#EIC2MNC Series Economic Intelligence

BSNL-Cisco Deals – The Scam Behind The Scam

It has come to light recently that the dubious dealings between Bharat Sanchar Nigam Ltd (BSNL) and Cisco Systems, an American multinational technology conglomerate headquartered in San José, California, has caused a loss of Rs 300 crore to the Indian taxpayers. The scam involves 2 deals:

  1. BSNL’s Rs 95 crore purchase order for expanding India’s National Internet Backbone
  2. BSNL’s Rs 300 crore annual maintenance contract for 5 years and purchase of new hardware

Cisco outsourced purchase to Presto Infosolutions, a Cisco partner with offices in Dubai and Singapore. Presto which has no previous experience in the field in turn outsourced to Singapore-based Ingram Micro. Finally outdated equipment were purchased at inflated rates and that also were under-invoiced by Ingram Micro and Cisco causing avoidance of customs duties and taxes to the government. The dirty money thus created was diverted to a “slush fund that was appropriated by senior executives of the two companies”.

Sounds familiar?

This is exactly what happened in the 2010 Commonwealth Games Scam or the CWG Scam. Emmar Properties (sometimes spelled Emaar) were consultants in executing the Common Wealth Games which was close to the tune of Rs 1.25 lakh crores ($ 24 billion) fraud (this is what was revealed) in which the ever forgetful Kalmadi was sent to Tihar but the money reached Dubai and CBI went on a merry chase behind Australian and Swiss firms to find out the truth in over invoicing of gym equipment supplied in CWG. The quality of the work done in Delhi was so great that the foot-over bridge built by Emmar collapsed just a week before inauguration of CWG and it was re-built in record time by Indian Army. For the amazing work done by Emmar, the Delhi Development Authority (DDA) had even given a Rs 700 crore bailout package to the cash-drained Emaar due to the 2008 global meltdown. The bill for this CWG was twice the combined total of all CWGs ever conducted in the entire history of CWG. Finally CBI sources revealed in July 2012 that the probe against alleged corruption in construction of Barapullah Flyover and grant of Bail-out Package to EMAAR MGF was likely to be closed in the absence of substantiating evidence. However the probe is still on. What is not known to many Indians is that Emmar is the abbreviation of Emma Rothschild, Nobel laureate Amartya Sen’s third wife. It is owned by the House of Rothschild, one of the ancient bloodlines that controlled the East India Company.

The modus of operation was simple: Many front companies were promoted as subsidiaries of Dubai based companies in Singapore, South Korea, Malaysia, etc. to lend some international flair and authenticity to the parent Dubai-based business houses. Over invoice every item several times citing international standards and get the bills passed. Then subcontract the work to local Indian contractors for the actual price.

In a matter of months, Emmar attached itself to almost every State Government and was working on several key infrastructure projects. For example, in Andhra Pradesh, Industrial Infrastructure Development Corporation (APIIC) entered into joint venture with Emmar Properties in developing golf courses, villas, high rise complexes, stadiums, recreation and entertainment centers etc. These deals signed between 2004-11 are now under the CAG, Vigilence and CBI scanner. The modus operandi was simple – first APIIC and EMMAR agreed to become equal (50%) partners. Then within months, APIIC’s ownership share dropped to 26% and eventually to 6%. This was done by transfer of shares to Indian front companies setup by the EMMAR group. This is exactly how Rothschild managed to get controlling stakes in Kingfisher Airlines and Air Deccan. This entire story of the wholesale bailout of bankrupt Western-European economies is told in our exclusive Foreign Countries Dictating India Series.

dubai-flu-fdi-greatgameindia-magazine-rothschild-emaar-bailout-of-uae

The recent BSNL-Cisco scam follows the same pattern, except theres a catch – which brings us to the scam behind the scam.

This BSNL-Cisco dubious dealings comes out just a week after BSNL employees held a nation-wide protest against the privatization of BSNL. The plan is to form a new company to manage the 72,000 mobile towers of the BSNL, a move fears BSNL will lead to its eventual privatization. The plan in-fact is in motion since few years now but couldn’t get through owing to strong pressure from BSNL employees. The scam is to be a godsend for certain group.

This is not a case of just BSNL alone. The day the BSNL employees went on strike the “government approved an ambitious plan to sell loss-making state-owned companies, subsidiaries and select manufacturing plants to strategic buyers, setting the stage for the return of privatisation after more than a decade”.  Touted under what is called as the Strategic Sale of PSUs, there is a wholesale privatization of what is termed as distressed assets (state units) underway. Maybe it’s just a coincidence that this historic plan was approved when the entire nation was busy fighting foreign spies infiltrated SIMI terrorists on whatsapp, just like they were during the #JNURow in the ongoing debate on tolerance, when the ball for the privatization of state-owned banks was set rolling. Or maybe expecting resistance from people, such major steps are announced/taken under cover of such diversions. Whatever be the case, there are 2 very important questions that needs to be asked and answered here.

  1. If the problem the PSUs are in is because of the bad-debt write offs, corruption, dubious dealings, what should be the appropriate solution? To ensure appropriate regulatory mechanism to prevent such frauds from occurring and bringing the fraudsters to book or by simply privatising the PSUs? Is privatisation the only one-stop solution to all of the problems the country is facing, be it the railways, energy, education or any other sector?
  2. Who are these strategic buyers who will buy these state assets at dirt cheap rates? For these reforms the proponents of privatisation raise the issue of productivity in the PSUs. However what they fail to mention is that these are the same banks/companies whose fraudulent policies of the sub-prime housing mortgage collapsed the entire US economy. Now these same entities posing as ‘strategic buyers’ are lining-up to buy Indian PSUs. The question is where is all the money coming from in these bankrupt entities in the first place?

When a PSU undergoes a loss it is slated for sale rather than improving its working environment and management; whereas when the private companies the so called ‘strategic buyers’ who are in-line to buy these PSUs refuse to pay their taxes, the govt simply writes it off, or in some cases even bails them out, as in the case of Tata bailing out Jaguar. And these are lakhs of crores of rupees we are talking about. As per recent data in 44 years, India lost at least Rs 17 trillion to tax havens. In contrast the extent of revenue-forgone (corporate tax write-offs) for 2015-16 alone is estimated to be a whooping Rs 6.11 trillion. But we only have the data from 2005-06 to 2013-14. In those nine years, the corporate karza maafi amounted to Rs 36.5 lakh-crore. That, in case you like the sound of the word, is Rs 36.5 trillion. What is the amount for 44 years? No one knows! And these companies are still making a lot of profit. Why can’t the money that these private companies owe the government recovered and infused in these ailing PSUs? A good example is set in this direction by the Bengaluru Mahanagar Palike which has come up with a novel Intel Inside Garbage Outside tactic to make Intel cough up the tax it owes to the government which it was dogging since 9 years.

A still better example was set by the Russian President Putin. Immediately after the collapse of the Soviet Union large-scale privatization of state-owned assets was implemented. From Glasnost and Perestroika – the tools created by the East India Company for enslavement of their colonies emerged the Oligarchs – who amassed vast wealth by acquiring state assets very cheaply (or for free) during the privatization process.

After coming to power Vladimir Putin set about on a massive purging of these oligarchs from Russia, the power struggle that continues to this day. The most famous case is that of Mikhail Khodorkovsky. In 2003, Khodorkovsky was believed to be the wealthiest man in Russia (with a fortune estimated to be worth $15 billion) who accumulated considerable wealth through obtaining control of a series of Siberian oil fields unified under the name Yukos, one of the major companies to emerge from the privatization of state assets during the 1990s. Khodorkovsky was later backed up by Henry Kissinger, George Soros and Rothschilds as a candidate to run for a Presidential election against Putin as well as an attempted revolution.

After Putin kicked them out from Russia these same East India Companies turned Multi-National Corporations setup shop in India under the same tried and tested ideology of enslavement – Glasnost and Perestroika (called in India as Liberalization and Privatization) which is just another term for Free Trade and Globalization in the guise of which the East India Companies setup their shop in India some 400 years ago. India still finds itself as it did then, at the crossroads to Swaraj or Slavery!

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Report by Shelley Kasli & Raja Sekhar for GreatGameIndia – India’s only quarterly magazine on Geopolitics and International Affairs.

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References:

Emaar-MGF gets Rs 700 cr Games bailout
CWG scam: CBI may close Barapullah, Emaar cases
Controller Houses Of The East India Company: EIC Series Part IV
What Has A Secret Account In Rothschild Bank To Do With The Kingfisher Deal?
FDI – Foreign countries Dictating India Series
The Bailout Of UAE – From Dubai FLU to Indian FDI
BSNL staff hold protest against Centre’s move
Decks cleared for strategic sale! Government okays plan to exit sick PSUs, subsidiaries
Exclusive: Rs 300-Cr Scam in BSNL-Cisco Deals in Modi’s Achhe Din
Disinvestment dept working on Niti Aayog’s stake sale proposal
Is SIMI Infiltrated By Foreign Spies?
Should State Owned Indian Banks Be Privatised?
How Tata Fooled India & Bailed Out Jaguar With Indian Taxpayers Money?
In 44 years, India lost at least Rs 17 trillion to tax havens
Rothschild Inside, Garbage Outside
Vijay Mallya And The Sanctuary Of Oligarchs & Criminals
East India Company – Part I Noble Motives
Does The East India Company Still Exist?
Ideology & Methodology: East India Company Series Part III
India At Crossroads To Swaraj Or Slavery?

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