Reality Check India

Where’s our story ? Media on 2G Spectrum Scam – Shyness or something more ?

Posted in Uncategorized by realitycheck on December 3, 2010

Nira Radia is not just another news source.

The 2G scam is not just another scam.

I was nodding in agreement with Manu Joseph of the Open Magazine when he stuck to his question to Barkha Dutt.  His question is, “Where is the story ?” If you string along such a high profile lobbyist with such high stakes head-fakes like “I will talk to xyz” – then the expectation is something big would break.  No story.  A corporate lobbyist desperate to place a person already under severe corruption charges in the exact same ministry is not a story, she tells us. She plainly said, “I dont think this was a big deal”.  Because, if she really felt the 2G scam had robbed an asset belonging to  street children  – the coverage of the scam would have been completely different. We do have to be careful to not make it just about Barkha Dutt – the entire media played a very suspicious role in the first 18 months since the scam broke. And it continues to do so today (next post)

 

I know so much about media silence on this scam because I despaired for a long time about the woeful lack of coverage of a scam that outraged me.  Who am I ? Why should I care so much ? Am I allied to the rival political party ?  How dare a tiny nameless ant take on the mighty ?  These questions are irrelevant. Lets just say I will do whatever it takes to punch way above my weight category against the corrupt and purveyors of fake social justice.  Just an ordinary outraged Indian citizen.

I have researched, scoured the internet, and recorded whatever I could about the 2G scam over a period of two years. My dominant feeling during this entire period was a sense of exasperation about the near total silence in the media.  Most of my inputs in the early days of the scam were from some cowboy outfits (Pioneer being the most notable).

Here is a list of blog posts on the subject with specific excerpts of my frustration with media silence.

Dec 12 2008 : Spectrum Scam and bullet proof vests

Thats right ! The size of the scam is greater than the amount we are going to spend on all defence purchases this year.  We can probably give each commando a bullet proof humvee and still have some money left over. How do you think this will make those who wear substandard bulletproof vests feel ?

Yet this story will hardly make a ripple in the media. Why ? Mr Raja has already passed the buck to Mr Singh and Mr Chidambaram, both media darlings. The matter has reached a dead end.

Dec 14 2008 : Scam robs poor street children

Maybe, the problem is that this scam has not been explained in the media in simple language.  Lets try it.

Dec 15 2008 : CPM for JPC to probe 2G scam

BJP does not seem to be doing its job as the main opposition party. Unfortunately, neither the media, nor the ‘middle-class’ bloggers will take it up because this been linked to the Prime Minister and P.Chidambaram, both who are above criticism.

To hell with 55,000 Crores cash money !! (I am not kidding, this is CASH the government could have got today, but has gone to Aravind-Adiga-White-Tiger-style-entrepreneurs)

Dec 16 2008 : About Yechury’s letter to PM on 2G scam

Yesterday, the media ran non stop headlines on the cash-for-votes scam.  Some bloggers including Offstumped covered it too. The only interesting thing about this toothpick of a scam is how the BJP hobnobbed with the CNN-IBN, literally begging them to do a sting.

The three stunning characteristics of the spectrum scam are :

….

The medias next assignment is this : Somehow run stories to divert attention from this scam. The minister A. Raja has clearly mentioned that he has full backing of the PM and former Finance Minister P. Chidambaram.

The CPM is the only party making a noise about this.  For that Kudos !

Dec 17 2008 : Satyam Daddy buys sons companies for $1.6B (2G ref)

First, an update on the grand daddy of all scams. The Congress Party led UPA government’s underselling of a national property by Rs 55,000 Cr is starting to attract eyeballs.  Some “entrepreneurs” have become dollar billionaires in just a 6-9 months.

….

Nothing is going to expose Indias underbelly like this scam.

The media must strain every muscle to shield some people in the Congress. The Telecom minister has clearly said that both Prime  Minister Dr Manmohan Singh and former Finance Minister and current Home Minister Mr P. Chidambaram were in the loop on all details.  We have not heard a single word from these two gentlemen. As things stand – they are in on this !

Dec 18 2008 : Biggest scam in history of independent India

Request to bloggers (Mutiny, National Interest, etc)

Please write at least one post about this  ! It is in the “National Interest” to protect the scarcest of national resources. Is it not ?

Dec 19 2008 : RS Debate on scam

I remember around this time there was a near complete blackout in the media. I had to find information from Rajya Sabha transcripts ! None of the channels even reported this truthfully later !

Dec 19 2008 : No simple scams please

We will continue to follow this story. Of course stupid, we are aware it will die soon. The PM and former FM continue to maintain a silence waiting for this outcome. Which they will be rewarded with in due time.

Around this time a couple of stray sources like Statesman / Telecom Tiger had some content.

Dec 19 2008 : Scam – CPM pushes for investigation

Watch UTVI

I switched TV channels today see if any one was running a story on this giant among scams. CNN-IBN, NDTV, TIMESNOW, none of them even mentioned it. My guess is because the PM and former FMs have been in the loop according to the minister.

UTVI was the only channel which carried a story including an interview with Sitaram Yechury.

This is a great chance for UTVI + Business Standard to shake up the other media houses.

Dec 20 2008 : Incredible India – Rs 1,00,000 Cr turns private

At this point everyone agrees the government and the poor people of India lost BIG. There are only alibis being offered. It is time the PM responded to this issue.

————————————

It is not too late now. The Telenor, the DOCOMO, and the Etisalat deals have to be scrapped. The cash returned to their respective owners. These companies should either roll out on their own or surrender their licenses so they can be sold for their actual value. If they are too small to offer services on their own, they should not even be allowed to play this game.

I called for license cancellation in 2008. By this time, quite a few blogs (Ecophilo) etc had picked up on the story. Still nothing on TV.

Dec 23 2008 : Antulay matter laid to rest (2G scam ref)

The Indian state lost big, dollar billionaires were created out of thin air. No one seems to dispute that. Yet, there is no word from the PM or FM.  This is what the 100K Cr spectrum scam is was all about. Sukh Ram was hounded for causing a loss of Rs 2 Crore to the exchequer. Thats right ! We have come a long way, haven’t we ?

The corrupt state of India is like a giant flying octopus.. If you want to change its nature you have to grab on to something real, like a dangling tentacle. If you can hold on to the tentacle and patiently climb up, you can  kill the monster. Antulay’s outburst does not mean much. It is not anything concrete, it is just words that can at best lead to ‘Gee it came out all wrong, sorry’.  It is like a jet of ink that confuses and prevents us from holding on to a tentacle.

This is my last post about the scam. This was the best tentacle we had in a while.  Sad to see it go.

Of course, this was not my last post about the scam. I was still outraged / dejected at how something so obvious did not get air time and Antulay’s nonsense antics (which I bet none of you remember now) topped air time.

Dec 27 2008 : We want clinching evidence (Prabhu  Chawla)

Dollar billionaires created holding just a piece of paper. No one, including you Mr Prabhu can dispute it. National assets sold for their real value to foreign players via real estate companies acting as intermediaries. No one, including you disputes it. We do not know if there is a fire, but we sure can see the thick smoke billowing.

Yet, you want evidence to even ask these questions. You have not written enough.

Can you blame our enemies (the cross border variety) from adopting the same ‘give me evidence’ tactics ?

Of all, Mr Prabhu Chawla’s cavalier and dismissive response stands out. Of course , now we have a pen with which we can connect the dots.

Jan 1 2009 : Satyam past must be investigated (2G scam ref)

This past year alone various institutions (Supreme Court, TRAI, COAI, CVC, etc) have been asked to prove their mettle. All have fallen woefully short. The CVC is being exposed in the way it deals with the magnificent spectrum scam.

The complex interconnection of politics + landlords + entrepreneurs dominate the political landscape in India today. (Political clout might save the day ) Cash changes hands freely while the media is paid off in cash or in secular money.

—-

I say we hold off on asking our soldiers to make the supreme sacrifice until we fix the house. Do you agree ? Dont we owe them that much ?

Jan 14 2009 : 2000 Cr Satyam bailout (2G scam ref)

Manmohan Singh and P. Chidambaram who are completely silent on the Rs 60,000 Crore spectrum scam can hardly be expected to represent the hapless tax payer.

May 5 2009 : No issues of any kind this election

It does not define itself. If the BJP is for Hindu rights, where was it in Malaysia or Sri Lanka ? It did not make a big deal about the Spectrum scam (which I think is a hidden factor in this election). Either it did some adjustments on the scam or was unable to make an issue out of it.  Both scenarios are disturbing.   Still its work on the Ram Sethu is appreciated.

Was really upset the BJP did not make the spectrum scam an election issue.

VVVVVVVVVVVVVVVVVVVVVVVVVVVVVV

INTERMISSION !

22 May 2009

Barkha Dutt  / Vir Sanghvi talk to Radia here on 22 May 2009

This is the untold story of Mediagate. You can see by now HOW MUCH water has flowed under the bridge as far as the 2G corruption story goes.  It is in this context that Mr Manu Joseph of The Open Magazine nailed Barkha Dutt on her show.

Where is the story ? This would have been the story of the century for me and almost all Indians. That a corporate lobbyist it pushing an already tainted person into the same ministry.  Not to mention the splits in the DMK. Nothing. Nada. Was reported.

Not only is this a story but is evidence of a crime committed against the hungry.

VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV

 

Jun 3 2009 : The vote magnet

“you accuse them of hopeless bias, exagerration, dramatization, and working up a frenzy, the perplexing defence the media will offer you is : “Hey let us go, only 1% of 3% watch English electronic media”. The fact is, the media still sets the table at dinner. What they dont like isnt even on the menu. Competition is laughable as they are mostly from the same gene pool.  For example : they could have easily pursued the spectrum scam as vigorously as Varun. This would have dramatically changed the colour and the mood of the free agent voters.”

Oct 24 2009 : CBI raids DoT offices over spectrum scam

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.

Oct 26 2009 : Sunil Jain on spectrum scam and the corrupt state

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.

Oct 27 2009 : Decoding the governments defence of the UASL Licensee windfall

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.

Oct 31 2009 : Raja turns tables

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” ?

Nov 19 2009 : Serendipity and the new age entrepreneurs

Normally, monsoon time means rains and fog, but it seems like this season it is smoke and mirrors.

Jan 22 2010 : Chennai based company sells stake to Etisalat for 380 Cr

How many have heard of this company ?  How many companies without even a website sell their stake for Rs 380 Cr.  This single deal is worth more than half of funds raised by all Private Equity (PE) firms combined* in 2009. Surely a monumental achievement. Yet no one talks about it.

Aside : Outstanding and courageous journalism by Mr Gopikrishnan and the Pioneer.  All other media houses are avoiding this story at the same time as if on cue.

Back in the early 90′s, the media would jump on every story of corruption. That in  no small measure was responsible for toppling the Congress party’s monopoly. You would think that will all the liberalization, the media would go hammer and tongs on this one. Well its not happening and that tells you a lot about how liberalized the media really is.

Another scandal the media isn’t touching

The case, popularly known as Motorola…

Sep 24 2010, Corruption across the spectrum

I have blogged extensively in the past about the so called 2G spectrum scam. What really sets this scam apart in a nation wallowing in corruption is the scale, the brazenness, and the role of the media (we want clinching evidence Prabhu Chawla).

Role of the media: Take spotlight off the beneficiary

Recently, a leading media channel organized another Business Awards night. The usual suspects were awarded. …

You would expect that a couple of young entrepreneurs who crashed into the Forbes India Billionaires list at position #49 and #50 would find at least a mention. Not to be.  Is this how we treat our young entrepreneurs and start ups ?

In the answer to this lies a great secret.

Our media these days is very careful to screen beneficiaries of corruption. They would rather prefer a top-down approach to coverage of corruption stories because inevitably this gets lost in bureaucratic  ‘octopus-ink’.  In contrast, a bottom up pursuit will act as very potent entry points into the scam and have a high human interest angle. All Indians, including Maoists, really hate others getting rich on their money.

Lets put the scam in terms of the actors (underlined) :

Foreign firms paid market value to Indian middlemen for a natural resource who in turn paid peanuts to the government.

So does the media give equal airtime to the three actors. Lets see.

We have a spectacle of an  interview with Telenor CEO, who plainly said his firm is used to doing business in “countries like India”.  We also have the cursory interview with the government officials and ministers. But, you never hear from the “middlemen” who now command companies with market valuations in the billions of US dollars.  I have another example of a inspirational entrepreneur. They are a venture capital firm which sold their stake for 350 Crores – more than a 1/2 of all private equity investments in India in 2009 – yet we did not have one interview with their management and not one award. Contrast to the constant air time and awards given to sundry silicon valley venture capital firms who talk big over puny investments of 1-3 crore.  How are our young supposed to get inspired ?

Forbes India quite obviously has a lot to learn about India.

Nov 20 2010 : Spectrum scam – Daddy’s got a sweet tooth

But, if you push this line of offense you are falling into their trap. They will trap you in technicalities and word play. This is what Sibal is doing.  The intent will be relegated to the corner and something absurd like a technicality or misinterpretation or word play will take centre stage.

 

Thanks for getting this far.

This is not the end. The media even today is having unfocused coverage of this particular scam. The disallow any talk about this scam in isolation instead always wanting to pull in a secondary irrelevant scam as a smokescreen.

 

Advertisements

2G spectrum scam : Daddy’s got a sweet tooth

Posted in Uncategorized by realitycheck on November 20, 2010

The governments strategy has been pretty consistent all along.

“Nobody stopped us from perpetrating what you people are now calling as the ‘scam of the century’.”

 

Shorn of technicalities the scam can be summarized as below :

Before Picture :

1. Country (including minorities, dalits, tribals) had 4.4 Mhz of spectrum

After Picture :

1. Country has 0  Mhz of spectrum

2. Country got 10,000 Cr extra cash in pocket

3. Telenor, Docomo, Etisalat, Bahrain Telecom – the companies offering services – have 40,000 Cr less

4. Dozens of Indians gatecrash Forbes India Rich list ( a few even make it to the Billionaires list)

We can debate all we want about investment vs buyout, presumptive vs substantive loss, paper money vs cash money.  Even ignoring the 3G spectrum price discovery, simply based on what foreign companies have paid to Indian real estate middlemen – the value of the loss is 60,000 Cr.

All the arguments about low cost spectrum enabling low cost services and rural coverage is bogus. From the service providers point of view, they paid 6000 – 10,000 Cr. Period. They could care less about what their Indian partners paid.  Thats right, Etisalat who is giving you services does not care if Swan got the waves for free. For them, they paid 6-7,000 Cr and that investment would determine the pricing of their service.

Absence of bonafides is the new normal

Which brings us to this : Nobody stopped us from doing what we did

Mr Kapil Sibal who is the new Telecom Minister has decided to pursue the “Somebody stop me” line of defence. This is not only deplorable but insulting to the intelligence of those who have been following this scam.  Separatists will use these as yet another reason not to put up with the shenanigans of the state.

The premise :

1. We (the UPA & ally DMK) will operate in a malafide manner unless someone stops us.

2. If we get caught – we are guiltless because no body stopped us. You should be asking why the systems that ought to have stopped us failed. We just did what we do best.

All the back and forth by the government pinning saying, “But TRAI didnt say anything” / “PMO didnt say anything” squares off perfectly with the “somebody stop me” strategy.

The absurdity of this line is :

1. TRAI is not a superior power to the government. If the government wanted to it can ask TRAI to explain. Change its malicious positions. As it is doing now.

2. Besides, the TRAI has repeatedly refuted standing behind the 2001 price level.

From the CAG :

The TRAI, in its report, observed that the entry fee, as it existed in 2001, was not a realistic price for obtaining a licence in the changed situation considering the dynamism and growth of telecom sector… It also observed that the value of spectrum was not correctly reflected in the extant pricing model, and recommended again for de-linking of spectrum from licence.”

But, if you push this line of offense you are falling into their trap. They will trap you in technicalities and word play. This is what Sibal is doing.  The intent will be relegated to the corner and something absurd like a technicality or misinterpretation or word play will take centre stage.

Dont believe me.

Try arguing with the following statement.

“But that report was never discussed by us because GoM and Finance Ministry were not saying they ought to be discussed in reply to our Nov 31 letter to them”.

 

 

Somebody stop me video from The Mask

Corruption across the spectrum

Posted in Uncategorized by realitycheck on September 14, 2010

Terror : Saffron, Green, and Red

Corruption : Across the spectrum

India today under the dominant political party

I have blogged extensively in the past about the so called 2G spectrum scam. What really sets this scam apart in a nation wallowing in corruption is the scale, the brazenness, and the role of the media (we want clinching evidence Prabhu Chawla).

Today, the Supreme Court has issued a show cause notice to Union Minister A. Raja and other branches of government while hearing a PIL filed by various agencies like the Telecom Watchdog, the CPIL,  and veteran journalist Pranonjoy Roy Thakurta.

The CBI’s failure to file a chargesheet or arrest any person in the murky 2G spectrum scam came under scrutiny in the Supreme Court, which on Monday directed Union Telecom Minister A Raja, the Centre and the CBI to respond as to why not the probe be monitored by the apex court or a special investigation team be set up to go into the scam.

Source : Daily Pioneer

In legal terms, the notice itself is fairly routine. At the very least,  it flies down the news wires and brings the corruption scandal into the media again.

The appointment of new CVC : Heads I win, tails you lose

In this light, Pranonjoy Guha Thakurta as a must read piece in the Deccan Chronicle today on the recent appointment of the new Central Vigilance Commissioner Mr PJ Thomas. Please go and read it now. Here is an excerpt of how serious this government is about pursuing the alleged theft of billions of dollars of the scarcest natural resource.

How Manmohan Singh and P. Chidambaram of the Congress completely overruled the fair objections of Sushma Swaraj of the BJP, even when a unanimous alternative choice was within reach.

It is hardly surprising that the appointment of Mr Thomas as CVC by Prime Minister Manmohan Singh and Union home minister P. Chidambaram by over-ruling the objections raised by Sushma Swaraj (who, incidentally, also holds a Cabinet rank as Leader of the Opposition) raised a big hue and cry, since he had just demitted office as secretary, DoT.

About how the new CVC appointee secured a note pre-emptively clipping his wings in what would be his new job.

The Bharatiya Janata Party has alleged that Mr Thomas was chosen because he would not rigorously pursue investigations into the 2G spectrum scandal since he “secured” a note from the law ministry while he was DoT secretary which argues that the allocation of electro-magnetic airwaves, or spectrum, used for telecommunications was part of official “policy” that cannot be questioned either by the CVC or the Comptroller and Auditor General (CAG) of India.

Source  : Deccan Chronicle

Observe how fast the files flew through various offices – as if his appointment was a foregone conclusion. This would automatically mean Manmohan Singh and P. Chidambaram viewed Sushma Swaraj as a mere dummy – who believes friendliness can sway a regime such as the Congress.

The DoT note to the law ministry on the spectrum allocation issue apparently moved with remarkable alacrity between August 10, 2010, and August 12 from official to official before the signatures of minister Mr Raja and secretary Mr Thomas were appended. That’s not all. Within a day, on August 13, the law ministry responded to the DoT’s queries. Such expeditiousness is hardly the hallmark of Indian bureaucracy.

Source  : Deccan Chronicle

On behalf of the citizens of India who are open to an alternative conventional wisdom, Reality Check India would like to extend a Thank You to Mr Pranonjoy Roy Thakurta for this excellent piece.

Role of the media: Take spotlight off the beneficiary

Recently, a leading media channel organized another Business Awards night. The usual suspects were awarded. This year, some brown people holding mid level positions in Obamas cabinet too were honoured. They in turn duly regaled the crowd with their funny accents. The anchor beseeched Mr NR Narayana Murthy once again to step into public life, straight into the office of the President. Mukesh Ambani received the ‘last but not least award’, then cocktails flowed and the crowd dispersed into the Mumbai night. Nothing wrong with these awards.

You would expect that a couple of young entrepreneurs who crashed into the Forbes India Billionaires list at position #49 and #50 would find at least a mention. Not to be.  Is this how we treat our young entrepreneurs and start ups ?

In the answer to this lies a great secret.

Our media these days is very careful to screen beneficiaries of corruption. They would rather prefer a top-down approach to coverage of corruption stories because inevitably this gets lost in bureaucratic  ‘octopus-ink’.  In contrast, a bottom up pursuit will act as very potent entry points into the scam and have a high human interest angle. All Indians, including Maoists, really hate others getting rich on their money.

Lets put the scam in terms of the actors (underlined) :

Foreign firms paid market value to Indian middlemen for a natural resource who in turn paid peanuts to the government.

So does the media give equal airtime to the three actors. Lets see.

We have a spectacle of an  interview with Telenor CEO, who plainly said his firm is used to doing business in “countries like India”.  We also have the cursory interview with the government officials and ministers. But, you never hear from the “middlemen” who now command companies with market valuations in the billions of US dollars.  I have another example of a inspirational entrepreneur. They are a venture capital firm which sold their stake for 350 Crores – more than a 1/2 of all private equity investments in India in 2009 – yet we did not have one interview with their management and not one award. Contrast to the constant air time and awards given to sundry silicon valley venture capital firms who talk big over puny investments of 1-3 crore.  How are our young supposed to get inspired ?

Forbes India quite obviously has a lot to learn about India.

On the United Voters of India and Free Agents

Posted in Uncategorized by realitycheck on November 2, 2010

Atanu Dey has a really thought provoking post over at his blog called A bit on Democracy in India.

The central problem according to him and shared by all of us is :

How do we get men of better quality into elected office ?

The man is an accused, lodged in jail, more than likely guilty of a heinous crime — and wins an election. I can confidently assert that had I contested that election, I would have lost to that man. I am not a paragon of virtue but it is hard to imagine that I am less than a man who is suspected of being a viciously violent person.

I don’t know you, dear reader, but I can bet my bottom dollar that you are not as ethically challenged as that minister of telecommunications accused of a spectrum scam that has probably cost the country billions of dollars. I bet that you have more integrity than the prime minister who shields corrupt politicians from being brought to justice. I wager that you are not so greedy as to siphon off thousands of millions from funds allocated for organizing a games event. Yet you, and thousands like you, don’t have a snowball’s chance in hell of ever being elected to any political office. Indeed it is your scruples, your sense of decency, your moral values, your integrity and intelligence which will be your handicap in getting you to any political office.

Source : A bit on Indian Democracy (emphasis mine)

 

He proposes a new voting bloc called “The United Voters of India”. This is how it would work.

Who decides whom should one vote for? I guess the voter decides. In the UVI context, the group collectively decides. Membership to UVI is voluntary but the condition is that the member adhere to the sworn duty of voting, and voting only for the candidate chosen by the association. The members choose whom to vote for through “primary” elections in which all members are eligible to vote — but it is neither compulsory nor mandatory. The only compulsory bit is that the member eventually vote at the real elections for the candidate chosen by the group.

This is a subject that fascinates me because it contains a call to action.   Like many of you I have spent countless hours dreaming about ways to break this gridlock – How do we get into this ecosystem as a mutant – where everyone already thriving in it stands to lose by allowing us in ?   Atanu comes tantalizingly close with his theory of  “endowment effect” – but I think we are actually in a far worse state.  We are in a loop of exclusive benefits leading to political power. This has been iterated over and over again to a point where entry of a mutant can only be tolerated as a court jester.

Most readers are probably going, “Here he goes again with his free agent theory“.  I do feel dirty for taking on an idea promoted by a man of such high intellect with such a mundane counter as “people vote for their benefit protectors”.

Getting elected

Consider this : Does Atanu Dey who has shown such a passion with concrete ideas for improving India really have no chance of getting elected ?

Dont lose hope yet. All he has to do is join an existing party such as the Congress, the Left, the Trinamool, etc – and get a ticket. There are many ways to go about that including just purchasing a ticket. Lo and behold, we have a new MLA or MP.  Hundreds of people including our prime minister and home minister make it to politics that way. Many more such as Kiran Bedi, Narayan Murthy, are waiting in the wings. So it cant be that hard to get in line. That is not what he is really asking.

So me try to rephrase.

Can a person like Atanu Dey contest on the basis of his own big picture issues and win ?

We are getting closer. Almost impossible – but the degree of impossibility depends on how many ‘free agents’ are in his constituency. I can confidently say that south of the Vindhyas there are very few places where such a miracle can happen. I suspect this is true even in the north – but I leave it to better informed people from that area. You may wonder, what about the dozens of independents who make it past the polls.  Those are really local satraps who protect this or that tailored benefit in that area and have little to articulate by way of “big picture” issues. This could be a route to a landlord, a sugar factory owner, a former politician or someone who has a disproportionate influence in his area.

Endowment vs Ad hoc benefits

What we have in India are not endowments or entitlements – it is in fact something far worse.  We have ad hoc benefits to groups purely at the pleasure of the politicians protecting them. In fact, the politicians are themselves selected for advancing new benefits or protecting existing benefits from examination. Allow  me to explain.

From Atanu’s blog an excellent description of the “endowment effect” –

once you give people something, you cannot say, “oops, that was a mistake, so give it back to me” and expect them to give it up.

It is easy to gloss over the all important “you” and “them” in the above sentence.  In this context,  you refers to the state – represented solely by the humans elected and sitting in the parliament and legislatures.  Them refers to the beneficiaries of the said endowment.

Now imagine a system, where there is a feedback loop between you and them. If the nature of the endowment is such that it directly impacts who gets elected and thus gets put in a position to command the future of the endowment – we have an adhoc benefit.  We expect these humans (ie the Indian state) to scrutinize the very endowment which put them there in the first place.  This would be high treason to the beneficiary group and indeed this is the worst mistake a political party can do today in India. If this feedback loop between you and them is iterated over multiple electoral cycles, the gaps get filled up and it becomes a formidable well oiled machine.

To be sure this machine can also accommodate a sprinkling of harmless court jesters – like Tharoor or Aiyar – who pose no danger to the link of endowments.  It must also accommodate a few fixers such as Pranab and PC. The primary purpose of this machine is however benefit protection, big ticket issues are treated as nuisances that need minimum effort patching. However, this machine has one fatal vulnerability – which I shall address later.

The UVI voting block

I think this sounds very similar to the frequent appeals to “the middle class” to vote for governance. Popular bloggers like Offstumped (formerly of INI)  still seem to believe in this.  I claim the middle class is hopelessly divided into free agents and locked in voters. The middle class is least likely to rebel/defect against their protectors.

A true test of the UVI voting block would be : Can you get Christians to join it ? Even the cool rocker types ? You can extend this to Muslims, caste groups like Gounders, Vellalas, other flexible but numerically tiny beneficiaries like public works contractors, government employees just coming off a 50% hike in DA.

Let me further put across the weakness of the UVI in another way.

Consider this duty of a UVI member :

The only compulsory bit is that the member eventually vote at the real elections for the candidate chosen by the group.

Now lets us consider the dilemma of a UVI member with ad hoc benefits, say an OBC or  Minority. What you are essentially asking him to do is “Sacrifice your benefit protector – who is very much on the ballot – and vote for a larger interest”.  The UVI charter would then seek to extract a sacrifice from him while the free agents have to make no such sacrifice.  Very few will resolve this dilemma the way we want it. Indeed over a period of time, the UVI will end up being a free agent voting block. Which is not a bad thing, but then it has little use as a compulsory voting group. Free agents are all ears for debate.  The UVI might then become a platform to inspire debate. A short distance from there is an outfit to relentlessly challenge conventional wisdom advanced by the big media.  This I think is extremely effective because it has the potential to exploit the fatal vulnerability of the “well oiled” machine I mentioned earlier.

More on this vulnerability later. Let us just say the necessary condition for this adhoc-benefits regime to thrive is darkness and ignorance.

This post should not be interpreted as a cynical view at the UVI. I would be the first person to join such an outfit, but you already got me and others like me at “Hi, I am UVI..”. It is about breaking the logjam and releasing a population of free agent voters – none of whom might be like me or you.

A big thanks to Atanu Dey. We owe him for producing such thought provoking pieces day after day. These exercise a part of the brain which has been numbed by our education system.

 

Chennai based company sells stake to Etisalat for 380 Crores

Posted in Uncategorized by realitycheck on January 22, 2010

The big telecom news last week was Etisalat approaching the FIPB (Foreign Investment Promotion Bureau) to assume full control of their Indian arm, Etisalat DB (formerly Swan Telecom).

They also recently acquired a stake from a venture capital firm.

Last month, media reports said Etisalat had bought an additional 5.27 per cent stake in its Indian subsidiary for 3.8bn rupees (Dh305 million) from Genex Exim Venture, an investment firm based in Chennai.

Source : National (Abu Dhabi)

How many have heard of this company ?  How many companies without even a website sell their stake for Rs 380 Cr.  This single deal is worth more than half of funds raised by all Private Equity (PE) firms combined* in 2009. Surely a monumental achievement. Yet no one talks about it.

So  how does the media in Abu Dhabi sees the original deal ? To refresh your memory : the original deal refers to the loss incurred to the Indian government due to the role played by the middlemen.

Etisalat originally bought its 45 per cent stake in the former Swan Telecom from the Dynamix Balwas Group in December 2008 for US$900 million (Dh3.3 billion), which included a premium to control the company’s management. Etisalat’s stake values the Indian subsidiary at $1.53bn.

Source : National (Abu Dhabi)

Etisalat seems to have paid a premium to control the company’s management.  This was not reported in the media and is counter to what the former FM said. (See previous posts). It might be safe to assume that Telenor also paid a premium to the spectrum winners for control.

The startling thing about the scam is that nobody questions the fact that the government and the people of India lost and lost big.

Recently the CBI seems to be going after Mr A Raja, the minister who is in charge.  There have been major raids this week.

The CBI’s sudden turn to Raja’s family-run companies in connection with the investigation on spectrum scandal is going to be a huge embarrassment to the UPA Government in the coming days.

According to sources, the CBI sleuths had got evidence of huge money transaction from abroad to real estate companies like Green House Promoters and Equaas Estates. The money flowed from Singapore, Malaysia and Dubai into these companies during the same period in 2008 when the controversial allocation of 2G spectrum took place.

Source : The Pioneer

Aside : Outstanding and courageous journalism by Mr Gopikrishnan and the Pioneer.  All other media houses are avoiding this story at the same time as if on cue.

Mr Raja has repeatedly claimed that he had the backing of the Prime Minister and the former Finance Minister. He says they have been updated on every move. The Prime Minister even unusually attempted a defence from Bangkok. In public office, personal integrity does not just stop at not accepting cash. It includes not allowing others to get away with it either. This is going to be a litmus test for the PM and the former FM.

Back in the early 90’s, the media would jump on every story of corruption. That in  no small measure was responsible for toppling the Congress party’s monopoly. You would think that will all the liberalization, the media would go hammer and tongs on this one. Well its not happening and that tells you a lot about how liberalized the media really is.

Another scandal the media isn’t touching

The case, popularly known as Motorola scandal, dates back to 2003 when the CBI had recovered Rs 50 lakh in a raid on a middleman on September 25 that year. According to the FIR, MTNL paid Rs 7.18 crore to Motorola for purchase of equipment, and made illegal gratification to MTNL officials through one Rajiv Gupta, a middleman.

The Pioneer

* Source : India PE Blog http://www.indiape.com/blog

Pegs total PE mobilization in 2009 at Rs 792 Crores.