Finance ministry note on Aircel-Maxis deal withheld proposal value, say auditors

NEW DELHI: The CAG has taken exception to the finance ministry under UPA government granting approval for the controversial investment of Maxis in Aircel, without disclosing the full value of the proposal.

In a departure from the usual procedures, the ministry note only spoke about the percentage of stake being picked up by the Malaysian firm. The federal auditors have now revealed these and other details about the controversy surrounding the approval, granted by the ministry under P Chidambaram, for the Rs 3500 crore FDI investment of Maxis group in Aircel. The auditors have also raised several questions regarding the conduct of the ministry and department of telecom in the entire affair.

The CBI is presently investigating how Chidambaram approved the investment on the recommendations of Foreign Investment Promotion Board (FIPB), when it should have been referred to the cabinet committee on economic affairs (CCEA). Earlier this month, CBI examined Chidambaram.

Queries submitted by the CAG in recent weeks show that the finance ministry's letter "conveying the approval of FIPB in March 2006 did not indicate the approved quantum (amount) of the foreign investment, ie up to which value the investment was to be made by GCSHL/Maxis group in Aircel Ltd". Instead, only the percentage of shares intended to be acquired was written in the approval.

When contacted, Chidambaram said he could not comment about the queries. "These have to be dealt with by the ministries/officers concerned," he said, referring to his previous public statements on the issue, in which he has refuted all allegations of wrongdoing.

The auditors have also pointed out that-- based on official documents including details of 74 meetings of FIPB during 2007-14— FIPB had recommended to CCEA all foreign investments that were beyond the power of the finance minister. The finance minister could approve deals up to Rs 600 crore, which was raised to Rs 1200 crore in 2010. Auditors have pointed out that the Aircel-Maxis FDI of Rs 3514.45 crore was probably the only exception which was not referred to CCEA.

Through their direct and indirect investments, Maxis group effectively had "effectively 99.3% stakes in Aircel," the federal auditor said.