In a move that could spell trouble for former Finance Minister P Chidambaram, the CBI has sought from the CAG details of its audit report in the Aircel-Maxis deal exposing “undisclosed” and “illegal” fund flow of Rs1,255 crore to Aircel from Malaysian company Maxis.
While the Foreign Investment Promotion Board (FIPB) had given approval for only `3,514 crore of investment by Maxis in Aircel, the CAG’s P&T Audit wing with the help of its counterpart auditors from Malaysia, has discovered that Aircel got `4,769 crore from Maxis in clear violation of Foreign Exchange Management Act (FEMA) and Prevention of Money Laundering Act (PMLA).
“During the course of investigation of the above-referred case (Aircel-Maxis), it transpired that P&T Audit Office had conducted audit of Department of Telecommu-nications with reference to the Aircel-Maxis deal and had raised certain audit paras/objections. In this context, the following documents/information are required,” said CBI in a “Most Urgent” communication to CAG in the first week of July.
The CBI sought details of the audit report, audit paras/objections raised and also replies from Finance Ministry and Department of Telecom. In its final finding in January, the CAG’s P&T Audit wing observed that the FIPB approval to Aircel-Maxis was a “mockery” of FDI norms. It also pointed out that communications from the Finance Ministry in 2006 were “silent” on the value of the FDI flow in the above deal.
It also blamed Finance Ministry and DoT for allowing Maxis to acquire 99.3 per cent of shares in Aircel in “secret ways.” During that period in 2006, foreign companies were allowed to invest only 74 per cent in telecom companies. Interestingly to the CAG’s query in this regard, the Ministry of Finance in September 2013 said they had relied on the statement given by the Company Secretary of Aircel.
Reiterating the CBI’s earlier findings, the auditors also said that as FIPB Chairman Chidambaram had no authority to approve any deal above `600 crore.
As per the rule, any investment above Rs 600 core has to be approved by the Cabinet Committee on Economic Affairs (CCEA). Despite this, the FIPB meeting chaired by Chidambaram approved the Rs 3,500 crore worth Aircel-Maxis deal in March 2006.
The CAG auditors found that this was the only case in which Chidambaram gave FIPB approval, while he referred all other similar cases to the CCEA. Under Chidambaram, the Finance Ministry even sent Malaysian company Maxis’ subsidiary Astro’s Rs 660 crore investment proposal in Sun TV Group to the CCEA for approval. The CBI in its charge sheet against former Telecom Minister Dayanidhi Maran, termed this investment as a quid pro quo from the Malaysian tycoon Ananda Krishnan.
“Audit further found that the letter of the Finance Ministry conveying the approval of FIPB in March 2006 did not indicate the approved quantum (amount) of the foreign investment i.e., upto which value the investment was to be made by Maxis group in Aircel Ltd,” said the CAG’s audit wing.
It was interesting to note that the Finance Ministry’s letter was dated March 20, 2006, and on the very next day Maxis invested Rs 3,514.35crore in Aircel. The CAG in its findings has given a detailed chart on how Rs 4,769 crore has flown from Maxis to Aircel.
The auditors also found that the Finance Ministry’s communications to Aircel were addressed to the c/o address of Amarchand Mangaldas & Suresh A Shroff & Co. Incidentally, in December 2014, Chidambaram represented one of the promoters of this firm in their legal battle of separation in Mumbai High Court.
In its charge sheet in August 29, 2014 against Maran brothers and Maxis owners, the CBI said that Chidambaram illegally gave FIPB clearance to Aircel-Maxis deal. The charge sheet also said that probe in the illegalities in grant of the FIPB clearances will be finished soon. In October, the Supreme Court (SC) had ordered the CBI to submit a status report on the probe against Chidambaram upon BJP leader Subramanian Swamy’s petition.
In the first week of December, the CBI had interrogated the former Finance Minister. However, the CBI Joint-Director Ashok Tewari, the officer who summoned Chidambaram was unceremoniously shunted out to his parent cadre in Himachal Pradesh within months.
Enforcement Directorate (ED) had already attached Rs.750 crore worth of properties of Sun TV in March. However, the ED has not yet launched prosecution proceedings against the people involved for PMLA and FEMA violations in the Aircel-Maxis scam. The SC is expected to hear the case next week.