Was Malaysian govt silent partner in Maxis-Maran deal?
By Raman Kirpal, Firstpost.Business
The 2G scam is beginning to create ripples abroad. While that was always likely – with companies ranging from Etisalat to Telenor and Maxis having invested in Indian partners who are now under a cloud of suspicion or in jail – for the first time a foreign government has begun to be impacted indirectly.
Reason: Maxis group, which is a Malaysia-based group owned by T Ananda Krishnan, and the Malaysian government are partners in Astro, which invested Rs 629 crore in Sun Direct TV, the Maran family’s direct-to-home company.
It found that Khazanah Nasional, a Malaysian government-run company, owns nearly 40 percent in Astro All Asia Networks. Reuters
If, as the Central Bureau of Investigation (CBI) alleges, Krishnan paid Rs 550 crore to the Sun TV Group for alleged favours shown by Dayanidhi Maran when he was Communications Minister, by implication the Malaysian government’s money has been used for something illegal – though it may have been completely unaware of it.
The CBI stumbled upon Malaysian government links while investigating Dayanidhi Maran’s alleged role in forcing C Sivasankaran to sell his stake in Aircel to Maxis Group. It found that Khazanah Nasional, a Malaysian government-run company, owns nearly 40 percent in Astro All Asia Networks.
Astro, which is majority-owned by Krishnan, is alleged to have invested in Sun Direct, allegedly as a quid pro quo for favours shown to Maxis in spectrum licences. The Sun TV group is run by Dayanidhi Maran’s brother Kalanithi.
Khazanah’s chairman is none other Malaysian Prime Minister Haji Mohammed Najib bin Tun Haji Abdul Razak (or Najib Razak, for short). Given its high stake in Astro, the chairman of Astro is a government appointee – former government minister Haji Badri Haji Masri.
The situation is tricky for the CBI, which is planning to send a number of letters rogatory (LRs) to Malaysia to seek information on Ananda Krishnan’s companies and activities. The LRs will be sent on the assumption that the Malaysian government does not know about the details of Ananda Krishnan’s corporate involvement with the Sun TV Group. But with Ananda Krishnan now becoming an accused in the 2G scam case, it is becoming embarrassing both for him and the Malaysian government, which is his partner.
CBI sources are in the process of sending a formal request to the Malaysian government for information, which, they believe, could set off separate formal investigations against Krishnan for paying the “alleged bribe’’ from a company in which the government has a high stake. Khazanah Nasional has listed Astro as one of its industry partners on its website. The website says: “Khazanah Nasional is a driving force in shaping selected strategic industries in Malaysia, nurturing their development and doing so with the objective of pursuing the nation’s long-term economic interests.’’ In its code of ethics, which applies to all its partners, including Astro, Khazanah believes in sustainable business relationships based on the key principles of integrity, accountability, management of conflicts of interests, honest representation, compliance with applicable laws and regulations and gifts policy.
In its annual report, Astro says that its wholly-owned subsidiary South Asia Entertainment Holdings Ltd (SAEHL) subscribed to shares in Sun Direct, in which it holds a 20 percent stake. Astro’s 2010 annual report reads: “As on 31 January 2010, the group had invested some INR 5,990 million (Malaysian ringgit 490 million) in Sun Direct TV for a 20 percent equity interest. During the year, the group accounted for INR 1,102 million (RM81 million) for its share of the anticipated start-up losses arising in Sun Direct TV.’’
It’s not yet known if Astro’s chairman and government appointee Haji Badri Haji Masri was aware that some of this investment may have been made for collateral reasons. Astro’s deputy chairman and group CEO Ralph Marshall, however, knew about the “malafide” intentions, the CBI claims. He too finds himself listed as an accused in the 2G scam.
The CBI, which has named Ananda Krishnan as an accused in its FIR, charges that Sun Direct TV had grossly overvalued its assets. Astro bought a 20 percent stake for Rs 629 crore, while the Maran family paid only Rs 79 crore to buy 80 percent in the company. Thus Astro pumped in an additional Rs 550 crore for favours showered by Dayanidhi Maran.
The CBI claims in its FIR that Maran had favoured Maxis Communications by clearing seven spectrum deals and, in return for this favour, Maxis’ sister concern Astro invested Rs 629 crore at the rate of Rs 69.57 per share.
As the CBI readies its formal LR to seek help from the Malaysian judicial and regulatory authorities, it expects the news to impact Malaysian politics. As a near 40 percent owner of Astro, the proportionate part of the quid pro quo amount of Rs 550 crore would be Rs 220 crore. This can, quite legitimately, be considered as use of government funds for unintended purposes and personal gains.
Astro could theoretically claim that it had to do some things to gain entry in a foreign market with opaque rules. In fact, its report to shareholders says it faces risks of unexpected changes in laws, regulations, licensing, taxation and other policies, as it invests in foreign ventures and operates overseas. Whether this broad disclosure will cut any ice with the Malaysian government remains to be seen – and also whether the CBI manages to prove quid pro quo.
The CBI, in its LRs, clearly mentions “criminal intent” on the part of Ananda Krishnan and Ralph Marshall in investing funds in the Maran family’s Sun Direct business.
