acknowledged as received by the Prime Minister.

According to this letter, on 4 November 2008, Raja was "advised" by the Prime Minister at a meeting, which was also attended by the then Finance Minister Chidambaram, to hold a press conference to explain "the policy and rules" being adopted for spectrum allotment.

Raja refers to meeting the Prime Minister "along with Hon'ble Finance Minister in connection with 3G spectrum auction and one time spectrum charges for 2G."

"During the discussion, you (the Prime Minister) have advised me to meet the press to explain the policy and rules being adopted in granting new licenses and spectrum allotment in accordance with the TRAI recommendations," Raja's letter states.

"Accordingly, I addressed the issues in the press conference today (7.11.2008) and explained the related issues including dilution of shares, as explained by the Finance Minister, of M/s Swan and M/s Unitech who are the new licensees."

The brief note issued by Raja at the press conference that day justified the dilution of shares in these companies as "infusion of FDI into the country" and argued that the question of "windfall gain or for that matter, any gain for the promoters does not arise."

The press conference was being held in the wake of the announcement in October 2008 that Norway's Telenor was taking over 60% of Unitech's telecom unit Unitech Wireless for Rs 6,120 cr. Earlier in September, UAE's Etisalat had finalized a deal for 45% of Swan Telecom.

"Regarding sale of shares by Swan and Unitech, it is clarified that the foreign companies have entered into agreement to subscribe to the new equity shares of the company," it was stated in Raja's press note. "No share of the founding promoters of the companies have been sold. Hence, the question of windfall gain or for that matter any gain for the promoters does not arise."

"In case of Swan, Rs 3500 crores approx. is proposed to be inducted into the company. Similarly, in case of Unitech, Rs 6000 crore approx. shall be inducted by the foreign partners in the company," the note said. "This is as per FDI policy of the government and these transactions are going to result in infusion of above FDI into the country," it adds.

"These funds in the company will be utilised for establishment of network including infrastructure. It is clarified," the press note states, "that it is necessary for such licensees to seek technical, managerial and financial support from suitable collaborators in order to successfully comply with license conditions which involves telecommunication operations."

It added, "The valuations being quoted are 'post-money' — it reflects the value of the funds applied to the business and not the value of the licence or spectrum."

"This matter has been discussed and clarified with the Finance Minister," the note stated.

The Sunday Guardian had sent a questionnaire to P. Chidambaram on 16 June 2011 for his reaction to these revelations. The answers are still awaited.

Raja's defence in the 2G case is expected to focus on the limited nature of his role in these decisions.

Says Manu Sharma, Raja's advocate, "Raja's role was over when the LOIs were signed and spectrum was allocated. He had no control over the promoters." Stressing that Raja is being unfairly "singled out" in the entire case, Sharma added, "We have always maintained that all the decisions were taken collectively."


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