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Home » business » Erstwhile policy allowed FIPB to clear Aircel-Maxis case

Erstwhile policy allowed FIPB to clear Aircel-Maxis case

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ED files chargesheet against Chidambaram in Aircel Maxis case

On February 10, the Supreme Court asked BJP leader Subramanian Swamy to put forward “concrete” evidence to prove that former Finance Minister P Chidambaram had directly given FIPB clearance to the Aircel-Maxis deal in 2006, bypassing the Cabinet Committee for Economic Affairs (CCEA). Foreign ministry officials however say that it was the erstwhile policy, which allowed the Foreign Investment and Promotion Board (FIPB) to give its nod without directing the case to the CCEA.

Senior finance ministry officials say that till 2010, the FIPB had the power to clear investments up to Rs 600 crore; this was later revised upwards to Rs 1,200 crore. Any deal above Rs 1,200 crore would have to be vetted by the CCEA. However, the earlier policy did permit the FIPB to consider investments based on the face value of a company share proposed to be acquired rather than on the actual foreign investment inflow.

While the Central Bureau of Investigation (CBI) has had its nose in the $ 800 million Aircel-Maxis case, at least 20 other cases were given approval by the FIPB in a similar manner. Ashok Jha, the Department of Economic Affairs (DEA) secretary who chaired the FIPB meeting during the Aircel-Maxis deal, told Business Standard in 2014 that “There is no impropriety whatsoever in granting FIPB clearance. Everything was done strictly in accordance with existing rules.” The other 20 cases included proposals for investments in Idea Cellular, ICICI Venture Funds, Essar Infrastructure Holdings, Teletech Investments, and Hilton Hotels.

Aircel Cellular Ltd’s shares were acquired by Malaysia’s Maxis Communication in2006. The ownership of Aircel was transferred from C Sivasankaran, the then promoter ofAircel, to Maxis. Since Maxis was a foreign entity, FIPB approval was soughtfor. The approval was given by the then Finance Minister P. Chidambaram.

“The FIPB was chaired by the Secretary, department of economic affairs and recommended proposalsfor the approval of the finance minister and, where required under the rules, the approval of theCCEA,” said a lawyer handling the case.

In the Aircel-Maxis case, the FIPB sought the approval of the finance minister in accordancewith the rules. The case was submitted through the additional secretary and secretary,department of economic affairs (DEA). Both of them recommended the case for approval, and the finance minister, in the normal course, granted it.Jha was the DEA secretary and AshokChawla, now chairman of the Competition Commission of India (CCI), was the additional secretary at that point.

In November last year, Chidambaram filed an affidavit against the Enforcement Directorate (ED) investigating his son Karti in connection with money laundering probe in the Aircel-Maxis deal. As per the affidavit, it is said the CBI has not found or reported any offence under any law in respect of the Foreign Investment Promotion Board (FIPB) approval.

During the course of the hearing on November 25, Chidambaram said that the investigation against his son Karti were in respect of the FIPB approval.The affidavit added that the approval was granted in the ordinary course of government business.

“The chargesheet in the Aircel-Maxis case was filed on 28 August, 2014. The statement in respect of FIPB approval from the official concerned were recorded, Thereafter, in course of further investigation under section 173(8) of the Code of Criminal Procedure, it is thereafter that the status report was filed in the Supreme Court. The CBI has not found or reported any offence under any law in respect of the said FIPB approval”, the affidavit stated.

Karti Chidambaram is being probed for his role in firms identified as Advantage Strategic Consulting Private Limited and Chess Management Services, where Karti had been a director, and a few others for alleged violations under the Prevention of Money Laundering Act. Karti has repeatedly claimed that his only connection to Aircel-Maxis is a SIM card of Aircel.

With the collapse the Aircel-Maxis case and CBI refusing to further probe the matter relatingto FIPB due to lack of any credible material, Swamy may be trying flog a dead horse.  “Swamy is always avexatious litigant and had filed several cases against the family of Mr. P. Chidambaram and allhave been dismissed by the respective Courts,” said a lawyer who is handling the case. It will be known in a few days if Swamy lives up to his bravado or is rebuffed by the courts.

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