Need to keep politics out of Maxis-Aircel deal probe

October 16, 2011

http://www.thestar.com.my

A QUESTION OF BUSINESS By P. GUNASEGARAM (10-15-11)
p.guna@thestar.com.my

THE problems that tycoon T Ananda Krishnan’s companies are facing in India may well be a reflection of India’s political climate now, which has been rocked by a scandal over the awarding of the 2G telecommunications spectrum.

The resolution of the issues facing Maxis Communications Bhd (MCB) and Astro All Asia Networks will be closely watched not just because of the serious allegations being made against Ananda, senior executive Ralph Marshall and the two companies but also as a gauge of the independence of Indian criminal investigation and the courts if it goes to that.

If there is any hint of bias in the investigation and victimisation of a foreign investor, a Malaysian in this case, for nothing else but the fact that he was doing business in India – under the best of circumstances a very difficult place to do business in – then the ramifications for both India and all who do business there are serious and far-reaching.

Businesses and investors must at all times be assured that they will get a fair deal for all the money that they have put in (MCB’s investments in India amount to a huge RM24bil) and that any investigation will be done fairly and quickly and disputes are settled equitably by the courts.

On hindsight, after his experiences in India recently, it certainly looks like Ananda was right in taking his telecommunications operations private in 2007 and subsequently re-listing only the Malaysian operations under Maxis.

With the problems that he is facing in India, including a relentless investigation by the powerful Central Bureau of Investigation into a deal that the now private MCB made to purchase Aircel way back in December 2005, he must be thankful he does not face a spread of public shareholders and volatile share prices.

Ananda had also privatised Astro All Asia Networks last year in a deal which valued the company at some RM8.5bil. Basically, the investigations allege that Indian entrepreneur and former owner of Aircel, C. Sivasankaran, was pressured to sell Aircel to MCB by then Telecoms Minister Dayanidhi Maran, and that Astro’s purchase of a 20% stake in India’s Sun TV owned by Maran’s brother was quid pro quo for the alleged coercion. Both MCB and Astro, which are majority owned by Ananda’s Usaha Tegas, have denied the allegations.

Indian authorities are no doubt keen to show that they are pursuing any transgressions following the 2G spectrum allocation scandal in which the nation could have lost as much as an estimated US$40bil in revenues because of alleged corruption in the award of scores of licences in 2007-2008.

The Telecoms Minister at that time A Raja was arrested earlier this year while some of India’s billionaires including Anil Ambani of the Reliance group and Ratan Tata of the Tata group have been questioned.

The investigations involving MCB dates back to 2-3 years before the 2G spectrum awards in 2007-2008 and is seen by the public almost as an extension of that even though there were different telecoms ministers then.

But, any complaints made now, in the wake of the 2G scandal are likely to receive a lot of public attention and therefore pressure both from the public and politically for a “thorough” investigation and punishment.

However, Indian authorities must not bow to such public, media and political pressure and be overzealous in their investigation for that would be unfair to those being investigated. There should be no tendency towards a witch-hunt and disputes about agreements must not be allowed to become something which is criminal in nature.

In the specific case involving MCB and Astro, the question has to be asked why the complaint to the authorities from Sivasankaran only came soon after he lost arbitration proceedings with MCB and five years after the sale of Aircel.

Also, while the controlling shareholder of both MCB and Astro are the same, both companies also have other strong and different shareholders and boards which are independent of each other.

A conspiracy involving both companies with one company paying for the benefit received for another company may be stretching the facts too far because all relevant parties – the shareholders and board members of both companies – will have to conspire or all of them have to be deceived for such a deal to go through.

India must not let political expediency rule even though it would be populist to hang a few big guys in the name of the 2G and related scandals. The overiding aim of investigations must be to uncover and punish wrongdoing – nothing more and nothing less. The sooner they conclude the investigations the better for all concerned.

For Ananda, Marshall, MCB and Astro, the reality is that whether they like it or not, they are going to face a potentially long and tough investigation. Cooperating with the authorities is of course the right thing.

But, beyond that they need to keep their stakeholders, including the public, appropriately informed at every step, keep their noses to the grindstone and get on with the business.If they have done nothing wrong, they should be vindicated – hopefully not too long from now.