Maran may have misled us on Maxis deal with Sun TV

Special to Firstpost

Union Textiles Minister Dayanidhi Maran, now in the eye of a storm over alleged kickbacks in yet another telecom licence scandal, appears to be lying.

When confronted with a Tehelka story nailing him for allegedly favouring Maxis Group with telecom licences and spectrum in lieu of a friendly investment in his brother Kalanithi’s direct-to-home (DTH) company Sun Direct, Maran said it was totally false. Firstpost published excerpts from the report on 1 June.

In a statement on Wednesday, Maran said: “No telecom company, directly or indirectly, had ever invested in any of the companies owned by my brother during my tenure as Telecom Minister. I was not even a minister when M/s Astro invested in Sun Direct in December 2007 as I had resigned on May 13, 2007.''

Astro All Asia Networks is a Maxis Group company owned by Malaysian entrepreneur T Ananda Krishnan, and its wholly-owned subsidiary South Asia Entertainment Holdings Ltd invested 20% in Sun Direct. Maxis owns 74% of mobile services operator Aircel.

The sum-total of Tehelka’s allegation, for which Maran has sued the magazine for Rs 15 crore, is that Maran sat on Aircel’s applications for telecom licences and spectrum in more circles till after its owner C Sivasankaran (“Siva”) sold it to Maxis. The unstated allegation is that Dayanidhi did not want Siva to get licences, and wanted to favour Maxis, for reasons best known to him. Maran allocated 14 circles and related spectrum to Aircel after Maxis took over.

Documents available with Firstpost reveal that Astro had agreed to invest $ 166 million (approximately Rs 750 crore) in Sun Direct TV, more than a month before Dayanidhi Maran resigned as Union Minister of Communications and IT. In its quarterly report on consolidated results for the second quarter ended on 31 July 2007, Astro announces: “On 5 April 2007, Astro agreed to participate (in a ) joint venture for the provision of direct-to-home digital satellite broadcast (“DTH’’) pay-television services in India, with Kalanithi Maran (Dayanidhi Maran’s brother) and Kavery Kalanithi, collectively referred to as the Maran Group.''

In a 30-page quarterly report of the company released in Malaysia, Page 18 reads: “Under the proposed joint venture, South Asia Entertainment Holdings Limited, a wholly-owned subsidiary of the Group (Astro), agreed to invest up to $166 million by subscribing for new equity shares representing 20% of the enlarged capital of Sun Direct TV Private Limited (“Sun Direct TV’’), a company incorporated in India with a licence to provide DTH pay-television services in India. The Maran Group will hold the remaining 80% interest in Sun Direct TV.’’ See report, Page 18

Not only this. The Maran family was allotted additional equity shares at the rate of Rs 10 a share in Sun Direct TV to maintain their total stakeholding. Maxis paid Rs 80 per share, a premium of Rs 70, for its 20% equity shares in Sun Direct TV. “This is quid pro quo in exchange of spectrum allocated to Aircel,” an informed source close to the investigation alleges.

_(_That, however, remains to be proven. Firstpost emailed the Minister a list of questions on this subject on Thursday at his official email address. No reply had been received at the time of writing. Firstpost will carry a full version of whatever he has to say in this matter.)

In its preliminary probe, the Central Bureau of Investigation (CBI) has also tracked the proposed funding of $ 166 million for Sun Direct. Initial findings are that a part of the $ 166 million invested in Sun Direct TV had probably started coming in from 31 March 2007. Maran had resigned on 13 May 2007. So whether Maran was actually minister or not at the time of the money coming in is a technicality. He was certainly minister when the deal was done - as indicated in the Astro report above.

CBI has reportedly tracked two unsecured loans taken by Kalanidhi Maran’s Sun Direct TV. Gemini Industries and Imaging Ltd, known for film production, graphics and special effects in film-making, had given Rs 61 crore to Sun Direct TV as unsecured loans on 31 March 2007. Kalanidhi’s company also received Rs 117 crore as unsecured loan from a Mauritius-based company DE Shaw Composite Investments. CBI is verifying the genuineness of these loan investments. The agency has also begun investigating the investments of the Maran family’s recent foray into aviation, Spicejet. Kalanithi owns over 38% directly or indirectly in SpiceJet.

(Both Sun TV and SpiceJet shares crashed on Thursday when the stuff hit the fan. On Friday, around 12 noon, however, both shares were up by 6% and 5%, partly as a correction from the previous day’s sharp fall of over 31% and 25% at one stage.)

Dayanidhi Maran also says in his press statement that “in so far as the issue of grant of UASL (Unified Access Service Licence) to Dishnet Wireless Limited (Aircel) is concerned, as far as I could recall, even before I joined as Minister of Communications and IT on May 27, 2004, there were serious queries relating to the funding potential of the company, its net worth and debt-equity ratio raised by the Department of Telecommunications and the application was under examination even before I became Minister.''

The Ministry of Communications records do not seem to accord with this statement. Maran’s predecessor Arun Shourie received eight requests for UAS licences from Dishnet Wireless on 5 March 2004 and he cleared all of them within a month without raising any major issue. The Dishnet owner, Sivasankaran, had sought licences in eight telecom circles - Assam, Bihar, Himachal Pradesh, Jammu & Kashmir, North East, Orissa, West Bengal and Madhya Pradesh.

Shourie cleared the deck for licences in all the eight telecom circles on 6 April 2004. In seven cases (except Madhya Pradesh), he had even issued Letters of Interest (LOI). Since the LOI was not issued to Dishnet Wireless Ltd for the MP telecom circle, Maran sat over Shourie’s decision and issued several show-cause notices to the company.

Maran cleared the Madhya Pradesh licence for Dishnet (renamed Aircel) on 29 November 2006, when Ananda Krishnan of the Maxis Group was already the majority owner of Aircel.

During Maran’s tenure, Sivasankaran applied for 13 UAS licences. Two of them were applied for on 21 April 2004 for UP East and UP West, before Maran was minister. Another four of them were applied for on 1 March 2005 for Haryana, Kerala, Kolkata and Punjab telecom circles. Sivasankaran got no telecom licences, only show cause notices, during Maran’s tenure.

Siva changed the company’s name from Dishnet to Aircel and then again applied for four spectrum licences on 12 January 2006 (Karnataka, Maharashtra, Rajasthan and Mumbai telecom circles) and again on 3 March 2006 (for Andhra Pradesh, Delhi and Gujarat). This is when he made a sudden exit and sold off Aircel to the Maxis Group.

On 16 May 2006, Dayanidhi Maran’s ministry ignored all the show-cause notices served on Dishnet or Aircel in the past and initiated a process to allot the spectrum to Aircel, now owned by Ananda Krishnan. With nine days (between 20 and 29 November 2006) Aircel became the eighth largest telecom company in the country, as Maran cleared all the pending requests for UAS licences to Aircel.

CBI is in touch with Aircel’s old owner Sivasankaran, who sold off Aircel to the Maxis Group in 2006. He appeared before the CBI on 18 May, and offered to make himself available for another round of questioning. According to The Economic Times, this could happen next week.