Latest Posts


Saturday, January 1, 2011

Unholy nexus between politicians, bureaucrats, corporates and lobbyists:

2010: Raja, Ambanis, Tata & Radia figured prominently in SC
New Delhi, Dec 28, (PTI) :

Legal battles involving corporate czars like the Ambanis and Tatas figured prominently in the Supreme Court in 2010, but it was the Niira Radia controversy that threw the light on the corporate prowess in certain quarters of the government, already under fire over a telecom scam.

                The 2G spectrum scam not only led to A Raja's resignation as Telecom Minister and the apex court directing searching questions at Prime Minister Manmohan Singh over the alleged "inaction" and "delay" in probing irregularities in the allocation of licences for the radiowaves, but also brought many companies under the scanner for their dubious role.
                The hearing on the telecom scam coincided with transcripts of tapped phone conversations between corporate lobbyist Niira Radia and others being leaked to the public, forcing Tata Group Chief Ratan Tata to unsuccessfully rush to the apex court to stop any further publication of the contents, which he claimed were purely private in nature.
                However, the government dropped a bombshell, maintaining that Radia's conversations were recorded as a part of surveillance ordered by the Directorate General of Income Tax (Investigation) following a complaint alleging that Radia was an agent of foreign
intelligence agencies and was indulging in anti-national activities.
                The complaint received by the Finance Minister on November 16, 2007, alleged that Radia had within a short span of nine years built up a business empire worth Rs 300 crore.
                The heat generated by Radia tapes was so great that it became a part of the record in the case relating to the 2G scam, which, according to a report by the Comptroller and Auditor General (CAG) report, caused a loss of Rs 1.76 lakh crore to the exchequer.
                While all these events pointed toward an unholy nexus between politicians, bureaucrats, corporates and lobbyists, the court decided to monitor the 2G spectrum scam probe by asking the CBI to widen its investigation to look into the grant of licences by both the NDA and UPA regimes between 2001 and 2007.
                The order for a probe by the CBI and Enforcement Directorate was a severe indictment for Raja, as the apex court held that, prima facie, there were "serious irregularities" in the grant of licences to 122 firms, the majority of whom were "ineligible".
                The ineligible firms whose names cropped up in the apex court were Swan Telecom, allegedly a front company of Reliance Communication; Loop Telecom, which is purportedly owned by the Essar Group; and real estate major Unitech, which had entered into a joint venture with Norway-based Telenor.
                The sale of equity by Tata Tele Services to Japanese operator, Docomo, after getting spectrum licence at the 2001 price also evoked a sharp reaction from the court, which questioned the role of PSU banks in granting huge loans of about Rs 10,000 crore to the 2G licencees.
                Even as the entire telecom sector was under the apex court's scanner over the spectrum scam, British telecom giant Vodafone rushed to it against a Bombay High Court order directing it to pay Rs 11,000 crore as tax to the Income Tax Department.
                The I-T Department alleged that Vodafone had evaded payment of tax on its acquisition of Hutchison's stake in Hutchison-Essar for around USD 11 billion in 2007, following which it was renamed Vodafone-Essar. However, Vodafone rejected the contention that it had to pay any tax on the deal, which was done overseas.
                Vodafone, however, found itself in a tricky situation, as the apex court directed it to first deposit Rs 2,500 crore, along with a bank guarantee of Rs 8,500 crore, pending adjudication of the dispute.
                Nevertheless, the year gone by would perhaps best be remembered by the corporate world for the historical verdict in the gas row between the two Ambani brothers, which was reserved on December 18 last year.
                Though a bench headed by then-Chief Justice K G Balakrishnan held that gas is a national asset that can only be priced by the government, the May 7 verdict clearly made billionaire Mukesh Ambani the victor in his battle with younger brother Anil, whose claim to cheap gas from RIL's landmark D6 field in the Krishna-Godavari Basin was rejected.
                ADAG boss Anil Ambani suffered another blow after the apex court held that the Ambani family MOU that sought to divide gas between group firms of the two brothers was not binding, both legally as well as technically.
                Amidst these cases, the apex court took a strong stance against corporate fraud by cancelling the bail granted by the Andhra Pradesh High Court to the disgraced Founder Chairman of Satyam Computer (now Mahindra Satyam), B Ramalinga Raju, and his associates by observing that the fraud committed by them has eroded the "corporate credibility of the nation".
                During the year, the apex court also made it clear that the need to preserve the environment and wildlife outweighed the claims of industry to exploit mineral-rich areas.
                A special forest bench of the Supreme Court gave a jolt to French cement giant Lafarge by stopping it from carrying out limestone mining in the Khasi Hills of Meghalaya for its plant in Bangladesh.
                The dispute over mining activities kept the Green Bench busy throughout the year and even assumed political hues when the activities of Obulapuram Mining Company, owned by Karnataka's powerful Reddy brothers, at the Bellary mines in Anantpur district of Andhra Pradesh came under the scanner of the apex court.
                The proposed projects of South Korean steel major Posco and private sector miner Sesa Goa, a subsidiary of UK-based Vedanta Group, also suffered setbacks in the High Courts of Orissa and Karnataka, respectively and are now stalled indefinitely pending a green signal from the apex court.
                The year gone by also saw some important judgements passed by the apex court that altered the corporate landscape. One such important ruling settled the dispute over jurisdiction between the Competition Commission of India (CCI) and its appellate body Competition Appellate Tribunal (COMPAT).
                It said the CCI, which replaced the erstwhile MRTPC (Monopolies and Restrictive Trade Practices Commission), has the right to order a time-bound probe against any company on receiving a complaints or proof of unfair business practices. It also debarred COMPAT from interfering with probes initiated by the CCI.
                The Supreme Court also cleared formation of the new National Company Law Tribunal (NCLT), which will assume the powers hitherto exercised by the High Court, Company Law Board and BIFR (Board of Industrial and Financial Reconstruction) to deal with corporate disputes.
                The previous year's legal battle between two top industrial houses -- the Tatas and Ambanis -- over tendering of the Rs 20,000 crore ultra-mega power project at Sasan in Madhya Pradesh continued in the apex court.
                The spat between two regulators -- Securities and Exchange Board of India (SEBI) and Insurance Regulatory and Development Authority (IRDA) over Unit Linked Insurance Products (ULIP) also found its way to the Supreme Court as they locked horns over which of them has the power to regulate these hybrid investment products.
                Beverage major Pepsico got a major relief in its four year legal battle as the apex court set aside the criminal proceedings initiated against the company and its directors by the Kerala government over the alleged presence of pesticide residue beyond the prescribed limit in its soft drinks.
                However, due to the delay on the part of the Centre in making its stand clear, various issues -- including field trials of Genetically Modified crops -- were hanging fire in the Supreme Court.

No comments:

Post a Comment