By Saurav Yadav, School of Law and Legal Studies
INTRODUCTION
What is Spectrum?
Spectrum is a natural resource used for wireless communication, such as mobile networks. It is as valuable as other natural resources like water, minerals, and land.
The Indian government can sell spectrum in two ways:
- Auction: Companies bid for the spectrum, and the highest bidder wins. This method ensures maximum revenue for the government.
- Fixed Price: The government sets a price, and companies can buy the spectrum at that price. This method can lead to favoritism if not managed properly.
The 2G Spectrum Sale (2007-2009)
During 2007-2009, A. Raja, the Communication and IT Minister under the Congress government, was responsible for allocating spectrum licenses. In 2008, he sold 122 licenses for 2G spectrum at a fixed price. The spectrum was sold at very low prices, significantly below its market value. The conditions set by A. Raja favored certain telecom companies, allowing them to gain spectrum unfairly. The sale process did not follow proper rules and regulations, leading to a lack of transparency.
The Indian government incurred a massive financial loss of 1.76 lakh crore rupees due to the fixed-price method and the favoritism involved in the sale. This loss was substantial because the spectrum was sold for much less than it was worth in the market.
Instead of opting for an auction, which would have maximized revenue, A. Raja chose the fixed-price method, leading to a significant loss for the government. This decision was seen as corrupt because it unfairly benefited certain companies, highlighting issues of favoritism and lack of transparency in the allocation process. The 2G Spectrum Scam remains a stark reminder of the importance of transparency and fairness in governmental transactions.
BEGINNING OF THE CASE
Between 2007 and 2009, A. Raja served as the Communication and IT Minister in the Congress government. In 2008, he allocated 122 licenses for 2G spectrum using a fixed price method, leading to a massive controversy.
KEY ISSUES
Raja sold the licenses at very low prices, bypassing proper rules and regulations. This method unfairly favored certain telecom companies. Initially, the application deadline was October 1, 2007, but Raja moved it up to September 25, 2007, without warning. This sudden change meant many companies couldn’t apply in time. On January 10, 2008, the day licenses were issued, companies were given only a few hours to submit cheques and documents. The companies favored by Raja were already prepared, while others struggled to meet the sudden deadline. Raja did not consult the Law and Finance ministries, which would have provided necessary oversight and prevented such irregularities.
CONSEQUENCES
- The low-priced licenses led to a significant financial loss for the government, estimated at ₹1.76 lakh crore.
- On November 16, 2010, the Comptroller and Auditor General of India (CAG) reported that Raja did not follow proper procedures and ignored critical advice from key ministries.
A. Raja’s allocation of 2G spectrum licenses favored certain companies through manipulated deadlines and ignored regulatory advice, causing a substantial financial loss to the government and raising serious concerns about corruption and transparency.
CHARGES ON FORMER TELECOM MINISTER A. RAJA
Cheap Telecom Licenses
- Underpriced Licenses: A. Raja set the entry fee for 2G spectrum licenses in 2008 at 2001 prices, despite the mobile subscriber base having grown from 4 million in 2001 to 350 million in 2008.
No Procedures Followed
- Changed Rules: Raja altered the rules for 2G spectrum allocation before the process began.
- Reduced Application Deadline: The application deadline was reduced by 25 days.
- Fixed Price Basis: Licenses were issued at a fixed price instead of through a proper auction process.
- Ignored Expert Advice: Raja ignored the recommendations of the Telecom Regulatory Authority of India (TRAI), Law Ministry, and Finance Ministry, which had advised auctioning the spectrum at market rates.
Key Individuals and Companies Named
- A. Raja: Former Telecom Minister.
- R.K. Chandolia: Raja’s personal secretary.
- Siddharth Behura: Former telecom secretary.
- Shahid Usman Balwa: Former MD of Swan Telecom.
- Corporate Entities: Reliance Telecom, Swan Telecom, and Unitech Wireless.
- Executives: Gautam Doshi (Reliance ADAG MD), Surendra Pipara (Reliance ADAG President), Hari Nair (Reliance ADAG VP), Sanjay Chandra (Unitech MD), and Vinod Goenka (Swan Director).
KEY ALLEGATIONS
- Underpriced Licenses: Licenses for 2G spectrum were sold at 2001 prices in 2008, causing a huge financial loss to the government.
- Irregular Allocation Process: Raja altered the application deadline, reducing it by 25 days, and issued licenses at a fixed price rather than through an auction.
- Ignoring Expert Advice: Raja ignored recommendations from the Telecom Regulatory Authority of India (TRAI), Law Ministry, and Finance Ministry, all of which advised auctioning the spectrum at market rates.
LEGAL CHARGES
- Criminal Conspiracy: Raja and others conspired to favor specific companies.
- Cheating and Forgery: Involved deceit and forgery in the allocation process.
- Abuse of Power: Raja and his associates misused their official positions.
- Prevention of Corruption Act: Various sections under this act were applied.
DETAILS FROM THE CHARGE SHEET
- Manipulation and Favoritism: The charge sheet alleges Raja, soon after becoming telecom minister, appointed Chandolia and Behura to key positions to execute their plan. They manipulated the allocation process to favor Swan Telecom and Unitech, which were promoted by individuals known to Raja.
- Ignored Legal Opinions: Raja ignored the Law Ministry’s advice and set cutoff dates to benefit Swan and Unitech.
- First-Come-First-Serve Basis: The policy was redefined to benefit specific companies, bypassing existing rules.
- Technology and Spectrum Allocation: Raja ignored TRAI’s recommendations and allocated spectrum to Swan in the Delhi circle, unfairly denying other companies like Tata Teleservices and Spice Communications.
Financial Impact
- Loss to the Government: The actions of Raja and his associates led to a loss of ₹30,984 crore to the state exchequer as reported by the Comptroller and Auditor General (CAG) of India.
In summary, A. Raja and his associates are accused of manipulating the 2G spectrum allocation process to favor certain companies, ignoring legal advice, and causing significant financial loss to the government, resulting in various criminal charges.
THE ACCUSED
- Ex- telecom minister A. Raja
- Ex-telecom secretary Siddharth Behura
- Raja’s PS R K Chandolia (right)
- Swan promoter Shahid Usman Balwa
- Unitech MD Sanjay Chandra
- Vinod Goenka, director of Mumbai-based DB Realty
- Gautam Doshi, group MD of Reliance Telecom
- Hari Nair, Reliance ADAG senior vice-president
- Surendra Pipara, group president, Reliance ADAG
- Swan Telecom
- Reliance Telecom
- Unitech Wireless
Role of the Comptroller and Auditor General (CAG) in the 2G Spectrum Case
The Comptroller and Auditor General (CAG) played a crucial role in uncovering the 2G spectrum scam. Here’s a simplified explanation of their involvement:
Background and Report
- Time Frame: The CAG’s report examined the period from 2003-04 to 2009-10.
- Purpose: The report was prepared for submission to the President of India under Article 151 of the Constitution.
- Content: The report focused on the issuance of licenses and allocation of 2G spectrum by the Department of Telecommunications, part of the Ministry of Communication and Information Technology.
IMPACT OF THE CAG REPORT
- Financial Loss: The CAG estimated that the government suffered a loss of ₹1.76 lakh crore due to the underpricing of licenses.
- Legal Proceedings: The findings of the CAG report led to further investigations and legal actions, including charges against former Telecom Minister A. Raja and other officials.
- Public Awareness: The report brought significant public attention to the mismanagement and corruption involved in the 2G spectrum allocation.
In summary, the CAG’s report highlighted major financial and procedural irregularities in the allocation of 2G spectrum licenses, leading to legal action and widespread public awareness about the scam.
KEY ISSUES IN THE ALLOCATION PROCESS
- Fixed Price Allocation: Licenses were sold at outdated 2001 prices in 2008, despite the rapid growth in the telecom sector.
- Lack of Consultation: The high-powered Telecom Commission, which includes members from various ministries, was not consulted regarding the TRAI recommendations of August 2007.
- Ignoring Prime Minister’s Suggestions: The Prime Minister had advised a fair and transparent auction process to adjust the entry fee for spectrum licenses. However, A. Raja disregarded this advice, justifying his decision by stating that TRAI and the Telecom Commission did not recommend auctions and that it would be unfair to new applicants.
ISSUES OF ELIGIBILITY AND FAIRNESS
The Department of Telecommunications (DoT) was found to have lacked due diligence in verifying the eligibility of applicants for the licenses. Out of the 122 licenses issued, 85 were given to companies that did not meet the basic eligibility criteria. These companies had submitted incomplete or fictitious documents and suppressed facts to obtain the licenses.
COURT PROCEEDINGS AND VERDICT
In November 2010, the Comptroller and Auditor General (CAG) reported that A. Raja did not consult the Telecom Commission, and did not follow the recommendations of the Law and Finance ministries. This resulted in a loss of ₹1.76 lakh crore to the state exchequer. The CBI charge sheet listed 12 individuals and organizations, including A. Raja, his secretary R.K. Chandolia, former telecom secretary Siddharth Behura, and MD of Swan Telecom Shahid Usman Balwa, as accused.
The CBI charge sheet, which was 127 pages long with 88,000 annexures, detailed how A. Raja and others manipulated the spectrum allocation process to benefit specific companies like Reliance Telecom, Swan Telecom, and Unitech Wireless. It also included high-profile names from Reliance Anil Dhirubhai Ambani Group (ADAG) and Unitech.
LEGAL CHARGES
The accused were charged with criminal conspiracy, cheating, forgery, and various sections under the Prevention of Corruption Act. Specifically, A. Raja and his associates were charged with abusing their official positions to benefit certain companies by manipulating the allocation process and disregarding established guidelines and advice from higher authorities.
COURT VERDICT
On December 21, 2017, a special CBI court acquitted all 18 accused, including A. Raja and K. Kanimozhi. The court found that the prosecution failed to prove the charges. Special Judge O.P. Saini stated that the charge sheet was based on misreading, selective reading, and irrelevant reading of official records. The court noted that the witnesses did not support the oral statements they had made during the investigation when they testified in court.
Despite the acquittal, the verdict did not overturn the Supreme Court’s earlier judgment that had declared the 2G spectrum allocation process unlawful. This Supreme Court ruling had led to the cancellation of the licenses issued during the allocation.
CONCLUSION
The 2G spectrum case highlighted significant flaws in the allocation process, including lack of transparency, consultation, and adherence to proper procedures. The financial implications were substantial, and while the CBI court acquitted the accused due to insufficient evidence, the case underscored the need for stricter regulatory oversight and adherence to fair practices in spectrum allocation.
FAQs on the 2G Spectrum Case
1. What is spectrum?
- Spectrum is a natural resource used for wireless communication, essential for mobile networks. It is as valuable as other natural resources like water, minerals, and land.
2. How can the Indian government sell spectrum?
- Spectrum can be sold through two methods:
- Auction: Companies bid for the spectrum, with the highest bidder winning, ensuring maximum revenue for the government.
- Fixed Price: The government sets a price, and companies can buy the spectrum at that price, which can lead to favoritism if not managed properly.
3. What was the 2G Spectrum Sale (2007-2009)?
- During 2007-2009, A. Raja, the Communication and IT Minister, allocated 122 licenses for 2G spectrum at a fixed price, significantly below market value. This process lacked transparency and favored certain telecom companies, leading to a massive financial loss for the government.
4. What were the key issues in the 2G spectrum allocation process?
- Low Prices: Licenses were sold at 2001 prices in 2008.
- Procedural Irregularities: Rules were changed abruptly, and proper consultations were bypassed.
- Favoritism: Certain companies were unfairly favored, leading to a lack of transparency.
5. What were the consequences of the 2G spectrum allocation?
- The government incurred a financial loss of ₹1.76 lakh crore.
- Legal and public outcry over the irregularities and favoritism in the allocation process.
- Increased scrutiny and demand for transparency in governmental transactions.
6. Who were the key individuals and companies involved in the 2G spectrum case?
- Individuals: A. Raja (former Telecom Minister), R.K. Chandolia (Raja’s personal secretary), Siddharth Behura (former telecom secretary), and executives from Swan Telecom, Unitech, and Reliance Telecom.
- Companies: Swan Telecom, Unitech Wireless, and Reliance Telecom.
7. What were the legal charges against A. Raja and others?
- Criminal Conspiracy: Conspiring to favor specific companies.
- Cheating and Forgery: Involved deceit and forgery in the allocation process.
- Abuse of Power: Misusing official positions.
- Prevention of Corruption Act: Various sections under this act were applied.
8. What was the role of the Comptroller and Auditor General (CAG) in the 2G spectrum case?
- The CAG’s report highlighted major financial and procedural irregularities, estimating a loss of ₹1.76 lakh crore to the government. The report led to further investigations and legal actions.
9. What were the court proceedings and verdict in the 2G spectrum case?
- In November 2010, the CAG reported procedural lapses and financial losses.
- The CBI charge sheet accused several individuals and companies of conspiracy and corruption.
- On December 21, 2017, a special CBI court acquitted all accused due to insufficient evidence, despite the Supreme Court previously declaring the allocation process unlawful.
10. What lessons were learned from the 2G spectrum case?
- The importance of transparency and adherence to proper procedures in spectrum allocation.
- The need for stricter regulatory oversight to prevent favoritism and corruption.
- The significance of public and governmental awareness in preventing similar issues in the future.
