THE 3G LOOT (PART 2) - THE SCAM THAT DID NOT GO THROUGH

In this, the second part of my investigations into the 3G loot, let us find out the reasons why 3G telephony did not come of age in India 

and how a scam-in-the-making got aborted.

Sanjeev Kumar Dwivedi hailed from Ranchi, but had made Chennai his home. He had considerable expertise in the telecom industry. Acting as a consultant for Ice Group, he lined up 11 global companies for negotiations. After several rounds, Ice Group identified California based investment company Vale Ventures  headed by a NRI lawyer Selvaraj Venugopal.

My investigations reveal that Vale Ventures floated Venus Enterprises in Mauritius and routed all their funds to India taking advantage of the special tax treaty between India and Mauritius. In an e-mail to Ice Televentures, Selvaraj expressed his interest in the project  and preferred option to fully own the whole project  through an outright purchase. “However we are also open to consider creating a special purpose vehicle and get  into a joint venture between both our entities and  get the project done,” Selvaraj said. He was also ready to sign a Non-disclosure agreement.

Before signing non-disclosure agreement for the deal, Selvaraj demanded information regarding the tie up between TVS-ICS and Ice Group as the business plan provided by TVS–ICS had not mentioned the role of the Ice group in the deal.  But since Ice Group had claimed ownership of the project, he wanted an explanation from the consortium regarding the share of partnership.

During a meeting in Chennai in September 2009, he was offered the entire BSNL Infra deal worth Rs 40,000 crore. The size of the project and the money involved fascinated him. But since it was beyond his capacity to invest so much,  Selvaraj changed his business plan and started selling the project globally. Vale Ventures tied up with Larsen and Toubro in a joint agreement with Ice Televentures for implementing the project. The head of the Infrastructure Division of L&T issued a Letter of Intent for the deal with Selvaraj. 

Then he contacted Hong Kong based SAIF Partners headed by Ravi Adusumalli, NRI businessman from Hyderabad. Ravi Adusumalli and Selvaraj Venugopal arrived in Chennai in October 2009 and held several rounds of discussions with Samson Manuel, Shyam, BV Sanjeevkumar and Sanjeev Kumar Dwivedi and finalized the deal. According to the agreement, SAIF Partners was to channelise initial investment by the first week of November. 

According to Sanjeev Kumar Dwivedi, Ice Group (read the K Family) received the funds for the project in November. Interestingly, these deals were made without having original Purchase order from BSNL or any offer letter in the name of TVS-ICS.

But by this time, the story of the 1,76,000 crore rupees 2G scam had broken out. On October 22, 2009, the Directorate General of Income Tax Investigations raided the offices of the Director of Telecommunications in New Delhi in connection with the 2G scam. On November 16, the CBI sought details of the tapped conversations of corporate lobbyist Niira Radia to find out the involvement of middlemen in the grant of  spectrum to telecom companies. Things started getting too hot for Raja and his political masters in Chennai. And a decision was taken to leave the 3G infra deal in limbo till things quietened down.

Unfortunately for them, things did not quieten down. Raja was arrested in February 2010. Months later, Kanimozhi and others were also arrested. Charge sheets were filed. The media went crazy... In the mad frenzy, infrastructure for 3G was forgotten altogether. 

Like in 2G spectrum allocation, the BSNL Infra deal for 3G also lacked transparency and flouted every canon of financial propriety, rules and procedures to benefit a few shady companies and their benami promoters. But the brilliance of the BSNL deal was the real benefactors of the deal never came to the light. Just as a thief cannot cry out when stung by a scorpion, those who parted with money to corner what was patently an illegal deal, are in no position to complain.

The result – though a national loot did not take place as it did in the 2G allotment, the nation suffered in as much as the transmission towers were never installed. Even today, BSNL’s infrastructure is not adequate to support 3G. And that accounts for the large number of calls that do not go through, calls fading away or breaking midway, slow speed of internet connectivity, absence of VOIP and so many other maladies plaguing BSNL.

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....