Finmin set to screen FDI in HTIL before FIPB okays Vodafone call
By Gaurav Malani, TNN |
Highlights
New Delhi: Despite clarifications from
Hutchison Essar managing director Asim Ghosh and Max India chairman Analjit
Singh, the finance ministry has decided to look into Vodafone’s
application for picking up controlling stake in Hutchison Telecom International
Ltd (HTIL) only after ascertaining the Reserve Bank’s views on alleged
violation of FDI policy by Hutchison Telecom International.
In a letter sent to the apex bank on Tuesday, the ministry has said that Vodafone’s filings with the Securities and Exchange Commission (SEC) should be looked into. “M/s Vodafone International Holding Netherlands had also filed an application on February 22, 2007 before FIPB regarding the acquisition in Hutchison Essar Ltd. A detailed examination of facts mentioned in paras 1 & 2 above and the earlier OM (office memorandum) dated February 28 2007 is essential before this proposal is put up for consideration of FIPB. Hence, it is requested that the comments may be expedited,” says the ministry’s communication to RBI.
A copy of the office memorandum — dated March 6 — has also been sent to the ministry of communications & IT. The finance ministry’s initiative follows complaints to the Prime Minister’s Office (PMO) about FDI policy violation by HTIL which is now being taken over by Vodafone. Ajoy Chakraborty, a CPI MP, had written to PMO about violation of FDI policy, demanding a probe into the HTIL-Vodafone transaction.
The crux of the allegation is that Asim Ghosh and Analjit Singh were ‘fronting’ for Hutch and now they are ‘fronting’ for Vodafone to circumvent FDI regulations. However, both Mr Ghosh and Mr Singh have clarified that they are actual owners of 12.25% equity stake in HTIL. Mr Singh’s effective shareholding in the company stands at 7.57% while Mr Ghosh has said in a letter to the government that his effective ownership works out to 4.68%.
The complex holding structure of HTIL is now likely to be studied in detail to check if the FDI ceiling of 74% in telecom sector has been violated. While policy regulations may not make it necessary for Vodafone to obtain FIPB clearance, the company filed an application with the board on February 22, after the deal with Hutch was finalised. Automatic clearance is applicable for the transaction and the application is more for the purpose of information, it is understood. The controversy, however, has the potential to delay the big-ticket takeover.
The confusion over FDI in HTIL persists despite clarifications since some of the announcements by Vodafone talked about controlling 67% stake in HTIL. Mr Chakraborty has also, in a follow-up letter, cited Vodafone’s statements to emphasise his argument about FDI policy violation.
The papers submitted by the Lok Sabha MP from West Bengal include a Hutch presentation which talks of selling ‘direct and indirect’ stake plus all loans, options and rights. The presentation cites a deal value of $11.7 billion for 66.98% stake though clarifications to the government put Vodafone’s direct holding in the company at 52%.
The finance ministry first wrote to RBI on February 28 regarding the alleged violations which is said to run contrary to FEMA and telecom licensing conditions, besides FDI policy. Soon afterwards, Mr Ghosh and Mr Singh wrote to the government to deny allegations of violations.
In a letter sent to the apex bank on Tuesday, the ministry has said that Vodafone’s filings with the Securities and Exchange Commission (SEC) should be looked into. “M/s Vodafone International Holding Netherlands had also filed an application on February 22, 2007 before FIPB regarding the acquisition in Hutchison Essar Ltd. A detailed examination of facts mentioned in paras 1 & 2 above and the earlier OM (office memorandum) dated February 28 2007 is essential before this proposal is put up for consideration of FIPB. Hence, it is requested that the comments may be expedited,” says the ministry’s communication to RBI.
A copy of the office memorandum — dated March 6 — has also been sent to the ministry of communications & IT. The finance ministry’s initiative follows complaints to the Prime Minister’s Office (PMO) about FDI policy violation by HTIL which is now being taken over by Vodafone. Ajoy Chakraborty, a CPI MP, had written to PMO about violation of FDI policy, demanding a probe into the HTIL-Vodafone transaction.
The crux of the allegation is that Asim Ghosh and Analjit Singh were ‘fronting’ for Hutch and now they are ‘fronting’ for Vodafone to circumvent FDI regulations. However, both Mr Ghosh and Mr Singh have clarified that they are actual owners of 12.25% equity stake in HTIL. Mr Singh’s effective shareholding in the company stands at 7.57% while Mr Ghosh has said in a letter to the government that his effective ownership works out to 4.68%.
The complex holding structure of HTIL is now likely to be studied in detail to check if the FDI ceiling of 74% in telecom sector has been violated. While policy regulations may not make it necessary for Vodafone to obtain FIPB clearance, the company filed an application with the board on February 22, after the deal with Hutch was finalised. Automatic clearance is applicable for the transaction and the application is more for the purpose of information, it is understood. The controversy, however, has the potential to delay the big-ticket takeover.
The confusion over FDI in HTIL persists despite clarifications since some of the announcements by Vodafone talked about controlling 67% stake in HTIL. Mr Chakraborty has also, in a follow-up letter, cited Vodafone’s statements to emphasise his argument about FDI policy violation.
The papers submitted by the Lok Sabha MP from West Bengal include a Hutch presentation which talks of selling ‘direct and indirect’ stake plus all loans, options and rights. The presentation cites a deal value of $11.7 billion for 66.98% stake though clarifications to the government put Vodafone’s direct holding in the company at 52%.
The finance ministry first wrote to RBI on February 28 regarding the alleged violations which is said to run contrary to FEMA and telecom licensing conditions, besides FDI policy. Soon afterwards, Mr Ghosh and Mr Singh wrote to the government to deny allegations of violations.
New Delhi: Despite clarifications from Hutchison Essar managing director Asim Ghosh and Max India chairman Analjit Singh, the finance ministry has decided to look into Vodafone’s application for picking up controlling stake in Hutchison Telecom International Ltd (HTIL) only after ascertaining the Reserve Bank’s views on alleged violation of FDI policy by Hutchison Telecom International.
In a letter sent to the apex bank on Tuesday, the ministry has said that Vodafone’s filings with the Securities and Exchange Commission (SEC) should be looked into. “M/s Vodafone International Holding Netherlands had also filed an application on February 22, 2007 before FIPB regarding the acquisition in Hutchison Essar Ltd. A detailed examination of facts mentioned in paras 1 & 2 above and the earlier OM (office memorandum) dated February 28 2007 is essential before this proposal is put up for consideration of FIPB. Hence, it is requested that the comments may be expedited,” says the ministry’s communication to RBI.
A copy of the office memorandum — dated March 6 — has also been sent to the ministry of communications & IT. The finance ministry’s initiative follows complaints to the Prime Minister’s Office (PMO) about FDI policy violation by HTIL which is now being taken over by Vodafone. Ajoy Chakraborty, a CPI MP, had written to PMO about violation of FDI policy, demanding a probe into the HTIL-Vodafone transaction.
The crux of the allegation is that Asim Ghosh and Analjit Singh were ‘fronting’ for Hutch and now they are ‘fronting’ for Vodafone to circumvent FDI regulations. However, both Mr Ghosh and Mr Singh have clarified that they are actual owners of 12.25% equity stake in HTIL. Mr Singh’s effective shareholding in the company stands at 7.57% while Mr Ghosh has said in a letter to the government that his effective ownership works out to 4.68%.
The complex holding structure of HTIL is now likely to be studied in detail to check if the FDI ceiling of 74% in telecom sector has been violated. While policy regulations may not make it necessary for Vodafone to obtain FIPB clearance, the company filed an application with the board on February 22, after the deal with Hutch was finalised. Automatic clearance is applicable for the transaction and the application is more for the purpose of information, it is understood. The controversy, however, has the potential to delay the big-ticket takeover.
The confusion over FDI in HTIL persists despite clarifications since some of the announcements by Vodafone talked about controlling 67% stake in HTIL. Mr Chakraborty has also, in a follow-up letter, cited Vodafone’s statements to emphasise his argument about FDI policy violation.
The papers submitted by the Lok Sabha MP from West Bengal include a Hutch presentation which talks of selling ‘direct and indirect’ stake plus all loans, options and rights. The presentation cites a deal value of $11.7 billion for 66.98% stake though clarifications to the government put Vodafone’s direct holding in the company at 52%.
The finance ministry first wrote to RBI on February 28 regarding the alleged violations which is said to run contrary to FEMA and telecom licensing conditions, besides FDI policy. Soon afterwards, Mr Ghosh and Mr Singh wrote to the government to deny allegations of violations.
In a letter sent to the apex bank on Tuesday, the ministry has said that Vodafone’s filings with the Securities and Exchange Commission (SEC) should be looked into. “M/s Vodafone International Holding Netherlands had also filed an application on February 22, 2007 before FIPB regarding the acquisition in Hutchison Essar Ltd. A detailed examination of facts mentioned in paras 1 & 2 above and the earlier OM (office memorandum) dated February 28 2007 is essential before this proposal is put up for consideration of FIPB. Hence, it is requested that the comments may be expedited,” says the ministry’s communication to RBI.
A copy of the office memorandum — dated March 6 — has also been sent to the ministry of communications & IT. The finance ministry’s initiative follows complaints to the Prime Minister’s Office (PMO) about FDI policy violation by HTIL which is now being taken over by Vodafone. Ajoy Chakraborty, a CPI MP, had written to PMO about violation of FDI policy, demanding a probe into the HTIL-Vodafone transaction.
The crux of the allegation is that Asim Ghosh and Analjit Singh were ‘fronting’ for Hutch and now they are ‘fronting’ for Vodafone to circumvent FDI regulations. However, both Mr Ghosh and Mr Singh have clarified that they are actual owners of 12.25% equity stake in HTIL. Mr Singh’s effective shareholding in the company stands at 7.57% while Mr Ghosh has said in a letter to the government that his effective ownership works out to 4.68%.
The complex holding structure of HTIL is now likely to be studied in detail to check if the FDI ceiling of 74% in telecom sector has been violated. While policy regulations may not make it necessary for Vodafone to obtain FIPB clearance, the company filed an application with the board on February 22, after the deal with Hutch was finalised. Automatic clearance is applicable for the transaction and the application is more for the purpose of information, it is understood. The controversy, however, has the potential to delay the big-ticket takeover.
The confusion over FDI in HTIL persists despite clarifications since some of the announcements by Vodafone talked about controlling 67% stake in HTIL. Mr Chakraborty has also, in a follow-up letter, cited Vodafone’s statements to emphasise his argument about FDI policy violation.
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The papers submitted by the Lok Sabha MP from West Bengal include a Hutch presentation which talks of selling ‘direct and indirect’ stake plus all loans, options and rights. The presentation cites a deal value of $11.7 billion for 66.98% stake though clarifications to the government put Vodafone’s direct holding in the company at 52%.
The finance ministry first wrote to RBI on February 28 regarding the alleged violations which is said to run contrary to FEMA and telecom licensing conditions, besides FDI policy. Soon afterwards, Mr Ghosh and Mr Singh wrote to the government to deny allegations of violations.
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