Reality Check India

Raja turns tables

Posted in Uncategorized by realitycheck on October 31, 2009

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

Posted in Uncategorized by realitycheck on October 29, 2009

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

Posted in Uncategorized by realitycheck on October 27, 2009


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

Manmohan defends Raja

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

Posted in Uncategorized by realitycheck on October 26, 2009

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.

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

Posted in Uncategorized by realitycheck on October 24, 2009

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

Posted in Uncategorized by realitycheck on October 23, 2009

Check out this blog

Much better than the twitter silliness of Sashi Taroor.

Four women get 3 months jail for contempt of court

Posted in Uncategorized by realitycheck on October 22, 2009

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.

We want more of this ! The default choice model.

Posted in Uncategorized by realitycheck on October 18, 2009

Six, eight, twelve hour power cuts. Thousands of farmers driven to suicide. Scams large and small. No improvement in standard of living. No hope of security. Or equality. The same social justice fraudsters. Dusty trails for roads. We were told this was going to be India’s century. Yet 10% of this century is done and we are still stepping on sewage water on our way to work.

Yet the people of Maharashtra and Haryana are going to say they want more of this !!

Can people actually want more of this ? What is wrong ? I think this exposes a fundamental flaw in our democratic reasoning. Democracy will never work if there is going to be a default choice in the absence of a perfect choice.  You must iterate the process of selecting the lesser evil.

Why is the ‘default choice’ system bad ?

1. There are reports of many areas where the Congress/Shiv Sena/BJP have worked out deals. It is entirely conceivable that in the future, elections will only be nominal. Like gangsters, the real deals will happen behind closed doors. ‘Areas will be divided, and data not available to the public will the the primary tool of negotiation’.

2. The political scenario will degenerate into a friendly where powerful families are represented on multiple sides. A case in point is Tamilnadu, where many political families have feet in all major parties. Except the top, everything is fluid. All energy is spent in protecting the status quo.

Non performing governments must be punished. Even if it means electing another evil.

A judicial blast from the past, Justice Ramaswamy case

Posted in Uncategorized by realitycheck on October 18, 2009

While, the commotion over Justice P.D.Dinakaran’s elevation to the Supreme Court is still on. It would be fruitful to recall the first ever impeachment attempt of a Judge in Indian history. The Justice V Ramaswamy case in 1993. The readers of this blog should also be aware of the distance the Congress party went to defeat the motion.

Check out this paper : It is a suspense thriller. Our media’s newest heartthrob Mr Kapil Sibal plays a key role in the script. (Note: It is a PDF file)

The main players are still here. The same guys are on TV,on the streets, in parliament, making your laws.  Note how that in 1993, the BJP and the National Front were able to turn the  issue of corruption into a chicken game with the Congress.  Can the BJP do it today ? What changed ? When did they become wheeler dealers and make peace with scams a thousand times larger ?