NGO Telecom Watchdog plans to send its Hutch-Vodafone FDI 'analysis' to bureaucrats in economic ministries and departments some time this week.
NEW DELHI: The Telecom Watchdog, an non-governmental organisation (NGO) which had moved the Delhi high court earlier this year alleging a breach of foreign direct investment (FDI) rules in Hutchison Essar, is now preparing to up the ante. It is putting together an “analysis” to tell members of the Foreign Investment Promotion Board (FIPB) how the Vodafone deal to buy India’s fourth largest mobile company is a “violation of government norms”.
The NGO plans to send its Hutch-Vodafone FDI “analysis” to top bureaucrats in various economic ministries and departments some time this week, ahead of the FIPB meeting scheduled for April 23, it is learnt.
The NGO, which had earlier sought time from the FIPB to make a presentation on the issue, is once again raising the demand, a source close to the development said.
During the previous FIPB meeting, representatives of Hutchison Essar, Vodafone, and Hutchison Telecom International Ltd (HTIL) were called to make presentations before the board.
Not leaving anything to chance, the Telecom Watchdog has sought information under the Right to Information (RTI) Act to get details of FIPB proceedings, DNA Money has learnt. However, despite everything, the Telecom Watchdog is gearing up for the courts again on the assumption that the FIPB verdict will go against the NGO.
Meanwhile, most departments/ministries have responded to the FIPB with their inputs on the issue. The law ministry is yet to give a final view. More than a week ago, the law ministry was in favour of seeking the attorney general’s views on the Hutch-Vodafone FDI issue.
Despite several attempts by this correspondent to contact him, attorney general Milon Banerji could not be reached for a comment on the issue.
Among others, the Reserve Bank of India (RBI) has submitted its view, indicating that there could be Fema violations in the minority shareholding of Hutchison Essar (now Vodafone Essar).
When asked whether Vodafone was open to the idea of an equity rejig in case the FIPB asks for it, a UK-based company spokesman told DNA Money: “We will not be commenting on speculation”. Sources in Hutchison Essar maintained that “everything is legal in the company”, and that there was no question of any FDI violation.
Vodafone, the world’s largest mobile services provider, bought a direct 52% stake in Hutch, apart from an economic interest in another 15% for $11.1 billion. The 15% minority shareholding, of which over 12% is split between Hutch India managing director Asim Ghosh and Max India chairman Analjit Singh, is at the centre of a controversy right now, due to “ownership ambiguity”. In the telecom sector, FDI is capped at 74%.
The crux of the problem is that the Essar Group holds 22% (of its 33% total holdings) outside the country. If these are added to Vodafone’s 52%, the 74% FDI ceiling is
reached. If the stakes held by Ghosh and Singh are treated as part of the foreign holdings, the total foreign stake would cross the 74% prescribed under the rules.
On March 9, responding to a petition filed by the Telecom Watcdog, the Delhi high court had referred the case to the FIPB. The court wanted the board to complete
investigations relating to `ownership’ of minority shareholdings in Hutch Essar within two months. The deadline ends on May 9.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}