The Telegraph
Since 1st March, 1999
Email This Page
Reliance Info hits House
- Nirupam query on shares

March 15: Before signing off as MP on Bal Thackeray's instruction, Sanjay Nirupam did a part of what he had set out to do: bring the Reliance Infocomm controversy into Parliament. The part he left unsaid was BJP leader Pramod Mahajan's name.

In the Rajya Sabha today, the Shiv Sena MP asked if the government was aware 1 crore preferential shares in Mukesh Ambani-run Reliance Infocomm had been issued to three 'fake firms'.

Nirupam, who resigned from the Shiv Sena last week and had said he would quit as MP only after raising the share allotment in Parliament, was joined by Jibon Roy of the CPM.

But, possibly, not to upset Thackeray any further, Nirupam did not mention Mahajan's name in connection with the allotment. Earlier reports had said the Sena leader told him to quit as MP after his alleged threat to link Mahajan, former communications minister, to the allotment.

Nirupam is still looking for a chance to speak. 'I will request the chairperson of the Rajya Sabha to allow me to make a statement tomorrow. If I am not allowed to make the statement, I will resign,' he said.

Reliance Infocomm has got caught up in the battle between the Ambani brothers, Mukesh and Anil, a skirmish that has often been fought by proxy through other people.

The allegation was that the three companies, which were allotted the shares at a price of Re 1 each, were linked to Mahajan through Ashish Deora, who is connected to all three. The market value of the 1 crore shares would be Rs 500 crore.

Finance minister P. Chidambaram said in his reply: 'The government is looking into the allocation of Reliance Infocomm Ltd shares to ascertain whether any law has been violated.'

The Securities and Exchange Board of India (Sebi) will investigate if Reliance Industries (RIL) had violated any law when its subsidiary, Reliance Infocomm, allotted the shares to the three firms.

The beneficiaries of the allotment were Prerna Auto, Softnet Traders and Fairever Traders.

Sebi cannot look directly into the allotment by Reliance Infocomm to the three firms since the company is not listed on a stock exchange and is, therefore, outside its ambit.

Responding to members' demand for an inquiry by the CBI, Chidambaram said: 'During investigation by Sebi if any corruption came to light, some other authority could do the investigation.'

Nirupam wanted to know if the government would respond to complaints by some RIL shareholders that investments made by the company in Reliance Infocomm were unjustified.

Chidambaram said: 'Sebi is looking into all the aspects.'

Anil Ambani has charged Reliance Infocomm with issuing preferential shares at a price of Re 1 a share to Mukesh Ambani-owned entities and persons closely associated with him while charging a premium of Rs 249 per share from the parent company, RIL.

Chidambaram said Prerna, Softnet and Fairever had acquired shares in Reliance Infocomm from three persons in September 2002.

Deora, a young Mumbai-based entrepreneur, had acquired control of the three companies and stood to make a Rs 500-crore gain based on the market valuation of Reliance Infocomm. When the controversy snowballed, RIL claimed that Deora and his firms were no longer a beneficiary of Reliance Infocomm shares as they had failed to meet certain obligations.

Chidambaram rejected the charge that the three entities were fake firms. 'Since the three companies have filed balance sheets as at 31/3/2004, they are working companies,' he said.

The statement also said the three firms had transferred their entire shareholding in Reliance Infocomm to Ganesh Infrastructure Fund 'which appears to be a trust'.

The statement did not say who the beneficiaries of the trust were. The share transfer took place on February 12, 2005.

Jibon Roy asked the finance minister whether some favours had been extended to Reliance Infocomm when the government changed the conditions of licensing to allow telecom companies to operate all services with a single licence.

Reliance Infocomm was a big beneficiary of the change wrought during the Vajpayee government's tenure as in the earlier system its mobile phone service was operating under severe restrictions.

Chidambaram said: 'These questions should be posed to the communications minister and I am sure he will be glad to answer them.'

Email This Page