2G scam: Will CBI establish Swan-Reliance link today?

Perhaps the most significant scam trial in the history of modern India, begins today.

Anil Ambani's Reliance top-executive A N Sethuraman and Assistant Vice President Anand Subramaniam are expected to appear in the CBI designated special court at Patiala House today. Etisalat DB Telecom's (earlier known as Swan Telecom) Chief Regulatory Officer Vinod Kumar Budhiraja will be the third witness.

With the focus on three corporate honchos of Anil Dhirubhai Ambani Group- Gautam Doshi, Surendra Pipara and Hari Nair, the Central Bureau of Investigation (CBI) will try to prove that the trio structured and funded Swan Telecom, which had no business history, to fraudulently acquire 2G spectrum. And the CBI believes that AN Sethuraman, soft spoken and tech-savvy Group President of ADAG, had submitted the first application on 2 March 2007 at the instance of Gautam Doshi, Surendra Pipara and Hari Nair.

The main charge against them is that Doshi, Pipara and Nair used Reliance Telecom funds to create net worth for Swan Telecom. Swan Telecom, the CBI will try and prove, was specially created to obtain 2G spectrum in areas/circles where Reliance had no spectrum. They violated UASL (unified access service licence) rules and conspired with former Communications Minister A Raja to fraudulently get licences for a company which was ineligible. In short, Swan Telecom is an "associate’’ of Reliance Telecom.

Sethuraman was recently also in the news, again, for wrong reasons. He, his uncle V Balasubramanium and Shankar Adawal of the undivided Reliance Group are facing criminal proceedings on charges of possessing confidential government documents under the Official Secrets Act. In May 2011, the Supreme Court had rejected their appeal and refused to give them any relief in this case. The Delhi Police had filed the case against Sethuraman and others after recovering photostat copies of four classified documents in 1998. Later in 2002, the CBI took over the case and filed an FIR. Sethuraman had filed an appeal against the CBI's FIR in the High Court and later the matter came up in the Supreme Court.

The same Sethuraman has given a three-page statement to the CBI, admitting that he had submitted the Swan Telecom's application. The statement will hold ground, only when Sethuraman speaks out today, explaining what he had stated in his statement to the CBI.

In a reconstruction of the 2G scam, the CBI contends that the scam began with Reliance and thus the investigating agency will chronologically produce or summon witnesses for the trial. Twenty-eight of a total of 125 witnesses will be produced by this month-end.

Reliance

In the first lap, the Central Bureau of Investigation (CBI) will parade as many as 13 senior Reliance group officials and 15 bank and other officials as 'reliable’ witnesses. Deshakalyan Chowdhury/AFP

On Friday, 11 November, two Reliance Group officials — Group President AN Sethuraman and Assistant Vice-President of Reliance Capital Ltd Anand Subramaniam – and one Etisalat DB Telecom (earlier known as Swan Telecom) official, Chief Regulatory Officer Vinod Kumar Budhiraja, will appear in the witness box.

Sethuraman had apparently submitted the first application for spectrum on 2 March 2007. In his statement to the CBI, he had stated that he did this on behalf of Doshi, Pipara and Nair. Similarly, other Reliance officials, who will appear in the witness box, have blamed the trio in their respective statements to the CBI.

The trial will test the CBI as well. It is yet to be seen if these witnesses will stick to what they told the CBI or whether they will turn hostile? The CBI, however, claims that it has 'material and 'documentary’ evidence to prove an 'act’ of every witness who will be produced in court. “Thus it will only harm them, if they turn hostile,” a senior CBI official says.

With focus on Reliance, the CBI will attempt to establish that all activities and bank transactions of Reliance Communications, Reliance Telecom, Swan Telecom and Tiger Traders (later called Tiger Trustees) were carried out by the same group of persons as per the instructions of Doshi, Pipara and Nair.

The trio had allegedly structured several private companies named after animals and birds – Tiger Traders, Zebra Consultancy and Parrot Consultants. All the three companies had stakes in each other. “In such a cross-holding structure, no one is the absolute owner of any company and practically the same are controlled by the directors,’’ says the CBI. All the three survived on Reliance funding.

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Tiger Traders had 90.1 percent of the equity in Swan Telecom and the rest (9.9 percent) belonged to Reliance Telecom. Tiger Traders received funds from Reliance Telecom worth Rs 98.51 crore to buy majority equity shares in Swan Telecom, while Reliance Telecom paid Rs 992 crore towards purchasing preference shares of Swan Telecom, which had no business history. Reliance paid Rs 999 for each preference share, which otherwise had a face value of Rs 1.

Doshi, Pipara and Nair allegedly created a web to ensure that the association of Reliance Telecom with the other companies was not detected. They told the Department of Telecom (DOT) that Tiger Traders was held by India Telecom Infrastructure Fund of the Ashok Wadhwa Group of Companies. Ashok Wadhwa is also one of the 28 witnesses who will appear in the witness box this month. Several bank officials will appear as witnesses to prove that the money has come from the Reliance Group.

Nair, Doshi and Pipara have been in jail for over five months now and the CBI-designated court recently rejected their bail pleas on the ground that they had committed a serious crime and were in a position to influence witnesses. With the trial on, the only ray of hope for them is that they stand a better chance of obtaining bail from the high court by the month-end, when most of the witnesses will have given their testimonies.