What is the 2-G- Spectrum Scam?

In the year 2008, the Telecom Ministry under Mr.A.Raja issued 122 Licenses of the 2 G Spectrum to 85 companies including many new Telecom Companies with little or no experience in the telecom sector, at a price set in the year 2001.

Compared to the year 2001 and the year 2008 the demands for Mobile Phones and the related services have increased by more than 20 times.

And such improper allocations of the 2G –Spectrum Technology has caused heavy loss to the Government of .

The estimated loss is subject to confirmation by experts, as the figures given in the Audit Report are only on assumed values. The loss is said to be around Rs 60000 crores.

And as per the CVC Report to CBI the losses are around Rs 22000 crores.

According to the Audit Report of 'The Comptroller and Auditor General of India', the Audit authority to the accounts and the activities of the Government of India, had pointed out in its Audit Report that:-

• The Process of allocation of the 2-G-Spectrum Licenses did not reflect the correct values,

• And there was no proper auction and

• The entire process of allocation was flawed • And benefiting selected companies.

Out of 122 Licenses issued 85 had been given to ineligible and inexperienced companies and The Telecom Ministry deviated its own guidelines and changed the cut- off date for applicants enabling some selected companies to get unfair advantage in getting the licenses and The entire process of allocation "lacked transparency and was undertaken in an arbitrary, unfair and inequitable manner". Several companies got the 2G-Spectrum Licenses by: deliberately suppressing facts, disclosing incomplete information, submitting fictitious documents and using fraudulent means. According to the Audit Report of the 'CAG' the following companies are ineligible for the 2G- Spectrum Licenses:-

Units of Unitech Ltd which are not fulfilling the eligibility conditions including the required Share Capital, received licences in the year 2008 and now operates services in a joint venture with Norway's .

• Loop Telecom,

• Videocon Telecommunications,

• Ltd.

Swan Telecom, which has since been partly acquired by the UAE's Etisalat , was given licences even though a unit of No. 2 telecoms firm held over 10% of equity, a violation of rules.

The CAG Report has named 9 other operators including the following market leaders which were allotted spectrum beyond the contracted limit without paying any upfront charges, costing loss to the Government of India:

Bharti Airtel ,

Reliance Comm and

Vodafone. The explanations given by the Telecom Ministry to the 'CAG' were not satisfactory and the matter was handed over to CBI for further enquiry and action.

The Central Bureau of Investigations of India (CBI) being under the control of the Central Government of India and is called by the opposition political parties in India as “The Congress Bureau of Investigations”.

So, the opposition parties have been demanding an enquiry by a Joint Parliamentary Committee (JPC), comprising Members of the Parliament belonging to various parties, including the ruling parties and the opposition parties.

The Prime Minister Dr. was not ready for the enquiry by the Joint Parliamentary Committee (JPC). However, Dr.Singh was ready for an enquiry by the Public Accounts Committee of the Parliament (PAC).

The PAC will also be under the Central Government’s control and the opposition parties are against the PAC enquiry and have been insisting upon JPC enquiry on the “2-G Spectrum Scam”.

Mr.A.Raja belonging to DMK, was the Telecom-Minister responsible for the ‘2 G Spectrum’ allocations. Though Mr.Raja was telling that he had acted according to ‘TRAI’ rules and guidelines and whatever he had done in the matter was with the knowledge and concurrence of the Prime Minister.

Earlier, Mr.M.Karunanidhi, the Chief Minister of Tamilnadu, and the Chief of DMK, a major ally with the ‘United Progressive Alliance’ had been defending the actions of Mr.Raja. However, Mr.Karunanidhi abandoned his party-man and declared that his ‘Kazhagam’ will not support frauds causing loss to the Government of India. And subsequently Mr.Raja had to resign his post as the Minister of Telecom as advised by his party chief on 14th November 2010. Dr.Subramania Swamy had filed a petition in the seeking permission to sue the then Telecom Minister Mr.A.Raja in the ‘2G-Scam’.

And when his petition came for final hearing in the Supreme Court of India, Mr.Raja had already resigned. And Dr.Swamy did not require permission to file a suit against Mr.Raja in some other high court. However, the Supreme Court of India is continuing hearing of the case.

Also, the Centre for Public Interest Litigation (CPIL) has also filed a petition in the Supreme Court of India in the 2G-Spectrum Scam, further to its petition in the Delhi High Court was dismissed.

The CPIL has prayed the Supreme Court of India to:-

Call for the entire records, documents from CBI and ED regarding investigation into the 2G spectrum scam and Direct the CBI and ED to produce regular and periodic status reports in the matter of 2G spectrum scam investigations before The Supreme Court of India. The Supreme Court has ordered the CBI to go into detailed enquiry in the Scam and continued to follow the matter closely.

The CBI was enquiring Mr.Raja and questioned him on 24th and 25th December 2010 and on 31st January 2011.

Mr.Raja was questioned in detail by CBI and documents were recovered and some computers were seized during the searches conducted at his premises by the CBI.

Mr.Raja was asked about his conversations with Mrs., a Corporate Lobbyist and he was questioned about the pre-poning the cut-off date by one week for the Spectrum Application in the year 2007. The CBI also questioned former Telecom Regulatory Authority of India (TRAI) Chief Mr. Pradip Baijal and former Telecom Secretary Mr. D S Mathur in connection with the case.

And CBI has arrested Mr.Raja and his former Secretary Mr.R.K.Chandolia and the former Telecom Secretary Mr.Siddartha Behura on 02nd February 2011.

The following is a list of important dates and events from Mr.A.Raja taking over as Telecom Ministry to the arrest of Mr.Raja by CBI:-

- On 16th May 2007 Mr.A.Raja of DMK took over as Telecom Minister from Mr..

- On 24th September 2007,DoT Press Release said that no applications under Unified Access Service(UAS) License will be accepted after 01st October 2007.

- On 25th October 2007 DoT ruled out auctioning of 2G –Spectrum for Mobiles.

- On 02nd November 2007, DoT decided and announced that applications received upto 25th September 2007 only will be processed.

- On 02nd November 2007, the Prime Minister Dr.Manmohan Singh wrote to DoT/ Mr.Raja, the Telecom Minister to have transparent auction methodology with revised entry fee as it was benchmarked on 2001 figures of Rs 1658 crores for pan India License.

- On 10th January 2008, applicants who applied on or before 25th September 2007 were asked to call on the Ministry to collect the letters.

- On 25th Januray 2008 new UAS Licenses were issued.- On 15th November 2008, the Central Vigilance Commissin (CVC) found lapses in the Spectrum allocation from its initial investigation and recommended for further action.

- On 31st May 2009, Telecom Portfolio was given again to Mr.A.Raja. - On 21st and 22nd October 2009, CBI registered case in ‘2G-Spectrum Scam’ and made searches in DoT offices.

- On 06th September 2010, Mr.P.J.Thomas, the ex-Telecom Secretary was appointed as the Chief of CVC.

- On 17th October 2010, Comptroller and Auditor General of India (CAG) indicted DoT with multiple violations in issuing the 2 G Licenses.

- On 19th October 2010, The Supreme Court of India pulled up the CBI for its ''slipshod'' probe into the 2G scam costing the exchequer over Rs 70 000 crores, and wondered how and why the Union Telecom Minister Mr.A Raja, who allegedly allocated the spectrum to select firms flouting norms, was still in office.

- On 14th November 2010, Mr.A.Raja resigned his post as Telecom Minister, as the opposition parties rocked the Parliament’s functioning demanding his ouster.

-On 15th November 2010, Mr.Kabil Sibal, HRD Minister took charge of DoT as additional charge.

- On 16th November 2010, the CAG talbed its Audit Report on the 2G Spectrum Scam, indicting Mr.A.Raja, for causing ‘presumptive’ loss to exchequer ranging from Rs 57000 Crores to Rs 1 76 000 Crores in the Spectrum allocations.

- On 24th and 25th December and on 31st January 2011, CBI questioned Mr.A.Raja on the scam.

- On 01st Februray 2011, the one-man Panel(set up to examine the procedures for awarding 2G Licenses between 2001 and 2009) submitted its 150 pages with about 1300 pages of annexures report to the Union Telecom Minister Mr.. The panel report has named Mr.A.Raja, the Ex-telecom Minister, Mr.Chandolia, his Personal Secretary and Mr.Behuria, the former Telecom Secretary for wrongdoings. - On 02nd February 2011, Mr.A.Raja,the ex-Telecom Minister, Mr.R.K.Chandolia, his former Secretary and Mr.Siddartha Behura, the former Telecom Secretary were arrested by CBI. The Supreme Court of India has asked the CBI and the Enforcement -Directorate to submit status reports on their investigations into the by 10th February 2011, when the case will come up for further hearing.

As told by the Congress Party officials the arrest of Mr. A. Raja and others in the 2G spectrum allocation scam is a case of the ‘law taking its own course’.

As expressed by the leaders of the opposition parties the action of arrests are a 'little too late', but definitely better than never. However, we have to wait and see the further proceedings in the prosecution of the wrong doers.

“Satyameva Jayate!”

2G spectrum scam The 2G spectrum scam in India involved the issue of 1232 licenses by the ruling Congress-led UPA alliance[1] of the 2G spectrum to 85 companies including many new telecom companies with little or no experience in the telecom sector at a price set in the year 2001. The scam involved allegations regarding

.the under pricing of the 2G spectrum by the Department of Telecommunications which resulted in a heavy loss to the exchequer, and .the illegal manipulation of the spectrum allocation process to favour select companies

The issue came to light after the auction of airwaves for 3G services which amounted to 67,719 crore (US$15.1 billion) to the exchequer.A report submitted by the Comptroller and Auditor General based on the money collected from 3G licenses estimated that the loss to the exchequer due to under pricing of the 2G spectrum was 176,379 crore (US$39.33 billion).

The scam came to public notice when the Supreme Court of India took Subramaniam Swamy's complaints on record [With Case type:Writ Petition (Civil),Case No:10, Year:2011].it is a very dangerous scam by A Raja. There still many licenses sold from A Raja.

Civil Servants, Politicians and Corporations Involved in scam bad

All the accused have been booked under sections 120(B) (criminal conspiracy), 468 (Forgery for purpose of cheating), 471 (using as genuine a forged document or electronic record), 420 (cheating and dishonestly inducing delivery of property) and 109 (abetment if the act abetted is committed in consequence, and where no express provision is made for its punishment) of the . Politicians, Ministers and Parliamentarians involved

. Andimuthu Raja , Union Cabinet Minister for Communications and Information Technology : The Comptroller and Auditor General holds Raja personally responsible for the sale of 2G spectrum at 2001 rates in 2008, resulting in the previously mentioned loss of up to Rs. 1.76 lakh crores (US$40 billion) to the national exchequer. In August, 2010, evidence was submitted by the Comptroller and Auditor General (CAG) showing that Raja had personally signed and approved the majority of the questionable allocations. . M. K. Kanimozhi , Member of : On April 25, 2011 Kanimozhi was named as a co-conspirator in the supplementary chargesheet filed by the Central Bureau of Investigation (CBI) in connection with the 2G spectrum case. The chargesheet submitted before the Supreme Court establishes how Rs 200 crore connected with the scam traveled from a partnership firm of businessman Shahid Balwa of Swan Telecom to the -owned Kalaignar TV.[5] She has been charged with section 7 and 11 of the Prevention of Corruption Act. The sections deal with acceptance of alleged gratification.

Bureaucrats involved . Siddhartha Behura , Civil Servant (IAS officer of 1973 batch UP cadre) : He was the Telecom secretary who served in the DOT at the time of the 2G allocation. . Pradip Baijal , Civil Servant (IAS officer of 1966 batch MP cadre) : He is alleged to have recommended policies that favored certain Telecom companies when he was heading the TRAI. Post retirement, Baijal joined Noesis, a consulting firm.Raja has made references to Baijal's decisions in 2003 as the basis for his decisions in 2008; something which has been attacked by Arun Shourie and several media pundits. The houses and offices of the bureaucrat were visited by the Central Bureau of Investigation in December 2010 as part of their investigations.however, Baijal is expected to get a clean chit in this issue . R K Chandolia , Civil Servant (IES officer of 1984 batch cadre) : He was private secretary of Raja during UPA-I when the licences were awarded. When Raja became the Telecom Minister once again in UPA-II, Chandolia had been promoted to the Joint Secretary rank. Raja re-designated him Economic Adviser, that gave him the charge of all important policy- related work. Chandolia interacted with all the licensees. It is said that it was Chandolia who, from DDG-access services A K Srivastava's room, had handed out letters of intent to representatives of various companies.

Corporations involved

.Allianz Infra . .Dishnet Wireless . . Sistema Shyam Mobile (MTS) – Sistema Mobile Russia . Reliance Communications . S Tel . Swan Telecom . Tata Tele Services . Unitech Group . Videocon Telecommunications Limited . Vodafone Essar . Virgin Mobile India

Corporate personalities involved

. Anil Ambani - Reliance Group (ADAG) . Ratan Tata . Shahid Balwa - Swan Telecom (now Etisalat DB) . Vinod Goenka - Swan Telecom (now Etisalat DB) . Venugopal Dhoot - .Prashant Ruia - Essar Group . Sanjay Chandra , Managing Director of Unitech Ltd and Unitech Wireless

All of them have either been questioned by the CBI or are prospective suspects in the scam. Media persons and lobbyists involved

. Nira Radia , a former airline entrepreneur turned corporate lobbyist whose conversations with politicians and corporate entities were recorded by the government authorities. The contents were later leaked by unknown parties creating the Nira Radia tapes controversy

Politicans, Ministers and Parlimentarians involved

. Dayanidhi Maran , former Union Cabinet Minister for Textiles : The main allegation revealed by Tehelka magazine and followed up in several other reports, is that Maran forced C Sivasankaran, owner of Aircel, to sell the telecom company to Maran's Malaysia-based friend T Ananda Krishnan in 2006. The reports allege that Maran deliberately delayed issuing spectrum licenses to Aircel's sister concern, Dishnet Wireless, when it was owned by Sivasankaran. He issued the licenses soon after it changed hands to Ananda Krishnan who owns Maxis. . P. Chidambaram , current Union Cabinet Minister for Home Affairs : Subramaniam Swamy states that when the 2G Spectrum rate was finalised, P.Chidambaram was the finance minister of India and he had a major role in deciding the spectrum price with A.Raja. Subramaniam alleges that Chidambaram had received kickbacks and undervalued the spectrum cost.

Petitioners to 2g scam

. Subramaniam Swamy , activist lawyer and politician, whose letters to the Prime Minister demanding action and affidavits and cases in the Supreme Court brought the issue into the public limelight. ., a journalist who was one among the very first to write on the irregularities in the awarding of 2G spectrum allocation by the Telecom Ministry. He is also one of the petitioners in the 2G PIL currently being heard in the Supreme court. . , on behalf of the Centre for Public Interest Litigation. .Anil Kumar, on behalf of the civil society organisationTelecom Watchdog .Others:Several eminent people like former chief election commissioners J.M. Lyngdoh, T.S. Krishnamurthy and N. Gopalaswami and former central vigilance commissioner (CVC) P. Shankar are also petitioners in the suits filed by civil society groups. Loss to Exchequer

The Controller and Auditor General of India used three different methods to assess the presumptive loss to the exchequer resulting from not auctioning 2G spectrum. The first method was based on the fact that S Tel, one of the licensees, explicitly offered to pay significantly higher license fees for the spectrum. Based on the fees offered by S Tel, the CAG estimated the loss to the exchequer at 67,364 crore (US$15.02 billion) The second method was based on the price recovered by the 3G auction in 2010. The CAG reasoned that since 2G is really 2.75G (EDGE), its price should be comparable to that of 3G licenses. Based on this method, the CAG estimated the loss to the exchequer to be 176,000 crore (US$39.25 billion) The third method was based on the fact that some of the licensees received FDI in the form of equity, shortly after the spectrum allocation. The CAG reasoned that this equity infusion was entirely due to the value of the allocated spectrum; this can be construed as re-sale of the spectrum by the licensee, and hence was a valid basis for assessing loss to the exchequer. Based on this method, the CAG estimated the loss to the exchequer to be anywhere between 57,666 crore (US$12.86 billion) (based on Etisalat's investment in Swan Telecom) and 69,626 crore (US$15.53 billion) (based on Telenor's investment in Unitech). For its part, the Congress-party led government has publicly defended itself on this count and Kapil Sibal, who replaced A. Raja as the communication minister, has refuted the CAG reasoning.He has also justified his government's decision not to auction 2G spectrum as being in line with the policy guidelines laid down by the 10th Five-Year Plan.

Relationship between media and government

Media sources such as OPEN and Outlook reported that and Vir Sanghvi knew that corporate lobbyist Nira Radia was influencing the decisions of A. Raja.The critics alleged that Dutt and Sanghvi knew about corruption between the government and the media industry, supported this corrupt activity, and suppressed news reporting the discovery of the corruption. On April 4, 2011 Indian Parliament's Public Accounts Committee (PAC)questioned Tata Sons Chairman Ratan Tata and corporate lobbyist Niira Radia regarding their roles in 2G Scam.

Response to scam

In early November 2010 Telecom Minister A Raja resigned. In mid November the controller issued show-cause notices to Unitech, S Tel, Loop Mobile, Datacom (Videocon), and Etisalat to respond to his assertion that all of the 85 licenses granted to these companies did not have the up-front capital required at the time of the application and were in other ways illegal.Some media sources have speculated that these companies will receive large fines but not have their licenses revoked, as they are currently providing some consumer service. In response to the various allegations, the Govt of India has replaced the then incumbent Telecom minister, A. Raja with Kapil Sibal who has taken up this charge in addition to being the Union minister for Human Resources Development.Mr Sibal contends that the "notional" losses quoted are a result of erroneous calculations and insists that the actual losses are nil. The CBI conducted raids on Raja and four other telecom officials - former telecom secretary Siddharth Behura, Raja's personal secretary R K Chandolia, member telecom K Sridhar and DoT deputy director general A K Srivastava on 8 December 2010.Kanimozhi, DMK MP and Karunanidhi's daughter, was arrested and sent to by a Delhi court which dismissed her bail plea in the 2G spectrum scam, saying there was a possibility of witnesses being influenced considering the "magnitude" of the crime.

Arrests and Chargesheets

On February 2, 2011, the Central Board of Direct Taxes arrested former Telecommunications Union Minister Andimuthu Raja. The CBDT also arrested R.K. Chandolia, Raja's personal aide, and Siddharth Behura, the former Telecom Secretary.Both Raja and Chandolia are heard in conversation with Niira Radia in the released Radia tapes. On February 8, 2011, the CBI arrested Mumbai based Dynamix Balwas (DB) group managing director Shahid Usman Balwa in connection with the 2G spectrum allocation scam. The CBI has evidence from the Income Tax department that Shahid Usman Balwa, considered close to Raja, was instrumental in channelling the kickbacks allegedly received by the former telecom minister. On March 29, 2011, in Delhi, the CBI arrested Asif Balwa (younger brother of the arrested former Managing Director of DB-Etisalat Group,Shahid Balwa) and Rajeev Agarwal for their alleged involvement in money transfer to the Dravida Munnetra Kazhagam's (DMK) Kalaignar TVchannel. On April 2, 2011, the CBDT filed its first 80,000 page chargesheet in the 2G spectrum scam before a Special Court in Delhi naming nine individuals and three companies. It said the wrongful acts of the accused deprived the government exchequer of possible revenues amounting to INR Rs 30,985 crore (USD $ 6,983,322,233). The accused include the following individuals:

1. Andimuthu Raja, former Telecom minister 2. Siddharth Behura, former Telecom Secretary 3. R.K. Chandolia, Raja's former personal secretary 4. Shahid Usman Balwa, former Director of Swan Telecom (now Etisalat DB) 5. Sanjay Chandra , Managing Director of Unitech Ltd and Unitech Wireless 6. Gautam Doshi , Group MD, Reliance Anil Dhirubhai Ambani Group 7. Hari Nair , Senior Vice-President, Reliance Anil Dhirubhai Ambani Group 8. Surendra Pipara , Senior Vice-President, Reliance Anil Dhirubhai Ambani Group and Reliance Telecom Ltd 9. Vinod Goenka , Director, Swan Telecom (now Etisalat DB) The three companies named are:

1. Swan Telecom 2. Unitech Wireless 3. Reliance Telecom

In the first chargesheet, the CBI had named lobbyist Niira Radia and 124 others as witnesses. On 25 April 2011, in its second chargesheet in the scam, the Central Bureau of Investigation (CBI) named five more accused individuals:

1. Kanimozhi - Rajya Sabha Member of Parliament (DMK) and daughter of ex-Chief Minister M Karunanidhi 2. Sharad Kumar of Kalaignar TV 3. of Cineyug Films 4. Asif Balwa of Kusegaon Realty 5. Rajiv B Agarwal of Kusegaon Realty

On 20 May 2011, Special CBI Judge O P Saini of the Delhi court ordered the arrest of DMK Member of Parliament Kanimozhi and Kalaignar TV Managing Director Sharad Kumar after rejecting their bail pleas in the 2G spectrum case.

P.A.C. (Public Accounts Committee)

Public Accounts Committee, a 21-member committee, with chairman as Murli Manmohar Joshi, was formed to investigate, independent of other committees like JPC. The chairman submitted a draft report on 2G scam to Speaker on Saturday 30-04-2011, and insisted that it be tabled in the Parliament. UPA members' claimed that the report had been "rejected", and 11 MPs of same committee(majority out of 21) had "rejected" the report - which was termed as "unconstitutional" by MM Joshi pointing out that such a possibility does not exist till the report is "read" by members and "discussed" para by para. Defending his action of calling witnesses from diverse fields in connection with the 2G scam probe, Joshi said it was the duty of the PAC to "trace and examine the way the money of common man is spent". He alleged that on 28-04-2011, during the last meeting of the committee, ministers passed on "chits" and called up PAC members to speak and behave in a particular manner; that said trouble started when a decision was taken to call top officials of the PMO, Cabinet Secretary, Attorney General and CBI director for questioning. A minister reportedly commented that the PAC draft report will be thrown in the dustbin, to which the chairman regretted and questioned if Parliament's proposals and then Supreme Court orders would be given the same treatment.

Impact on stock markets

The first casualty in Stock Markets once Raja was arrested was DB Realty.20% fall in the stock prices of DB Realty. Sun TV had its shares fall by 10%. Sun TV COO refused the allegations. Swan Telecom Chief Balwa was arrested on Feb 8 and this led to rumours of links with Anil Ambani's Reliance ADAG and it led to 20% fall of his stocks . Its reported that nearly 2 Billion USD was eroded from his stocks . Spicejet stocks went down after reports of investigation on Maran's recent takeover of Spicejet

Details of CAG report on 2G Spectrum Scam

The Supreme Court of India has rapped the premier investigating agency, Central Bureau of Investigation (CBI), for conducting a slipshod investigation into the 2G Spectrum Scam. The Apex court took the CBI to task by stating that the agency was dragging its feet in the investigation. The SC is hearing two petitions in the matter. The first was filed by an NGO, Centre for Public Interest Litigation (CPIL), and the second filed by Janata Party chief . Swamy had challenged the Delhi High Court order that rejected his plea to direct the PM to grant sanction to prosecute Telecom Minister A Raja.

CPIL has placed before the Supreme Court two draft reports of the Comptroller and Auditor General (CAG), which pointed out that the 2G scam has caused a loss of over 1 lakh crore to the exchequer.Canary Trap brings you some important extracts of the CAG draft reports, which directly points a finger of suspicion towards Raja for alleged irregularities and favoritism in the allotment of spectrum.

• Despite all agencies having full knowledge of scarcity and under pricing of spectrum, the entry fee for issue of licenses continued to be pegged at 2001 rates even in 2007 without delinking and independently pricing spectrum through a market mechanism, when the entire scenario in the telecom sector had transformed in the meanwhile.

• Ignoring the advice of the Prime Minister, and the Law Ministry, Raja went ahead with arbitrarily deciding that the cut-off date for issue of LoI would be advanced to September 25, 2007 and the applications received would be decided on first-come-first-serve (FCFS) basis.

• The CAG report states that “it was amply demonstrated between September 2007 and December 2008 that its (spectrum) demand in view of its scarcity was at its peak and thus would have fetched the market determined price at a much higher level than that of 2001 entry fee. If price is calculated at 3G rates, which also be taken as one of the indicators for assessing the value of 2G spectrum allocated to UAS licensees in 2008, the value works out to Rs 111,511 crore against Rs 9,012 crore realised by DoT. Similarly, for spectrum allocated under the dual technology as referred in earlier para the value would have been Rs 40,526 crore, as against Rs 3,372 crore collected. The total difference in value worked out to Rs 139,652 crore.”

• It was evident that at the time of applying for UAS licence the substantial equity of M/s Reliance Telecom Ltd in M/s Swan was 10.7%. Since M/s Reliance Telecom Ltd. were operating in all the service area for which M/s. Swan Telecom Ltd. has applied for USAL, their application was not in conformity with clause 8 of UASL Guidelines, and hence was not eligible to be considered. DoT did not have any mechanism to verify the correctness of the shareholders pattern of the applicant and hence the matter should have been referred to the Department of Company Affairs as was advised by the Finance Wing of the Department. No Reference, however, was made to the Department of Company Affairs and instead M/s Swan Telecom was given an opportunity to resubmit a revised stake holding pattern in December 2007 i.e. 9 months from their date of application which declared that M/s Reliance Telecom had divested their entire stakes. This was accepted by DoT and M/s Swan Telecom was given the benefit of seniority form the date of their initial application i.e. March 2007. As M/s Swan did not meet the eligibility criteria on the date of application, its application, its application should have been rejected by the department and the company should have been asked to apply afresh. Even if it is was to be considered eligible on the basis of its old application, the date of priority based on FCFS basis should have been revised from March 2007 to December 2007 in order to ensure fairness. Had it been so, the company would have been out of the race as the department processed only those applications which were received up to 25.09.2007.

• It was noted that the priority list was adjusted in Punjab and Maharasthra service areas to give under advantage to M/s Swan Telecom Pvt. Ltd. in allocation of spectrum. In Punjab service area, 15 MHz GSM spectrum was available in September 2008 which was sufficient to meet the demand of only first three applicants in the priority list i.e. M/s HFCL, Ltd. and Unitech Wireless Pvt. Ltd. The request of M/s Idea Cellular Ltd. who was at the second place in the priority list was, however, not considered on the grounds of its merger with M/s Spice who were offering service in Punjab service area. By keeping out M/s Idea from the priority list, spectrum was allocated to M/s Swan Telecom who was at the 4th position on the priority list. In identical situation in Maharashtra service area, M/s Spice Communications was not allocated start-up spectrum citing its merger with M/s Idea Cellular Ltd. Here too, the resulting beneficiary was M/s Swan Telecom Pvt. Ltd.

• Deviation from a Cabinet decision should normally be with the approval of Cabinet. However, in the present case, such a crucial decision to permit service providers to offer access services using combination of technologies (CDMA, GSM and/or any other) under the same license with the dual spectrum allocation was taken without the matter being referred to Cabinet.

• DoT has given a list of operators who could attract foreign investments, consequent to the grant of UAS licenses in January 2008 as in the Table below (Table not included in the post). Out of the above six, three companies viz M/s Swan Telecom, M/s S Tel and M/s Unitech were new entrants in the telecom sector. The fact that these operators could draw huge foreign investment, even before establishing a foothold in the Indian Telecom market would suggest that acquiring UASL and with it, allotment of 4.4 of GSM spectrum for rollout, was the main factor which attracted the foreign investment.

• The Unitech Wireless Services, claimed in their letter to DoT on November 4, 2008 that M/s Telenor was partnering with them at a stage when about 6 months of effort and Rs 2,100 crore expenses had already been put in and the entity’s value was not only that of spectrum. However, considering that Telenor is an established international provider of a high quality telecommunications, data and media communication services and one of the Norway’s largest companies owned 54% by the Norway Government what they would have required to run their business in this country was, primarily access to the spectrum. Considering its trained manpower strength in 12 countries, its long standing technical expertise and international experience of dealing in telecom business, it can be convincingly concluded that, the high value paid by them was primarily for the spectrum and not for other inputs claimed to have been infused by Unitech. Such huge equity infusion by the investor company was a price that they paid for 2G spectrum which was allocated to Unitech, a company with no experience in telecommunication sector, at a throw away price DoT. The value which should have accrued to the new licensees in the form of huge capital infusion for enriching their business.

• The entire process of spectrum allocation was undertaken in an arbitrary manner. The Hon’ble prime Minister had stressed on the need for a fair and transparent allocation of spectrum, and the Ministry of Finance, and the Ministry of Law and Justice had sought for the decision regarding spectrum pricing to be considered by an EGoM. Brushing aside these concerns and advices, the Development of Telecommunications, in 2008, proceeded to issue 122 new licenses for 2G spectrum at 2001 prices, thus flouting all rules and procedures to be followed for spectrum allocation was also unfair, considering the fact that DoT introduced in artificial cap, arbitrarily changed the cut-off-date for receipt of applications post facto and altered the conditions of the FCFS procedure it had been following, thus creating an environment which cannot be perceived as transparent and fair.

• Dual Technology was introduced by DoT in a manner, which was in contravention of the Cabinet decision of 2003, resulting in additional spectrum being allotted to certain operators at 2001 price. Also by introducing unfair adjustments in the priority list, DoT favoured certain operators. Given its scarcity value and increasing demand, a comprehensive evaluation of available spectrum was required which was not done. With the UAS policy and its subsequent amendments being implemented in a weak and indeterminate manner and with the reluctance on the part of DoT to address the issue of pricing of 2G spectrum, it was only natural that 2G spectrum was allocated at much below its value.

• The Hon’ble MoC&IT for no apparent logical or valid reasons ignored the advise of Ministry of Law, and Ministry of Finance, avoided the deliberations of the telecom Commission to allocate 2G spectrum, a scarce finite national asset at less than its true values on flexible criteria and procedures adopted to benefit a new operators. TRAI, the regulator also stood by as a helpless spectator when its recommendations were being either ignored or misused.

The CAG draft report also mentions a note (Dated: January 15, 2008) sent to the PM by the Finance Ministry, which says that the “previous issues of licences be treated as a closed chapter and henceforth price of spectrum be discovered through an auction process.” This reveals the casual approach within the UPA Government towards this mega-scam, which resulted in a loss of Rs 139,652 crore to the exchequer.

Despite mounting evidence (from CVC, CAG, CBI) of blatant corruption A Raja still presides over the Telecom Ministry. While Prime Minister Manmohan Singh — heading one of the most corrupt governments in our country post-Independence — seem helpless in taking action against Raja because of the electoral considerations for the assembly polls in Tamil Nadu due to take place in 2011. 2G Scam: Power of having big "Surname" in India like Tata, Birla and Ambani

Recent scams in India not only tell about the free loot of scarce resources but also show the power of having big “Surnames” like Tatas, Birlas and Ambanis. It seems that India has been taken over by corrupt politicians in alliance with corrupt bureaucrats and businessmen. Number of PSUs (Balco, VSNL, Modern Food, Hindustan Teleprinters, etc.) has been divested at throwaway prices. Since liberalization from “Licence Permit Raj”, few industrial houses managed by people having big “Surnames”, have grown exceptionally by exploiting India's scarce resources, be it mines, oil, land, ports or spectrum, in alliance with the political masters. Small and medium entrepreneurs are going out of business, because of monopoly created by established industrial houses by lobbying with the government. When public becomes angry over revelations of such scandals, the strategy often employed is to start targeting second- tier selectively while protecting top-tier who can buy India democracy with the vast wealth gained by corruption. Recent example is 2G spectrum scam. When things were going as per the whims and fancies of Tatas, Birlas and Ambanis in telecom sector, there was no scam and no inquiry from CBI, ED, Income Tax, PAC or JPC. The moment new players entered in this sector, they were killed by these big people with the support of Indian beaurocratic system. People know that big corporate houses, like Ambanis, Tatas and Birlas, not only control the government but also play a major role in the formation of government and allocation of ministries, as apparent from the Radia leaked tapes.

TATA Let’s start with Tata first who has been shown as victim of DMK leader A. Raja policies in the CBI first chargesheet. Surprisingly, in the same chargesheet, CBI estimated loss of Rs.8,448.95 crores to the exchequer from Tata’s dual technology licenses. Tata not only got 19 dual technology licenses but also got 3 new licenses in 2008 at 2001 price for which loss to the exchequer is estimated to Rs.22,535.6 crores. Till recently, two senior DMK leaders (PV Kalyanasundaram and VRS Sampath) were helping Tata by acting as director in Tata Communications. A. Raja considered Tata applications for dual technology licenses even though these applications were filed after last date. It shows, Tata was the biggest beneficiary of A. Raja policies and major contributor of loss to the exchequer claimed by CBI in its chargesheet. Tata’s hand-written letter of November 13, 2007 (delivered personally through Niira Radia) to the then Tamil Nadu Chief Minister praising A. Raja’s action defies the CBI story of Tata as victim. In this letter, Tata had complained about some ‘powerful vested interest groups’ in the telecom industry but Tata had forgotten that he is also part of the same class. For this reason only, Tata got a clean chit in Unitech-Tata Realty deal and Voltas land deal with Karunanidhi family, and on the contrary, shown as victim. When unsecured loan from DB Realty to Kalaignar TV can be quid pro quo, then why not Voltas land deal? Recently, Tata regretted that his conglomerate couldn't enter the growing aerospace industry in India because his attempts to enter the segment were thwarted by corruption. Why is Tata complaining now in November 2010? Why he is not disclosing the names of the 3 Prime Ministers he approached and the minister who asked bribe from him? Why had he not filed any complaint against such minister – if he really wanted to remove corruption? Does it mean that all private aviation operators are part of corruption or is he trying to show that Tata has created a big empire without being part of corruption? If it is true, why does Tata need to hire corporate lobbyist – Niira Radia? Surprisingly, CBI had failed to unearth anything incriminating against Niira Radia whose leaked conversations with assorted bigwigs have riveted the nation.

BIRLA Idea Cellular (Aditya Birla Group company) was also issued 9 GSM licenses in 2008 at 2001 price and accordingly, it has also contributed in the loss to the exchequer like others. But, CBI has found no evidence against Idea Cellular to prove any wrongdoing – may be, because Idea Cellular is owned by Birlas or CBI is not sure about its calculation of loss to the exchequer. CBI also failed to investigate Idea-Tata connection (like Swan- Reliance connection) when it applied for license in Mumbai circle. Idea applied for this license in August 2005 when Tatas were providing telecom services in Mumbai and also holding more than 10% stake in Idea. Instead of rejecting Idea’s application (being in violation of Indian telecom rules), DoT favoured Birlas by putting this application on hold till Tatas exited the company in 2006. Now, CBI is favouring Birlas by saying that its application for Mumbai circle was kept in abeyance for 6-month period to comply with DoT rule. While giving this clean chit, CBI has failed to check that there is no provision in DoT guidelines to keep the applications in abeyance.

AMBANI In 2003, Reliance and Tata (fixed line operators) were allowed to offer mobile phone services, at first in the limited WLL mode (Wireless local loop) and later full mobility without paying the hefty fees paid by the earlier operators. Apart from Tata, the biggest beneficiary of change in policy was Ambani’s Reliance Infocomm who gained thousands of crores of spectrum without paying a dime in additional license fees, and the then telecom minister are reported to have received benami shares of Reliance Group companies as a “gift”.

Again in 2007, Ambani also got dual technology licenses (like Tata) in 2007 at 2001 price and that too, a day before the announcement of policy, therefore causing loss to the exchequer going by the CBI understanding. None of the companies which have got dual technology licenses, has been booked so far by CBI. In fact, for Swan-Reliance connection, CBI has made small employees of Ambani as accused and kept him out of its loop despite having a statement of ICICI bank manager that only Anil Ambani and his wife were entitled to sign big cheques. Even otherwise, it is unbelievable that these small employees were authorized to take decisions worth thousands of crores of rupees without taking permission of Ambani. CBI has closed its mind on a question – whether these employees were the beneficiaries?

RUIA Coming to Ruias who have recently sold balance 33% stake in Vodafone-Essar to Vodafone for a whopping amount of USD 5 billion. The Ruias are under CBI scanner as they suspect Essar of using Khaitans as a front for ownership in Loop Telecom. Current regulations prevent any entity from holding beyond 10% stake in more than one company in a circle. Essar was holding 33% stake in Vodafone-Essar when it applied for telecom licenses again through Loop. But it appears that CBI is not able to get hold of Ruias because of their name and fame. CBI in March 2011 admitted before the Supreme Court that first chargesheet shall be filed in April 2011 against 2 companies - MD of one company is already in custody and second company is linked to Vodafone. But suddenly, Ruias managed to keep themselves out of the first chargesheet. Till date, no one from Essar or Loop has been booked by CBI despite having a written compliant from Indian High Commissioner to Mauritius, Madhusudan Ganapati, against Prashant Ruia and I. P. Khaitan, saying that both Ruia and Khaitan came to meet him under the pretext of discussing the business environment in Mauritius but ended up asking him to share details on the Letter Rogatory sent by CBI to the Mauritius government. This incidence also took place before filing of first chargesheet but no action has been taken till date. On the one hand, CBI is opposing bail of 2G scam accused on an apprehension of interference in investigation whereas in case of actual incidence of interference, no action is being taken.

In terms of magnitude of the crime, that is loss to the exchequer, Loop has caused almost equivalent loss as Datacom and Unitech has done. CAG also said that Loop was ineligible for license on the ground of objects clause and paid up capital. In case of Swan and Unitech, CBI has filed the chargesheet pending reply of the Letter Rogatory but chargesheet against Loop is being delayed contending that reply on the Letter Rogatory is pending. For Loop, opinions from the Corporate Affairs ministry (MCA) and legal experts are being considered but no such opinion was not taken for Swan- Reliance connection. In a recent communication, MCA has reversed its stand of April 13, 2009 confirming violation of norms by Essar. Surprisingly, Loop is aware of such MCA communication but CBI is claiming its ignorance. Why CBI is receiving various representations from legal experts and politicians to save Ruias? Isn’t it sufficient to show how influential is the power of ‘Surname’ in India? DHOOT Dhoot company (Datacom Solutions) also got 21 GSM licenses in 2008 at 2001 price and therefore, has a fair contribution in the loss to exchequer claimed by CBI in its chargesheet. Despite having recorded statements of DoT officials (Kirthy Kumar, S K Saxena, S E Rizwi and S C Sharma) saying that Rajya Sabha MP Rajkumar Dhoot of Videocon group was present at DoT reception where applicants were completing formalities relating to LOI. In fact, Dhoot partner in Datacom, Mahendra Nahata, was creating "disturbance and chaos" on crucial day of January 2008. Datacom is the major beneficiary of tweaking in FCFS policy by coming at number 2 position from number 9 position. But, CBI is going cold on these issues and protecting Dhoot brothers.

MITTAL Though it is called as 2G “Spectrum” Scam, but investigation agencies are keeping their ears, eyes and mouth closed where the spectrum is. According to CAG report, old operators, including Sunil Bharti Mittal company, are hoarding spectrum of 150 MHz. Even in JPC, CBI stated that Sunil Bharti Mittal-led Bharti Airtel was allotted spectrum beyond 8 MHz in violation of eligibility norms. Five months have gone in the preliminary inquiry registered in January 2011 on allocation of 2G spectrum during 2001-07, but CBI is still busy in scrutinizing the documents, looking at the telecom policy and its implementation by telecom ministers. Justice Shivraj V. Patil Committee report is also being looked into by CBI (sent to it by the Telecom Ministry early this year) which has reported many faults in the functioning of the previous telecom ministers and DoT officials favouring old operators. How much time does the CBI needs to read Justice Shivraj Patil’s Repot of 149 pages and to convert its PE into FIR. Shockingly, when CBI says that it is busy in looking at the telecom policy, then pending such review, how it can blame A. Raja for tweaking the same, or is the CBI is again trying to protect some big names like Mittals. Recently, it was reported that documents related to the telecom policy of 1994 are untraceable in DoT. Could it be that the CBI is waiting for crucial papers to go missing and then to get into action?

Delay Tactics Adopted by Big Influencers As per recent media report on CBI performance, at least 2300 cases are pending unsolved for more than a decade. The agency has at least 1000 cases pending for more than 15 years and 381 cases for more than two decades. As per K Madhavan, former joint director of CBI, "The pile-up happens due to various tactics used by influential accused. They want to delay the case. This is a main reason why 99% of the cases move slowly in CBI courts." The latest example supporting K Madhavan statement is 2G spectrum scam where persons like Balwa, Goenka and Chandra have been arrested. In case of Ambani, small employees have been arrested. In case of Ruias, the CBI chargesheet itself has got delayed, since this time, Loop was supposed to figure in the chargesheet. Why no action has been taken against big “Surnames” despite having all the evidences? Can someone believe that these small people, who have been arrested till date, were influential enough to tweak the telecom policies in their favour and against the big people like Tatas, Birlas or Ambanis? This makes it very clear that it is easier to buy anything in India if you are carrying a big “Surname

Chidambaram and 2G Scam?

The constant factor of the home minister and former finance minister P Chidambaram in the 2G Scam is a matter of interest. The Finance ministry put Niira Radia under surveillance when he was in-charge of the ministry. The tapping went on for three hundred days over the next two years and the home ministry now under Chidambaram readily gave sanctions for it. Then the leaks that went on to expose 2G scam.

There is no sufficient material in the public domain to attribute ulterior motive to Chidambaram, but the grapevine is buzzing with folklores on him.

Like just a couple of days ago when the CBI was grilling DMK chief M Karunanidhi’s second wife Dayaluammal and daughter Kanimozhi at the party headquarters in Chennai, guess who was there?

None other than Chidambaram himself. Ofcourse, he was not part of the CBI team or in capacity of DMK’s lawyer. He was there for a different reason, officially.

Chidambaram was having talks with the DMK leadership to identify Congress seats for the coming Assembly elections or renegotiate the seat sharing arrangement. That is the most thorny issue to settle between allies before an elections. Sometimes failure to reach a seat sharing arrangement itself leads to parting of ways. Both Congress and DMK need each other in Tamil Nadu. But the million dollar question is who needs whom more?

Historically to settle a question like this, the CBI investigations against a regional party has proved to be a great bargaining chip for a party in power at the Centre.

Chidambaram being there at the right time could mean lot of obvious things. One: Congress party is using CBI as bargaining chip to make DMK agree to seat sharing skewed in favour of Congress that they would not have done otherwise. Two: was Chidambaram there to tell that no harm will come to the DMK leadership and his family?

Or three: express his helplessness at taming CBI for benefit of DMK as the 2G Scam is now being investigated under the aegis of the Supreme Court.

Even the corruption has been politicised

Kapil Sibal and Arun Jaitley after a long while had debate that could be called parliamentary in Rajya Sabha.

Sibal referred to the political culture of Finland and Sweden after having lost a whole winter session on this issue without a word of debate. He quoted Finland example where 3G spectrum was allotted free. He perhaps is unintentionally hinting at another scam: the 3G scam. Or he is saying that there is no 2G Scam given what Finalnd has done.

He doggedly defended his zero revenue loss argument despite it having already caused major embarrassment to the government in the apex court. In the same vein, Sibal maintains that there were some issues with A Raja’s ‘first come first serve’ method of allocation of spectrum space.

Sibal seems to be rather impressed with what Sweden did while we struggle to put telecom ministry in order. Sweden’s government had used “a beauty contest format in which it charged a nominal fee of $11,020 for each 3G licence”. But Mr Sibal, there is no beauty in siphoning off public money and stashing it in foreign banks. Sibal perhaps means that beauty lies in the eyes of beholder and millions of dollars in foreign banks make a pretty sight.

Arun Jaitley was scornful; he had reasons to be. Sibal defence trivialise the issue. “It can happen in Finland. And in Finland they don’t send people to jail if this happens. Therefore, nothing wrong if somebody in 2007-08 did this in India,” Jaitley commented on Sibal’s skewed logic.

There was rhetoric but no substance in the deliberations of Sibal. Remember he is a minister of a ministry that is under scanner for institutionalised corruption of humongous proportions. Such diatribe do not aspire confidence. Just before JPC is to start work there is a strong sense that even the corruption has been politicised.

CBI to submit status report on 2G Scam investigations It is likely that CBI will submit its first interim report to the Supreme Court post interrogation of Shahid Balwa promoter of the Swan Telecoms and that of joint interrogation of Anil Ambani, A Raja with Balwa.

CBI will present to the apex court the status report that will thread bare the Balwa and RCom links in alleged hanky panky in the .

The CBI after two years of laziness, and perhaps after the political sanction is given to book the guilty, now the apex investigative agency is leaving no stone unturned to take the matter to its logical conclusion.

Radia leaked by IT to a private group now investigated by CBI?

According to the latest buzz from CBI there are three people from the Income tax department who could have leaked Radia Tapes. They are the top officials in the Income tax department who were originally in possession of the tapped Radia phone conversation. One of these three is a woman.

The IT trio passed the tapes to private hands, top functionaries of a telecom company that is under investigation now. They, then in turn, circulated the tapes that reached select TV channels and print organisations.

Ratan Tata made a writ petition with the Supreme Court for protection of his right to privacy as a violation of fundamental right under article 32 of the constitution. He was the worst sufferer of Radi Tape leaks. He should be a happy man now after so much of mudslinging.

Land deals make 2G Scam murkier: Tata have a lot to explain

The CBI quizzed for six hours a board member of flagship Tata Sons, R K Krishna Kumar along with MD and CEO of Tata Realty Sanjay G Ubale.

Tatas have been very kind to DMK in general and former telecom minister A Raja in particular. In a confidential hand written letter by Ratan Tata to M Karunanidhi which was leaked recently is revealing. In this letter Tata bats for Raja with Karunanidhi.

Now CBI is investigating the reasons of this cosiness. Kumar and Ubale were grilled about it. The CBI is probing allegations Voltas building in Chennai that was owned by Tatas changed hands to a Malaysia-based businessman, known to be close to Karunanidhi. There are allegations too that this land was directly transferred in the name of Karunanidhi’s wife name for all the favours extended by A Raja to Tatas-a quid pro quo. An allegation to which Kanimozhi-the profile daughter of Karunanidhi-has vehemently denied. But as they say there is no smoke without fire. The two top functionaries of Tatas had lot to explain in their 6-hours long grilling date with the CBI.

Prime minister resolve against corrupt is a bad news for 2G Scam swindlers

The hyper activity in CBI’s investigation is also linked with the Prime Minister Manmohan Singh’s resolve to punish the guilty.

This would mean bad news for the likes of A Raja, his bureaucrats, corporate leaders like Anil Ambani and Ratan Tata, and people like Shahid Balwa of Swan Telecom who have made it really big in quick time. All alleged to have played a role in what came out as the biggest scam of the country: the 2G Scam.

Prime Minister Singh is believed to be upset about the fact that now he is being blamed for the mess. Those in the know how maintain that Singh is absolutely upright. But because he is politically light weight, he has failed to stop corruption taking place under his nose. Corruption has acquired institutional proportions under his regime.

It is alleged that the prime minister’s office knew about the Antrix-Devas deal for S- band spectrum. This was later annulled by the government at the behest of the Singh, it is said. Prime minister is motivated to set the house in order; his resolve was evident in his last week’s interaction with the TV editors.

So, it is time to face the music, not a pleasant music by all means. Be aware 2G Scam swindlers!

Prime Minister, coalition politics, DMK and 2G scam

After the beleaguered Prime Minister Manmohan Singh held a rare media roundtable with TV editors saying that the corrupt will not be spared this time. And that he is not a lame duck prime minister.

This assertion by the Singh is significant. Suddenly the government, its investigative agency is become hyperactive to clamp down on corruption whether it is about the Commonwealth games or 2G scam.

The CBI carrying out raids at DMK controlled Kalaignar TV is indicative that prime minister is put a limit to what he described as “we have to put up with a lot in coalition politics.” The government seems to have a plan 2 in case DMK ends being a UPA ally on 2G Scam.The corporate sector is in a tizzy too. Their top leaders are being questioned, some of them send to jail. A Raja is struggling to have a life in Delhi’s Tihar Jail. He is given company by his top bureaucrats and Swan chief Shahid Balwa. Government has also given in to the opposition demand of JPC probe on 2G Scam. Government is bending backwards to have the budget passed in the parliament. Or is it true concern to stop institutionalised corruption that seems to have become the predominant culture in the corridors of power.

This blog will throw light on the backroom activities to uncover the 2G Scam

This blog will discuss backroom activities involved in the uncovering of the biggest scam in India so far: the 2G Scam.2G Scam has already send top politicians, top corporate leaders and senior bureaucrats to jail. This scam poses a great challenge to the stability of the government, as a regional party is made to pay disproportionately big price for this scam. The government at top echelons is divided in their support to two warring factions of the corporate world. Under the supervision of the Supreme Court there is no stopping of CBI

BIBLIOGRAPHY

1. Wikipedia.com 2. Rediff.com 3. Times Of India 4. Business Line 5. MoneyControl.com