Malaysian Tycoon Embroiled in India Scandal
|Oct 11, 2011|
Billionaire T. Ananda Krishnan, Malaysia’s richest man, has been ensnared in the giant telecommunications scandal that has wracked India and played a major role in fueling the protest led by Anna Hazare that threatens to bring down the Indian government and change the nature of politics.
Indian investigators have filed charges against the tycoon and a top Krishnan executive, Ralph Marshall, along with former Indian telecommunications minister Dayanidhi Maran and Maran’s brother, Kalanidhi, according to the Press Trust of India, on charges of criminal conspiracy over a controversial deal involving the telecommunications giant Maxis Communications Bhd. and a sister company of Krishnan’s, Aircel.
Few details have been given of the charges. Local media in Kuala Lumpur reported that Krishnan’s headquarters said they were aware of the charges but made no further comment and that the charges would have no effect on the stock. The Press Trust of India reported that the Central Bureau of Investigation had filed charges in connection with the purchase by Maxis of Aircel India in 2006.
A sister company of Aircel invested R6.75 billion (US$137.5 million at current exchange rates) in the Maran family’s Sun TV DTH venture in 2006, according to a report in the Hindustan Times. Under the terms of the agreement, Ananda planned to produce TV channels catering to the Indian market, particularly to the Indian diaspora in the United States and Europe. Krishnan was said to also be planning TV services featuring Web-based interactivity.
The 73-year-old Krishnan was listed by Forbes Magazine as Asia’s second-richest businessman, with US$9.6 billion in assets, behind sugar king Robert Kuok. Born of Sri Lankan parents in relatively modest circumstances in Kuala Lumpur, Krishnan’s association with former Prime Minister Mahathir Mohamad is considered to have played a major role in amassing his fortune. His publicly traded gaming company, Tanjong, operates three lotteries in a predominantly Muslim country that frowns on gambling. He especially endeared himself to Mahathir by agreeing to become the anchor tenant in the country's iconic Petronas Towers, owned by the national energy company.
After Mahathir’s departure from power, Krishnan has continued to remain close to members of the ruling Barisan Nasional, He holds the title of Tan Sri, one of the highest accolades in Malaysia’s odd system of titles.
Krishnan has a dizzying number of businesses including media, satellites, oil and gas, telecommunications and a wide variety of other holdings involving power generation, gaming and leisure facilities across a broad swath of Southeast Asia including Singapore and Indonesia. His MEASAT Broadcast Network Systems boasts three communications satellites.
It isn’t the first time that Krishnan has found himself in a joint venture gone sour. In Indonesia, a high profile partnership between Krishnan's Astro and the Lippo Group's First Media pay TV operation was unwound and in dispute shortly after it reached the air. That JV, Direct Vision, ended up in private arbitration in Singapore as the two sides each accused the other of wrongdoing. Astro sought $250 million in damages. The arbitration court found in Astro's behalf but the bitterness reportedly lingers and the two sides have yet to come to a settlement.
The telecommunications scandal, involving the licensing of spectrum for 2G services in 2008, has been cooking in India for more than a year. So far more than a dozen top businessmen, government officials and politicians have been implicated, including another former telecommunications minister, A. Raja, who was forced to resign in November 2010.
The Indian treasury is said to have lost nearly US$40 billion after the ministry sold the licenses at 2001 prices on a first-come, first-serve basis instead of auctioning them as other countries do. The sale was designed to benefit a select few bidders, according to the Comptroller and Auditor General of India.
Among those implicated are some of India’s most illustrious companies including Reliance Communications, run by Anil Ambani, and the Essar Group, run by the Ruia family. Mukesh Ambani, who runs the separate Reliance Industries group and is an active rival of his younger brother, has also been linked to ministers involved.
The prime minister’s office itself has been tarnished by the scandal as it has come clear that Prime Minister Manmohan Singh knew what Raja was up to and declined to do anything about it.
The scandal might have disappeared as other corruption scandals have in India. However, the opposition parties capitalized on the auditor general’s report to drum up rising public anger. Singh and his Congress Party political boss, the ailing Sonia Gandhi, who was recently operated on for cancer in the United States, have both been attempting contain the crisis with little effect, especially after Hazare, a 74-year-old retired army driver, went on a hunger strike that attracted millions of followers. Hazare was jailed but public outrage soon freed him. One lawyer said he would produce evidence implicating Robert Vadra, Sonia Gandhi’s own son-in-law.
Hazare’s movement appears to have raised the political temperature across the entire country, with his hunger strike bringing together an unprecedented demand for cleanup crossing caste, class, regional and religious lines, with Hindus and Muslims both demanding reform. There seems little hope of stemming corruption, however, from officials’ street-level bribes and killings to national scandals – despite the Hazare movement.
However, according to widespread anecdotal reports, officials at all levels of government are becoming so frightened of facing corruption accusations that they are reluctant to make decisions, seriously delaying policy implementation.