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To

Chief Vigilance Commissioner A K Agrawal ( 09845097444)


New Delhi E 13/2 Vijaykiran Apartment
32 Victoria Road
Bangalore 560047
13/05/09

Complaint to CVC on telecom scam resulting in a loss of


around of Rs 50,000 crores to the exchequer.

The complainant is the author of the book “Reliance the Real Natwar” and has
impeccable credentials in exposing financial scams with documentary evidence.
This complaint is being filed against the Minister and the government officials in
the Ministry of telecommunication and who were involved in the decision of giving
telecom license to Reliance Communication on 18/10/07 and to other companies on
10/1/08 under the first cum first serve policy. The licenses were given at a price that was
far below the market price and the booty of the difference was shared. Anil Ambani who
benefited from dictating the policy decision along with the real estate operators who were
given LOI are co conspirators in the offence.
The complaint desires that his identity be kept confidential and his concern is the
public interest in recovering the amount involved in the corruption.
The informant is aware that the Vigilance Commission is seized of the matter and has
sought repeated explanation from the concerned Ministries. However the conclusion of
the complainant based on documentary evidence will convince the Commission that there
is no other conclusion other than that the allotment of licenses were the outcome of
corrupt deals..
As for the mystery as to who owns Swan Telecom, which even the Ministry of
Company Affairs is not able to solve, the answer is : it is the company/person which
bought 992 crore worth of Re1/- , 8% preference shares invested by Reliance
Communication in Swan Telecom by paying a hefty premium of Rs999, which was
overvalued by 99900%, is the actual owner of Swan Telecom. The company which
bought the investment of Reliance Communication at the fantastic overvalued price

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is reportedly registered in Mauritius and that cannot be unraveled, partly because
of the law relating to tax haven, and partly because of the pathetic track record of
cover up by the investigative authority, the Enforcement Directorate, on matters
relating to Reliance.
The documents of the scam are enclosed as various annexures. The facts can be
verified from the balance sheet of Reliance Communications, the electronic filings of
Swan Telecom Pvt Ltd and Tiger Trustee Pvt Ltd available on the web site of Department
of Company Affairs and the web site of DOT. ( Department of Telecommunication).
The ADAG group applied for two GSM licenses , one in the name of Reliance
Communication in 2006 and another in the name of Swan Telecom on 2/3/07. The
evidence of Swan Telecom being owned by the ADAG group is proved by the
Registration of the company, change of name, address of the company and the nominee
directors on the Board ( see Annexure A), the fact that GSM licenses were applied for in
circles where Reliance Communication did not have GSM license ( refer DOT website
for LOI issued for various circles ), and the investment that were made by Reliance
Communication ( Annexure B) and Tiger Trustee ( see Annexure C ) in Swan Telecom.
The fact of Tiger Trustee being a ADAG company is also proved by documents placed at
Annexure D. Of particular interest is the fact that Reliance Communication ( through its
subsidiary ) subscribed to preference shares of Re 1/-, on which 8% interest was to be
paid ( with no other benefit like dividend or bonus) at a unheard premium of Rs999
(Annexure E ). Preference shares are like fixed deposit which in this case had a fixed
return of 8%. The investment in the preference shares at a premium does not make
economic or commercial sense because why would any person pay Rs1000/- for
something valued at Re1/-. The amount invested by Reliance Telecom in the 8%
preference shares of Swan Telecom Pvt Ltd was a staggering 992 crores. While 90% of
the money was provided by Reliance Communication in Swan Telecom , 90% of the
equity was owned by Ambani’s private company- Tiger Trustee. The fact of Tiger
Trustee being a ADAG company is proven by the nominee directors who were
employees of the group and the fact that it held the controlling interest in Swan Telecom,
in which Reliance Communication had invested over 1000 crores by way of preference
and ordinary shares.

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At the material time when the two licenses were applied for the government
neither invited application for fresh licenses nor was there a policy to issue any fresh
licenses.
Around September 2007, Anil Ambani and the decision makers in the DOT
Ministry came up with the ingenious plan of allotting fresh licenses at a huge discount to
the market price, under the first come first serve policy, so that both the licenses of
ADAG group could be granted licenses on a priority basis and the booty shared. The deal
was ‘give one get one’ and it was set in motion by the government officials and the
ADAG group on 24/9/07 and completed on 10/1/08.
As the ADAG group could not get two licenses, one license, that of Swan
Telecom was traded , in all probability as a bribe, for obtaining the license and priority
allotment of GSM license and spectrum to Reliance Communication. While the bribe
would not cost much to the bribe giver, the receiver of the bribe by allotting a license to
Swan Telecom at a low price could increase the value of the company Rs10,000 crores.
As that is exactly what happened, it is the decision makers which knowingly overlooked
the change of ownership while giving Reliance Communication and Swan Telecom
license and allotting spectrum ahead of others that have to be the prime suspects.
The trading of Swan Telecom, by transfer of ownership of the holding company
owning 90% of the shares - Tiger Trustee- took place on the very day that the other
license application of the ADAG group -Reliance Communication- was given the license.
( See Annexure F). The fact that the Swan telecom with an asset of Rs1100 crores in paid
up capital was sold for a mere Rs4.99 crores ( see Annexure F and G) on the very day the
license was granted to Reliance Communication -18/10/07- establishes that the sale was a
bribe for giving the license and the consideration of Rs 4.99 crore was a token money
consideration to make the transaction look genuine. The fact that only 4.99 crores were
paid for a company having Rs1100 crores of capital and the value of which would
increase to 10,000 crores ( The valuation for which 45% was allotted to Etisalat) after the
license was granted is sufficient to establish bribe.
The front owners of Swan Telecom – Goenka and Bhalwa- to whom the
company was transferred through the transfer of ownership of Tiger Trustee and also by

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being given control of Swan Telecom on 18/10/07, were nominees of the alleged corrupt
decision makers
The application of Swan telecom should have been rejected as both control and
ownership changed hands on 1/10/07 and 18/10/07 respectively after the cut off date for
applying -25/9/07- but was nevertheless treated as a valid one by the Ministry while
giving the license on 10/1/08, which further establishes that they were a party to the
bribe.
The documentary evidence clearly establish that the deal was a corrupt one in
which largesse of thousands of crores were given, is sufficient to file a FIR under the
PCA even after the deletion of section 13 (1) (a) (d)(iii) and the guilty charge-sheeted as
the offence has been committed under 13 (1) (a) and 13 (1) (a) (d)(ii).
In the case of Swan Telecom, the following facts are established from the filings
made by the concerned company and its holding company, Tiger Trustee :

• The management of both the holding company and the company that it controlled,
that is Tiger Trustee Pvt Ltd and Swan Telecom Pvt Ltd, changes on the day DOT
notified the cut off date for issuing fresh telecom license-1/10/07. This was a
result of quid pro quo arrangement.
• The ownership of the holding company which owned Swan Telecom Pvt Ltd-
Tiger Trustee Pvt Ltd- changes on the day DOT doled out a GSM license to
Reliance Communication- 18/10/07.
• Anil Ambani voluntarily gave up ownership of the holding company- Tiger
Trustee Pvt Ltd- which owned 90% of the company which had applied for the
license and was about to be allotted a telecom license- Swan Telecom Pvt Ltd –
by reducing his ownership from 100% to a mere 0.2%.
• Anil Ambani gives up ownership of Tiger Trustee Pvt Ltd for a meagre
investment of 4.99 crores, to proxies with whom he had struck the deal, when the
capital and reserve of the company it owned Swan Telecom Pvt. Ltd was over
1100 crores. The fact that both these events happened on 18/10/07 when Reliance
Communication was given a license shows that there was a quid pro
arrangement..

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• The fact that both the management and the ownership of Swan Telecom had
changed and the change took place on 18/10/07 made Swan Telecom ineligible
for being considered for a license as the last date for application was 1/10/09. The
application became a new application on 18/10/07 as both the management and
the ownership changed by that day. The DOT has wrongly stated in their affidavit
before the Delhi High Court that the management and the ownership of Swan
Telecom had remained intact. This is not true according to the filings made with
the Registrar of Companies.
• Reliance Communication ( through its subsidiary ) subscribed to preference
shares of Re 1/-, on which 8% interest was to be paid ( with no other benefit like
dividend or bonus) at a unheard premium of Rs999. Preference shares are like
fixed deposit which in this case had a fixed return of 8%.The preference shares
were overvalued by 999 times or 99900%. The amount invested by Reliance
Telecom in the 8% preference shares of Swan Telecom Pvt Ltd was a staggering
992 crores. This investment was made sometimes in on 23/03/07 at the time Swan
Telecom applied for the license. The application for the license was for the circles
in which Reliance Communication did not have GSM license. The investment
made by Reliance Communication, the persons on the Board of Swan Telecom
and the circles for which the license was applied for clearly establish that the
license was for and behalf of Reliance Communication and its owner Anil
Ambani. ( refer ROC filings of the companies involved).
• The first cum first serve policy was in violation of the judgment of the Delhi
Court and yet it was the policy adopted in handing over licenses to Reliance
Communication on 18/10/07 and to various other new applicants on 10/1/08. The
first come first procedure of allotment was the only manner in which massive
largesse could be given to the chosen few who had paid the quid pro quo.
• As the last date of accepting application was announced on 24/09/07,
application prior to that date could not be given priority nor could the
application submitted till 25/9/07, and the application submitted till the last
day -1/08/07, could be treated as invalid on grounds of first cum first serve

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method of selection. One can only speculate the chaos that would ensue if the
same principle of selection was applied elsewhere.
• .Though the cut of date for fresh application was 1/10/07 and the same was
announced on 24/9/07, only application that were submitted till 25/07/07 were
considered eligible for the purpose of issuing LOI- refer press release dated
10/108. The fact that most of the applicant did not have the prescribed net worth
( equity plus reserves) but had taken debt and were therefore ineligible for the
license further proves that the granting of the license was tainted with corruption.
It is not surprising that most of the successful applicants were builders, a trade
traditionally known for dealing in black money – while purchasing land and
selling built up space – only confirms the obvious that the LOI were issued for
monetary consideration..
• . When the time period for submitting an application is only a week, and the grant
of license depends on first come first basis and massive formalities have to be
complied with before making an application, then the leak leading to early
application becomes the deciding factor in concluding corrupt deals with
certainty.
• The two application of ADAG could only be placed ahead of all other application
by applying the first cum first serve and the procedure was adopted for illegal
gratification.
• The licenses were given at historical cost of Rs 1650 crores for all the circles
while the same were valued in the market at Rs 10,000 crores.
Te following illegal means have been adopted in obtaining for themselves and other
persons who were granted license for pecuniary advantage:
Applying the first cum first serve method for allotment which was declared illegal by
Delhi High Court to favour the select few, granting the license at a price far below the
market price and causing loss of Rs 50,000 crores, leaking the cut off date resulting in
most of the new players applying on the first or the second day of the announcement –
24/09/07- ignoring the fact that most of the applicants did not have the required net worth
while giving them the license, ignoring the fact that Reliance had traded the ownership

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and control of Swan Telecom after the last day for application, filing a false affidavit in
Delhi high Court that the ownership and control of Swan Telecom was intact from the
time they applied-2/3/07- for a license, announcing on 10/1/08 that the license would be
given on first cum first serve basis to those who have applied till 25/09/07, and granting
the license on the same day so that the same could not be challenged in Court are all
evidence of wrongdoing by the decision makers for corrupt ends.
Other evidences relate to Anil Ambani’s letter to PMO lobbying for allotment of
license to new players at historical cost after Reliance Communication was allotted the
license on 18/10/07 ( to benefit Swan Telecom) , Reliance Communication subscribing to
preference shares of Re1 at Rs1000 and investing 992 crores, change in control of Swan
Telecom and Tiger trustee on 1/10/07 when the cut off date for new license was
announced by DOT, change in ownership of Swan Telecom and thereby of Swan
Telecom on 18/10/07 when Reliance Communication was granted GSM license, the
giving up of control of Tiger trustee for a mere 4.99 crores when it controlled 1100 crores
( equity plus reserves ) in Swan Telecom, and finally the sale of preference shares by
Reliance Communication held in Swan Telecom. Who bought 992 crores of Re1/- 8%
preference shares at a over valued premium of 99900%? That is the million dollar
question to the billion dollar scam.
Relief prayed for:
1. All the LOI issued on 10/1/08 should be cancelled.
2. The LOI should be auctioned
3. Reliance Communication should be made to pay the highest price fetched at the
auction for the license allotted to it on 18/10/07.
4. All the conspirators should be arrested and taken into police custody for
questioning as is done with ordinary criminals.

Other Annexures: Swan Application dated 2/3/07, cut off date being 1/10/07 announced
on 24/7/07 by DOT, Press release dated 10/1/08 that application upto 25/7/07 will be
given license on first cum first serve process. Balance sheet of R Communication for
March 2008 showing sale of 992 crore preference shares.

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A K Agrawal

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