People's Democracy

Harkishan Singh Surjeet

WIDELY known as the main fundraiser for the Bharatiya Janata Party (BJP), Pramod Mahajan is once again at the centre of talk in the town — and once again for the wrong reason. And with him, once again has there come under cloud the BJP’s reputation as the "party of principles," as the "party with a difference." While the party could not rid the country of its curses like bhook (hunger) and bhay (fear) during the six years of its ignominious rule, which it had bombastically claimed it would do, by now it is more than evident that it was itself neck deep in bhrashtachar (corruption) — the third curse it had promise to eliminate.

As a matter of fact, the people of this country have been well aware that top BJP leaders were not averse to engaging in shady dealings for the shake of filthy lucre. Who can forget the Bangaru Laxman image on TV or the famous Joodev words about money being no less than God! And the recent revelation about Mahajan adds one more feather to the BJP’s cap of wrongdoings.

THE recent revelation has its origin in the bitter cold war that is currently going on between the Ambani brothers, Mukesh and Anil, over who will control and how much of the business empire the late Dhirubhai Ambani had left. Not very long ago had it transpired, as a direct fallout of this war, that the Reliance Infocomm had transferred one crore of its shares to three small companies for only Rs one crore, i e just at Re one per share. As the Reliance has been the biggest industrial house of this country for some time, and as the shares of any company of this group have been fetching huge premiums in the market, the news surprised everybody and gave the indication that something shady was going on in the group.

And now comes to light the fact that one of these three companies, called Fairever, has been linked to a company that was earlier called Global e- Secure, and the latter’s office address was precisely the Fairever’s address — at Shriram Mills, Lower Parel, Mumbai. But the key part of the story is that Global e-Secure’s managing director, Ashish Deora, is also the promoter of Indiaonline. And guess who are his co-promoters! None other than Shri Pramod Mahajan’s daughter Poonam and his son Rahul Mahajan, now an NRI. Mahajan’s son-in-law Anand Rao has also been associated with this company.

The story also reveals the circuitous route these gentlemen have been using — like all cheaters. (1) Reliance Infocomm transfers its shares cheaply to three companies, which are benami companies, and nobody knows precisely why these pigmy companies were obliged in this manner. (2) One of these companies is Fairever whose managing director is, in turn, the promoter of another company in collaboration (or collusion!) with Pramod Mahajan’s daughter and son. (3) Two years ago this second company (Global e-Secure) changed its name to IOL Broadband Limited, and Rahul Mahajan is actively associated with it, even though he has no official position in the company. (4) The website of this company (IOL) does not give any more details about it, like the company’s history or the names of its promoters.

Journalist Olga Tellis made this revelation in the February 6 issue of The Asian Age daily.

IT is clear that, insofar as the magnitude of this scam is concerned, the three benami companies that received the largesse from Reliance Infocomm have pocketed at least Rs 700 crore in this dubious manner. This is based on the fact that immediately before the cold war between the Ambani brothers broke out, Reliance Infocomm shares were being sold at Rs 700 per share.

Further, it is reported that the three benami companies were given an equal number of Reliance Infocomm shares. In that case, it means that the company promoted by Messrs Poonam Mahajan and Rahul Mahajan was handed over a largesse of no less than Rs 233 crore 33 lakh 33 thousand 33 rupees and 33 paise.

It is thus clear that if such companies say they are in possession of necessary skills and state-of-the-art technologies and that they utilise these things to render services to their customers, the biggest beneficiaries of their services are the promoters themselves, like the Mahajan family.

This makes it further clear that if Pramod Mahajan’s son is an NRI (non-resident Indian), the flamboyant BJP leader himself comes in the category of what this paper has been calling the NIRs — i e non- Indian residents.

IN her report, Olga Tellis describes the Mahajans’ company as Indiaonline while saying that Global e-Secure later changed its name to IOL Broadband Limited. Though Rahul Mahanjan is said to be associated with the latter, it has not been made clear if there is any intrinsic relationship between the Indiaonline and IOL Broadband Limited.

Yet, the convergence of names is notable — IOL could very well be the abbreviation for Indiaonline. Now, one eagerly waits to see whether, or how, this convergence of names was meant for duping the customers and cheating the authorities.

The Asian Age report makes one more serious omission, apart from the above. The report says: "IDBI is said to have given a loan of Rs 10 crore to the firm and this could be a bad debt in IDBI’s books." But the important thing that should have been probed and conveyed to the readers is whether the Industrial Development Bank of India (IDBI) had completed the necessary formalities and checked the credit-worthiness of the IOL Broadband Limited before sanctioning it such a huge loan amount.

Let us hope that some more revelations in regard to these two points would come out in the days to come.

AS for the IDBI’s loan to the IOL Broadband Limited, this is a cause of concern in view of one serious fact. One recalls that it is these very types of investments in dubious or shaky companies that had pushed the US-64, the most sought-after mutual fund scheme of the Unit Trust of India (UTI), into the red four years ago. For example, the dispensation of the same BJP and same Mahajan & Co had arm-twisted the UTI to make investments into The Pioneer (the rag of a paper), Pritish Nandi Communications and some other shaky companies. (These included one Lucknow based company whose promoter was close to the then prime minister Vajpayee; the latter also graced with his presence one of the ceremonies of this company.) And it is these investments that finally pushed the UTI under, gobbling in the process the lifetime savings of at least two crore investors.

A queer, and meaningful, aspect of this UTI scam was that big investors including the Reliance group were informed in advance that the US-64 was soon to go under. This enabled them to withdraw their monies in time. In the end, it was only the small investors who lost their savings in this BJP patronised scam.

After the public sector Unit Trust of India, once the biggest and most trusted mutual funds of this country, lost its trust-worthiness courtesy BJP leaders, one more public sector finance company has gone under. This was the Industrial Finance Corporation of India (IFCI), whose liabilities were then taken over by the IDBI.

And now the same ominous threat looms large in face of the IDBI. The concern had already reached in a shaky position under the BJP rule, and its vulnerability further increased after the same regime forced it to take over the IFCI’s liabilities.

COMING back to the Mahajan-Reliance relationship, one may recall that it was the same Mahajan who had pleaded that Reliance group’s founder, late Dhirubhai Ambani, must be honoured with a Bharat Ratna, the highest civilian award of the country. Mahajan’s wish remains unfulfilled up till now, but the demand makes one wonder where our country has landed since independence.

Consider this. The Reliance group started its operations in 1976, had reached the tenth position among India’s industrial houses by 1986, and is now the leading industrial house of the country, leaving far behind the traditional top rankers viz the Tatas and Birlas. In sum, the less than three decades journey of the group has been truly amazing. But this also makes one ponder as to at what cost this meteoric rise was achieved. Dhirubhai’s biographer has given some instances of his unethical acts when he was just an ordinary employee at a petrol pump in Dubai.

Nay, Mahajan’s unethical relation with the Ambanis has not been confined to this demand; it went much deeper. For example, there was a dispute between the WLL and GSM companies when Mahajan was the communications minister in the Vajpayee government, and he had to naturally intervene in the dispute. There was nothing wrong in it per se, as it was his duty to intervene. But Mahajan intervened in the dispute in such a manner that it benefited the Reliance group. Mahajan’s interventions in many other matters was also of the kind that it only legalised certain illegalities — in order to benefit the Ambanis.

It is therefore no wonder that people widely regard Mahajan as the Ambani man, and some media groups have told it in so many words. For example, Hindi daily Punjab Kesari (February 7) says that if Reliance transferred one crore shares to three fake companies, "in this whole affair the ultimate beneficiary was Pramod Mahajan who was then the communications minister at the centre. Pramod Mahajan was known as the Reliance man in the Vajpayee cabinet."

AND not confining itself to Mahajan, the same paper says at another place: "The Vajpayee government was completely in the Ambanis’ hands and, as this paper had written several times earlier, the economic policies of the Vajpayee government were being conducted by the Ambani family." Further, "Pramod Mahajan was not alone to help the Ambanis; there were several ministers who had had Vajpayee’s full support."

Regarding what lowly depths this unethical relationship of the BJP top brass with the Ambanis could touch, one has only to consider that the group has been accused of illegally procuring documents that were vital for the country’s security. Today it is common knowledge that one of the Reliance representative in Delhi was found in possession of secret cabinet papers, which only shows that the group had had access to the high-ups during the BJP regime. Moreover, it was during the BJP rule when the Central Bureau of Investigation (CBI) carried out a raid on a Reliance office in Delhi, recovered five secret notes from the office and questioned three Reliance officials under the Official Secrets Act (OSA). But, then, a minister wrote on file that these documents had had no bearing upon national security and integrity, that they were recovered from the desks of certain employees of the company, and that the company had no hand in the theft. And the aim was to enable the Reliance to participate in the BJP government’s infamous disinvestment process, as no one charged under the OSA could take part in this process.

To quote the Punjab Kesari again: "This shows what lame arguments ministers in the Vajpayee government used to give in order to help the Ambanis."

In her later report in The Asian Age on February 7, regarding the fraud perpetrated by Reliance Infocomm and US-registered Reliance Communications Inc (RCI) upon the public sector BSNL and MTNL, Olga Tellis also gives an instance of how these companies posed a threat to national security. She says: "In the absence of correct CLI (caller line identification), security agencies have to approach the concerned licensee to trace back the calls, which should be avoided as it severely dilutes the secrecy of the intelligence." She said so on the strength of a department of telecommunications enquiry into this "well-thought out and carefully organised fraud" in which international calls were being routed as local calls. This report was categorical that by tampering with the CLI, the RCI "breached security regulations." (This report too is being printed elsewhere in this issue.) The whole RCI episode in fact gives ample indication of what security hazards powerful and unscrupulous foreign telecommunication companies may pose after the Manmohan government has raised the FDI cap in telecom.

It is thus clear that this party, the BJP, which used to shout patriotism from the roof top, could go to any length to rush benefits to the Ambanis, even if it meant putting the country’s security into jeopardy.

AS for what kind of corporate governance is evolving under the tutelage of the Ambanis and the like, and under the very nose of successive governments of India over the decades, this is in itself a separate topic of discussion. We also believe that we would get an occasion in future to say something on this topic. Here we can only say that the whole Mahajan episode has come as a shock to the nation and that the government should properly investigate this issue.

This is something the UPA government can ignore only to its peril. Already, voices are being raised in this regard, and the Punjab Kesari has gone to the extent of saying that "there is no dearth of such leaders in the Congress as have relations with the Ambani family; the list of such Congressmen is as long as those of the BJP." The paper also suggests that there are enough grounds for the CBI to proceed on its own under the anti-corruption law. As Mahajan was a union cabinet minister at that time, he may certainly be brought to book under this law.

Another issue worth investigating is the transfer of the pubic sector oil company, the Indian Petrochemicals Corporation Ltd (IPCL), to the Ambani house. We know that for more than three decades there has been existing in this country a law aimed at curbing the growth of monopolies, viz the Monopolies & Restrictive Trade Practices Act (MRTP Act), and that this law was observed more in its breach. And the BJP government has been no exception in this regard; it sold the IPCL to the Ambanis in order to enable them to have virtual monopoly in this crucial field.

We also know that most of the cases of disinvestment under the Vajpayee regime were not above board and that public wealth was handed over to private hands for a song. BALCO and the Centaur Hotel episodes were only two such cases of the kind. The UPA government must keep this aspect also in view while investigating the terms and conditions of the IPCL’s transfer to Ambani hands.

This is truly the time of a fiery test for the Manmohan government and its credibility would very much depend on how it conducts itself in this regard.