Vodafone is seeking an out-of-court settlement with the Indian government over a $2 billion tax dispute that has been ongoing for three years in Supreme Court. The Netherlands has requested India consider an alternate dispute resolution process called Mutual Agreement Procedure that could run parallel to the court case. Cabinet reshuffle is likely in mid-January, with Kapil Sibal temporarily taking over the telecommunications portfolio until it is handed to the DMK party. The CAG issued a scathing report on former telecom minister A. Raja, saying he flouted rules and ignored advice to favor certain companies in the 2008 2G spectrum allocation, causing an estimated $38 billion loss. Axis Bank agreed to acquire key businesses

1. Weekly News

2. Vodafone wants to settle tax row out of court
 THE Dutch government, on behalf of Vodafone International Holdings BV,
has approached the Indian government for settling a three-year-old dispute
involving a tax claim of over 11,000 crore, even as the world’s largest
private mobile phone company continues to fight the case in the Supreme
court, two tax officials with direct knowledge of the development said. UK-
headquartered Vodafone had bought Hutchison’s operations in India
through its Netherlands-registered subsidiary, Vodafone International
Holdings BV.
 The Netherlands has now written to India asking it to consider an alternate
dispute resolution that will run parallel to the ongoing court process
through what is termed as a Mutual Agreement Procedure (MAP), a
government official aware of the development said.
 MAP is an alternate process of dispute resolution, and is an option
available to a taxpayer in addition to and concurrent with the appellate
process. However, under MAP, once the proceedings are initiated, it is
possible to obtain a stay on the tax demand provided one gives a bank
guarantee.

3. CABINET RESHUFFLE LIKELY IN MID-JAN
Sibal to hold telecom portfolio till next rejig
 IN AN attempt to erase the popular image of sleaze now associated
with the telecom ministry, Prime Minister Manmohan Singh on
Monday handed over the reins of Sanchar Bhawan to HRD minister
Kapil Sibal. But the department will have to be handed over to the
DMK when Mr Singh goes in for a rejig of his team, probably in mid-
January.
 The prime minister got an opportunity to exercise his “discretion” on
selecting a baby-sitter only because DMK chief M Karunanidhi failed
to thrash out the inner dynamics of his party and choose a successor to
disgraced ex-minister A Raja.
 While TR Baalu’s nomination will just not be acceptable to the
Congress—he was kept out of the government in 2009 at its instance—
the DMK chief’s daughter, Kanimozhi, does not have the complete
backing of the family. Moreover, Ms Kanimozhi is closely identified
with a discredited Raja.

4. CAN OF WORMS: TELECOM ENTANGLED IN CORRUPTION
CAG calls Raja’s bluff on 2G licence allocation
 Raja dumped advice of PM and ministries to favour a chosen few in
allocation of precious 2G airwaves in 2008 while companies hid facts,
used fictitious documents & fraudulent methods to grab licences
Shady cos benefited from tainted minister.
 ARAJA flouted almost every rule in the book, ignored advice from the
prime minister down and indulged in blatant favouritism while awarding
mobile licences to mostly undeserving companies, the country’s chief
auditor has said, in a stinging indictment of the former telecom minister
who is accused of causing a loss of nearly 177,000 crore to the government.
 Using language rarely ever used against a minister, the Comptroller and
Auditor General (CAG) accused Raja of granting “undue benefits” to
Reliance Communications (RCOM) and giving “undue advantage” to the
erstwhile Swan Telecom (now Etisalat DB), singling out these two
companies for special mention in sub-headings of its report submitted to
Parliament on Tuesday. The report mentioned Swan as a “front” for Anil
Ambani-controlled Reliance.

5.  CAG also slammed Mr Raja for mishandling the 2G spectrum allocation in
2008, noting that the telecom ministry under him awarded 122 mobile
permits to nine companies at prices fixed in 2001, disregarding the prime
minister’s plea for a ‘fair and transparent allocation policy’. It also accused
him of ignoring the advice of the law and finance ministries, and the
counsel of the telecom ministry’s senior bureaucrats.
 The auditor said 70% of the telecom licences issued by Mr Raja were
“illegal”, and companies granted these permits, notably Unitech, S Tel,
Loop Mobile, Datacom (Videocon) and Etisalat, had disclosed “incomplete
information and submitted fictitious documents and used fraudulent
means” for obtaining them. Many companies were allowed to change
‘doctored and fictitious documents’ later, in some cases even as late as 12
months after they had submitted their applications. It said most licensees
had prior information and even pre-dated demand drafts, allowing them to
jump the queue. “The entire process of allocation of licences lacked
transparency and was undertaken in an arbitrary, unfair and inequitable
manner,” the CAG said,

6. WIN-WIN DEAL POSITIVES FOR BOTH SIDES
Axis wins Enam, buys its best for 2,067 cr
 AMBITIOUS private lender Axis Bank has snapped up the best of the
house of Enam—one of Dalal Street’s most influential brokerage-cum-
investment banks.
 Axis, led by CEO Shikha Sharma, a former ICICI Bank director, will
acquire Enam Securities’ key businesses such as investment banking,
institutional and retail broking, and distribution of financial products in
an allstock deal worth 2,067 crore.
 With this, Enam will exit its famed agency businesses that will be
demerged from Enam Securities to a wholly-owned Axis subsidiary.
Close to 400 Enam officials will move to the new outfit that will be
headed by Manish Chokhani—a key member of the Enam management
and one of the four shareholders in Enam Securities.

7.  Mr Chokhani, and the founders of Enam—Nemish Shah, Vallabh
Bhanshali and Jagdish Master—will own a 3.3% equity in Axis after
the bank issues new shares to them. The transaction will need approvals
of RBI, Sebi, and the high courts of Gujarat and Mumbai.
 The story was broken by ET NOW, this paper’s business channel, at
12:35 pm on Wednesday, ahead of other broadcasters and wire services.
Later in the afternoon, ET NOW correctly reported the swap ratio,
which is 5.7 Axis Bank shares for one Enam share.

8. Here’s the bellwether of scams
Bells palsy:Trai annuls 62 licences for rollout delays
 THE telecom regulator has asked the government to cancel 62 of the
122 licences issued by former telecom minister A Raja under
controversial circumstances in 2008 to new companies, including joint
ventures of international operators such as Telenor ASA, Emirates
Telecommunications Corp and Sistema JSFC, because they had not
been able to launch services in time.
 The recommendations of the Telecom Regulatory Authority of India—
which claims that its views were ignored by Mr Raja—strengthens the
possibility of several licences issued in 2008 being revoked.
 On an action-packed day, the telecom department, under new minister
Kapil Sibal, decided to seek legal opinion on the validity of the telecom
licences dished out by Mr Raja after the country’s national auditor said
70% of these mobile permits were obtained through fraudulent means,
an official aware of the development

9. SPECTRUM SCANDAL GOVT FILES
AFFIDAVIT TODAY
 WITH the Supreme Court’s observations in the 2G spectrum case
creating a toxic political environment for the government, the Centre on
Friday decided to depute Attorney General Ghulam E Vahanvati to
represent the prime minister in the apex court for countering the charge
that there was a delay in acting on the petition for the prosecution of
disgraced telecom minister A Raja.
 The affidavit that will be filed in the court on Saturday will explain
“every attention received and action taken” on the petition of Janata
Party MP Subramaniam Swamy for action against Mr Raja.
 Mr Swamy had sought sanction for the prosecution of Mr Raja in a
communication to the prime minister on November 29, 2008. “The
affidavit will convince the court that every communication from
Swamy received the required attention,” sources said.

10. Manmohan acted promptly on 2G scam
complaints: PMO
 The Prime Minister’s Office on Saturday told the Supreme
Court that Dr Manmohan Singh acted promptly within days
on the complaint of Janata Party president Subramanian
Swamy seeking his sanction to prosecute the then telecom
minister A Raja in 2G spectrum allocation scam. The Prime
Minister referred the first two complaints of Swamy for
examination to the concerned official within two days, third
complaint within four days, the fourth one in a day from the
date of its receiving, said PMO in its 11-page affidavit filed
by its director, V Vidyavati. According to the PMO, it had
received two more communications from Swamy which
were looked into