2G spectrum scam

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The 2G spectrum scam involved allegations of

 underpricing of 2G spectrum Telecom Ministry of India, resulting in loss to

the exchequer and
 illegal manipulation of the spectrum allocation process to favour a few
select companies
According to a report submitted by the Comptroller and Auditor General based on
money collected from 3G licenses, the loss to the exchequer due to underpricing
of 2G spectrum was  176,379 crore (US$39.16 billion).
The issuing of the 2G licenses occurred in 2008, but the scam came to public
notice when the Supreme Court of India took Subramaniam Swamy's complaints
on record [With Case type:Writ Petition (Civil),Case No:10, Year:2011].[1]
Contents
 [hide]

1 Civil Servants, Politicians and Corporations Involved in

scam
o 1.1 Politicans, Ministers and Parlimentarians
involved
o 1.2 Bureaucrats involved
o 1.3 Corporations involved
o 1.4 Corporate personalities involved
o 1.5 Media persons and lobbyists involved

2 Petitioners to 2g scam
3 Loss to Exchequer
4 Relationship between media and government
o 4.1 Ratan Tata petitions over leak

5 Response to scam
 6 Arrests and Chargesheets
7 Impact on stock markets
8 See also
9 References
10 External links

[edit]Civil Servants, Politicians and Corporations Involved in scam

All the accused have been booked under sections 120(B) (criminal conspiracy),
468 (Forgery for purpose of cheating), 471 (using as genuine a forged document
or electronic record), 420 (cheating and dishonestly inducing delivery of property)
and 109 (abetment if the act abetted is committed in consequence, and where no
express provision is made for its punishment) of the Indian Penal Code.[2]
[edit]Politicans, Ministers and Parlimentarians involved
Name of the
Occupation and
Person Allegation and Charges
Designation
involved
The Controller and Auditor General holds Raja
personally responsible for the sale of 2G spectrum at
2001 rates in 2008, resulting the previously mentioned
loss of up to Rs. 1.76 lakh crores (US$40 billion) to the
Union Cabinet Minister national exchequer.
for Communications
A. Raja
and Information [3]
 In August, 2010, evidence was submitted by the
Technology
Controller and Auditor General (CAG) showing that
Raja had personally signed and approved the majority of
the questionable allocations.[4]
On April 25, 2011 Kanimozhi was named as a co-
conspirator in the supplementary chargesheet filed by
the Central Bureau of Investigation (CBI) in connection
with the 2G spectrum case. The chargesheet, which was
submitted before the Supreme Court establishes how Rs
Kanimozhi
Member of Rajya Sabha 200 crore connected with the scam traveled from a
Karunanidhi
partnership firm of businessman Shahid Balwa of Swan
Telecom to the Karunanidhi family-owned Kalaignar
TV.[2] She has been charged with section 7 and 11 of
the Prevention of Corruption Act. The sections deal
with acceptance of alleged gratification.[5]
[edit]Bureaucrats involved
Name of the Occupation Allegation and Charges
Person and
 involved Designation
Civil Servant
Siddhartha (IAS officer of He was the Telecom secretary who served in the DOT at the time
Behura 1973 batch UP of the 2G allocation.
cadre)
He was the Secretary of the Department of Telecommunications.
Civil Servant
On September 7, 2010 he was appointed as the Chief Vigilance
(IAS officer of
P. J. Thomas Commissioner. Thomas later stepped down after the Supreme
1973 batch
Court questioned his track record as a civil servant in the wake of
Kerala cadre).
investigations into the 2G spectrum allocation scam.
He is alleged to have recommended policies that favored certain
Telecom companies when he was heading the TRAI. Post
Civil Servant retirement, Baijal joined Noesis, a consulting firm. [6][7] Raja has
(IAS officer of made references to Baijal's decisions in 2003 as the basis for his
Pradip Baijal
1966 batch MP decisions in 2008; something which has been attacked by Arun
cadre). Shourie and several media pundits. The houses and offices of the
bureaucrat were recently[when?] raided by the Central Bureau of
Investigation as part of their investigations.[8]
He was private secretary of Raja during UPA-I when the licences
were awarded. When Raja became the Telecom Minister once
again in UPA-II, Chandolia had been promoted to the Joint
Civil Servant
Secretary rank. Raja re-designated him Economic Adviser, that
RK (IES officer of
gave him the charge of all important policy-related work.
Chandolia 1984 batch
Chandolia interacted with all the licensees. It is said that it was
cadre).
Chandolia who, from DDG-access services A K Srivastava's
room, had handed out letters of intent to representatives of
various companies.[9]
[edit]Corporations involved

 Unitech Group a real estate company entering the telecom industry with its
2G bid; sold 60% of its company stake at huge profit toTelenor after buying
licensing (Including land values properties for towers)[10]
 Swan Telecom sold 45% of its company stake at huge profit to Emirates
Telecommunications Corporation (Etisalat) after buying licensing[10]
 Loop Mobile
 Videocon Telecommunications Limited
 S Tel
 Reliance Communications
 Sistema Shyam Mobile (MTS) – Sistema Mobile Russia
 Vodafone Essar
 Dishnet Wireless
 Allianz Infra[11]
[edit]Corporate personalities involved

 Anil Ambani - Reliance Group (ADAG)[12] -

 Shahid Balwa - DB Realty and Etisalat DB Telecom(formerly Swan
Telecom)
 Vinod Goenka - Dynamix Group
 Venugopal Dhoot - Videocon Group
 Prashant Ruia - Essar Group
 Ratan Naval Tata - Tata Group
All of them have either been questioned by the CBI or are prospective suspects
in the scam.
[edit]Media persons and lobbyists involved

 Nira Radia, a former airline entrepreneur turned corporate lobbyist whose

conversations with politicians and corporate entities were recorded by the
government authorities. The contents were later leaked by unknown parties
creating the Nira Radia tapes controversy
 Barkha Dutt, an NDTV journalist alleged to have lobbied for A. Raja's
appointment as minister.[citation needed]
 Vir Sanghvi, a Hindustan Times editor alleged to have edited articles to
reduce blame in the Nira Radia tapes.[citation needed]
[edit]Petitioners to 2g scam

 Subramaniam Swamy, activist lawyer and politician, whose letters to the

Prime Minister demanding action and affidavits and cases in the Supreme
Court brought the issue into the public limelight.
 Paranjoy Guha Thakurta, a journalist who was one among the very first to
write on the irregularities in the awarding of 2G spectrum allocation by the
Telecom Ministry. He is also one of the petitioners in the 2G PIL currently
being heard in the Supreme court.[13]
 Prashant Bhushan, on behalf of the Centre for Public Interest Litigation.
 Anil Kumar, on behalf of the civil society organisationTelecom Watchdog
 Others:Several eminent people like former chief election
commissioners J.M. Lyngdoh, T.S. Krishnamurthy and N. Gopalaswami and
 former central vigilance commissioner (CVC) P. Shankar are also petitioners
in the suits filed by civil society groups.[11]
[edit]Loss to Exchequer
The Comptroller and Auditor General of India used three different methods to
assess the presumptive loss to the exchequer resulting from not auctioning 2G
spectrum.[14]
The first method was based on the fact that S Tel, one of the licensees, explicitly
offered to pay significantly higher license fees for the spectrum. Based on the
fees offered by S Tel, the CAG estimated the loss to the exchequer at 
67,364 crore (US$14.95 billion)
The second method was based on the price discovered by the 3G auction in
2010. The CAG reasoned that since 2G is really 2.75G (EDGE), its price should
be comparable to that of 3G licenses. Based on this method, the CAG estimated
the loss to the exchequer to be  176,000 crore (US$39.07 billion)
The third method was based on the fact that some of the licensees received FDI
in the form of equity, shortly after the spectrum allocation. The CAG reasoned
that this equity infusion was entirely due to the value of the allocated spectrum;
this can be construed as re-sale of the spectrum by the licensee, and hence was
a valid basis for assessing loss to the exchequer. Based on this method,
the CAG estimated the loss to the exchequer to be anywhere between 
57,666 crore (US$12.8 billion) (based on Etisalat's investment in Swan Telecom)
and  69,626 crore (US$15.46 billion) (based on Telenor's investment in Unitech).
For its part, the Congress-party led government has publicly defended itself on
this count and Kapil Sibal, who replaced A. Raja as the communication minister,
has refuted the CAG reasoning.[15] He has also justified his government's
decision not to auction 2G spectrum as being in line with the policy guidelines
laid down by the 10th Five-Year Plan.[16][17]
[edit]Relationship between media and government
Main article: Nira Radia tapes controversy
Media sources such as OPEN and Outlook reported that Barkha Dutt and Vir
Sanghvi knew that corporate lobbyist Nira Radia was influencing the decisions of
A. Raja.[18] The critics alleged that Dutt and Sanghvi knew about corruption
between the government and the media industry, supported this corrupt activity,
and suppressed news reporting the discovery of the corruption.[18]
[edit]Ratan Tata petitions over leak
The tapes leaked to the public include conversations between Nira Radia
and Ratan Tata. Tata petitioned the government to acknowledge his right to
privacy and demanded accountability for the leak, with the Minister for Home
Affairs, CBI, Indian Income Tax Department, theDepartment of
Telecommunication, and the Department of Information Technology as
respondents in the petition.[19]
On April 4, 2011 Indian Parliament's Public Accounts Committee
(PAC)questioned Tata Sons Chairman Ratan Tata and corporate lobbyist Niira
Radia regarding their roles in 2G Scam.[20]
[edit]Response to scam
In early November 2010 Telecom Minister A Raja resigned.
In mid November the comptroller Vinod Rai issued show-cause notices to
Unitech, S Tel, Loop Mobile, Datacom (Videocon), and Etisalat to respond to his
assertion that all of the 85 licenses granted to these companies did not have the
up-front capital required at the time of the application and were in other ways
illegal.[21] Some media sources have speculated that these companies will receive
large fines but not have their licenses revoked, as they are currently providing
some consumer service.[21]
In response to the various allegations, the Govt of India has replaced the then
incumbent Telecom minister, A. Raja with Kapil Sibal who has taken up this
charge in addition to being the Union minister for Human Resources
Development.Mr Sibal contends that the "notional" losses quoted are a result of
erroneous calculations and insists that the actual losses are nil.[15][16]
The CBI conducted raids on Raja and four other telecom officials - former
telecom secretary Siddharth Behura, Raja's personal secretary R K Chandolia,
member telecom K Sridhar and DoT deputy director general A K Srivastava on 8
December 2010.[22]
[edit]Arrests and Chargesheets
On February 2, 2011, the CBI arrested former Telecommunications Union
Minister A.Raja. The CBI also arrested R.K. Chandolia, Raja's personal aide, and
Siddharth Behura, the former Telecom Secretary.[23][24] Both A.Raja and R.K
Chandolia are heard in conversation with Niira Radia in the released Radia
tapes.
On February 8, 2011, the CBI arrested Mumbai based Dynamix Balwas (DB)
group managing director Shahid Usman Balwa in connection with the 2G
spectrum allocation scam. The CBI has evidence from the Income Tax
department that Shahid Usman Balwa, considered close to A. Raja, was
instrumental in channelling the kickbacks allegedly received by the former
telecom minister.[25]
On March 29, 2011, in Delhi, the CBI arrested Asif Balwa (younger brother of the
arrested former Managing Director of DB-Etisalat Group,Shahid Balwa)
and Rajeev Agarwal for their alleged involvement in money transfer to
the Dravida Munnetra Kazhagam's (DMK) Kalaignar TVchannel.[26]
On April 2, 2011, the CBI filed its first 80,000 page chargesheet in the 2G
spectrum scam before a Special Court in Delhi naming nine individuals and three
companies. It said the wrongful acts of the accused deprived the government
exchequer of possible revenues amounting to INR Rs 30,985 crore (USD $
6,983,322,233). The accused include the following individuals:[27]
1) A. Raja, arrested former Telecom minister 2) Siddharth Behura, arrested
former Telecom Secretary 3) R.K. Chandolia, A. Raja's arrested former personal
secretary 4) Shahid Usman Balwa, arrested former Director of Swan
Telecom (now Etisalat DB) 5) Sanjay Chandra, Managing Director of Unitech
Ltd and Unitech Wireless 6) Gautam Doshi, Group MD, Reliance Anil Dhirubhai
Ambani Group 7) Hari Nair, Senior Vice-President, Reliance Anil Dhirubhai
Ambani Group 8) Surendra Pipara, Senior Vice-President, Reliance Anil
Dhirubhai Ambani Group and Reliance Telecom Ltd 9) Vinod Goenka,
Director, Swan Telecom and Managing Director of DB Realty
The three companies named are: 1) Swan Telecom 2) Unitech
Wireless 3) Reliance Telecom
In the first chargesheet, the CBI had named lobbyist Niira Radia and 124 others
as witnesses.
On 25 April 2011, in its second chargesheet in the scam, the Central Bureau of
Investigation (CBI) named five more accused individuals:[28]
1) Kanimozhi - Rajya Sabha Member of Parliament (DMK) and daughter of Tamil
Nadu Chief Minister M Karunanidhi 2) Sharad Kumar ofKalaignar TV 3) Karim
Morani of Cineyug Films 4) Asif Balwa of Kusegaon Realty 5) Rajiv B Agarwal of
Kusegaon Realty
[edit]Impact on stock markets
The first casualty in Stock Markets once Raja was arrested was DB Realty.
[29]
 20% fall in the stock prices of DB Realty. Sun TV had its shares fall by 10%.
[30]
 Sun TV COO refused the allegations. Swan Telecom Chief Balwa was
arrested on Feb 8 [31] and this led to rumours of links with Anil Ambani's Reliance
ADAG and it led to 20% fall of his stocks . Its reported that nearly 2 Billion USD
was eroded from his stocks .[32] Spicejet stocks went down after reports of
investigation on Maran's recent takeover of Spicejet .[33]
[edit]See also

 Belekeri port scam - Iron-ore scam as big as this one, worth an estimated 
60,000 crore (US$13.32 billion)
 2010 housing loan scam in India
 Adarsh Housing Society Scam
 Commonwealth games scam
 Indian political scandals
 Corruption Perceptions Index
 Rent seeking
 Jan Lokpal Bill
[edit]References

1. ^ "Case Number". Courtnic.nic.in. Retrieved 2011-02-11.

2. ^ a b "Accused have been booked under sections". The Hindustan Times. 2011-04-25.
Retrieved 2011-04-25.
3. ^ Singh, Shalini (28 October 2009). "BJP takes on Raja over telecom spectrum
scam". Times of India. Retrieved 2009-11-08.
4. ^ Joseph, Josy (August 30, 2010). "CAG draft report nails Raja role in 2G scam". The
Times Of India.
5. ^ "DMK takes a hit, Kanimozhi charged and summoned". Hindustan Times. April 25,
2011.
6. ^ http://www.taratv.com/top_story.php?task=full&newsid=2151
7. ^ "Taming the retired". The Hindu Business Line. 2010-12-17. Retrieved 2011-02-11.
8. ^ CBI conducts raids; swoops on DMK associates, Niira Radia & Pradip
Baijal http://economictimes.indiatimes.com/news/politics/nation/CBI-conducts-raids-swoops-on-
DMK-associates-Niira-Radia--Pradip-Baijal/articleshow/7108883.cms
9. ^ "Who is R K Chandolia?". Ndtv.com. 2011-02-02. Retrieved 2011-02-11.
10. ^ a b Shafi Rahman (6 Nov 2008). "Big scam in 2G spectrum allocation: CPI-M". India
Today. Retrieved 3 December 2010.
11. ^ a b "Government, 11 telecom firms get court notice on 2G spectrum". Sify.com.
Retrieved 2011-02-11.
12. ^ http://www.hindustantimes.com/2G-spectrum-scam-Anil-Ambani-is-now-a-
suspect/Article1-663738.aspx
13. ^ "2G scam: Why I filed a PIL against the telecom minister - Rediff.com Business".
Business.rediff.com. Retrieved 2011-02-11.
14. ^ "Performance Audit Report on the Issue of Licenses and Allocation of 2G Spectrum by
the Department of Telecommunications, Chapter 5". Comptroller and Auditor General of India.
15. ^ a b "Offence as Defence". Frontline. 2011-01-07.
16. ^ a b "2G scam: No public loss to exchequer, says Kapil Sibal". MoneyControl.com. 2011-
01-11.
17. ^ "Tenth Five Year Plan, 2002-2007". Planning Commission. 2002-12-21.
18. ^ a b Amol Sharma (1 Dec 2010). "Wait a Minute, What Exactly Is Barkha Dutt Accused
of?". IndiaRealTime. Wall Street Journal. Retrieved 4 December 2010.
19. ^ "Government orders probe into leaking of Niira Radia tapes". The Economic Times. 29
Nov 2010. Retrieved 4 December 2010.
20. ^ PAC Quizzes Niira Radia, Rattan Tata in 2G Scam Probe http://abclive.in/invetigative-
news/political-investigation/161-pac-niira-radia-rattan-tata-2g-scam-probe-.html
21. ^ a b Joji Thomas Philip (18 Nov 2010). "2G scam: Govt to pull up five telcos". The
Economic Times. The Times Group.
22. ^ "2G spectrum scam: CBI raids residences of A Raja - The Times of India".
Timesofindia.indiatimes.com. 2010-12-08. Retrieved 2011-02-11.
 23. ^ "CBI arrests ex-telecoms min A.Raja over graft". Reuters India. 2 February 2011.
Retrieved 2 February 2011.
24. ^ PTI, Feb 2, 2011, 07.41pm IST (2011-02-02). "2G spectrum scam: Former telecom
minister A Raja arrested - The Times of India". Timesofindia.indiatimes.com. Retrieved 2011-02-
11.
25. ^ "CBI arrests DB group MD Shahid Balwa in 2G scam". Hindustan Times. 9 February
2011. Retrieved 9 February 2011.
26. ^ "CBI arrests Balwa's brother and another". Chennai, India: The Hindu. 30 March 2011.
Retrieved 30 March 2011.
27. ^ "CBI charges Raja, 8 others and 3 companies in 2G case". The Hindu Business Line. 2
April 2011. Retrieved 2 April 2011.
28. ^ "Kanimozhi charged with conspiracy in 2G scam by CBI". The Economic Times. 25
April 2011. Retrieved 26 April 2011.
29. ^ "When DB Realty ended up dialling the wrong no - Money - DNA". Dnaindia.com.
Retrieved 2011-02-11.
30. ^ "2G scam: The DB Realty-DMK puzzle - Rediff.com Business". Rediff.com. Retrieved
2011-02-11.
31. ^ 10 Feb, 2011, 03.50AM IST,ET Bureau (2010-07-23). "Arrest of Balwa may trip DB
Realty's rapid rise - The Economic Times". Economictimes.indiatimes.com. Retrieved 2011-02-
11.
32. ^ "Day after DB Realty chief’s arrest, ADAG scrips tank". Indianexpress.com. 2010-11-
05. Retrieved 2011-02-11.
33. ^ Chowdhury, Anirban. "SpiceJet Denies Maran Buy Under Investigation - WSJ.com".
Online.wsj.com. Retrieved 2011-02-11.
[edit]

What is the 2G scam all about

Wed, Feb 2 2011 16:48 IST | 854 Views | Add your comment
FONT SIZE: AAA SHARE:  

New Delhi, Feb 2

Following is a primer on the second-generation spectrum allocation scandal that resulted in

formercommunications minister A. Raja of DMK being arrested here Tuesday:
The issue dates to 2008 when nine telecom companies were issued scarce airwaves, a national
resource, and licences for 2G mobile phone services at Rs.1,658 crore (less that $350 million)
for a pan-India operation. As many as 122 circle-wise licences were issued.
The opposition said by giving airwaves cheap and in a controversial manner of first-cum-first-
served basis, the exchequer had lost billions of dollars. It also objected to the arbitrary
advancement of the cut-off date for filing applications to suit some firms.
But Prime Minister Manmohan Singh himself defended Raja's decision and said May 24 last
year that hiscommunications minister had done no wrong and had only implemented the policy
that was already in place. No norm wasn flouted, he added.
The opposition nevertheless stepped up its attack with two examples on 2G spectrum sale:
- A new player, Swan Telecom, bought licences for 13 circles with the necessary spectrum for
$340 million but managed to sell a 45-percent stake in the company to UAE's Etisalat for $900
million. This swelled its valuation to $2 billion without a single subscriber.
- Another new player, Unitech, paid $365 million as licence fee but sold a 60-percent stake to
Norway's Talenor for $1.36 billion, taking its valuation to nearly $2 billion, again without a single
subscriber.
Similarly, another licensor, Datacom, later became Videocon Mobile and Stel now has large
stake by Bahrain Telecom. The other companies are Tata Tele, Idea Cellular, Loop Telecom,
Shyam Telelink and Spice.
The isue cropped up again after auction of airwaves for third-generation (3G) services that
fetched nearly $15billion and for broadband access, which fetched over $8.5 billion to the
exchequer. Accordingly the the notional loss on 2G was estimated at $12.8 billion to $38 billion.
This estimate was arrived at by the Compteoller and Auditor General of India and leaked to
some sections of the media, forcing Raja to regisn Nov 5 from the union council of ministers
holding the communications and IT portfolio.
The official auditor also said the entire process of spectrum allocation was undertaken in an
extremely arbitrary manner and that the advise of industry watchdog, Telecom Regulatory
Authority of India (TRAI), was ignored and misused.
Meanwhile, Janata Party leader Subramanian Swamy filed a suit in the Supreme Court seeking
judicial intervention in giving directions to the government and probe agencies to act against
Raja.
Acting on the petition, the Supreme Court had asked the solicitor general last October
why Prime MinisterManmohan Singh had not responded in a timely manner to a request by
Swamy to sanction proceedings against Raja.
Then in December, the apex court itself decided to monitor the probe, that was being conducted
by multiple agencies, including the CBI and the Enforcement Directorate. The agencies have to
submit their respective reports to the apex court by Feb 10.