Maxis denies wrongdoing in Indian telco scandal, scrambles for investment treaty shields

Maxis Communications Bhd, part of tycoon Ananda Krishnan’s business empire, has denied claims it was involved in a shady business deal over the buy-out of an Indian mobile phone carrier eight years ago. — AFP pic
Maxis Communications Bhd, part of tycoon Ananda Krishnan’s business empire, has denied claims it was involved in a shady business deal over the buy-out of an Indian mobile phone carrier eight years ago. — AFP pic

KUALA LUMPUR, Sept 2 — Maxis Communications Bhd (MCB) denied today claims it was involved in a shady business deal over the buy-out of an Indian mobile phone carrier eight years ago, amid a high-profile trial of its bosses, Malaysia’s second-richest man T. Ananda Krishnan and his aide, Augustus Ralph Marshall, in New Delhi.

The Malaysian telecommunications giant also claimed that the Indian authorities commenced with the “totally unfounded” prosecution before investigations were completed, and it will also seek international investment treaty protections.

“MCB will also be seeking international investment treaty protections. MCB has received legal advice, including from eminent jurists of India that the coercion allegations are untenable in law and MCB firmly believes that it will be vindicated,” the company said in a statement.

“These opinions obtained from the eminent jurists have also been extended to the CBI for its consideration,” it added, referring to India’s top crime-fighting agency, the Central Bureau of Investigation.

Tycoon T. Ananda Krishnan and Maxis non-executive director Marshall were among those named in a charge-sheet filed at a New Delhi court last week; in addition to South Indian politician Dayanidhi Maran, who was India’s telecommunications minister between 2004 and 2007, and his brother billionaire Kalanithi Maran.

CBI started investigating the Maran brothers and Krishnan in 2011 after allegations that the telecoms minister had forced the sale of mobile carrier Aircel from Siva Ventures Ltd (SVL), allowing Krishnan’s Maxis to acquire a controlling stake in 2006.

However, MCB claimed today that the CBI had elected to proceed with the charge-sheet instead of properly completing its investigations with Malaysia in accordance to Malaysian and Indian law.

“The CBI also appears to have disregarded the numerous representations sent by MCB. Therefore, it is apparent that the charge-sheet has been filed on the basis of incomplete investigations,” it said.

MCB said it invested US$280 million (RM896 million) for a 26 per cent stake of Aircel, and then bought over the remaining 74 per cent for US$800 million in a joint-venture with its Indian partner Sindya Securities and Investments Pvt Ltd.

It said the sale was approved by SVL’s board members on December 19, 2005, and the transaction was completed on March 21, 2006, in compliance with Indian laws.

MCB also refuted claims that Aircel received special favours after the change in ownership, explaining that it had to wait for almost a year before it was issued with the licences from the Department of Telecom, and another year to receive its start-up spectrum.

The statement also claimed that SVL had allegedly approached the CBI in May and June 2011 to complain about Maran, after a weak claim in an arbitration hearing on Aircel’s initial public offering (IPO).

MCB had previously agreed to pay SVL a sum of Aircel’s IPO if it happens before March 2009, but the deal fell through after its IPO was delayed due to the global financial crisis in January 2008.

Astro All Asia Networks Plc, Maxis Communications Bhd, South Asia Entertainment Holdings Ltd — all part of Ananda Krishnan’s business empire — have also been named in the police charge-sheet.

MCB has a 65 per cent share in local telecommunication operator Maxis Bhd. Its shareholders included Usaha Tegas Sdn Bhd (45 per cent), Saudi Telecom Company (25 pc), and Bumiputera trust foundation (30 pc).

At the time of its Aircel acquisition, MCB was publicly listed in Bursa Malaysia. Its shareholders were Usaha Tegas (47 pc), Malaysian government institutions (10 pc), and the remaining 30 pc among global institutional investors and the public.