Marans lose Rs 3,000 crore in an hour after telecom expose

The Marans of Tamil Nadu, brothers Dayanidhi and Kalanidhi, grand nephews of former DMK Chief Minister M Karunanidhi, have lost over Rs 3,000 crore in paper wealth in just a few hours today after a news story linked Dayanidhi to another dubious telecom deal.

FP Editors June 02, 2011 14:17:28 IST
Marans lose Rs 3,000 crore in an hour after telecom expose

The Marans of Tamil Nadu, brothers Dayanidhi and Kalanidhi, grand nephews of former DMK Chief Minister M Karunanidhi, have lost over Rs 3,000 crore in paper wealth in just a few hours today after a news story linked Dayanidhi to another dubious telecom deal.

The Sun TV Network and SpiceJet airline are owned 77 percent and 38.61 percent respectively by Kalanidhi Maran, brother of Textiles Minister Dayanidhi Maran. Their shares dropped vertically after Tehelka published an expose suggesting that there was a payoff scandal involving the latter when he was Union Communications Minister between 2004-07.

Marans lose Rs 3000 crore in an hour after telecom expose

News about the CBI probe sent share prices of Maran companies crashing.Image: Reuters.

Firstpost had flagged of the public's concerns about the Marans as early as May 13, when Karunanidhi was swept out of power ignominiously in the Assembly elections. One reason why the Tamil Nadu voter turned dramatically against the Karunanidhis and Marans was their excessive control on the state's policy-making apparatus and accumulation of wealth.

We wrote then:

"In the five years of its rule, the DMK gave away nearly 1.9 crore colour televisions as part of its 2006 poll promise. So, Tamil Nadu became a state with one of the highest TV penetrations.... While television companies would have had a great time supplying 1.9 crore TVs, it was the Marans' cable networks - Sun Direct and Sumangali Cable Vision - that benefited the most because the DMK was careful not to promise free cable connections. So they now have an assured, recurring income, at the cost of the exchequer!"

Now, it appears that the Central Bureau of Investigation (CBI) is investigating whether Dayanidhi used the powers of his office as Communications Minister to seek illegal gratification from telecom operators - exactly the same offence that got his successor Andimuthu Raja into prison earlier this year.

News about the CBI probe sent share prices of Maran companies crashing. According to Reuters, shares in Sun TV fell more than 31 percent in the initial hours of trading on Thursday after media reports said Dayanidhi was named in a lawsuit related to a telecom probe, further embarrassing a coalition government mired in a series of scandals.

The CBI has started a "preliminary investigation" against Dayanidhi, an unnamed official from the agency said.

Maran allegedly favoured Malaysia's Maxis Communications, which owns a controlling stake in mobile carrier Aircel, in return for which the Malaysian firm invested in Maran's family business.

In a statement on Wednesday, Maran denied favouring any company during his stint as telecom minister. Meanwhile, the main opposition Bharatiya Janata Party and Tamil Nadu Chief Minister J Jayalalithaa have called for his resignation.

Shares in Sun TV and budget carrier Spicejet, controlled by Maran's elder brother, had recovered slightly around 2.15 pm on Thursday, bringing down their loss from overnight close levels to 25 percent and 15 per cent.

"There are rumours of a potential probe. Investors are concerned and are cutting down positions," said Suresh Parmar, associate vice-president of institutional equities at KJMC Capital Markets.

Sun TV and Spicejet did not immediately comment.

Maran belongs to the DMK party, which is the second-biggest partner in Prime Minister Manmohan Singh's government.

The CBI have already arrested Raja, who had taken over from Maran as Communications Minister, and Kanimozhi, the MP daughter of the DMK chief, over a huge telecom licensing scandal in 2007-08 that a state auditor said cost the exchequer upto $39 billion in potential revenue.

This has strained ties between Prime Minister Singh's Congress party and DMK, although few expect the DMK to pull out of the government as the party is weakened following the loss in elections in its bastion state of Tamil Nadu last month.

The telecom scandal is the largest of several that have emerged in Singh's second term and has weakened the government's political authority and spooked investors.

(With Reuters reports)

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