Serendipity and the new age entrepreneurs
Normally, monsoon time means rains and fog, but it seems like this season it is smoke and mirrors.
Here is Rajeev Chandrashekar’s latest article titled “Connection Errors“. He really takes DoT and TRAI to town while also saying the new age licensees simply found themselves in an “interesting situation”.
Read on.
The protagonists in this tragicomedy — DoT and TRAI — have by now developed a perfect track record of ‘doublespeak’. Phrases like consumer benefit, common man and competition when emanating from them take on an ominous hue. It’s not the first time that the TRAI and DoT (seemingly acting in concert — when the opposite should be true) have used the common man and his benefit to roll out scams.
Source : HT
Tragicomedy ? Hardly a term that fits here. He says, “TRAI and DOT used the common man and his benefit to roll out scams”. So, we are to believe that the TRAI and DOT rolled out the scam and not the Congress led UPA government.
Essentially this whole thing boils down to the death of nuance in Indian public life. In report after report, the main talking points are along the lines of “but there was no note from TRAI asking us not to do that”. “The FM and PM did not raise any objection”, “There was no XYZ note asking the government not to do ABC, so we did ABC”. Is it fair to say that in the Congress led UPA government, the absence of a note devoid of any nuance will immediately lead to a massive compromise of a national asset. Its like a 10 year old claiming there was no label on the cookie jar with his name on it telling him not to enjoy its contents.
TRAI and DOT as institutions cannot be expected to issue a consultation paper for every possible avenue of corruption. Look, if the government wants to undersell – it will. If the government had the goodwill to extract fair price for the airwaves, which do not discriminate between Hindu, Muslim, OBC, Dalit, it would not require the DOT and the TRAI acting as schoolteachers exhorting it not to cheat.
What really takes the cake is his recap of the events leading up to the great black swan event in Indian history:
A set of companies gets spectrum and telecom licences at Rs 1,600 crore apiece. The market value for this spectrum is much more — Rs 4,000-9,000 crore — depending on the market transactions of Unitech, Swan, and Datacom and the reserve price for 3G licences).
The DoT requires a lock-in period before the licences can be sold and holds these companies to their network rollout obligations. But the TRAI has come out with a consultation paper to do away with the restriction on sale of licences to allow ‘consolidation and M&As’.
That leaves all the new licensees in an interesting situation — they have licences worth far more than what they paid for and there’s no need to roll out or invest further. They can sell their licences to make a lot of money for doing nothing. Where does that leave the government and people for whom these new licences represented affordability and competition? Basically nowhere. The government loses money from spectrum and the people see the market going back to the same structure as before.
Source : HT
This is a very ambitious maneuver even for an Indian capitalist. He wants to you believe that the new age licensees (most of whom did not even have a website) just happened to be “left in a interesting situation“. Well, how many believe that !! Did these new age licensees know before hand that they would be left in the aforementioned “interesting situation” ? If not, they would have to be crazies to pony up 1900 Cr with no telecom experience and a strict policy lock in period of 3 years.
Any idea of a windfall tax is silly because we are talking about a finite natural resource here. It is highly disappointing that Mr Rajeev Chandrashekar chose to attribute the minus to DOT and TRAI and the huge plus to pure serendipity.
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On a related note : The CEO of Telenor was on TV a few days back. He was refreshingly candid. He acknowledged the whole allocation process was a bit strange, but he had worked with such countries (markets) before and was extending full co-operation to the CBI authorities investigating the case. (Sorry no URL, I saw the show)
Where are the CPI-M leaders ?
Faced with massive defeat in Kerala and West Bengal at the hands of their erstwhile UPA buddies, the Congress Party. You would think the left leaders would huddle up.
Brinda Karat – Brazil
Prakash Karat – London (Brinda will join him at London after Brazil)
Sitaram Yechury – Spain
Like them or not, India needs the left to check the Congress party which is the primary custodian of the status quo (read third world corruption empire characterized by a vice like grip of vested interests).
Their four and a half years in support of the Congress party shone unprecedented media spotlight on Brinda Karat, Prakash Karat, Yechuri, D.Raja etc. How many of us heard of them before ? For four and a half years they had it easy in TV studios, they were able to cash in the “secular” voucher in every TV debate. For a moment, they thought the “secular” voucher could be used by all parties not just the Congress. They made a fatal mistake. Secular is a synonym for the Congress Party. These three leaders seemed more and more like the Congress leaders, at least in terms of viciously attacking the other primary opposition the BJP. You could easily mistake Yechuri for a Tharoor.The left let the Congress define or place them inside TV studios and outside.
Would you like to spend your money to watch Michael Jackson dance or an imitator ? The voter has spoken.
“BJP leader joins Congress” and newspaper editing
A simple news story, “Mr Thirunavikkarasar of the BJP joined the Congress party”. When asked by newsmen, he clearly laid out the reasons for his decision.
Can you spot the difference in how these two newspapers carry this story ?
Specimen 1 : Deccan Chronicle
Mr Thirunavukarasar said that he had resigned from the primary membership of the BJP and also from the Rajya Sabha. Speaking at the AICC headquarters he-re, he said that he had joined the BJP because of Mr Atal Behari Vajpayee but since his exit, the party had “totally surrendered to the RSS.”
“The state leadership of BJP is not keen on developing the party. Also, it is difficult for the BJP to grow here (Tamil Nadu) by alienating 40 per cent of the population comprising the minorities. Hence, I decided to quit,” he said denying that he switched over to the Congress only to protect his own business interests.
Specimen 2 : The Hindu
Mr. Thirunvaukkarasar told The Hindu that he was joining the Congress without any pre-conditions as he was fed up with the BJP’s movement towards “communal politics” guided by the RSS. Moreover, former Prime Minister A.B. Vajpayee, to whom he was attracted, had retired from active politics. In his more than three-decade-long public life, he always wanted to be close to the people. But Tamil Nadu people were not ready to accept the BJP’s policies and the Congress was the only hope for them.
Were you able to spot it ?
Raja turns tables
Raja alleges 1.6 Lakh Crore scam during NDA rule.
“The NDA Government is responsible for irrational decisions without any legal backing. The scam during the NDA regime could be much more than Rs 1.6 lakh crore.” Mr Raja facing allegations, of a Rs 60,000-crore spectrum scam, from the BJP said that he will not resign. “Ours is a Government that has followed all rules to the letter and spirit by following the regulations of the Telecom Regulatory Authority of India,” he said.
Source : HBL (Emp added)
1. Obviously there is no story behind it.
2. Raja forgets that the DMK was also part of the NDA government.
3. Were there any letter pad companies that made windfall ?
4. Even if there was a scam, let us finish this investigation first and then get on to the next one.
5. Note the “Ours is a government…” quote. This is a clear signal that the Congress cant wiggle out and pin blame on Raja alone. Sachin Pilot in on stage and would agree.
This CBI case is dead on arrival. The people of India have lost 60K Cr because their property (airwaves) has been stolen. The only way for this story to make more headway is for the media to latch on to this. In the 90’s the media would stay put on corruption stories and that was in no small way for the downfall of the Congress. What happened “post liberalization” ?
Reddy brothers in the wrong party
It looks like Yeddy vs Reddy.
The Karnataka CM has taken on the Reddy brothers , it was only matter of time :
After a lull, chief minister B S Yeddyurappa had to again face tantrums of the Bellary ministers on Thursday. The recent levy of toll on trucks carrying ore to mobilize resources for flood relief, and appointment of MP Rajeev Chandrasekhar to coordinate a private-government partnership agency for monitoring rehabilitation work, triggered off the latest bout of anger by the Reddy brothers.
Source : TOI
The entrenched ‘default’ party is always the safer choice for entrenched interests. The Bellary trioka need to shift base. At the very least they will lose the ‘crypt music’ when the TV channels talk about them.
Decoding the governments defence of UASL licensee windfall
Time and again, the government goes out of its way in advancing arguments in favour of the big licensees (UASL – Universal licensees) such as Swan and Unitech. Most Indians fail to understand why the government has to step in and bat for them.
The more I follow this story, the more I feel that Mr Raja of the DMK must not be the only ones investigated. Mr Raja clearly mentions that Mr Chidambaram and the PM were appraised at every step. Mr Raja appears to have appraised the former FM at various stages. There have been no rebuttal from the either the former FM or the PM, so we have to assume what he is saying is true.
How would you justify the stake sale by Swan and Unitech soon after getting licence?
As telecom minister, I have to ensure that the licences are issued in accordance with NTP99) and recommendations of TRAI.
After issuance of licence, dilution of a company or offloading of shares is not in my domain. However, when there was a hue and cry that there was a windfall gain for some companies. After discussions, the then Finance Minister P Chidambaram clarified the position to the Prime Minister — in front of me. He said that it was not sale of equity by promoters. He said that valuations of companies reflected the “post money” invested in it, not just the value of licence or spectrum.
Source (emp added) : HT
Before we get into what “post money” is, lets lay out the basic facts.
The two UASL winners Swan and Unitech did not have any assets nor significant liabilities other than the license. If nothing else, this makes working out their valuations much easier.
Here is a good article that explains Joint Venture valuation in this context :
To illustrate the point let us look at the Unitech-Telenor deal. It is reported that Telenor is paying Rs 6,120 crore for 60 per cent stake in the JV. What it means is that Telenor will be parting with 40 per cent ownership of this amount for gaining 60 per cent interest in the assets and liabilities of the company.
Assuming that the JV company doesn’t have any other assets/liabilities other than licence, it means Telenor is paying Rs 2,448 crore (40 per cent of Rs 6,120) for 60 per cent ownership of telecom licence. This value of Rs 2,448 crore for 60 per cent ownership represents enterprise value of Rs 4,080 crore for the licence for which Unitech paid only Rs 1,650 crore.
Source : Business Line
Does the erstwhile FM Mr Chidambaram’s defence of the windfall beneficiaries in front of the Prime Minister hold water ?
Related News
Naxal problem
Singh once again said Naxalism was the “biggest internal security problem” facing India. The Centre and state governments will have to take “all types of steps” to control the menace, he said.
“Law and order machinery will have to be strengthened and with that we’ll have to take steps to do away with the economic and social causes, which increase alienation.”
Source : Topnews
Corruption is a more fundamental problem than naxalism.
Sunil Jain on the spectrum scam and the corrupt state
Its great to see Sunil Jain with more :
But there’s a far more serious problem the CBI has to deal with. Let’s assume the CBI gets all the proof it needs — where does it go after this to check how solid its legal case is? To Attorney General (AG) GE Vahanvati, India’s highest law officer. Well, when he was Solicitor General (SG), Vahanvati had opined in favour of much of what Raja’s done — how is the AG going to say that what he said as SG was incorrect?
Source : Can Manmohan ditch Raja
Why is the government of India risking becoming a laughing stock with the following defence of the billion dollar companies created ?
* As for the windfall profits made by companies like Swan, “this is a completely mistaken analysis”.
What they really mean is that the money paid by Telenor and Etisalat are only ‘capital infusion’ and not going directly to the bank accounts of the zoo creatures (zebra, swan, tiger, parrot, etc).
What is the difference, Sir ? The newly minted billionaires have many ways to achieve liquidity. Here is a quick list in the hope that the government will atleast drop this weak line of defence.
- In the long term : Selling their newly inflated holdings
- In the short term : Loans against their inflated holdings
- Any auditor will tell you dozens of more ways.
The question is not only whether someone became rich. The bigger question is : Did the actions of the government result in the Indian people losing about $10Bn ? I do not see anyone disputing this. So, address this first.
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In other news :
CBI in Chennai (Karunanidhi fumes at probe)
Prime Minister says nothing wrong when India’s poor lose $10 bn
Prime Minister Manmohan Singh said on Sunday that allegations about a scam in the spectrum allocation were incorrect but refused to answer a question about the Opposition’s demand that Telecom Minister A. Raja resign following last week’s CBI raids on the offices of the Department of Telecom.
…
“It is normal in a democracy to have differences of opinion and arguments,” he said, using the Hindi word ‘naunk-jhaunk,’ when asked about the Opposition’s allegations against Mr. Raja. “But that doesn’t mean that what the Opposition says is always correct.”
Source : The Hindu
I have no idea what “Naunk – Jaunk” means, but no one is claiming the opposition is always correct. We only want to know if the opposition is correct in this specific instance.
Bonus :
There is a lot of blogtalk about Kashmiris and Naxals. For arguments sake consider the following. What really happens if scams of this size time and again go unsatisfactorily handled. At least in the past they took place in the darkness of government media.
What effect would it have on the legitimacy of their claims and their challenge to states claim over monopoly over violence. What if they say that ” We dont want our stuff to be looted, maybe the north Indian plains guys dont care, maybe the south Indians dont care, but we dont want to be looted.” Any group whether Naxals or Jihadis with military resources can point to such corruption and advance their own agenda as morally better. The only response of the Indian state would have to be to increase the military force by y% to compensate for the decrease in its own moral legitimacy by the corresponding y%.
Such negative energy never leaves the system.
CBI raids DoT offices over spectrum scam
The CBI raided some offices of the DoT seeking evidence about the 2G spectrum allocation irregularities.
The Central Bureau of Investigation on Thursday raided top Department of Telecommunications (DoT) officials on allegations that they had colluded with private companies in issuing licences and allotting spectrum to new players on a first come, first served basis last year.
CBI officials searched the offices of, among others, deputy director general (access services-I) A.K. Srivastava and wireless adviser Ashok Chandra.
“The searches were done to collect incriminating documents linked to the irregular award of the licences,” said a CBI official who did not want to be named.
Source : HT
It would be helpful to recall the media’s complete unwillingness to follow the story when it broke. I know what you are thinking, “Gotcha RC, How can you link to stories in the media and then claim the medias deliberate silence ?” The answer is that there is a big difference between reporting a story and following a story. The media coverage, with the notable exception of the Daily Pioneer, was nothing more than repeating the newswire. We never had any interviews with the guys behind Dynamix Balwas, Tiger Trustees, Zebra and Parrot Holdings, Genex Exim (allocated 300Cr of Swan with only 1 lakh share capital) – who exactly are these guys who became billionaires overnight. Not one question was put in front of the then Finance Minister Mr P Chidambaram and the Prime Minister Dr Manmohan Singh. Mr Raja claims that the entire process was approved by them. Reality Check had covered the attitude of Mr Prabhu Chawla who wanted ‘clinching evidence‘ before following the story. Did you have clinching evidence before you followed Bofors in the 90’s ? Does the media have clinching evidence against Modi ? There is immense public interest in getting to the bottom of it as evidenced by the reactions blogs and other alternate media are getting for these corruption allegations.
Back to the CBI, are they serious about investigating the scam or are they forced to conduct raids as a formality following the complaints received by the CVC (Vigilance Commission) ?
To really answer this, we need to take a step back and lay out the facts as we know it.
1. Swan, Unitech, Shyam became overnight billionaires. Holding nothing more than just a piece of paper, they were able to parlay their Rs 1650 Cr into 6 or 8 times their value in a matter of weeks. Telenor and Etisalat paid what most consider to be fair price for the spectrum (owned by the poor people of India, but social justice champions of dissent will not tell you that). Till date no one disputes that these companies made it big and that a national resource was compromised to make it happen. However, this does not alone mean there was a scam. It could have just been incompetence.
2. The allocation of licenses was messy, the dates were moved around, and at the time of actual allocation there was a melee at the Sanchar Bhawan. No one disputes the process was messy, maybe this is how first-come-first-served licenses are issued in India. However, this does not alone mean there was a scam. It could have just been incompetence.
3. So, there are only two possibilities. Either there was a massive scam or massive incompetence. The net result is a national resource was used to make some private parties very rich (billion dollar rich).
4. The media did not follow this smoking gun because the scam occurred so close to the elections. The BJPs tepid response to this is even scarier. As Mr Swapan Dasgupta says, were they managed ? In the early 1990’s, the BJP could have rode this all the way to political victory. Of course, the media back then would pounce on every corruption story.
By raiding the DoT and prodding Mr Raja, the Congress party is up to its old tricks. The policy is “Tease but dont tickle”. Recall 1993 when the Congress party (Mr PV Narasimha Rao led) went to great lengths to defend a judge accused of corruption and defeated his impeachment motion. Mr Kapil Sibal was instrumental in that historic episode too.
The Congress wants this to be seen as a DMK issue and not a UPA issue. They are also making the vaccine scam a Ramadoss issue (Azad Vs Ramadoss : PSU closure to be probed). Both A Raja and Dr A Ramadoss have clearly stated that the Prime Minister and the cabinet was fully appraised of the activities and modalities.
What surprises me is the BJP’s statement.
BJP spokesman Ravi Shankar Prasad said, “For a fair investigation into the matter, it is important that the Union Minister should immediately be removed from office.” Responding to a query that Raja had said that the allocation was made with approval of Prime Minister Manmohan Singh, Prasad said that in that case the Prime Minister should clarify his position in the matter.
Source : Express Buzz
Mr Prasad makes the same mistake our confused educated elite make.
Exhibit 1 : After the terror attacks. At that time, the cacophony included “Shivraj Patil has to go”, “PM should sack Shivraj”, “Sonia should ask Shivraj to resign”.
Exhibit 2 : After the farm crisis and farmers suicides. The cacophony turns into “Sharad Pawar must go”, “Pawar spending more time in BCCI than at Agriculture”
Exhibit 3 : After the quota -without -data episode. Arjun must go. Light up Arjuns effigy.
Exhibit Now : Raja must go. The PM should take action. PM should rein in xyz.
These people have no idea how little they are asking for. “We like you but just make this tweak please” will get you nothing in a democracy (voting based selection). The only way to ask for tweaking your favorite party in a democracy is by voting them out, even if another evil gets in, so the next time around they will come back tweaked. Mr Ravi Shankar Prasad is asking for a tweak instead of going for the kill.
Say, the PM persuades Raja to go. Does that solve anything ? What happens to the beneficiaries ? Do they get to keep their Bentleys ? Recall the cabinet just approved Telenors hike in its share of Unitech Wireless. The Wall Street Journal reported the purchase value to be 37 billion rupees (about USD 800m). Raiding these companies is not enough. Under the Congress’s eyes, there is another one in the making- the WiMax controversy.
Do you expect much from these raids, Mr Raja has already claimed that the cabinet and the Prime Minister (of the Congress party) were being fully updated about the going-ons. Mr Karunanidhi has already hinted at Congress’ involvement.
DMK sources in Chennai said Karunanidhi impressed upon the PM that he felt Raja was being unnecessarily humiliated, as he had consulted the PM on the spectrum allocation issue all along. The DMK stalwart also argued that the PM’s decision to retain Raja in the communications ministry was clear evidence of his innocence. He also pointed out that Congress had defended the communications minister all along both in Parliament and in public, and even campaigned for him in the Lok Sabha elections.
Source : TOI
That is his ticket to immunity.
The poor Indian people continue to watch billionaires emerge from their money. Of course, negative energy of this magnitude will never leave the system.
Earlier coverage on Reality Check
I wished other topical Indian blogs covered it in addition to their coverage of big ticket items like how to deal with China, Pakistan, and United States. We need to deal with the basics in the same way we cant really run a 100m sprint without taking that much required dump first. Territory is just another national resource.
Home Minister’s blog
Check out this blog
http://drvsacharya.blogspot.com/
Much better than the twitter silliness of Sashi Taroor.
Four women get 3 months jail for contempt of court
This is deeply disturbing,
Four women employees of Mumbai’s Boss music school were on Wednesday sentenced to three months in jail by the Supreme Court for hurling a slipper at an apex court judge on March 20. The court also slapped a fine of Rs1 lakh on each of them.
The four had hurled a slipper at former justice Arijit Pasayat, who was then heading the bench hearing a petition alleging contempt of chief justice KG Balakrishnan. Justice Pasayat now heads the newly-formed Competition Commission.
A bench of justices Altmas Kabir, GS Singhvi and HL Dattu found school principal Leila David, 75, its audio engineer Annette Kotian, 23, music teacher Pavitra Murali and psychologist Savita Parekh guilty of contempt of court and sentenced them to a three-month prison term.
In its judgment, the court said, “Throwing footwear on judges amounts to scandalising the institution of the Supreme Court.”
While Kotian and Parekh were taken into custody in the courtroom itself, the court ordered the arrest of David and Murali from their residences in Mumbai. They will be brought to Delhi’s Tihar jail.
Source : DNA India
Emphasis mine : One of the jailed women is 75 years old !
They could have forgiven the ladies in a gesture of magnanimity given that they had just been through the “legal process” in a wild witchcraft case earlier.
In its judgment, the court said, “Throwing footwear on judges amounts to scandalising the institution of the Supreme Court.”
Speaking of scandalized, how the court deals with its own corruption accused, how it checks the social justice encroachments (which is the foundation of the modern Indian state) with deep scrutiny, how it deals with the political corrupt and looting of national wealth, how it brings the arduous process of appeal to the poor – these are the things that will make people respect it.
The judges are human beings just like you and me. Unlike gods, respect for humans comes from we do and not who we are. Forgiving these women would have compensated in a little way for the beating the judiciary has taken in recent weeks.
