THE 3G LOOT (PART 1) - THE UNKNOWN STORY

I have a BSNL mobile connection. It's highly temperamental. Sometimes, during a call, the voice fades away and the connection breaks. Most times the call does not go through at all. The signal keeps fluctuating for no rhyme or reason. Very frequently, while on the move, I expect the signal to get cut. But it doesn't....

When I checked out with a BSNL lineman on the reasons for my mobile connection's eccentricity, he spread out his hands, expressively. "We just don't have enough towers", he said. "Both 2G and 3G are operating through the same towers. That's why we have so much problems". 

He was only reiterating what I had known all along. I am sure the Indian people would also like to know what is wrong with our national telecom major.

The year : 2008. India was on the threshold of a telecom revolution. Implementation of 2nd generation telephony (2G) was well under way. And the nation was getting ready to usher in 3G technology. The third generation telephony would give access to uninterrupted wireless broadband and internet connectivity, high speed data connections, VOIP (Voice Over Internet Protocol) services and several other facilities one normally associates with telecommunications in developed countries.

May Day 2008 : Bharat Sanchar Nigam Limited (BSNL) unusually issued a tender notification on the national holiday inviting bids for upgrading BSNL's infrastructure to support the proposed 3G network in the country. The mega bid worth Rs 40,000 crore for planning, engineering supply, installations, testing and commissioning of infrastructure for 90 million lines of mobile expansion in six phases was an ambitious project, extremely tempting for all key players in the telecom Industry.

On instructions from the then Telecom Minister, Andimuthu Raja, then CMD of BSNL Kuldeep Goyal, directed all his immediate subordinates to work with the Department of Telecom in rolling out the tender notification process. They issued the tender notification with No /TA/ Cellone/SZ/2008/01 consisting the 145 page document inviting two stages bidding system in four parts. The last date for the bidding was on July 16, 2008. But at 11.30 hours, it announced that the bids would be opened on the same day at 12 noon.

There was nothing abnormal in the tender notification and nobody doubted the genuineness and scope of the business opportunity. BSNL was moving on fast to improve its huge infrastructure and network facilities across the country setting up 60,000 mobile towers for facilitating 3G technology. In south zone comprising five circles Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Chennai Telecom District itself 16,000 mobile towers were required with a total tender value of Rs. 6500 crores.

With the notification of the bid, the stage was set for the new scam.

Meanwhile, an unknown Chennai software company BR Softtech Enterprises Private Limited started its benami operations in the BSNL Infra deal. BR Softtech had been incorporated on December 01, 2007 with its registered office No 6, 30^th street Ganapathy Colony, O-Block, East Anna Nagar, Chennai. It was a letter-pad company promoted by two businessmen MK Bhasker (PAN: AKMPB3198C) and V Ramkumar (PAN AMGPK5102 R). The company was registered at their residential address. After incorporation, the company transacted no business at all. It was waiting for its turn in the telecom scam.

The two were petty businessmen who had the right connections with a political family that mattered.  Bhasker held 9000 shares in the company, while Ramkumar held 1000 shares of Rs10 each making a paid up capital of Rs One lakh. 

According to the minutes of the Board of directors meeting held at the registered office on May 27, 2009 at 10 AM, a decision was taken to rename the company as ICE Televentures Pvt Ltd. The main objects of the Memorandum were altered to “venture into the business of telecommunications, which includes hardware, software and 3G technology and to carry on all types and kinds of services and turnkey infrastructure business in telecom”. This meeting was the first step in the BSNL 3G Infra scam. ICE Televentures then changed its registered office to 11/23 Mannppan Street, Old Washermenpet, Chennai. The Registrar of companies issued a fresh certificate in the of name of the company on June 25, 2009.

Well before BR Softtech or ICE Televentures had come into existence, two other businessmen had registered a real estate company, Desi Holding and Consultants Private limited in 2005 to carry out business in Tamilnadu. They were MRT Ramanujam and MV Damodaran, both known to be close to the same political family. When they formed Desi Holdings, with a paid up capital of Rs One lakh on 2005 November 11, Damodaran did not even have a PAN number. In Desi Holdings, Ramanujam had the major stake with 9900 shares and Damodaran’s stake was only 100 shares worth Rs1000. Like BR Softtech, this letter-pad company in its extra ordinary meeting on  April 16, 2008 decided to change its name to Genext Telecom Pvt Ltd and changed the main objects of its memorandum of Association of the company as “to carry on the business of manufacture and trading of telecom equipment, telecom infrastructure and its maintenance, providing telecom services in India and abroad” and also “to build ports, airports and operate on lease from government”.

Genext Telecom later changed its name once again. On June 10, 2008 Genext Telecom Pvt Ltd was renamed as Ice Telecom India Pvt Ltd  with its registered  office at Ashirwad Apartments, First Floor, # 14/1 First main Road, I Block Anna Nagar East , Chennai.

Interestingly, MV Damodaran, the Director of Ice Telecom India Pvt Ltd, submitted on his company’s letterhead a no objection certificate to the RoC, Chennai stating that Ice Televentures was part of the Ice Telecom group of companies. Such a certificate was necessitated when BR Softtech applied for its change of name. MV Damodaran wrote to Registrar of Companies on 2009 May 25, “We came to know that the name of  BR Softtech Enterprises (P) Ltd  is going to be changed  into Ice Televentures (P) Ltd . As it’s our group of company, we hereby give no objection certificate for the name change of BR Softtech Enterprises (P) Ltd into Ice Televentures (P) Ltd. Even though its name resembles like our name, our business will not be affected”.

This letter, in essence links the two companies.

Since both Ice Telecom and Ice Televentures did not have expertise or required experience to vie for the bid, Minister Raja, who was obviously under instructions to favour them, advised them to enter into partnership with another company which had the required expertise in the telecom sector. The search narrowed down to TVS-Inter-Connect Systems Ltd with registered offices in Bangalore. ICE Telecom India Pvt Ltd, Ice Televentures and TVS–ICS formed a consortium to bid for the BSNL Infra order. In the bid, ICE group’s involvement was never mentioned. Instead, TVS-ICS front-ended.

According to a Business presentation made by TVS–ICS to its global partners, the company won the bid for BSNL Infra tender for the South Zone for Rs 6500 crores and company’s share of 50 per cent of the total tender amounted to Rs 3250 crores. The rest went to its silent partners ICE Group of companies (which together had a paid up capital of a mere Rs 2 lakhs!).  The Business plan was silent on its partners and their role in the BSNL Infra deal.

In June, 2009, BSNL shortlisted Spanco Telesystems & Solutions, TVS Interconnect Systems and Acme Tele Power for executing the BSNL 3G infrastructure contract. Spanco was the lowest bidder for the west zone, TVS-ICS for the south zone  and Acme for  the North and East for the passive cellular infrastructure contract.

From June 2009 onward, the Ice Group started looking for global partnerships as they had neither money nor capacity to execute the mega deal. When the bid was made, TVS–ICS was not keen on providing the infrastructure to BSNL. Their role was of a front ending company, pocketing a 4 to 5 per cent commission from the deal.

Soon after winning the deal, the Ice group of companies started scouting for global partnership. But they miserably failed in their attempts. By mid-July of 2009, global Telecom players started smelling a scam in Indian telecom deals. Many Embassies warned their leading companies that the Indian game was an unsure bet and cautioned them against deals with their Indian partners. So the consortium decided to appoint an investment consultant for identifying investors for the project. 

On August 27, 2009, Ice Televentures appointed one Sanjiv Kumar Dwivedi, the CEO of Ubiqui Softech Ltd as its investment consultant. His role was to identify and line up global investors for the BSNL Infra deal and bring money for their project. Dwivedi was offered 1.5 per cent syndication charges for the amount arranged or structured.

What was Dwiwedi's role? Under whose instructions did Raja favour rank outsiders like the Ice Group to execute a mega project? What ultimately happened to the 3G infrastructure? These are questions that will be addressed in the next post in a few days from now. 

So keep watching....