Tuesday, February 15, 2011

Reliance Comm accuses old 2G operators of Rs.1 Trillion fraud

Mumbai: Reliance Communications has accused all old 2G operators for causing losses over 1 trillion to the exchequer through fraudulent business practices. Reliance Communications said in a statement that the old 2G operators had concealed material facts from the government and has caused unscrupulous loss to the national exchequer during 2001 and 2010. The company has demanded a Central Bureau of Investigation probe into the irregularities. Although RCom did not mention the old operators it is understood that during that period the 2G operators were Bharti Airtel, Vodafone and Idea Cellular.

Syed Safawi, president of Reliance Communications, said in a statement that an excess of 6.2 MHz of excess spectrum was held by some of the DoT officials and the loss incurred due to the concealation of the holding was around Rs 55,000 crore (Rs 550 billion). He also said that the 2G operators also had the luxury of extending their license period from 10 years to 20 years without paying any additional fees.
As mentioned in the CAG (comptroller & auditor general) report of 2010, the 2G operators had gained many benefits through their illegal practices and they flaunted off the benefits by giving away stakes in their companies.

The CAG also reported that Reliance Telecom held 10.17 per cent in Swan Telecom, breaching government rules,for which Safawi said that the company had held only 9.9 per cent of the equity share capital of Swan at the time of filing the relevant licence application in March 2007. He said that this information was made public as well. Safwai said that abiding to the legal advice, RCom had not disclosed the preference share capital held by Reliance Telecom in Swan, as it is not included for the purposes of determining shareholding levels, under the provisions of the Companies Act, 1956. He said that there were no monetary gains that the company made during the 2G license was granted to Swan.

Coming to the CBI investigations on RCom, firstly the company had denied the rumors that it was being probed by the government's investigation wings. After which the company shares dropped and incurred a loss of 115 billion. After the sharp fall in the share price, the group filed a complaint with the market regulator urging a probe into the alleged illegal trading in its groups' stocks and claimed it was being targeted by rivals, who were spreading baseless sensational charges against it.

Source: Siliconindia

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