Column : The curious case of Datacom

Written by Rishi Raj | Updated: Apr 15 2011, 08:52am hrs
The first chargesheet filed by the Central Bureau of Investigation (CBI) on April 2 before the special court to try the 2G spectrum scam has been seen as weak by many, for it has merely tried to structure the manner in which the irregularities were committed by former telecom minister A Raja and his key officials in connivance with certain private parties. So, clearly, there were three players and the scam could not have happened without the active participation of all the three stakeholders. Put simply, Raja would not have been able to commit the fraud if, say, telecom secretary Siddharth Behura or Rajas private secretary RK Chandolia would not have cooperated with him. Even if the three acted in concert, the scam would not have taken place if the private parties in queue for the licences would not have connived with them to jump the queue for getting licences and spectrum.

Logically, therefore, the CBI earlier arrested Raja, Behura, Chandolia and Shahid Balwa (promoter of Swan Telecom, a key beneficiary) and later chargesheeted them also. In addition, it has chargesheeted another beneficiary firm and its promoter, Unitech and its managing director Sanjay Chandra. Three officials of Anil Ambanis ADAG have been chargesheeted because it is alleged that Swan was a front company for Reliance Communications. However, what is curious is the case of another major beneficiary Datacom (now Videocon Telecom), jointly promoted by HFCLs Mahendra Nahata and Videocon groups Venugopal Dhoot.

Datacom benefited as much as Swan and Unitech in terms of jumping the queue to get licences and spectrum due to Rajas skewed first-come first-served (FCFS) norm, which, instead of taking into the account the date of application, cleverly changed it to the date on which the firms complied with the terms and conditions of the letters of intent, which means those that paid the licence fee first. However, despite this clear benefit, the CBI has not chargesheeted Datacom. It is true that this is only the first, preliminary chargesheet and a second one will be filed on April 25. But, looking at the enormity of the benefit Datacom got, it is a bit puzzling why its name was omitted in the first chargesheet when it should have been sharing the spotlight with Swan and Unitech. Surely, if the CBI has been able to understand the modus operandi of the scam and the benefit accruing to Swan and Unitech, it would not have missed out on Datacom. Or is this because Datacom, unlike the other two firms, was not able to sell part stake to a foreign operator It was not that Datacom did not try. The firm lost out because Nahata and Dhoot were fighting for control of the company and no foreign player wanted to touch it until this was resolved!

Datacom, which had applied for licences for 21 circles on August 28, 2007, virtually scored the number one position in spectrum priority, jumping the queue over Idea, Spice, Swan and S-Tel, all of whom were in the fray for spectrum in exactly the same circles. In fact, it also jumped ahead of Shyams (now Sistema Shyam) 21 applications and Tata Teleservices 3but that is irrelevant since they were in the queue for CDMA spectrum.

The way Raja and the DoT officials manipulated this feat was not only by changing the FCFS definition to suit favoured companies, including Datacom, but by setting up four counters on January 10, 2008the day the letter of intents were doled out amidst major fisticuffs at Sanchar Bhavanand placing Datacom at counter number 1behind ByCell and Swan. This way, Datacoms position, which was number 6 by date of application, moved up to number 3 at this counter. ByCell later got disqualified and Datacom moved further up to number 2.

In fact, by being able to comply with the letter of intent conditions, it moved to the number 1 position in 19 of the 21 circleseven ahead of Swan and Unitech! It was at number 2 only in two circles. By contrast, Swan was number 1 only in two circles (more prized ones though, namely Delhi and Mumbai), and Unitech was number 2 and 3 in all the circles.

This means that much like Swan and Unitech, even Datacom had drafts for the licence fee and bank guarantees, totalling to almost R26,000 crore ready to be submitted within hours of announcement, thanks only to some insider information. In fact, Swan and Unitech have been charged by the CBI for having the information due to their earlier familiarity as well as proximity to Raja, Behura and Chandolia.

In fact, the CBI chargesheet has provided detailed analysis on pages 37-40 of how the spectrum table stacks up vis--vis the date of applications but surprisingly maintains a studied silence on how Datacom, and not Unitech or Swan, was the biggest beneficiary of the FCFS manipulation. (See table).

The CBI may chargesheet Datacom on April 25 but it surely needs to explain why this company and its promoters/officials were spared the honours they deserved on April 2, considering their accomplishment on the historic day of January 10, 2008.

rishi.raj@expressindia.com