The Hindu Business Line : Govt examining Reliance Info share deals: Chidambaram

THE Union Government on Tuesday said that it was examining whether any law had been violated by Reliance Infocomm in allocating one crore shares to three unlisted firms at the rate of Re 1 per share.

Replying to a supplementary question in the Rajya Sabha, the Finance Minister, Mr P. Chidambaram said, "We are looking to see if any law has been violated in the allocation of shares. The enquiry is not over. We will continue to look into it. From the available balance sheets of the three companies, as at March 31, 2004, the price at which the three companies acquired shares in the erstwhile Reliance Infocomm Ltd appears to be at Re 1 per share."

Mr Chidambaram said that since Reliance Infocomm was an unlisted company it did not fall under the jurisdiction of SEBI and its regulations.

"The Directors and General Body of an unlisted company are, under the law as it stands today, free to allocate shares to anyone as long as appropriate resolutions are passed. But, we are looking into the matter to see if there is any law violated. At the moment, I am not in a position to say that any law has been violated," the Minister said.

He said if any corruption came to light, then some other agency could do the investigation.

In his written reply to a question raised by Mr Sanjay Nirupam, the Minister said according to information furnished by the Ministry of Company Affairs, three unlisted companies held shares in Reliance Infocomm Ltd, which was also unlisted.

Mr Chidambaram said the shares were acquired, in September 2002, by Prerana Auto Private Ltd (33,00,000 shares), Softnet Traders and Consultants Private Ltd (33,00,000 shares) and Fairever Traders and Consultants Private Ltd (34,00,000 shares).

As per the information provided by the National Securities Depository Ltd, each of the three companies transferred its entire shareholding in February 2005 in favour of Ganesh Infrastructure Fund.

It was alleged by Mr Nirupam that Reliance Infocomm Ltd sold a total of one crore preferential shares at Rs 1 to three "fake" companies when the market rate was Rs 250 each. Mr Nirupam had alleged favouritism in the deal and demanded a high-power enquiry into the matter.

However, Mr Chidambaram said that since three companies have filed their balance sheets they are working companies.

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