Arvind Kejriwal questions Sibal's Vodafone move

Cites the minister's son's past links with telco; son says charges baseless

Aam Aadmi Party leader Arvind Kejriwal today questioned the decision of Law Minister Kapil Sibal to clear a proposal that might pave the way for a settlement of the Rs 11,217-crore tax liability of British telecom giant Vodafone through conciliation.

Sibal had on Tuesday overturned his predecessor Ashwani Kumar’s decision on the dispute over capital gains tax to be paid by Vodafone as part of its multi-billion dollar deal purchasing the India assets of Hutchison Whompoa.

Terming Sibal’s move “a blatant misuse of power”, Kejriwal asked: “What is the motive behind such a decision? Is such a conciliation move to negotiate a tax liability crystallised by Parliament legal? Can millions of taxpayers in the country get into such deals? What is the fee?"

Brandishing extracts from court documents, Kejriwal and his party colleague and Supreme Court lawyer, Prashant Bhushan, alleged there was a direct “conflict of interest” as Sibal’s son, Amit Sibal, had appeared for Hutchison Telecommunications International in a public interest litigation challenging the validity of the Vodafone deal in the past. The duo said the junior Sibal continued to defend Hutchison in the case pending in the Delhi High Court.

Amit Sibal denied the charges. “The last time I appeared for a telecom company was on April 22, 2010, much before (Kapil) Sibal became the telecom minister. I have consciously avoided taking such cases. The last time I appeared for Vodafone was over three years ago, when the issue of taxation was not there,” he told a news agency.  

Kapil Sibal said: “My sons are lawyers and they also represented some telecom firms. But on the day I became telecom minister, they returned all the briefs they held. The same applies to the HRD sector. We are very careful about these things, and I would never betray the trust of my party and my prime minister.

“What I find interesting about the accusation is Mr Prashant Bhushan was the petitioner in the cases in those very cases that he charges my son with fighting. He knows fully well when my son appeared in the case and when he did not. Then why is he pretending to show such outraged indignation ?

My son has made his own statement and there is really nothing to add to it. I treat such charges with the contempt they deserve.”

Congress spokesperson Shakeel Ahmed, too, rejected the charge, saying Sibal's son parted ways with all telecom companies for which he used to appear as a counsel soon after Sibal became the telecom minister in 2010.

Kejriwal also took on the Essar group alleging that its $415-million (Rs 2,280-crore today) settlement deal with Hutchison was actually an agreement to secure approvals from the Foreign Investment Promotion Board and fix court cases. He questioned if a part of this sum was paid to people who facilitated the deal.

The Mumbai-based group denied the allegations. "Essar denies any allegation of wrongdoing and had fully disclosed the referred agreement to all statutory authorities in 2007 itself. The agreement relates to a settlement of commercial disputes with Hutchison in 2007. Essar, as a minority joint venture partner, had claimed certain pre-emptive rights in respect of the sale of Hutchison’s shareholding in Hutchison Essar Ltd (HEL),” Essar said in a statement.

Under the agreement, Essar agreed to withdraw its objections to the proposed sale of Hutchison’s interests in HEL to Vodafone. “Essar sold its entire shareholding in Vodafone Essar Ltd in 2011-12 and does not have any continuing interest in the company,” the statement added.

Earlier, Kapil Sibal’s predecessor, Kumar, had rejected the finance ministry’s plea for conciliation with Vodafone for the tax dispute, terming it as “illegal”. Kapil Sibal’s move is also in concurrence with Attorney-General G E Vahanvati’s fresh opinion that conciliation is legally tenable. Vahanvati had earlier opined against a compromise.

Kapil Sibal has agreed with Finance Minister P Chidambaram that if negotiation can resolve the tax issue with Vodafone, the government and Vodafone could discuss the matter, and if necessary, take it to the Cabinet, and later get Parliament to endorse the proposal. The Kejriwal-Bhushan duo also pointed to the “questionable role” played by Finance Minister Chidambaram. In April 2007, Chidambaram pressurised officers in the department of economic affairs and the director of FIPB to ignore their findings about irregularities in the deal and clear it, Bhushan said.