2G scam: Vahanvati, Subbarao quizzed by CBI

Attorney General GE Vahanvati stated that some notings on a press release sent by the DoT were tinkered with to suit the needs of some people. D Subbarao, then the finance secretary, had raised questions over the entry fee for mobile operators ahead of the spectrum allocations

New Delhi: The probe into the second generation (2G) scam led India's premier investigative agency Central Bureau of Investigation (CBI) to the doors of the country's top law officer Attorney General GE Vahanvati and Reserve Bank of India (RBI) governor D Subbarao whose statements were recorded by the agency in connection with the multi-crore spectrum allocation, reports PTI.

During the examination Mr Vahanvati was asked about his legal opinion given to the telecom ministry when the spectrum process begun, agency sources said.

However, Mr Vahanvati told reporters that CBI approached him only for some clarifications and he was not questioned.

He said that Department of Telecom (DoT) had earlier sent him a press release and had sought his opinion on it. He had sent back the release to DoT after making some notings on it, the AG said.

But the notings on the release had been tinkered with and the CBI wanted to know about it from me, he said.

Mr Vahanvati's statement to CBI was taken on the legal opinion relating to a press release issued by the DoT on the allocation of 2G spectrum on a first come-first-serve basis.

In the statement, the Attorney General is understood to have told the CBI that two paragraphs of the press release had been deleted to suit the needs of some people following which the CBI carried out forensic examination of the handwriting in the original press release by experts.

The sources said the experts had claimed to have found that the document was forged and some words had been included separately.

Janata Party leader Subramanian Swamy had written to prime minister Manmohan Singh urging him to withdraw Mr Vahanvati from spectrum hearings as he had become a party to the decision taken by Mr Raja by giving his opinion.

The statement of the Attorney General is seen as crucial by the agency as it would help it in strengthening the case against Mr Raja who was mainly relying on the fact that he had taken a policy decision and that it could not help in establishing alleged forgery and malafide intentions of the former telecom minister and others involved in the case.

The CBI also quizzed Mr Subbarao, who was the then finance secretary, and recorded his statement. He had raised questions over the entry fee for mobile operators ahead of the spectrum allocations.

Mr Subbarao is understood to have told the CBI that he had suggested staying the implementation of the decision on spectrum and also sought previous communications granting permission and the dates on which the decision was taken.

The letter was sent by the then finance secretary by end of November 2007 and the DoT is alleged to have ignored it and headed for allocation of 2G licenses in January 2008.

The government, in an affidavit filed in the Supreme Court of India on the 2G spectrum issue, had also stated the then finance secretary had raised certain queries on 27 November 2007, regarding the entry fee. A reply to this was given by the telecom secretary on 29 November 2007. However, there was no further communication on the issue.

Mr Subbarao had earlier this month appeared before the Public Accounts Committee (PAC) of the Indian Parliament after which PAC Chairman Murli Manohar Joshi had said Mr Subbarao shared "accurate information" with the members on the controversial issue.

A communication sent to RBI seeking Mr Subbarao's reaction has not been answered yet.


Goldman Sachs acquires Benchmark Asset Management Company

Following the acquisition, Goldman Sachs will integrate entire operations of Benchmark Asset Management Company as well as its manpower. Besides, Goldman Sachs Asset Management intends to bring actively managed on-shore funds to India

Goldman Sachs Asset Management today said it has agreed to acquire Benchmark Mutual Fund to increase its presence in the country. The transaction is expected to close later in the year, subject to regulatory approvals, Goldman Sachs Asset Management said in a statement, without disclosing the deal amount.

Following the acquisition, Goldman Sachs will integrate entire operations of Benchmark Asset Management Company as well as its manpower. Goldman Sachs Asset Management got market regulator Securities and Exchange Board of India's (SEBI) approval in 2008.

Goldman Sachs Asset Management has a team of eight based in Mumbai, headed by Prashant Khemka. The team currently provides research for off-shore funds, including Indian and other BRIC equities.

The last acquisition in the asset management space in the country happened in 2008, when Religare Enterprises took over Lotus India Mutual Fund from Temasek-promoted Alexandra Fund Management and Sabre Capital.

In addition, it said, Goldman Sachs Asset Management intends to bring actively managed on-shore funds to India.

"India is one of the world's largest growth markets and a strategic priority for our firm. The acquisition of Benchmark illustrates our commitment to expand in India and we look forward to working closely with Benchmark to accelerate the growth of the business," said Goldman Sachs Asset Management head (Asia) Oliver Bolitho.

"We are also pleased to announce that we will bring on-shore funds to India-building on the strong expertise that Prashant Khemka's team has established," he said.

The fund launch would be after the acquisition process is complete, he said.

Benchmark Asset Management Company was founded in 2001 and is the number one Exchange Traded Funds (ETFs) provider by both market share and assets under management (AUM) in India. It has around $700 million asset under management (AUM).

"As index and ETF product demand continues to grow significantly in India, Goldman Sachs' local expertise and global platform will provide us the opportunity to grow further and enhance our offering for clients," said Benchmark Asset Management Company executive director Sanjiv Shah.

With over 40 mutual fund companies operating in the country, the average assets managed stood at Rs6,75,377 crore on 31 December 2010.

With so many players in the market Indian is still very attractive market for asset management, Mr Bolitho said.



R Balakrishnan

6 years ago

Pity that India's best mutual fund co is falling in to not so nice hands. I hope Sanjiv/Rajen remain at the helm and keep the quality and integrity in place. In case the firangs run it, I will pull out my small investment with the fund house.



In Reply to R Balakrishnan 6 years ago

Really. Pity that the Fund that intorduced us to ETFs, showed us the benefits of passive index based investing has sold out

Japan crisis: What’s in store for India?

The tsunami and nuclear crisis in Japan may provide some opportunity for few Indian companies like pharmaceutical and steel. The crisis may also affect some upcoming as well as existing nuclear power plants in India, in terms of safety and security

Japan is still fighting hard to contain the damage caused by the earthquake and subsequent tsunami. On Wednesday morning, there was a second fire at the number four reactor at Daiichi plant. The biggest uncertainty at present is whether Japan would be able to safely shutdown the nuclear reactors or not. The exact magnitude and duration of economic problems in Japan is hard to estimate at present due to the evolving situation with the nuclear reactors and the unclear future of nuclear power sector in general.

Although it is too early to predict, the re-building of damaged areas and required healthcare facilities in Japan may provide some opportunity for Indian companies, mainly pharmaceutical and steel companies.

Religare Capital Markets Ltd, in a report said,"While impact of the crisis would be moderate on account of lower business exposure of Indian companies to Japanese markets, Autos (Maruti in particular), Capital Goods (BGR Energy), Pharmaceuticals (Lupin), and Telecom (Bharti) are the companies to watch out for on account of their revenue, raw material and funding linkages with Japan. While several other companies such as L&T, Tata Motors, Idea and Tata Steel have yen denominated debt, most of it is either hedged or converted and thus has minimal/no impact on yen appreciation."

Japan is the second largest market for pharmaceutical companies after the US. The Japanese generic market is expected to grow at about 9%-13% to $8-$11 billion, with the government target of 32% generic prescription by 2012. After the recent earthquake and tsunami, Japan is going to witness a rise in health problems related to gastro-intestinal, post-traumatic care and infections.

"Given their established presence, Ranbaxy Laboratories and Lupin are expected to be the major winners who can tap the Japanese opportunity. The increasing healthcare demand after the Japanese crisis would lead to a favourable opportunity for Lupin as the demand for anti-inflammatory (AI), neuro-psychiatric treatment and gastrointestinal (GI) drugs would see a rise," said Sharekhan Ltd, in a research note.

India has been a major supplier of iron ore to Japan. However, in recent years, many Japanese companies have set up joint ventures with Indian steel makers. During 2010, JFE Steel bought about 15% stake in JSW Steel, India's largest private steel maker for $1 billion. Sumitomo also bought 40% stake in Bhushan Steel's project in West Bengal, while Nippon Steel formed a joint venture with Tata Steel to make auto grade steel in India. Kobe Steel, which already has an existing agreement with state-run Steel Authority of India (SAIL), signed an umbrella agreement with Essar Steel.

Those Japanese steel producers who have a joint venture or plant in other countries are likely to have an upper hand while catering to local demand, as almost all companies from the earthquake-affected areas have stopped production owing to the tsunami and the disruption of power supply.

While the overseas investments from Japan are expected to be lower in the near term, there are chances of more outflows over a longer term. "In the near term, Japanese companies are likely to delay overseas direct investment (ODI) plans. However, longer term, we could see greater demand from Japanese companies to diversify production bases in geologically more stable countries," said Citigroup, in a report.

Japan accounted for around $3.7 billion, or less than 2% of India's total exports of $175 billion during 2009-10. Over the past ten years, foreign direct investment (FDI) from Japan has been around 4% of the total FDI inflows in India.

Earlier in February, both the countries signed a Free Trade Agreement (FTA), which will eliminate tariffs on 94% of bilaterally traded goods in the next 10 years. Following the FTA, it was expected to boost bilateral trade between Japan and India. The temporary halt in Japan's export to other countries may also provide an opportunity to other countries. However, India may not be a beneficiary.

According to Citigroup, Malaysia, Singapore and Thailand look relatively more vulnerable to a sharper slowdown in exports to Japan. "However, slower exports to Japan could be offset by stronger exports for product segments where Asian countries compete directly with Japan. Korea and Taiwan have export structures most similar to Japan," the report added.

The earthquake-related economic and fiscal impact on Japan is significant, but, given the unfolding situation, Standard & Poor's (S&P) Ratings Services said it believes it is too early to judge the implications for the unsolicited sovereign credit rating, which currently stands at AA- with stable outlook.

"The key factors determining the future trajectory of the sovereign credit rating on Japan include the overall macroeconomic impact of the earthquake, the pace and duration of reconstruction, and the impact on fiscal deficit," said S&P's credit analyst Takahira Ogawa. "In addition, we need to assess the government's ability to pursue its economic and fiscal reform agenda once reconstruction is well underway."

According to a report from Citigroup, near term economic damage in Japan is likely to give way to a reconstruction boost in the second half of 2011. "The boost from Japan's reconstruction in 2H2011 could offset 1H economic weakness, boosting overall FY2011 growth by +0.2 point to 2.1%," the report said.

The total cost of the reconstruction and recovery programme in Japan is still unclear. It's likely, however, to be significantly higher than that in the aftermath of the Kobe earthquake in 1995. The Kobe disaster cost Japan $159 billion (about 16.3 trillion yen) over 1995-2000. The costs are again likely to be spread out over several years and funded from a number of sources, S&P said.

Following the Kobe earthquake, Japanese imports from Asia only slowed for about six months before rebounding, and Japan's share in Asia's exports has fallen significantly since then to a 7.3% share in 2010 from 12.3% in 1995. The slowdown in Japan's imports post-Kobe was more pronounced in industrial materials and consumer goods, while capital equipment imports posted a strong rebound. Indonesia and India also have a large share of industrial material exports to Japan, but exports matter less to these domestic-driven economies, Citigroup said.

"Given the sheer magnitude of the current disaster, the rating on Japan could be affected if the debt burden were to increase materially above our pre-earthquake expectations, due to a significant economic impact and reconstruction costs," Mr Ogawa added.

Related topics:

Japan crisis: PM warns radioactive levels high after third blast at Fukushima nuclear power plant

Will Japan derail India's $175-billion nuke dream?

Japan earthquake: Second explosion at Fukushima nuclear plant

Japan battles devastation, crisis at quake-hit nuclear plants




6 years ago


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