Investigation into the shareholding pattern of Swan Telecom (now Etisalat DB) to determine whether it acted as a front company for Anil Ambani?s Reliance Communications (RCom) will be fast-tracked by the ministry of corporate affairs (MCA). The MCA plans to solve the case as expeditiously as it resolved the Satyam scam. In fact, for a thorough probe, the MCA may even recommend the case to the Serious Fraud Investigation Office (SFIO).
?In the case of Satyam, the registrar of companies (RoC) sent the report back to the ministry in 3-4 days, after which SFIO took over the investigation… Once we get a formal request from the department of telecommunications (DoT) to carry out the probe, it would take around that much time now also,? corporate affairs minister Salman Khurshid told FE.
As per procedure, MCA directs RoC to provide details on the company?s shareholding pattern, memorandum of association, date of incorporation and annual filings. If the ministry finds any discrepancy or is not satisfied with the disclosures, it can be referred to the SFIO.
?If they (Swan) have not disclosed their precise shareholding structure as alleged in the CAG report, the RoC would report to us following which we may engage the SFIO,? the minister said.
Khurshid said SFIO is a semi-independent body of the ministry and could act only after a formal ministry go-ahead. ?We do our own in-house due diligence when there are indications that things are not right,? he said.
Telecom minister Kapil Sibal had earlier said that DoT would refer the Swan shareholding matter to the MCA.
As reported by FE earlier, MCA has already appointed a nodal officer to probe the entire 2G saga. The officer-in charge is closely coordinating with the CBI and passing on all relevant information required for the probe.
The CAG report said that Anil Ambani?s Reliance Telecom had more than 10% stake in Swan at the time of applying for licences; so its application was ineligible as per cross-holding norms.
The case of Swan, which was renamed as Etisalat DB with UAE-based Etisalat picking up 45% in the company in September 2008 for $900 million, has been shown in the report as getting undue advantage, as its application was favoured despite violating norms and it was given spectrum ahead of others.
The CAG stated that at the time of applying, RTL?s stake in Swan was 10.71%. DoT did not have any mechanism to verify this and hence the matter should have been referred to the MCA as advised by the finance wing of the DoT. However, no such reference was made and instead, Swan was given an opportunity to resubmit a revised stakeholding pattern in December, 2007 ?nine months after their date of application ? which declared that RTL had divested all their stakes. ?This was accepted by DoT and Swan was given the benefit of seniority from the date of its initial application, i.e. March, 2007,? CAG said.
Since Swan was ineligible on the date of application, its application should have been rejected and the company directed to apply afresh. Even if it was to be considered eligible based on its old application, the date of priority based on first-come-first-served basis should have been revised from March 2007 to December 2007 to ensure fairness. ?Had it been so, Swan would have been out of the race as the DoT processed only those applications which were received up to September 25, 2007,? the CAG noted.
On its part, RCom has said: ?Our group had no shareholding in Swan Telecom Ltd (now known as Etisalat DB Ltd) at the time of grant of licence to them or any time thereafter, and that issue is accordingly not relevant to our company. RCom has always been in full compliance with all applicable laws, rules and regulations, and there has been no violation of our licence conditions at any stage on account of cross-holdings in excess of 10%.?