Decoding the 2G Judgment: The Policy Deviation That Wasn’t

Still confused about auctions and cut-off dates in the 2G scam? Here’s why OP Saini acquitted Raja on these issues

DMK leader and MP Kanimozhi (left) and former Telecom Minister, A Raja, the key accused in the 2G spectrum case.

(Photo: The Quint)

As the dust settles in the week after special CBI judge OP Saini acquitted former Telecom Minister A Raja and all the others accused in the 2G scam case, it’s clear that the CBI failed to prove its case against them beyond all reasonable doubt. But with the case involving seven distinct legal issues, it’s also clear that there’s no one size fits all explanation for why the CBI’s case fell through.

The question as to why the prosecution failed is also important, not just because we need to examine why another high-profile case, which expended so much time and energy has failed, but also because when this case was being built, it seemed so strong. The Supreme Court’s findings in 2012 also seemed to indicate there were good grounds to believe that the spectrum allocation process was not conducted in a valid way.

So why then did Judge Saini find that there was no proof that Raja and the others had committed the crimes when we were all convinced they had?

The Need for a Wrongful Act

For there to have been a scam when it came to the 2G allocations, there obviously had to be some wrongful conduct by A Raja and his alleged co-conspirators. Even if the CBI’s claims of familiarity between them had been proved, it still needed to prove that they had then committed some illegal act, or committed a legal act in an illegal way.

In effect, this meant that the CBI needed to show that the allocation of 2G spectrum – itself not illegal – was not by the book. This is why stories on the 2G case from the start have been full of references to cut-off dates, auctions, the first-come first-served (FSCS) policy, and suspicious selling-off of licences to foreign companies.

This is also the basis on which the Supreme Court in 2012 cancelled 122 licences granted by A Raja during his tenure as Union Minister of Communications and Information Technology. The Supreme Court at the time held that Raja “wanted to favour some companies at the cost of the public exchequer.”

What Was Raja Alleged to Have Done?

The reasoning behind this, in the Supreme Court order and then argued by the prosecution before Judge Saini, was as follows:

1. The original cut-off date for filing applications for 2G spectrum was 10 October 2007. This was cut short to 1 October 2007, and then 25 September 2007 because of a conspiracy between Raja, Swan Telecom Pvt Ltd (STPL), Unitech group of companies and their directors. The idea was that if more applications were entertained, it may have been more difficult to provide licences to these favoured companies, hence the change to the cut-off date was made a day after their applications were filed.
2. The established FCFS policy of the Department of Telecommunications was subverted by Raja so that the favoured companies, which had not been the first companies to apply for licences, were not at a disadvantage. The policy was changed to give priority to applications based on the date of payment, rather than the date on which an application was made.
3. Raja set the entry fee at the 2001 prices for licences, rather than use an auction to sell the spectrum – despite a TRAI recommendation – which meant that there was a presumptive loss to the public exchequer.
4. A bidding process would have meant that higher amounts would have been paid to the Department of Telecom, but this was alleged to have been nixed by Raja so that the favoured companies could obtain licences at a lower price — which would be an abuse of power.
5. Further proof of the conspiracy to subvert the proper policy on spectrum allocation was alleged on the basis that STPL and the Unitech group of companies offloaded their shares to foreign companies immediately after allocation of spectrum to them. The share price of these companies had gone up after they had been allocated spectrum, which meant that the ultimate shareholders of these companies (the accused Shahid Balwa, Vinod Goenka and Sanjay Chandra) were benefited, which the prosecution argued was circumstantial evidence in favour of a conspiracy.

Why Did Judge Saini Dismiss These Allegations?

Saini, once again, took pains to point out that none of the evidence provided by the CBI backed up any of these allegations, and in fact, often supported the positions taken by the defence.

1. There was sufficient evidence, in Saini’s opinion, to show that the changes to the cut-off date were made in good faith, based on extensive discussions in the Department of Telecommunications about how much spectrum was available to allocate. The prosecution’s own evidence indicated that this round of applications had been significantly higher than ever before (a total of 575 applications had been filed by 1 October), and that the view of the Secretary (T) DS Mathur had been that letters of intent could not be issued for all of these. Based on these due considerations, the cut-off date was changed to 25 September on 2 November 2007.
2. The evidence provided by the defence witnesses showed that the FCFS policy changes had been contemplated for some time in the Department of Telecommunications. When cross-examined, some of the prosecution witnesses actually confirmed what was said by the defence – which the prosecution failed to counter.
3. When it came to whether or not the entry fee needed to be revised (to be done on a bidding basis), Judge Saini noted that Nripendra Misra, the chairman of TRAI at the time, was the only witness who deposed that TRAI recommended revision of entry fee for 2G spectrum. However, when Saini examined the text of TRAI’s recommendations, he did not find that they supported Misra’s testimony, and nor did the understanding of these recommendations by various officials or bureaucrats support Misra’s testimony. This meant that there was no basis to say that an auction should have been held, and therefore no loss to the public could be assumed.
4. The issue of offloading was also countered by one of the prosecution’s own witnesses, who acknowledged that there had been no sale of shares by the promoters, but instead, issues of fresh equity. The prosecution was unable to show that there were any rules/guidelines/regulations which prevented issues of fresh equity, which raises concerns about the actions of the Supreme Court, and is a shot in the arm for the companies which have been asking for compensation because their licences were cancelled.

Chances for Successful Appeal

The biggest stumbling block for the CBI once again will be that its own evidence seems to contradict the allegations it made against Raja and the accused. The failure to re-examine its own witnesses, whose cross-examination had supported the defence case, was completely unacceptable, and shows they were either sleeping on the job, or had realised they couldn’t counter what had happened.

There may be some scope to show that TRAI had actually recommended revising the entry fee for spectrum applications (which would mean that there weren’t good grounds to not hold an auction), since Judge Saini’s finding on this was based on his understanding of the recommendations, rather than a concrete document or witness statement. Instead, his interpretation can be compared with Nripendra Misra’s by the High Court, and given Saini’s own assessment that Misra seemed reliable and acting in good faith, this issue may actually have some sort of chance to succeed on appeal.

Of course, given that this is only one part of the grand conspiracy that the CBI needs to establish, merely proving this may not be sufficient to actually convict Raja and the others.