Imagine - a scam worth rupees one lakh crore blooming in New Delhi and going unnoticed. Yes, a scam worth billions and going unnoticed by the government led by an economist going unnoticed by the opposition asserting to be clean and going unnoticed by the media which claims to be free and fearless.
Imagine -the scam flourishing at one of the most important ministry at the Centre. The Ministry of Communications and Information Technology, and going unnoticed by all and sundry. Surprisingly those who noticed and objected are also silenced. The scam relates to allocation of 2G Spectrum to a few private companies who ostensibly amassed huge profits. And the man in question is DMK leader A Raja who heads the concerned Ministry.
The Raja of Scam
The Minister A Raja, who according to the left parties, not only misled but even lied to the Parliament on December 15 last, while responding to a question raised by members Sri Prakash Goyal and A Rashid in the Lok Sabha. Raja said no favour to any private party was given and neither any objections were raised by any government agency. To Raja's lies, even the principal opposition party, BJP remained mysteriously silent.
A Raja went to say that Central Vigilence Commission (CVC) and Telcom Regulatory Authority of India (TRAI) had raised no objection to spectrum allocation to 2G telcom service providers on a " first come first served" basis. However the fact remains that the CVC and TRAI both have repeatedly raised questions months back and objected to the manner the spectrum allocation was being done.
A Raja's party is Dravida Munnetra Kazhagam (DMK), an important ally of the UPA government led by Congress. On December 15 last, A Raja continued to mislead the Parliament even as the Prime Minister and his colleagues maintained a complete silence. Not that the Prime Minister was unaware of the facts, he was supposed to know every bit of what Raja was lying to the Parliament. Months ago, Sitram Yechury, leader of CPI(M) in Rajya Sabha, wrote a detailed letter to the Prime Minister dated February 29,2008, on the impropriety of issuing new licence under 2G spectrum at throwaway prices fixed in 2001 on "first come first served" basis.
In his detailed letter, Yechury mentioned that the market price of the spectrum allocation in question was six or seven times the 2001 prices, which were fixed through a multistage auction at a time when there were only four million subscribers in India as against 300 million subscribers now. The CPI(M) demanded that new licences be allocated on the basis of a fresh public auction. The party alleges that Department of Telecom ( DoT), branch of the Ministry under Raja, manipulated norms to allocate licences to the favoured private players and facilitate private auctions of spectrum at a later date. As a seasoned economist the Prime Minister is supposed to be aware of the gravity of points raised by Yechury.
The leader of Raja's party DMK, Chief Minister of Tamil Nadu M Karunanadhi, defended his protege very strongly at various fronts. No wonder, Karunanidhi went out of the way, to address a media conference on November 25 last, ten days after CVC raised questions on the manner of allotments. Karunanidhi defended Raja while asserting that the Union Minister has not deviated from the telecom policy and his action had the approval of the entire Union Cabinet, including the Prime Minister. Karunanidhi said, Raja was only following the policy formulated by his predecessors such as Arun Shourie and Dayanidhi Maran.
A few days before Karunanidhi's intervention , Raja triggered a "family fued" by accusing Sun TV and Tamil dailyDinakaran, owned by the family of Karunanidhi's nephew and former Minister Murasoli Maran, of tarnishing his image by carrying unfounded reports on spectrum allocation. He claimed that TV channel and the daily were castigating him only to spite DMK leadership. Interestingly at this juncture, the Marans and DMK leaders made up because all allegations and counter-allegations were making matters worse for Raja.
The principal opposition party in Loksabha, BJP too failed to rake up the issue on the fllor of the house. Reasons for being silent are unknown yet. A BJP leader revealed that things could have been different if A Raja had been from Congress. " The scam relates to an ally of the Congress. The focus could have shifted as we were targeting Congress on its double standards on terrorism, " he added.
The Samajwadi Party(SP) and its leader Amar Singh had raised some question on different front earlier when the party was in opposition but backed off after the party sided with the government in the vote of confidence over the nuclear deal.
What Raja lied to the parliament:
A perusal of CVC document bears out that on November 15,2008, exactly a month before Raja held forth in Lok Sabha about absance of objections, the CVC had written to the secretary of Department of Telcom (DoT) expressing dissatisfaction over an earlier response of the department to its queries on the policy of spectrum allocation. The CVC correspondence listed five points vis-a-vis spectrum allocation.These included questions on whether the DoT had carried out an assessment before alloting additional spectrum to various operators and on the result of such assessments if they had been carried out. It also noted that there were reports about spectrum allocation exceeding what service providers were eligible for and asked how the department planned to address such anomalies.
The CVC also referred to the media reports that some spectrum licensees were selling their equity at high values and observed: " This is highly unethical practice and necessary action in this regard is essential." The CVC pointed out that Swan Telcom was reported to have sold 45 per cent equity at Rs. 4,050 crore to Etisalat while a pan- Indialicense costs only about Rs. 1,650 crore. The CVC noted that this happened even though companies like Swan Telcom had made hardly any progress in operationalising mobile telephony, the purpose for which these companies had been allotted spectrum.
Raja's claim in the parliament on TRAI not raising any objection does not true either. TRAI documents show that the authority had repeatedly reminded DoT about the legal provisions relating to implementation of its recomendations. In a letter to DoT on January 14,2008, TRAI Chairman Nripendra Mishra pointed out that authority's recomendations could not be implimented in bits and pieces or by ignoring inter-linkages between various recommendations. This was with reference to two recommendations: the first came before the Letters of Intent (LOIs) on spectrum allocation were issued on January 10,2008, but before licences were signed.
TRAI had time and again held that its recomendations of October 2003 clearly stated that the new licences must be allocated through a multi-stage auction process. In fact the whole controversy on spectrum allocation hinges on the violation of this TRAI guideline. DoT under Raja violated this recomendation by allocating new licences to 2G telcom providers on a " first come first served" basis.
Further to " first come first served" basis adoption DoT adopted unfair methods to eliminate competition while granting licences to favoured few. The cut-off date for receiving applications, which was announced on September 24,2007, as October 1, 2007, was arbitrarily changed to September 25,2007, on January 10,2008. The move excluded a large number of applicants.
On these findings what CPI(M) leader Sitaram Yechuri wrote to PM was absolutely correct. An internal note of DoTwhich was obtained and made public by CPI(M) reveals that there was indeed a suggestion for a fresh auction to revise the 2001 price. The note, on the proceeding of pending applications for licences under 2G spectrums, signed by the then secretary, Telecom, D S Mathur and Member, Finance, Manju Madhvan, suggested an auction for new licences, in keeping with the TRAI recomendation.
This note which was presented to Raja, stated: "Existing criteria of entry fee paid by the fourth cellular operator,which was decided based on 3 stage informed ascending financial bidding at that time [2001]. The Indian Telcom sector has witness growth due to the continued liberalisation and has emerged as the fastest growing telcom network in the world. Therefore the bidding/auction process will establish the entry fee based on current market perception." Now it is evident that this note was not given any importance by Raja for obvious reason which was in his mind.
It is also alleged that the merger guidelines announced by DoT in April 2008 are discriminatory. A three year lock-in period from the effective date of the licences was laid down in the case of mergers but the acquisitions were left outside the purview of these guidelines. This was what helped Swan and Unitech sell their stakes at huge premium and exactely what the CVC has pointed out in its query.
The estimated loss:
The experts of telcom sector and finance have ascertained the losses that the spectrum allocations will cause to exchequir.The country may have already lost close to 60,000 crore on account of the policy adopted by Raja and his associates in DoT. This calculation is based on the sale made by two spectrum licencee firms, Swan Telcom and Unitech Wireless Ltd. Swan was alloted spectrum licences in 14 circles for Rs. 1,537.01 crore while Unitech got licences in 22 circle at 1,651 crore. Swan and Unitech sold 45 percent and 60 percent stakes respectively to foreign players at valuation of around $ 2 billion. On the basis of this transection, it is estimated that the market value of the licences would be would be to the tune of Rs. 9,990.565 crore and 10,731.5 crore respectively.
More interesting to know that these companies have neither any network, subscribers, knowledge or proven track record in the telcom business. So they reaped huge profits, almost 700 per cent, by just holding a piece of paper called "spectrum licence."
Swan and Unitech are not alone in reaping such astounding profits. Seven other companies - Datacom Solutions, STel, Shyam Telelink, Loop Telcom, Spice, Idea Cellular Ltd. and Tata Teleservices- have got licences for various circles. The total amount involved in allocation of these licences to these companies is 10,772.68 crore. If the transactions made by Swan and Unitech with foreign players Etisalat and Telenor is taken as basis, the cumulative market value of these licences would be Rs. 70,022.42 crore. If DoT had not allocated these licences at throughaway prices,fixed in 2001, all this money should have come to the government.
The story of losses does not end here. There are complaints that the losses caused by DoT are amplified also by undervaluation of crossover licences for existing CDMA operators. DoT had refused to charge the market value of surplus spectrum from existing GSM operators too. An estimation corroborated by CPI(M) Central Committee member Nilotpal Basu, the loss in these two sectors- CDMA conversion and allocation of surplus spectrum to existing GSM operators- adds up to 40,000 crores. So in total scam adds up to around one lakh crore.
Why:
Why Telcom Minister A Raja took these decisions and baring few like CPI(M), all political parties chose to keep mum. Especially when the government acts as a corporate in liberalised global market. The investigation being done by unitednews.in has got the definitive hints that many of the benificiary companies are considered to be close to the leadership of leading political parties.
For example, highly-placed sources in the Telecom Ministry told that Swan Telecom Private Limited was likely to invest in Green House Promoters Private Limited — managed, as known, by relatives and close associates of the Telecom Minister A Raja. According to these sources, Swan has planned to invest in 49 per cent equity in Green House at a dictated price of Rs 1,000 crore. To facilitate this financial deal, Greenhouse and Swan officials were reportedly working together with a Chennai-based audit firm. A Raja’s wife MA Parameswari, a director in Green House Promoters Private Limited, used the Minister’s official residential address as her business address. it is also noted that Raja had failed to file a ‘non-conflict of interest’ affidavit or inform Prime Minister Manmohan Singh of the business interests of his wife and other relatives. Parameswari was the company’s director till February 2008 by then all the spectrum deal were struck.
Any cickback in cash? Hard to know. But there are many related examples of milking the cow which will be published in coming editions when investigation is complete and all the proofs are in hand.
UNITEDNEWS VIEW:Mr. Prime Minister, his party colleagues and the opposition should remember the inogeral speech of newly elected President of USA Barack Obama, ".... to those cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history, but that we will extent a hand if you are willing to unclench your fist."
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