Bribes, Lies & Radia Tapes: The Full Rundown on 2G Spectrum ‘Scam’

All 17 accused, including former Telecom Minister A Raja, have been acquitted of all charges by Judge OP Saini.

Kanimozhi and A Raja, were the key accused in the 2G spectrum case.

(Photo: The Quint)

In a new twist to the 2G spectrum scam, the 17 accused in the case were acquitted of all charges by a special CBI court in New Delhi on Thursday, 21 December.

“I have absolutely no hesitation in holding that prosecution has miserably failed to prove any charge against any accused,” said CBI Judge OP Saini, acquitting former telecom minister A Raja, Rajya Sabha MP Kanimozhi and 15 other accused.

The trial in the 2G spectrum scam, which cost the-then Manmohan Singh-led UPA government heavily, began in 2011 after the court had framed charges against the 17 accused. All the accused in these cases had consistently denied the charges levelled against them.

Deemed as second in magnitude only to the Watergate Scandal (according to TIME magazine), the 2G spectrum scandal not only brought down the UPA II government, but ‘exposed’ a gross abuse of power, as the ‘collusion’ of businessmen, journalists and political leaders emerged in the case.

The scam took centre-stage after the Supreme Court issued notices to then Telecom Minister A Raja and the Central Bureau of Investigation (CBI) on 13 September 2010, following a PIL filed by two activist groups and independent journalist Paranjoy Guha Thakurta, which claimed that the exchequer had borne a loss of Rs 70,000 crore due to the 2G spectrum allocation.

The other two petitioners were the then-general secretary of the Centre for Public Interest Litigation, Prashant Bhushan, and the former secretary of NGO ‘Telecom Watchdog’, Anil Kumar.

What is 2G Spectrum?

2G is an abbreviation for ‘second-generation’ wireless telephone technology. But what is a spectrum? The word ‘spectrum’ here refers to a range of radio-waves that are used for communication purposes. Since these ‘waves’ are around us at all times, and pass through everything, this means that a spectrum needs to be monitored.

The government divides the spectrum, which is a national wealth, into ‘bands’ and manages the spectrum across the country by assigning different ‘telecom circles’.

Thus, in order for a telecom company to offer continual access across India, it would have to bid for a spectrum license in the 22 existing circles. Now, coming to the question of auctions, a spectrum, like any other natural resource, is required to be auctioned by the government to companies that can use this to provide a number of services and retrieve their investments.

So where did A Raja go wrong as telecom minister? Raja was accused of conniving with telecom companies, extending cut-off dates, and tainting the issuance of these licenses with irregularities. A Raja was also accused of giving away 2G spectrum in 2008 at 2001 prices.

What Was the Alleged Illegality?

Cheap telecom licenses were one major irregularity that had led to the 2G spectrum allocation scam. The entry fee for the spectrum licenses in 2008 had been fixed at 2001 prices. None of the government stipulated telecom procedures were followed by A Raja.

The cut-off date for applications was extended by a whole week, licenses were not allotted on a first-come-first-served basis as they were supposed to be, no due process of auctioning was followed nor were bids invited, Raja turned a deaf ear to the counsel of TRAI, Law Ministry and Finance Ministry.

On 2 February 2012, the Supreme Court quashed all 122 telecom licences allotted on or after 10 January 2008 to 11 companies during A Raja’s tenure as telecom minister. The apex court’s decision was succeeded by it declaring the allocation of 2G spectrum by the Congress-led UPA government as “illegal” and a case of gross abuse of power.

What Did the CAG Report Say?

The Vinod Rai-led Comptroller and Auditor General (CAG) report on the allotment of 2G Spectrum licences, which was submitted on 10 November 2010, held former Telecom Minister A Raja responsible for flouting rules, giving free reign to favouritism and above all, costing the government a “presumptive loss” of Rs 1.76 lakh crore by misusing his power to allocate 2G spectrum.

Here are the highlights of the CAG report on the 2G spectrum allocation scam, as reported by NDTV:

1. As many as 85 firms concealed facts and presented fake papers to the Department of Telecommunications (DoT).



2. A Raja turned a deaf ear to the advice of the Prime Minister, Finance Minister, Law Ministry.



3. DoT kept spectrum pricing issue out of Group of Ministers (GoM) on Telecom’s ambit.



4. 2G spectrum issued to new players at throwaway prices.



5. Swan Telecom was given unjustified advantage in allocation of spectrum.



6. Spectrum allocated beyond contracted quantity to nine companies including Bharti, Vodafone, Idea, BSNL, Reliance, Aircel.



7. Email ID of Swan Telecom shown as that of a Reliance ADA group official



8. In an illegal move, Idea and Spice were not issued spectrum on grounds of proposed merger.



9. Allocation of 2G spectrum led to a “presumptive loss” of Rs 1.76 lakh crore.



10. Cut-off date for license letters were advanced arbitrarily by a week.



11. DoT did not follow its own practice of first-come-first-served in allocation.

12. Spectrum, a rare source of national wealth, should have been auctioned.



13. A huge lack of transparency pervaded the entire process, which was arbitrary to begin with.

What Did the JPC and CBI Reports Say?

The CAG’s “presumptive loss” theory was condemned by the Joint Parliamentary Committee (JPC) (headed by PC Chacko) report on allocation and pricing of telecom licences, and the 2G spectrum.

The JPC report claimed that the calculations of the CAG report which helped it reach loss figures between Rs 57,666 crore and Rs 1.76-lakh crore were “untenable” and “unrealistic.”

As cited in this 2013 article by The Hindu, the JPC report quashed the basis of CAG’s “loss theory” saying that the DoT believed that allotting extra equity for attracting FDI was fair practice among corporates. Further, the CBI wasn’t able to establish in its probe that the FDI policy applicable in the telecom sector had been breached.

Who Are the Accused Now Acquitted?

Here is a list of the key accused, now acquitted, in the 2G spectrum scam:

1. A Raja, Former Telecom Minister



2. MK Kanimozhi, Member of Parliament, Dravida Munnetra Kazhagam



3. Siddharth Behura, Former Telecom Secretary



4. RK Chandolia, A Raja’s Former Private Secretary



5. Shahid Usman Balwa, Swan Telecom Promoter



6. Vinod Goenka, Swan Telecom Promoter



7. D Sanjay Chandra, Unitech Ltd Managing Director



8. Gautam Doshi, Group Managing Director of Reliance Group



9. Surender Pipara, Reliance Group President



10. Hari Nair, Reliance Group Senior Vice-President



11. Asif Balwa, Director of Kusegaon Fruits and Vegetables



12. Rajeev Agarwal, Director of Kusegaon Fruits and Vegetables



13. Sharad Kumar, Kalaignar TV Director



14. Karim Morani, Bollywood Producer

Three telecom companies — Swan Telecom Pvt Ltd (STPL), Reliance Telecom Ltd and Unitech Wireless (Tamil Nadu) Ltd — have also been acquitted of any wrongdoing.

The Other Players Involved

A) Niira Radia

Top journalists and politicians had come under the radar after tapes of telephonic conversation between them and corporate lobbyist Niira Radia were made public. Following suspicion, the Income Tax Department had tapped the phone lines of Radia for a few months in 2008 and 2009.

Radia headed Vaishnavi Communication, a PR firm representing both Tata and Ambani groups. The tapes of these phone conversations hinted at mediation by Radia and journalists like Barkha Dutt and Vir Sanghvi during the cabinet formation of UPA-II, after which Raja was given the telecom portfolio. She was a key prosecution witness in the case.

B) Subramanian Swamy

One of the main persons involved with the investigation of the 2G spectrum scam, Subramanian Swamy brought up charges against former Finance Minister P Chidambaram.

His plea for Chidambaram’s prosecution was initially rejected by the CBI court but when he approached the apex court, a detailed report was ordered. Swamy also named industrialist Ratan Tata as being involved in the case.

C) Manmohan Singh and UPA-II

Highly criticised for the spectrum scam that spun under his rule, the former Prime Minister also came under the radar when the ex-Chairman of Telecom Regulatory Authority of India (TRAI), Pradip Baijal alleged that Singh had ‘persuaded’ him to cooperate in the issuance of 2G spectrum licenses.

However, the CBI was of the opinion that A Raja had misled Manmohan Singh in matters of policy pertaining to the allocation of licenses.

Moreover, most of Singh’s recommendations were also allegedly rejected by Raja in 2007, with respect to a letter asking to ensure a fair process of allotment.

What Were the Prosecution’s Arguments?

The CBI investigated the case in which it filed an 80,000-page chargesheet before the trial court. In its chargesheet, the central agency accused A Raja of being complicit in the transaction of a Rs 200-crore bribe to a DMK-run TV channel in exchange of a 2G license to Swan Telecom Ltd. The CBI also accused Rajya Sabha MP and DMK leader MK Kanimozhi (the party chief Karunanidhi’s daughter) of being in cahoots with Raja with regard to the launch of Kalaignar TV network’s channels.

As per the CBI and ED’s reports, A Raja had received bribes to the tune of Rs 3,000-crore while allocating 2G licenses.

The CBI summoned as many as 154 witnesses during the course of the nearly six-year trial, including Reliance ADA chairman Anil Ambani, his wife Tina Ambani and the then Attorney General of India, GE Vahanvati.

According to the CBI, the quantum of loss was Rs 30,984-crore and NOT Rs 1,76,645-crore as the CAG report had claimed.

What Were A Raja’s Arguments?

During the final arguments in the 2G Spectrum Allocation Case, Raja compared his case to the parable of the blind men and the elephant – one that demonstrates the hazards of half-truths. He said, as quoted in a report by NDTV, “The 2G elephant was touched by the CVC, CAG, JPC and CBI without proper understanding.” He went on to add, “...on the basis of their own inference drawn by them, this case has been foisted against me.”

While the CBI report accused Raja of taking bribes and unfairly allocating 2G spectrum to companies he favoured, Raja has maintained that the then-prime minister Manmohan Singh was always kept in the know on developments in the 2G spectrum allocation, and that the Cabinet had sanctioned all policies for assigning 2G spectrum licenses.

“Why would the minister involve outsiders in the decision-making process (such as PM, Law Minister, Finance Minister, External Affairs Minister, and the Solicitor General) if there was a conspiracy?” Raja had asked in court.

Raja also stated that the CBI had failed to produce proof to support its claim that he was complicit in the transaction of Rs 200 crore bribe to a DMK-run TV channel in exchange for a 2G license to Swan Telecom Ltd Raja’s counsel Manu Sharma had told the court on his behalf:

There is no evidence that I was aware of the fact that DMK was running a TV channel and such a transaction took place. What evidence is there that I was helping Kalaignar TV? Prosecution has gone on an assumption that just because I was a leader of DMK party, I knew who had invested money in the channel.

A ‘Successful’ Re-Auctioning of the 2G Spectrum

Much to the relief of the telecom officials, in February 2014, the 2G spectrum re-auctioning saw total bids to the tune of over Rs 60,000-crore, crossing the expected mark of Rs 30,000-40,000 crore. There was a collective sigh of relief especially after the disastrous auctions in November 2012 and March 2013.

With the Supreme Court cancelling all 122 2G licenses in February 2012, fresh auctions were held for a re-allocation of the spectrum. However, much of the spectrum could not be sold due to the miserable state of markets at the time. According to this article in The Indian Express, the success of the second re-auctioning can be attributed to the TRAI ‘getting reserve prices right’.