Though the special CBI court on Thursday acquitted former telecom minister A Raja and all others who were charged in the 2G spectrum scam of January 2008, the irregularities with regard to the allocation of licences and spectrum clearly captured in various notes of officials, senior ministers in the then UPA government, and the report of Comptroller and Auditor General (CAG) remain unexplained.
Though the special CBI court on Thursday acquitted former telecom minister A Raja and all others who were charged in the 2G spectrum scam of January 2008, the irregularities with regard to the allocation of licences and spectrum clearly captured in various notes of officials, senior ministers in the then UPA government, and the report of Comptroller and Auditor General (CAG) remain unexplained. Acquitting all the accused, special CBI court judge OP Saini in his around 1,552-page judgment held there was no material on record to show that Raja was involved in any “wrongdoing, conspiracy or corruption” and there was nothing to indicate “any criminality in the acts allegedly committed by the accused persons relating to fixation of cut-off date, manipulation of first come, first served policy, allocation of spectrum to dual technology applicants, ignoring ineligibility of the Swan and Unitech group of companies, non-revision of entry fee and transfer of Rs 200 crore to Kalaignar TV as illegal gratification”. While the judge blamed the prosecution for failing to bring any direct and legally admissible evidence, the methodology adopted by Raja for granting licences was certainly questionable and the judgment fails to explain that convincingly. Saini has noted that due to various “actions and inactions” of department of telecommunications (DoT) officials, “a huge scam was seen by everyone in the entire case when there was none…” “Some people created a scam by artfully arranging a few selected facts and exaggerating things beyond recognition to astronomical levels,” Saini said.
Raja, who had all along maintained that he had gone by the Telecom Regulatory Authority of India (Trai) recommendations and had done nothing wrong, was contradicted by the then Trai chairman, Nripendra Misra. Misra in an interview to FE in November 2010 had said, “The DoT never sought Trai’s recommendations on the need and timing of granting new licences as required under the Trai Act.” Further, “it never made any reference to the regulator on fixing any cut-off date for accepting the applications”. Even the decision to accept the August 2007 recommendations of Trai which did not favour auction of 2G spectrum to new players for the sake of a level playing field with the earlier ones was not brought before the full Telecom Commission, which has representatives from finance and other ministries. Raja, despite objections from the then secretary DS Mathur and member (finance) Manju Madhavan took decisions unilaterally. He even ignored objections raised by the finance ministry over granting the licences at the price discovered in an auction in 2001.
Raja ignored the advice of the law ministry that the matter of licensing be decided by a group of ministers and even did not pay heed to the then prime minister Manmohan Singh’s suggestion for introduction of a transparent methodology of auction, wherever legally and technically feasible, and revision of entry fee, which was benchmarked to old auction figures. The then member (finance) in the Telecom Commission, Madhavan had put up a note arguing that the rates at which the licences were being planned to be given should be revised as they did not reflect the current market dynamics. “Since the rates have not been revised and the finance secretary has raised the issue, I am of the view that this issue should be examined in depth before any further steps are taken in this matter,” Madhavan had said in her note on receipt of a letter from the then finance secretary, D Subbarao, wherein concern was expressed that the licence fee was based on 2001 bids. Reacting strongly to the proposal, Raja had noted in the file, “The matter of entry fee has been deliberated in the department several times in the light of various guidelines issued by the department and recommendations of Trai. And, accordingly a decision has been taken that entry fee need not be revised.”
As has been clearly brought out by the CAG report in 2010, Raja even departed from the laid down policy and procedure apart from not revising the entry fee. For instance On September 24, 2007, the DoT issued a press release saying applications for fresh licences would be accepted till October 1, 2007. Till that time a total of 167 applications had been received including some going back to March 2006. By October 1, a total of 575 applications had been received. This was much more than the spectrum the government had with it. On January 10, 2008, the DoT issued two press releases. The first said the cut-off date that was to be used was September 25 — the day after the first press release was issued by the DoT. A second press release, at 2.45 in the afternoon, told companies to complete all their paperwork including submitting the demand drafts between 3.30 and 4.30 pm the same day. Interestingly, it was found that some of the companies that arrived had bank drafts and performance bank guarantees made in advance.
The first come, first served policy was also tweaked by Raja to favour some. To put it simply, the criteria was changed for eligible applicants from the date of application to determine seniority for allocating spectrum first to whoever first makes payment. This led to a scenario where Swan Telecom, which had applied on March 2, 2007, got spectrum in Delhi in August 2007 against Spice Telecommunications which had applied in August 2006 but had not got spectrum till March 2010 in the same circle. The biggest deviation that Raja made from Trai’s recommendation was with regard to mergers and acquisitions (M&As). This later enabled companies like Unitech Wireless and Swan to sell substantial equity to Telenor and Etisalat, respectively. The Trai recommendation was for banning the new licensees from any M&A for three years till when they were required to complete their roll-out obligations. While the DoT disallowed mergers, it allowed acquisitions, thus delinking the two and diluting the performance obligation on the new operators.