Vodafone's ownership in Indian arm may be probed

The department of economic affairs (DEA), ministry of finance, has written to the department of telecommunications to look into the security concerns the ministry of home affairs (MHA) had expressed on the proposal of Vodafone Plc, the London-based multinational corporation, to increase its stake in Vodafone India to 100 per cent.

The letter was written on February 20, two weeks after the Cabinet Committee of Economic Affairs (CCEA) had approved the 100 per cent ownership proposal of Vodafone Plc in Vodafone India, at a proposed investment of Rs 10,141 crore.

MHA had given its observations on the security issues on December 27, 2013.

Vodafone said it was not aware of any such probe.

"No such concern has been raised with us by the Indian government. Its approval of our FDI application states that it was cleared by the Foreign Investment Promotion Board and CCEA after all necessary due diligence. Vodafone complies with the law in all of our countries of operation, including - in the case of our European businesses - the EU Privacy Directive and EU Data Retention Directive. Vodafone does not disclose any customer data in any jurisdiction unless - like any other operator - it is legally required to do so. The company has never been accused of tax evasion. Vodafone's businesses around the world paid more than £4.2 billion in direct taxes to governments in our countries of operation last year, plus more than £3.2 billion in other non-taxation-based fees and levies. Our businesses also made a total indirect tax contribution to national governments of £6.1 billion," said a Vodafone spokesperson.

According to the MHA communication, Vodafone and Verizon (which has stake in Vodafone's wireless joint venture) are learnt to be secretely collaborating with Britain's Government Communications Headquarters (GCHQ) and passing on details of their customers' phone calls, email messages and other communication; they're known as intercept partners. GCHQ is a British government intelligence agency. Its mass tapping operation has been built up over five years by attaching intercept probes to transatlantic cables where they land on British shores, noted the MHA communication. Also, the British telco has a Rs 11,200-crore tax dispute with the government here on the purchase of the equity held by Hutchison Whampoa in Hutchison Essar in 2007. Also, a penalty of Rs 550 crore has been imposed on Vodafone for third-generation service licence violations. This is for offering 3G services through intra-circle service agreements with other telcos such as Bharti Airtel and Idea Cellular.

The government has also imposed a fine of Rs 870 crore on Vodafone for under-reporting of earnings during 2008-09 and 2011-12. The Central Bureau of Investigation has also filed a chargesheet in the spectrum allocation scam against Hutchison Max Telecom and Sterling Cellular, both now subsumed in Vodafone India.
NETWORK ISSUES

• According to the MHA communication, Vodafone and Verizon are learnt to be collaborating with GCHQ and passing on details of their customers' phone calls, email messages and other communication
• The British telco has a Rs 11,200-crore tax dispute with the government on the purchase of the equity held by Hutchison Whampoa