The Central Bureau of Investigation (CBI) probe into the corporate espionage has revealed that not just the controversial Jet-Etihad deal but several other big corporate deals inked between 2012 and 2014 were leaked ahead of their final approval by the Foreign Investment Promotion Board (FIPB).
The crucial deals that have caught the attention of the investigative agency are Sun-Ranbaxy, Tata-SIA, Glenmark-Aurbindo Pharma and HDFC Bank's FDI limit, among others.
"We are scrutinising all sensitive documents and the communication details unearthed from arrested officials. The documents pertain to the communication between the finance ministry, FIPB and Sebi. We have also received several legal documents related to several corporate deals," a senior CBI official told dna.
What kind of info was being leaked?
The CBI probe revealed that every single communication was shared with middlemen, right from the proposal stage to the final documents of the deal. "Not only big-bang decisions, but every small thing, even notes from the top level to the upper division clerk, were allegedly shared with middlemen," said officials.
What did the recipients do with the documents?
Agency sources alleged that a chartered accountant firm and a law firm played a pivotal role. They acted as middlemen and charged huge amounts, terming it as "fee" for their services. There, however, was no fixed fee for sharing information. It all depended on the size of the deal.
Who are the ultimate beneficiaries?
The CBI suspects that big corporate houses were indeed the ultimate beneficiaries. "The leaked documents will be definitely beneficial to respective companies. The rivals kept a close watch on the deal process to either derail the deal or malign the corporate's image probably," said a government official on condition of anonymity.
Will the CBI continue with its investigation?
On Monday, CBI arrested Daljeet Singh, an upper division clerk with the commerce ministry as the agency found that documents on foreign investments in HDFC Bank and Glenmark Pharmaceuticals were also leaked, reported PTI. According to PTI, the CBI also summoned a senior official of Reliance Industries, who was allegedly in regular touch with Khemchand Gandhi, a CA in Mumbai. Gandhi was arrested in Mumbai by CBI last week.
Is there a consultancy involved?
dna learns that the agency is probing the role of a consultancy group to gather corroborative evidence and decipher the official-middleman-corporate nexus in getting hands on confidential documents. According to PTI reports, an official of PricewaterhouseCoopers (PwC) was allegedly procuring documents from the department of economic affairs through Gandhi.
What did PwC say about its involvement?
In a media statement, PwC said that it had clarified its stand to the CBI. "Our manager met CBI officials on Monday in connection with the FIPB applications filed by our clients and the official communication that we have exchanged with FIPB in this regard, in the normal course of business. Necessary clarification as asked for were provided," the company said.
How did the Jet-Etihad deal take place?
Jet-Etihad deal is one of the most controversial deals in the aviation sector or even in the corporate industry. The deal has been going back and forth for long, before finally getting approval on November 12, 2013. Jet Airways and Etihad signed a strategic alliance. Etihad agreed to pick up a 24% stake in Jet Airways for about Rs 2,060 crore. The same year in May, Subramanian Swamy and Jaswant Singh complained to the prime minister against the deal. In July 29, FIPB gave the deal a conditional approval. Subsequently, Swamy filed a petition in supreme court against the deal and demanded a CBI probe. And finally in November, the Competition Commission of India gave its go-ahead to the deal.
How did the CBI find out the leak?
According to CBI sources, cross- questioning of suspects and phone intercepts, it emerged that Jet-Etihad deal was one of the deals whose records were leaked to middlemen. "But there might be other major deals that have been leaked with the help of some FIPB officials," added officials.
What does India's FDI policy say?
As per the FDI Policy, foreign investors are free to invest in India, except in a few sectors/activities, where prior approval from RBI or FIPB would be required. FIPB provides a single-window clearance for proposals on FDI in India. Recommendations of FIPB for proposals up to Rs 1,200 crore are approved by finance ministry. Recommendations for proposals of more than Rs 1,200 crore need to be approved by Cabinet Committee on Economic Affairs (CCEA).
How many deals were reported in the previous years?
FIPB approved 200 deals in 2013, which is almost the same as in 2012. If a listed company acquires up to 25% of another company, then the company has to follow SEBI guidelines and come up with an open offer. Earlier, the CBI had said that "first and second level of decision making in the finance ministry were compromised." But now, agency sources say that the probe may bring into scanner officials above these levels too.
How many arrests have been made by CBI so far?
The CBI has so far arrested six persons, including an under-secretary in the Department of Disinvestment and Grievances, Ashok Kumar Singh; an assistant in FIPB section, Ram Niwas; and, a section officer in the Department of Economic Affairs, Lala Ram Sharma. It has also arrested Paresh Chimanlal Buddhadeb, a partner in Chitale Law Associates, a Mumbai-based law firm.
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