Current Events Primer Series : The 2G Scam

2G Scam:-

Year: Auctioning done in 2008. Scam Unearthed in 2010. Arrest made in Feb 2011

People\Parties Involved:-

1)   A. Raja : The then Telecom Minister.

2)   Shahid Balwa: Promoter Swan Telecom

3)   Sanjay Chandra : MD Unitech

4)   Vinod Goenka: DB Realty Founder

5)   Kanimozhi: MP and Daughter of DMK Chief M Karunanidhi, 80% stake holder in Kalaingar TV.

6)   Sharad Kumar, the Managing Director of Kalaignar TV

7)   R.K Chandolia: Personal Secretary of A.Raja.

8)   Sidhartha Behura: Former Telecom Secretary.

9)   Senior Executives from Anil Ambani owned Reliance ADAG (Reliance Anil Dhirubhai Ambani Group).

Chief Petitioner in the court of Law:-

Dr. Subramanium Swamy.

Case:

--The persons involved in this scam allowed auctioning of Radio Frequency Bands to Mobile Telephony Companies at throwaway prices.

--The frequency band was supposed to be utilized by the companies for 2G communication.

--The TRAI (Telecom Regulatory Authority of India) had suggested the then Telecom Minster A Raja to

auction the spectrum at market prices.

--But there were deliberate irregularities in the entire auctioning process. Some of the most glaring ones are:-

1.     The cut-off date for applications was advanced by a week.

2.     The licenses were issued on first come first serve basis.

3.     The issuing of licenses took place in 2008 at prices of 2001.

4.     Both, Swan telecom and Unitech were awarded the licenses, despite the fact that they had no       prior telecom experience.

5.     No proper auctioning process was followed. No bids were   invited.

6.     A Raja ignored the advice of Telecom Ministry, TRAI and   Finance Ministry.

7.     Swan got license for 1,500 crore and then it sold 45% stake to UAE based company Etisalat for 4,200 crore.

8.     Unitech Wireless, a subsidiary of the Unitech Group, got license for 1,600 crore and later sold 60% stake for 6,200 crore to Norway based company Telenor.

--Investigations by the CBI revealed that:-

One of the companies named by the CBI in the 2G scam – Swan Telecom – allegedly sent Mr Raja a       Rs. 214-crore kickback that was routed through a maze of companies but rested finally with Kalaignar TV channel in Chennai that is owned mainly by Kanimozhi and Dayalu Ammal. Together, they have 80% stake in the company. Sharad Kumar, the Managing Director of Kalaignar TV, owns the balance and has also been accused of conspiring with Mr Raja.

--The shortfall between the money collected and the money which the law mandated to be collected is estimated to be 176,645 crore (US$35.24 billion) as valued by Comptroller and Auditor General of India based on 3G and BWA spectrum auction prices which held in 2010

--In the aftermath of this scam, several high-profile arrests were made and the likes of A Raja, Kanimozhi, Senior Execs of Reliance,Telecom Secretary etc suddenly found themselves in Tihar Jail.

--Recently on 2 February 2012: The Supreme court of India cancelled all 122 licenses allotted during A Raja tenure and imposed Rs 5 crore(US$ 1,018,122) fine on Unitech, Swan & Tata Teleservices. It also imposed a fine of Rs 50 lakh on Loop Telecom Pvt Ltd, S-Tel, Allianz Infratech and Sistema Shyam Tele Services Ltd. It also asked trial court to decide whether Home Minister P Chidambram should be made co-accused in 2G scam. 

--Later the Special court judge OP Saini, dismissed the plea of Subramaniam Swamy to make the then Finance Minister P Chidambaram as co-accused in the 2G Scam. It came as a big relief for the already embarassed UPA led government.

--The Supreme Court decision to cancel all the 122 licenses has recently been challenged by the govenment.

Govt of India recently filed a review petition in Supreme Court seeking partial review of the court's 2 February 2012 order which had quashed 122 licenses. The Govt questioned Supreme Court's authority over ruling against the first-come first-served policy but stayed away from challenging the cancellation of 122 licences issued during the tenure of A Raja as Telecom Minister.Government also filed presidential reference in Supreme Court seeking the court's opinion on various issues arising from its 2 February 2012 judgement.

--In 2011, Time magazine listed the scam at number two on their “Top 10 Abuses of Power” list (just behind the Watergate scandal)

--The whole scam was unearthed while the Income Tax Department was investigating the Political Lobyist Nira Radia.

--After a year in jail, A Raja and Kanimozhi were finally allowed to leave Tihar jail on bail.

--The case is still in court of law as on 22 May 2012.

--The role of the Supreme court and The CAG has been commendable in all respects and the people of India are expecting a fair trial and befitting punishments in this historic case that has put to shame the entire State machinery.

For Now,

Bye,

Take Care,

Ashish Mishra