Giske has denied that he actually threatened Indian politicians or tried to influence the SC. He just stated that this case not only concerns Telenor, the petroleum fund or Norwegian investors, but all international investors that depend upon predictability. Thus, the SC’s take on the fight against corruption in India represent a break with the established predictability serious investors need.
Giske and Baksaas have denied that they address the SC verdict, instead they focus on the politics of how to react to that verdict (Baksaas also stress that the verdict does not concern corruption as such). They want the responsible ministers and politicians to guarantee that until the new allotment of the license is finalised, Telenor should be able to run its business through Uninor as nothing has happened. And when the new and fair tenders takes place, they want to make sure that it will be restricted calls. If the larger Indian telecompanies are invited they will probably have the financial strength to overbid Uninor, resulting in Telenor loosing the approximately $3 billion it already have invested.
A central argument put forward by both Giske and Baksaas is an ethical one. They state Telenor is an innocent victim and should not suffer from the possible wrongdoings made by others. How come?
Uninor is a joint venture between the Norwegian Telenor Group and the Indian Unitech Group. Telenor Group holds a majority stake in Uninor of 67.25 percent. It is Uninor who have, or had, the Unified Access Service licences to offer mobile services to India’s 22 telecom circles. At present their services are offered commercially in 13 circles, thus covering 75 percent of the population. But who got the 22 licences in the first place? It was Unitech Wireless, a former subsidiary of the Unitech Group, who bought the licences in 2008.
The Comptroller and Auditor General of India (CAG) later stated that several licences were issued to companies with no telecom experience or who had suppressed relevant facts. The violations cost the exchequer as much as $36 billion in lost revenue. India’s Central Bureau of investigation (CBI) said that during the 2008-sales several rules were violated and bribes were paid to favour certain firms. The state auditor concluded that Unitech had not fulfilled eligibility norms for getting its 22 licences. Further , it had suppressed facts, had less share capital than required and submitted false certificates for paid up capital among other deficiencies found. Based on reports from both the CAG and the CBI, the SC withdraw the licences, and said the licences should be redistributed based on a new calls for tenders.
Essential to the Norwegian Minister of trade and industry and Telenor is that the purchase of the licenses took place before Telenor became the majority stake holder of the company that owned the 22 licences. Thus, it cannot be just that Telenor now risks to lose all the $3 billon it have invested in India through Uninor.
India has a problem with corruption. It is common knowledge that corruption almost by definition makes predictability in a seemingly open marked difficult. Or is it the opposite? That given India’s long history of corrupt practises any attempts to break with this history threatens the predictability so highly esteemed by international investors (according to Giske)?
Of course, any corporation has the freedom to protect their interests and investments. This also goes for government controlled companies like Telenor. It is also understandable that the Norwegian Minster and Telenor stress the political after-play a verdict produced by an independent SC might produce. To a certain extent that is their work.
Still, to fight corruption at the level we probably are witnessing through the 2G-scam will never be easy. And more than corrupt politicians, bureaucrats and corporate executives will lose both prestige and cash.
Perhaps Telenor is an innocent victim, then it must be a rather naive one with limited resources to make their own investigations before it goes into joint ventures and invests $3 billion. Perhaps Telenor thought that given its operations in both Bangladesh and Pakistan it had the necessary knowledge concerning the expected predictability offered their investments. A Supreme Court should perhaps not be able to act completely independent of any long-term political concerns concerning foreign investments?
Never mind, it is always sad when ethical sound politicians and CEOs from Norway get their Easter holidays spoiled just because of the unpredictability that all kinds of efforts to fight corruption provides. There should be a law against that.