NEW DELHI: The CAG has taken exception to the finance ministry under UPA government granting approval for the controversial investment of Maxis in Aircel, without disclosing the full value of the proposal.

In a departure from the usual procedures, the ministry note only spoke about the percentage of stake being picked up by the Malaysian firm. The federal auditors have now revealed these and other details about the controversy surrounding the approval, granted by the ministry under P Chidambaram, for the Rs 3500 crore FDI investment of Maxis group in Aircel. The auditors have also raised several questions regarding the conduct of the ministry and department of telecom in the entire affair.

The CBI is presently investigating how Chidambaram approved the investment on the recommendations of Foreign Investment Promotion Board (FIPB), when it should have been referred to the cabinet committee on economic affairs (CCEA). Earlier this month, CBI examined Chidambaram.


When contacted, Chidambaram said he could not comment about the queries. "These have to be dealt with by the ministries/officers concerned," he said, referring to his previous public statements on the issue, in which he has refuted all allegations of wrongdoing.

The auditors have also pointed out that-- based on official documents including details of 74 meetings of FIPB during 2007-14— FIPB had recommended to CCEA all foreign investments that were beyond the power of the finance minister. The finance minister could approve deals up to Rs 600 crore, which was raised to Rs 1200 crore in 2010. Auditors have pointed out that the Aircel-Maxis FDI of Rs 3514.45 crore was probably the only exception which was not referred to CCEA.

Through their direct and indirect investments, Maxis group effectively had "effectively 99.3% stakes in Aircel," the federal auditor said.

The Department of Telecom has also been found wanting by the auditors on many counts. After Aircel ownership went to foreign hands, DoT in May 2006 decided to delink processing of further applications from show-cause notices or any other advisory issued to the company or any other sister company in respect of any other licence. "This position taken by the department "only appeared to have helped applicant Aircel to obtain UAS licence in an irregular manner," the audit has pointed out.

They have also found that Aircel submitted the old ownership details of 2006 while applying for 3G auction and BWA auction in 2010. Reponses given by the telecom ministry proved that it did not do its due diligence to ensure that FDI norms were respected.

The auditors have also raised question as to why DoT did not seek any clarification from the finance ministry even though the total amount of investment was far in excess of the limit prescribed for finance ministry's approval. DoT also did not do the requisite scrutiny to ensure that Aircel complied with directions of the finance ministry regarding downstream investment.

Chidambaram has maintained that in the "Aircel-Maxis case, the FIPB sought the approval of the finance minister in accordance with the rules. The case was submitted through the additional secretary and secretary, DEA. "Both of them recommended the case for approval. Approval was granted by me, as finance minister, in the normal course."

CBI has filed a chargesheet in the Aircel-Maxis case, in which it has accused former telecom minister Dayanidhi Maran of pressuring Chennai-based telecom promoter C Sivasankaran to sell his stakes in Aircel and two subsidiary firms to Maxis group in 2006. CBI in its chargesheet has said that further investigation is being carried out into the circumstances of the FIPB approval for the deal.