Column: Spectrum of Raja?s ?innocence?

There is a touching innocence to the manner in which communications minister A Raja went about tweaking procedures to ensure that companies like Unitech and Swan Telecom got scarce 2G spectrum on a preferential basis, which later attracted foreign investors into these companies at huge valuations. Raja seemed innocent of the fact that our elaborate bureaucratic machinery would strike back at some time or the other.

That is precisely what seems to be happening. This newspaper has carried a series of articles over the past few weeks showing how the Central Bureau of Investigation (CBI) has stumbled onto loads of evidence, which suggests all was not well with the way Raja went about allocating spectrum worth billions of dollars.

The CBI has got hold of file notings by top DoT officials who vehemently disagreed with the minister and even moved out of the ministry. There is a written recommendation by the then law minister HR Bhardwaj saying that auctioning of spectrum was the appropriate policy option.

Raja?s self-assumed innocence still enables him to generate some righteous indignation as he maintains he did nothing wrong and merely followed Trai recommendations. He went by the Trai recommendation of not capping the number of new players and not auctioning 2G spectrum. As regards the indefensible act of awarding licences in 2007 at a price discovered in 2001, he maintains that Trai did not ask for revising it. However, Raja?s selective memory makes him forget that Trai in 2003 had categorically said that all new licences should be awarded through a multi-stage bidding. Even the August 2007 recommendation said that a realistic price should be determined through a market mechanism.

As regards the sale of equity by Swan Telecom and Unitech at considerably high valuations, Raja has said the deals were done as per the corporate laws and foreign investment policy of the country. It is quite another matter that later he himself chose to bar promoters of new licensee firms from selling their equity for 3 years after such acquisition!

So Raja?s conduct of policy has been riddled with contradictions, and one is not sure how long his self-righteous stance of ?I have done no wrong? will hold. The CBI is meticulously piecing together every bit of material relating to Unitech and Swan Telecom. Of course, there have been other stupendous achievements of Raja, which the CBI is not looking at. For instance, the unprecedented act on the midnight of October 18-19, 2007, when the communications ministry gave a dual use licence to Reliance Communications. This allowed RComm to migrate from CDMA technology to GSM. The most stunning aspect of this feat was that the company informed the stock exchanges in the morning but the DoT announced the formal policy of allowing dual use licence later in the afternoon! Raja got a bit late in announcing policy, perhaps.We grant him his innocence there.

Even if one grants Raja the benefit of doubt that he was adopting the first-come-first-serve(FCFS) policy in handing out 2G spectrum in a fair manner, he may have to answer some questions that the CBI would certainly raise. First, while adopting the FCFS approach, he suddenly advanced the cut-off date for accepting applications from October 1, 2007, to September 25, 2007. This effectively helped some firms and removed many others from the contention. Later the Delhi High Court ruled in favour of a telecom firm, which got left out because of the shift in the cut-off date for accepting applications. This came as a setback to Raja.

Later, Raja further tweaked the FCFS policy by shifting the criteria from the date of application to the date of payment. Thus, those who paid up first?significantly Swan Telecom and Unitech?suddenly jumped the queue by virtue of having paid for the spectrum ahead of others.

Thus, there is enough evidence to show that Raja tweaked procedures at every stage to favour some firms. Of late, Raja has been saying that the Prime Minister?s Office had okayed his policies. This is far from true. The PMO had simply received some communications from Raja informing it of the actions taken by the DoT. There is no record of the PMO having endorsed any of Raja?s creative approaches to grating spectrum.

In fact, the PMO had in 2007 wanted the DoT to bring the spectrum allocation policy to the Cabinet. However, Raja then took a firm stand that the spectrum allocation policy fell entirely in his domain and that there was no need for the Cabinet to examine it. If that was so, why is the current policy on the allocation of 3G spectrum being decided by an empowered group of ministers, one may ask.

There is a larger issue at stake here. Should allocation of precious resources such as spectrum, gas or iron ore be left to individual ministries? On a closer scrutiny, one realises that Prime Minister Manmohan Singh, who is nobody?s fool, gave a long rope to Raja until the latter tied himself up in all kinds of complicated knots. Now Raja himself may be relieved that the auction of 3G spectrum is being decided by an empowered group of ministers headed by Pranab Mukherjee.

Something similar happened in the case of gas allocation by the Petroleum ministry. After getting entangled in all kinds of controversies, the Petroleum ministry has also virtually conceded that an empowered group of ministers may be best equipped to decide on the allocation of gas and other related matters to industry users.

The lesson one draws from these two episodes is such critical issues are best handled collectively by Groups of Ministers. The outcomes would be cleaner and more transparent.

mk.venu@expressindia.com