2G Spectrum Scam: Presentation By

2G SPECTRUM
SCAM
Presentation By,
Introduction
• What is 2G?
• “2G” means: ‘Second-Generation Wireless Telephone Technology’
• 2G was relatively new technology in the field of mobile.
• 2G spectrum was the revolutionary technology in their time, it comes with

some more benefits.
1. SMS facility was first started with network.
2. Safe for the use, means security level was high.
3. Environmental conditions was very good for this network & no

network shortage was there.
2G Scam
• The 2G spectrum scam involved officials and ministers in the Government of India
illegally undercharging mobile telephony companies for frequency allocation
licenses, which they would use to create 2G subscriptions for cell phones. According
to a report submitted by the Comptroller and Auditor General based on money
collected from 3G licenses, the loss to the exchequer was 176,379 crore (US$38.27
billion).
• The issuing of the 2G licenses occurred in 2008, but the scam came to public notice
when the Indian Income Tax Department investigated political lobbyist Niira Radia
and the Supreme Court of India took Subramaniam Swamys complaints on record
[With Case type : Writ Petition(Civil),Case No:10, Year:2011]. The case details of
the main PIL filed with the supreme court is Type : Writ Petition(Civil),CaseNo:423,
Year:2010.
Who was the person behind scam?
• One of the main person behind the India’s Largest Fraud. A. Raja (Born May 10, 1963,
Perambalur, Tamil Nadu, India) is an Indian politician from the Dravida Munnetra
Kazhagam (DMK) political party.
• He is a member of the 15th Lok Sabha representing the Nilgiris constituency of Tamil
Nadu. Raja was first elected to the Lok Sabha in1996 and first served as minister of
state from 1999 to 2003. On being re-elected to the Lok Sabha in 2004, he became a
cabinet minister in the UPA government. In 2007, he became cabinet minister for
communication and information technology.
• On being re-elected in 2009 he was again appointed cabinet minister for

communication and information technology until being tainted in the 2G spectrum
scam and resigning in 2010.
What Are The Charges On Former
Telecom Minister A Raja?
• CHEAP TELECOM LICENSES
Entry fee for spectrum licenses in 2008 pegged at 2001 prices Mobile subscriber base
had shot up to 350 million in 2008 from 4million in 2001.
• NO PROCEDURES FOLLOWED
1.Rules changed after the game had begun.
2.Cut-off date for applications advanced by a week.
3.Licenses issued on a first-come-first-served basis.
4.No proper auction process followed, no bids invited.
5.A.Raja. ignored advice of TRAI, Law Ministry, Finance Ministry.
6.TRAI had recommended auctioning of spectrum at market rates.

Favoritism, Corporates Encase
Premium
• Unitech, Swan Telecom got licenses without any prior telecom experience.
• Swan Telecom given license even though it did not meet eligibility criteria.
• Swan got license for Rs.1537 crore, sold 45% stake to Etisalat for Rs.4200
crore.
• Unitech Wireless got license for Rs. 1661 crore, sold 60% stake for Rs. 6200
crore.
• All nine companies paid DOT only Rs.10,772 crore for 2G licenses.
IMPACT ON STOCK MARKETS
• The first casualty in Stock Markets once Raja was arrested was DB Realty.
DB Realty had given 200+ crores to Kalaignar TV (owned by Karunanidhis
Wife) .
• The news led to 20% fall in the stock prices of DB Realty.Sun TV had its
shares fall by 10% on the next day following rumors of Kalanidhi Maran
having stake in Kalaignar TV.SUN TV COO refused the allegations.
• Swan Telecom Chief Balwa was arrested on Feb 8 and this led to rumors of
links with Anil Ambanis Reliance ADAG and it led to 20% fall of his stocks.
Its reported that nearly 2 Billion USD was eroded from his stocks .
• Spicejet stocks went down after reports of investigation on Marans recent

takeover of Spicejet.
SHORTFALL OF MONEY
• A. Raja arranged the sale of the 2G spectrum licenses below their market value.
• Swan Telecom, a new company with few assets, bought a license for 1,537 crore
(US$333.53 million). [15] Shortly thereafter, the board sold 45% of the company
to Etisalat for 4,200 crore (US$911.4 million).
• Similarly, a company formerly invested in real estate and not telecom, the
Unitech Group, purchased a license for 1,661 crore(US$360.44 million) and the
company board soon after sold a 60% stake in their wireless division for 6,200
crore (US$1.35billion) to Telenor
Newspaper Clippings
Corporate Personalities Involved
• Anil Ambani - Reliance Group (ADAG) , Shahid Balwa - DB Realty and DB Etisalat
(Swan Telecom), Vinod Goenka - Dynamix Group Venugopal Dhoot - Videocon Group,
Prashant Ruia - Essar Group All of them have either been question by the CBI or are
prospective suspects in the scam.
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 and leaked creating the ‘Nira Radia tapes controversy’.
• Barkha Dutt, an NDTV journalist alleged to have lobbied for A.Rajas appointment as
minister.
• Vir Sanghvi, a Hindustan Times editor alleged to have edited articles to reduce blame
in the Nira Radia tapes.
Steps Taken By Government After
Scam
Government of India take some important steps looking forward in this Scam:
• Set up a special branch of CBI to look into the matter.
• Telecom Minister resigns his post after Scan.
• A Raja was also arrested by the Police.
• CBI is also interacting with the brothers of A Raja and some business men.
• In early November 2010 Jayalalithaa accused the Tamil Nadu state chief
minister M Karunanidhi of protecting A.Raja from corruption charges and
called for A. Rajas resignation.
• By mid November 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.
• 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.
• The CBI conducted raids on Raja and four other telecom officials - former telecom
secretary Siddharth Behura, Rajas personal secretary R K Chandolia, member
telecom K Sridhar and DoT deputy director general A K Srivastava on 8 December
2010 Raja, Behura and Chandolia were arrested on Feb 2nd 2011.
THANK YOU!

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2G SPECTRUM

• “2G” means: ‘Second-Generation Wireless Telephone Technology’

• 2G was relatively new technology in the field of mobile.

• 2G spectrum was the revolutionary technology in their time, it comes with

1. SMS facility was first started with network.

2. Safe for the use, means security level was high.

3. Environmental conditions was very good for this network & no

• On being re-elected in 2009 he was again appointed cabinet minister for

1.Rules changed after the game had begun.

2.Cut-off date for applications advanced by a week.

3.Licenses issued on a first-come-first-served basis.

4.No proper auction process followed, no bids invited.

5.A.Raja. ignored advice of TRAI, Law Ministry, Finance Ministry.

6.TRAI had recommended auctioning of spectrum at market rates.

• Spicejet stocks went down after reports of investigation on Marans recent

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