2G spectrum scam

From Wikipedia, the free encyclopedia

Jump to: navigation, search

The 2G spectrum scam involved officials in the government of India illegally undercharging
mobile telephony companies for frequency allocation licenses, which they would use to create
2G subscriptions for cell phones. The shortfall between the money collected and the money
which the law mandated to be collected is 1,76,379 crore rupees or USD 39 billion. The issuing
of licenses occurred in 2008, but the scam came to public notice when the Indian Income Tax
Department was investigating political lobbyist Nira Radia.

The government's investigation and the government's reactions to the findings in the
investigation were the subject of debate, as were the nature of the Indian media's reactions. The
discussion around the reactions to the 2G spectrum scam became known in the media as the Nira
Radia tapes controversy

The 2G spectrum financial scandal in the Telecommunications and IT Ministry under A.Raja is
noteworthy as the largest political corruption case in modern Indian history, amounting to a
record $40 billion loss from underpricing to the Government of India. The alleged modus
operandi was telecom bandwidth being grossly undervalued and offered to a chosen few with
vested interests, on a dubious 'First-Come-First-Served' basis. It is alleged that it should have
been put under a transparent auction system, purportedly advised by higher office.

The bandwidth-spectrum allocation of 2G bandwidth had later come under criticism for gross
irregularities. An FIR filed by the CBI claims that the allocation was not done as per market
prices, resulting in a scam worth 200,000,000,000 (US$ 4,540,000,000)[3]. However it had been
alleged by Arun Jaitley of Bhartiya Janata Party that the scam is worth around Rs. 1,70,000
crores (US$37.5 billion) . The Comptroller and Auditor General holds A. Raja personally
responsible for the sale of 2G spectrum at 2001 rates in 2008, resulting the previously mentioned
loss of up to Rs. 1.70 lakh crores (US$40 billion) to the national exchequer. [4] In August, 2010,
evidence was submitted by the Comptroller and Auditor General (CAG) showing that A. Raja
had personally signed and approved the majority of the questionable allocations.[5] Although the
political opposition was demanding his resignation over the 2G spectrum scam, A. Raja initially
refused to resign stating his innocence, and this view was backed by his party president
M.Karunanidhi. [6].

The financial scam eventually led to Raja's resignation [7] on the 14th of November, 2010. There
will be further criminal investigation and action on A. Raja with reports being filed by the
Comptroller and Auditor General (CAG) and the Central Bureau of Investigation (CBI

My client Tata Teleservices has also been a beneficiary in this (read 2G scam)." This is the
candid claim that Niira Radia made to a senior IAS officer Sunil Arora in a taped
telephone conversation in June 2009. It was no idle boast.
Corporate lobbyist Niira Radia.

Radia managed to get Tata Teleservices' precious GSM

spectrum across 18 telecom circles of the 22 at dirt cheap
rates. She ensured that Tata jumped the queue and got
spectrum ahead of 343 applicants. Till as late as 2010,
Department of Telecom (DoT) continued to allot Tata the
spectrum at the 2001 price. All Tata paid was a little over
Rs 1,600 crore for the 4.4 MHz spectrum. The CAG report
tabled in Parliament states that if former telecom minister
A. Raja had chosen the auction route, Ratan Tata would have paid anywhere between Rs
9,000 crore and Rs 20,000 crore for the same spectrum allocation.
After this deal, the net worth of Tata Teleservices skyrocketed. In November 2008, Tata
Teleservices sold 26 per cent stake to Japanese telecom player Docomo for a staggering $2.8
billion, making a stupendous profit out of a single deal.

While Raja, citing shortage of spectrum, arbitrarily altered the cut-off date for applications
made by new entrants from October 1, 2007 to September 25, Tata was shown a special
favour and allotted spectrum ahead of 343 applicants even when Tata Teleservices had
submitted the application only on October 20.

Radia's conversations tapped by the Income Tax Department reveal that as the scam
was being scripted, she lobbied fiercely with Raja, his personal secretary R.K. Chandolia and
other important DoT officials, and ensured that the spectrum was allocated to Tata
Teleservices at the same rate as Reliance, Swan and Unitech.

The tapes also reveal that former TRAI chairman Pradeep Baijal was on Radia's payroll.
Baijal was the TRAI chairman between 2003 and 2006. Rajya Sabha MP and former CEO of
BPL Mobiles, Rajiv Chandrashekhar told INDIA TODAY, "Baijal was directly responsible for
the UASL policy which legalised the WLL licences and gave the WILL licence-holders, Tata
and Reliance, backdoor entry into cellular in 2003. So in 2007, when Tata's PR lady Radia
employed Baijal, I found it very disturbing."

Radia consistently gathered inside information about policy decisions being made in DoT
from key bureaucrats and then passed it on to Tata and other senior Tata Teleservices
officials. In a conversation with Madhav Joshi, chief legal officer and company secretary of
Tata Teleservices (Maharashtra) on July 8, 2009, Radia passed on critical information
about DoT's future policy on a key committee's recommendations which she had gathered
from Chandolia, a key suspect in the 2G scam.

This conversation happened at the time when a report prepared by the committee headed by
Subodh Kumar, an additional secretary in DoT at the time, was causing major consternation
among Tata Teleservices officials. Kumar had recommended benchmarking the price of the
new 2G spectrum allocation on the auction price of 3G spectrum.
By mid-2009, Tata found himself lagging behind Anil Ambani in the ongoing scramble for
spectrum allocation in some cash-rich circles like Delhi. In a conversation between Tata and
Radia recorded on June 11, 2009, she could be heard telling Tata that she had been
deploying a multi-pronged strategy to get more spectrum, which included mounting
pressure on Raja through DMK chief M. Karunanidhi's daughter Kanimozhi.

In the first week of July 2009, Raja found himself in the eye of a storm when a sitting
Madras High Court judge alleged that a union minister had tried to influence him in a bail
application case. The anti-Raja lobby spread the news that it was Raja who had tried to
pressurise the judge. It was widely believed that Raja's bete noire Dayanidhi Maran was
behind the rumours.

In the backdrop of this raging controversy, Tata in a conversation with Radia on July 7,
2009, expressed his concerns over Raja's fate. Radia reassured Tata and told him that the
controversy had died down as the then Chief Justice of India had clarified that no minister
had tried to pressurise the judge. She told Tata that Raja was safe in his position.