2G scam: SC scraps 122 licences granted under Raja's tenure, trial court to decide on Chidambaram's rol

2G case: SC quashes 122 licences; PC gets a breather See photo

NEW DELHI: In a major development having implications for the corporate sector, theSupreme Court on Thursday cancelled the 122 2G spectrum licences granted by former telecom minister A Raja on the ground that they were issued in a "totally arbitrary and unconstitutional" manner. Imposing a fine of Rs five crore each on three telecom companies, which offloaded their shares after getting the licenses, the court directed regulator Telecom Regulatory Authority of India (TRAI) to make fresh recommendations on allocation of 2G licences. Asking the government to take steps on the recommendations of TRAI within a month, a bench comprising justices G S Singhvi and A K Ganguly said the allocation of spectrum will be done through the policy of auction within four months. The order came on petitions filed by NGO CPIL and Janata Party president Subramanian Swamy alleging scam in the allocation of spectrum licences by Raja in January, 2008 during the tenure of UPA-I government, on which the CAG had assumed the presumptive loss of upto Rs 1.76 lakhs. The 122 licences were given by Raja for over Rs 9,000 crore, while 3G auctions for a smaller number of licences had fetched the government a sum of Rs 69,000 crores. The companies that are set to lose on account of the cancellation of the licences are

Uninor (joint venture between Unitech and Telenor of Norway), Loop Telecom, Sistema Shyam (joint venture between Shyam and Sistema of Russia), Etisalat DB (joint venture between Swan and Etisalat ofUAE), S Tel, Videocon, Tatas and Idea. Among the 122 licences issued by Raja in January 2008 on first-come first-serve basis, Uninor was alloted 22 pan India licences, Loop 21, Sistema-Shyam 21, Etisalat-DB 15, S Tel 6, Videocon 21, Idea 9 and Tatas 3. Reacting to the Supreme Court judgement Uninor, which has launched services in most of the circles, expressed shock and said that the company has been treated unfairly. "We have been unfairly treated as we simply followed the government process we were asked to. We are shocked to see that Uninor is being penalised for faults the court has found in the government process," the company statement said. Noting that the order has not stopped the company operations for now Uninor said "we expect the authorities to ensure that our 36 million customers, 17,500 workforce and 22,000 partners are not unjustly affected." Other new operators said that they would examine the order before commenting on the future course of action. Trial court to decide on Chidambaram's role in 2G The Supreme Court on Thursday said the trial court will decide on Janata Party chief Subramanian Swamy's plea to make home minister Chidambaram a co-accused in the 2G spectrum allotment case, IANS reported. The apex court said that the trial court should decide the matter within two weeks. Special CBI Judge O P Saini, who is hearing a separate petition of Swamy to prosecute Chidambaram, has already reserved his order for February 4. (Read: SC refuses to ask CBI to probe role of Chidambaram in 2G case) (Read: BJP asks PM to sack Chidambaram) SC asks CBI to submit status reports on 2G probe to CVC The Supreme Court on Thursday asked the CBI to file status reports on its ongoing probe into the 2G spectrum allocation case to the Central Vigilance Commission (CVC).

The court's decision came on a plea for setting up a Special Investigation Team (SIT) to look into the 2G case, the bench asked CBI to submit status reports on further investigation into the matter to the CVC which will assist the court. The bench asked CBI to submit status reports on further investigation into the case to the CVC which will assist the court. Hailing the order, Swamy said the court's direction is a "de facto SIT". We can be proud of Supreme Court: Swamy after 2G order Janta Party leader Subramanian Swamy on Thursday welcomed the Supreme Court order cancelling 122 licences granted to telecom companies during the tenure of former communications minister A Raja. The country was proud of its Supreme Court, Swamy -- who had filed the original petition before the apex court -- told reporters after the landmark order. "This is the best judgment which could come... the country can be justifiably proud of the Supreme Court," Swamy, who had filed a petition in the Supreme Court, said. Licences to remain in place for 4 months Licences held by five companies including the local joint ventures of Norway's Telenor and Abu Dhabi's Etisalat were cancelled in the verdict, calling into question the stability of business contracts and regulation in India, Reuters reported. The Supreme Court ruling said the current licences will remain in place for four months, in which time the government should decide fresh norms for issuing licences, a lawyer involved in the case said. (Read: We have been unfairly treated, says Uninor) India's image as an investment destination was dented over the past year as the economy slowed, government reforms stalled and the telecoms scandals along with other high profile graft cases heightened concerns about government policies. Telenor has about 36 million subscribers in India and Etisalat has fewer, making them small players in a market dominated by Bharti Airtel, Vodafone and Reliance Communications. The telecoms scandal is the biggest of several that have emerged during Prime Minister Manmohan Singh's second term and has weakened him. Two ministers,

including former telecom minister Andimuthu Raja, who presided over the 2008 grant process, have resigned. Raja is in jail pending trial.
EW DELHI: In a major development having implications for the corporate sector, the Supreme Court today cancelled the 122 2G spectrum licences granted by former telecom minister A Raja on the ground that they were issued in a "totally arbitrary and unconstitutional" manner. The 122 licences were given by Raja for over Rs 9,000 crore, while 3G auctions for a smaller number of licences had fetched the government a sum of Rs 69,000 crores.

Telecom operators recently paid over Rs 1 lakh crore for buying 3G and broadband spectrum and require additional funding of $2-3 billion over the next six months for rolling out new network infrastructure. A number of operators are also looking at merger and acquisition possibilities for which money would be required Here is what top politicians and political parties had to say about the verdict:
Arun Jaitley, Leader of Opposition, Rajya Sabha "This whole scam has resulted in weakening domestic investment into India as well as FDI. India has been made a capital of crony capitalism by the UPA. This verdict smashed Kapil Sibal's zero loss theory." Ravi Shankar Prasad, Spokesperson, BJP: Chidambaram must be held accountable for the 2G scam. The credibilty of the government has been shattered and the Prime Minister along with Sonia Gandhi must own up."

NEW DELHI, MARCH 18: The Communications and IT Minister, Mr Kapil Sibal, has written to the Prime Minister, Dr Manmohan Singh, seeking his intervention in getting banks to start lending again to telecom companies. Over the past few months, both domestic and international banks have become wary of extending loans to telecom companies for fear of coming under the scanner of investigating agencies post 2G scam.
3G PAYMENTS

The Telecom Minister has also urged the Prime Minister to convene a meeting with the Finance Minister to resolve the issue, which is threatening to halt telecom operators' expansion plans. Many of these companies have borrowed heavily to pay the 3G auction fees. They are now facing difficulty in raising resources to undertake the very business that formed the basis of valuation of spectrum. This situation, if not remedied swiftly, could embroil the sector in a financial and legal quagmire. Even more importantly, it would be severely detrimental to the growth of the telecom sector as a whole, Mr Sibal wrote in his letter.

Telecom operators are finding it tough to raise fresh funds after the Supreme Court recently came down heavily on some banks for lending massive amounts to new 2G licensees by completely ignoring the risk factors. The Central Bureau of Investigation is also looking at the loans extended to some of the new players, including Swan and Unitech Wireless. Reportedly, there is reluctance among bankers to finance normal business activity in the sector. The cause is stated to be fear that any transaction may attract adverse attention from some investigating agency or judicial forum in the future. Hence, the belief that safety lies in avoiding financing the sector altogether, Mr Sibal said in his letter to the Prime Minister. Telecom operators recently paid over Rs 1 lakh crore for buying 3G and broadband spectrum and require additional funding of $2-3 billion over the next six months for rolling out new network infrastructure. A number of operators are also looking at merger and acquisition possibilities for which money would be required.
EXPANSION PLANS HIT

Mr Rajan Mathews, Director-General, Cellular Operators' Association of India, representing the GSM operators, said the lack of availability of funds is impacting operators' expansion plans. Over the past few months, we have seen a 20-24 per cent decline in foreign investments. Banks have also stopped lending to all operators, irrespective of whether the company is being investigated or not. The Government should clear the air on this issue and come out with a policy that ensures availability of funds to a critical and capital intensive sector like telecom, Mr Mathews said.

The buzz about 2G scam is witnessed over the last four years since 2008. It is the biggest scam ever taken place in India. The murmurs about Radia, A. Raja, Barkha Dutt, Ambani, P. Chidambaram, etc is all heard but still many are confused and striving to find out what is 2G scam and how it took place. Well help all those audiences to could not understand the2G scam. What is 2G spectrum? 2G spectrum is about number portability that allows users to change their service provider by retaining the original number. The snapshots of 2G scam are as follows:

In 2007, A Raja (Minister of Communication & Information Technology) said that there will be no auction for 2G spectrum unlike 3G & Winmax as recommended by TRAI. 2008 witnessed the segregation between 2G & 3G revenue mechanisms. COAI- Director General TV Ramachandran said that 3G will be acquired through an open auction to experience the benefits of broadband throughout the nation. For 2G spectrum A Raja followed the first come first serve approach whereas DOT announced that it would

accept the application for the same after October 1, 2007. But the applications accepted were those which were submitted before this date. Many companies did not get the spectrum because of the confusion about the cut-off date. There was something fishy here thats why Telecom Ministry opposed 2G spectrum auction because it would have demanded transparency. In lieu of which nearly 60million mobile subscribers could not be verified in India.

In 2010, Opposition alleged Congress led UPA government with the corruption related to 2G Scam. A. Raja lost his position in the cabinet reshuffle by PM, Manmohan Singh. CAG blamed A. Raja for violating the policies in handling 2G spectrum resulting in Rs. 1.39 trillion which was double then the former CAG report submitted to Supreme Court. With the relentless opposition pressure A Raja had to resign since he was scanned under the investigation of CBI demanded by Supreme Court. The battles between the

corporations & the political parties took place during this year.

In 2011, Kapil Sibbal was given the responsibility to further handle the scam. On February 02, 2011 A Raja was arrested by CBI causing a loss of Rs. 22000 crore. He was sent to Tihar Jail for 14 days under the judicial custody. CBI questioned DMK chief M Karunanidhis daughter Kanimozhi & his wife Dayallu Ammal on transfer of money from Cineyug to Kalainagar TV. They both share80% stake in it. Supreme Court asked DOT to explain the first come first service in detail. On March 22, 2011 A. Raja, Sharad Kumar (Kalainagar TVs managing director) , Shahid Balwa were arrested by CBI under the first charge sheet. The second charge sheet accused several others including Kanimozhi. In May, BJPs accusation demanded CBI to investigate P. Chidambrams role in the 2G scam. Pranab Mukherjee analyzed the scam & passed a letter to the Prime Minister, Manmohan Singh, asking P. Chidambarams resignation stating his direct involvement in the 2G scam. PMs speechlessness is shocking to the nation since the controversial note of 2G framed by officials passed though PMO i.e. Prime Ministers office.

The 2G Scam is the scam about the short fall of money that was supposed to be 39 billion dollar. Three major parties involved were Politicians, Corporations & Media. Politicians role we have already discussed. Medias Role in 2G Scam:

Nira Radias conversation with politicians and corporations was recorded & leaked. Barkha Dutt, NDTV Jounalist, was also found in the conspiracy threaded by A Raja. Vir Sanghavi, HTs editor was also accused for writing articles reducing blame on Nira Radia.

Corporations

in

2G

Scam:

Unitech Group (real estate company), Swan Telecom, Loop Mobile, Videocon Telecom, S Tel and eliance Communications had louder indulgence in the scam. TRANSACTION DETAILS

A Raja sold 2G spectrum to Swan Telecom @ Rs. 1537 crore in turn Swan sold 45% of its stake to Etisalat @ Rs. 4200 crore. A Raja sold 2G spectrum to Unitech Group @ Rs. 1661 crore in turn Swan sold 60% of its stake to Etisalat @ Rs. 6200 crore. These companies made a collective bribe to Ministery of Communication & IT @ Rs. 10, 772 core. The total money loss expected by CAG is Rs. 1, 76, 700 crore.

The above story is the composition of 2G scam. Tags: 2g, 2g scam, 2G Spectrum Scam, A. Raja, spectrum scam