ByCell may get clearance if main promoter exits

NEW DELHI, INDIA: The Ministry of Home Affairs said it withdrew security clearance of ByCell Telecommunication because the company’s main promoter does not have clean record as per the information collected by the Intelligence Bureau (IB).

“As per the present situation, ByCell cannot be given security. The record of ByCell’s main promoter is not clean and in the present situation we cannot give clearance to the company’s investment in India,” clarified Union Home Secretary GK Pillai on the decision to withdraw ByCell's security clearance. The Swiss firm was interested in extending its operations to India.

“If the main promoter sells his stake and some other person or company with clean record buys it, then we may consider its application but in the present situation the ministry cannot give the company security clearance,” Pillai added.

Bycell had, on March 24, 2009, approached the court against DoT and India's Foreign Investment Promotion Board (FIPB) for holding its telecom license.

Pillai, however, did not name the main promoter and refrained from elaborating on the information pertaining to the record of ByCell’s main promoter.

“The matter is in court and we cannot say anything more on this. There is information from Intelligence Bureau which cannot be shared in public,” he said.

ByCell Holding AG, in association with Hyderabad-based Jayalakshmi Group, had formed ByCell Telecommunications India in 2006. ByCell Holding AG has 74 per cent stake in the company whereas its Indian partner has 26 per cent stake.

However, as per a media report this decision of the government to revoke investment approval was taken by FIPB on the basis of report filed by intelligence agencies IB and the Research and Analysis Wing (RAW), which linked Maxim V Naumchenko and Andrey Polektov, the two promoters of the company, to terror funding, money laundering and fraud.

ByCell was given FIPB approval to invest Rs 500 crore and launch mobile services in five circles in January 2006. In February 2008, the company received clearance from the Home Ministry and was again given permission by FIPB to apply for telecom licenses in the remaining 17 circles in the country and raise its investments in India to $500 million.

Though ByCell got LoI from the DoT in 2008, the department again withheld its license citing FIPB nod and security issue raised by then MP from Varanasi, Dr Rajesh Kumar Mishra, sent to Prime Minister on October 18, 2007. Later Dr. Mishra denied to have sent any such letter.

The next hearing of ByCell’s case is on September 25, 2009.