SCHOOL OF COMMERCE

Assignment On

2G SPECTRUM SCAM
Submitted in the partial fulfilment of masters of commerce

Submitted by:
MANOJ

September 2019

Rukmini knowledge park, kattigenahalli, Yelahanka, Bangalore-560064

www.reva.in
2G SPECTRUM SCAM: FULL STORY
The 2G spectrum case was a $40 billion scam allegedly committed by the politicians and
government officials under the United Progressive Alliance (Congress) coalition
government in India. The Union Government of that time was accused of undercharging
mobile telephone companies for frequency allocation licenses, which they used to create
2G spectrum subscriptions for cell phones. The Government chose NM Rothschild and
Sons to design a first-of-its-kind e-auction mechanism in the world, a US$2.27 billion
landmark deal. The difference between the money collected and that mandated to be
collected was estimated by the Comptroller and Auditor General of India at ₹1.76 trillion
(US$25 billion), based on 2010 3G and BWA spectrum-auction prices. In a charge sheet
filed on 2 April 2011 by the Central Bureau of Investigation (CBI), the loss was pegged at
₹3,098,455 million (US$45 billion). In a 19 August 2011 reply to the CBI, the Telecom
Regulatory Authority of India (TRAI) said that the government had gained over ₹30
billion (US$430 million) by selling 2G spectrum.

On 2 February 2012, the Supreme Court of India ruled on a Public Interest Litigation (PIL)
related to the 2G spectrum allocation. The court declared the allotment of spectrum
"unconstitutional and arbitrary", cancelling the 122 licenses issued in 2008 under A. Raja,
the Minister of Communications & IT from 2007 to 2009, the primary official accused.
According to the court, Raja "wanted to favour some companies at the cost of the public
exchequer" and "virtually gifted away important national asset." The zero-loss theory
was discredited on 3 August 2012 when, after a Supreme Court directive, the Government
of India revised the base price for 5-MHz 2G spectrum auctions to ₹140 billion (US$2.0
billion), raising its value to about ₹28 billion (US$410 million) per MHz (near the
Comptroller and Auditor General estimate of ₹33.5 billion (US$480 million) per MHz

According to some analysts, many corruption scandals including the 2G spectrum case,
the coal mining scam, Adarsh Housing Society scam and the Commonwealth Games scam
were major factors behind the Indian National Congress-led UPA government's defeat in
the 2014 Lok Sabha election. Time magazine listed the India's Telecoms Scandal as one
of the Top 10 abuses of power.

On 21 December 2017, the special court in New Delhi acquitted all accused in the 2G
spectrum case including prime accused A Raja and Kanimozhi. This verdict was based on
the fact that CBI could not find any evidence against the accused in those 7 years. As per
the judgement, "Some people created a scam by artfully arranging a few selected facts
and exaggerating things beyond recognition to astronomical levels."
 On 19 and 20 March 2018, the Enforcement Directorate and CBI respectively filed appeals
against this verdict in the Delhi High Court.

In Feb 2019, Justice Najmi Waziri ordered the defendants to plant 3,000 trees each for
seeking more time to file their responses on the appeal challenging their acquittal in a 2G
scam case. The buzz about 2G scam is witnessed over the last four years since 2008. It is
the biggest scam ever taken place in India. The murmurs about Radia, A. Raja, Barkha
Dutt, Ambani, P. Chidambaram, etc is all heard but still many are confused and striving to
find out what is 2G scam and how it took place. We’ll help all those audiences to could not
understand the2G scam. What is 2G spectrum? 2G spectrum is about number portability
that allows users to change their service provider by retaining the original number. The
snapshots of 2G scam are as follows:

 In 2007, A Raja (Minister of Communication & Information Technology) said that there
will be no auction for 2G spectrum unlike 3G & WiMAX as recommended by TRAI.
 2008 witnessed the segregation between 2G & 3G revenue mechanisms. COAI- Director
General TV Ramachandran said that 3G will be acquired through an open auction to
experience the benefits of broadband throughout the nation. For 2G spectrum A Raja
followed the first come first serve approach whereas DOT announced that it would accept
the application for the same after October 1, 2007. But the applications accepted were
those which were submitted before this date. Many companies did not get the spectrum
because of the confusion about the cut-off date. There was something fishy here that’s
why Telecom Ministry opposed 2G spectrum auction because it would have demanded
transparency. In lieu of which nearly 60million mobile subscribers could not be verified
in India.
 In 2010, Opposition alleged Congress led UPA government with the corruption related to
2G Scam. A. Raja lost his position in the cabinet reshuffle by PM, Manmohan Singh. CAG
blamed A. Raja for violating the policies in handling 2G spectrum resulting in Rs. 1.39
trillion which was double then the former CAG report submitted to Supreme Court. With
the relentless opposition pressure, A Raja had to resign since he was scanned under the
investigation of CBI demanded by Supreme Court. The battles between the corporations
& the political parties took place during this year.
 In 2011, Kapil Sibbal was given the responsibility to further handle the scam. On February
02, 2011 a Raja was arrested by CBI causing a loss of Rs. 22000 crores. He was sent to
Tihar Jail for 14 days under the judicial custody. CBI questioned DMK chief M
Karunanidhi’s daughter Kanimozhi & his wife Dayallu Ammal on transfer of money from
Cineyug to Kalainagar TV. They both share80% stake in it. Supreme Court asked DOT to
explain the first come first service in detail. On March 22, 2011 A. Raja, Sharad Kumar
(Kalainagar TV’s managing director), Shahid Balwa were arrested by CBI under the first
charge sheet. The second charge sheet accused several others including Kanimozhi. In
May, BJP’s accusation demanded CBI to investigate P. Chidambaram’s role in the 2G scam.
Pranab Mukherjee analysed the scam & passed a letter to the Prime Minister, Manmohan
Singh, asking P. Chidambaram’s resignation stating his direct involvement in the 2G scam.
PM’s speechlessness is shocking to the nation since the controversial note of 2G framed
by officials passed though PMO i.e. Prime Minister’s office.
The 2G Scam is the scam about the short fall of money that was supposed to be 39 billion
dollars. Three major parties involved were Politicians, Corporations & Media. Politician’s
role we have already discussed.

MEDIA’S ROLE

Nira Radia’s conversation with politicians and corporations was recorded & leaked.
Barkha Dutt, NDTV Journalist, was also found in the conspiracy threaded by A Raja. Vir
Sanghavi, HT’s editor was also accused for writing articles reducing blame on Nira Radia.

CORPORATIONS IN 2G SPECTRUM

Unitech Group (real estate company), Swan Telecom, Loop Mobile, Videocon Telecom, S
Tel and reliance Communications had louder indulgence in the scam.

TRANSACTION DETAILS

 A Raja sold 2G spectrum to Swan Telecom @ Rs. 1537 crore in turn Swan sold 45% of
its stake to Etisalat @ Rs. 4200 crores.
 A Raja sold 2G spectrum to Unitech Group @ Rs. 1661 crore in turn Swan sold 60% of
its stake to Etisalat @ Rs. 6200 crores.
 These companies made a collective bribe to Minister of Communication & IT @ Rs. 10,
772 cores.
 The total money loss expected by CAG is Rs. 1, 76, 700 crores.

The above story is the composition of 2G scam.

"The prosecution has miserably failed to prove its case, and all accused are acquitted,"
Special CBI judge OP Saini is reported to have said while acquitting all accused in the 2G
scam case.

Former Telecom Minister A Raja, along with 14 others, was the prime accused in the 2g
scam case, and in the dock are three companies as well, namely Swan Telecom, Reliance
Telecommunications and Uniron.
According to the Comptroller and Auditor General of India, the scam has caused a notional
loss of Rs 1.76 lakh crore to the Indian national exchequer.

10 things you need to know about the 2G scam in India:

1) The primary allegation on A Raja was of allocating airwaves and licenses for cell
phone networks in exchange for bribes. According to allegations put on DMK MP
Kanimozhi, he had played a major role in facilitating the 217-crore bribe from Swan
Telecom to +Kalainagar TV, the propaganda arm of the DMK party.
2) The CAG report says that all the demand drafts were actually backdated, thereby
implying that the telecom operators had prior knowledge of the licences that were to
be issued.
3) The CBI charge sheet says Swan telecom was actually a front for Reliance Telecom
and that Reliance violated telecom policy to acquire more than 10 per cent share as
allowed under the law.
4) In 2008, a PIL against A Raja's alleged wrongdoings was admitted in the Delhi High
Court. During the PIL hearing, the court found out about the so-called lies that the
telecom ministry provided.
5) In 2012, Central Bureau of Investigation's (CBI) submitted before the court that it will
still conducting a probe with regard to the real beneficiaries of the spectrum scam
from the Anil Dhirubhai Ambani Group (ADAG).
6) In February 2012, the Supreme Court cancelled all the 122 licenses awarded in 2008
for a paltry Rs 9,200 crore, ruling that these licences and subsequently, all-natural
resources should be allocated through auctions/a fair bidding process alone. The
court declared the allotment of spectrum as "unconstitutional and arbitrary".
7) The Supreme Court then imposed a fine of Rs 5 crore each on Unitech Wireless, Swan
telecom and Tata Teleservices. The court further said A Raja "wanted to favour some
companies at the cost of the public exchequer" and "virtually gifted away important
national asset".
8) The wide coverage given to the 2G spectrum scam rocked the UPA II government. It
is considered to be among chief factors that led to the downfall of Manmohan Singh
government in the 2014 Lok Sabha polls. In 2011, the then Prime Minister Manmohan
Singh had also admitted that this government seemed to have "failed in managing
perceptions". "It is quite possible that we have failed to manage perceptions. We
should focus on changing perceptions", he told journalists.
9) Later, in 2014, Raja had claimed that certain forces who were angry with him wrote
letters to Manmohan Singh but "he was unaware of the telecom policy."
10)After A Raja resigned, Kapil Sibbal took charge of the telecom ministry and came up
with the "zero loss" theory in 2011. He claimed that no or zero loss was caused by
distributing 2G licenses on first-come-first-served basis.