Column : CAG loops Raja, again

Written by Sunil Jain | Updated: Oct 14 2010, 06:55am hrs
The CAGs attempts to prick holes in telecom minister A Rajas defence just dont seem to stop and that, of course, is why new telecom secretary R Chandrashekhar is trying to gag the CAG through an opinion thats bad in law (more on this later), with the support of the law ministry. It appears that in its hurry to favour a few firms, the CAG says Rajas ministry never even checked if these companies had got their paperwork right.

So, in the case of Loop Telecom, a software company, the CAG pointed out, while the company submitted its application on September 3, 2007, the companys articles of association, which were altered to allow it to enter the telecom business, were registered with the Registrar of Companies (RoC) only on September 28, 2007three days after the cutoff date of September 25, 2007. The resolution that allowed it to raise its capital from Rs 5.2 crore to the required Rs 131 crore was submitted to the RoC on October 29, 2007 and was certified by the company secretary only in December. The same thing happened in the case of others like Unitech and Allianz Infratechas many as 72 licences of the 122 given out, the CAG says, were given to applicants who did not meet the eligibility criterion prescribed. Had they been asked to fulfil the criterion, this would have pushed them down the spectrum queue and, given the shortage, theyd never have got any.

Whats hilarious is the way the ministry has replied to the CAGs comments. So why didnt the ministry address the issue of getting the best price for the licences, the CAG asked Government treats the telecom sector as infrastructure sector where the broad policy of taxes and regulationare promotional and where revenue considerations play a secondary role; the issue of auctions to get the best entry fee is dismissed as incidental entry fee.

Wasnt it unfair to allow Reliance Communications to get a GSM licence a day before the new dual technology policy was announced, more so given that Tata Telecom applied for the GSM licence only after the policy was announced and so never even got all the spectrum it applied for, the CAG asked. The ministry says the decision on dual technology was taken on October 17, 2007, Reliance, HFCL and Shyam Telecom got an in-principle approval on October 18 and the policy was announced on October 19, and then since no application of M/s Tata Teleservices for dual technology was pending with the Department, it was not given LoI on 18/10/2007 along with others in view of above it may be seen that no undue benefits were given to Reliance Communications...! Really cute, huh

What of the fact that the telecom secretary and the member finance were of the view a more detailed discussion was called for before handing out the licences on the cheap The ministrys reply to CAG says, Honble MoC&IT (thats A Raja) observed on the file ...These types of continuous confusions observed on the file whoever be the officer concerned does not show any legitimacy and integrity but only their vested interest

Were valuable national assetssquandered Whats important, the ministry said, was that teledensity had improved dramatically. It is pointed out that in March 2007, the rural tele-density was only about 6% and the total tele-density was about 18%It is only after May, 2007 when Honble MoC and IT took over and particularly after the grant of new UAS licences in 2008, the teledensity started increasing at an unprecedented rate by June 2010, the rural teledensity has increased to about 26% and the all-India teledensity has reached 57%. In other words, the ends justify the means. Well Trai data show new licensees like Loop, HFCL, Sistema, Unitech, STel and Videocon had just 18 mn of the countrys 635.5 mn subscribers at the end of June 2010. Sure Reliance and Tata, both beneficiaries of the new dual technology regime, had 111 mn and 72 mn respectively, but this is not out of line with their subscriber base growth before they got their new GSM licences, as well as the overall industry growth.

There is then the question of whether Chandrashekhar is right when he said the CAG has no jurisdiction to look at government policy.

Interestingly, when the CAG asked Rajas ministry why it never asked an EGoM to look into the matter, the ministry said the need for forming an EGoM arises when a new policy is being framed. Whereas, in this particular issue, no new policywas being framed! That is, Raja was just issuing licences as per the current practice. Well, all such licence issues can be appealed under Section 14 of the Trai Act.

What do the courts have to say about this When, in 2001, the Telecom Dispute Settlement and Appellate Tribunal (TDSAT) said it could not examine the Wireless in Local Loop policy as its purview didnt extend to government policy (the argument Chandrashekhar is making now), the SC said it was indeed part of the TDSATs jurisidictionthe lawyers for the cellular operators who had filed the case were P Chidambaram (currently home minister) and G Vahanvati (currently Attorney General).

In the current case, one of the aggrieved parties, STel, went to the high court, which ruled Rajas actions were wrong. The courts division bench upheld the judgement, and even the SC refused to turn down this judgment. What was STel appealing The same decision that is now being called policy. Well, the highest court in the land thinks it can be appealed. So what is the ministry talking about

Sir Walter Scott would have described it saying Oh! What a tangled web we weave, When first we practice to deceive! but I much prefer Rajas these types of continuous confusions observed on the file whoever be the officer concerned does not show any legitimacy and integrity but only their vested interest.

sunil.jain@expressindia.com