Author: Mudit Bhati, Faculty of Law, BHU
INTRODUCTION
The 2G Spectrum Scam, one of the largest corruption scandals in India’s history, shocked the political and corporate landscape of the country. The scam, which emerged in the year 2008 during the allocation of 2G spectrum licenses for mobile telecommunication services, revealed massive irregularities and misuse of power. This alleged fraud, pegged at a presumptive loss of Rs.1.76 lakh crore by the CAG (Comptroller and Auditor General) of India, brought to light the gaps in policy implementation and regulatory oversight.
This article explores the origins, the legal and political implications, the modus operandi, and the eventual outcome of the case in detail.
Background of this 2G Spectrum Scam
Natural resources are all that resources which exists in nature without the actions of humankind. This includes all natural characteristics such as magnetic, gravitational, and electrical nothing but a range of electromagnetic wave which is used as a communication carrier. These are natural resources because of their limited availability. We cannot use same spectrum for multiple purpose at one particular area. If we see the demand of spectrum it is huge and continuously increasing. We are getting limited data speed on 3G and 4G just because of scarcity of spectrum. In India, the government allocates spectrum to telecom operators to provide services. Historically, spectrum was allocated either through administrative methods or auctions. In 2008, spectrum for 2G (Second generation) telecom services was allocated using the first-come-first-serve (FCFS) policy, bypassing competitive auctions. The controversy stemmed from allegations that spectrum licenses were issued to telecom operators in a non-transparent manner, causing significant losses to the Indian government.
Key Issues Involved
1) Underpricing of spectrum:
● The spectrum licenses were sold in 2008 at prices set in 2001, ignoring the significant growth in demand for telecom services.
● The licenses were issued on a “first-come, first-serve” basis instead of through competitive bidding, which could have fetched higher revenues.
2) Favoritism and Corruption:
● It was alleged that several companies that received licenses did not meet the eligibility criteria but were favored due to political connections.
● Bribes were reportedly paid to governments officials and ministers.
3) Financial loss to the national treasury:
● The CAG (Comptroller and Auditor General) of India estimated the potential loss of Rs.1.76 lakh crore to the national treasury due to undervaluation of spectrum.
Key Figures Involved
1) A. Raja – The then Union Minister for telecommunications and the alleged mastermind of the scam.
2) Kanimozhi – The daughter of Tamil Nadu Chief Minister M. Karunanidhi and Member of Parliament of DMK party. She was accused of receiving bribes.
3) Corporate Executives – Senior officials from companies like Swan Telecom, Unitech wireless, and other were implicated.
Timeline
● September 25, 2007: The Telecom Ministry announces October 1, 2007, as the application deadline.
● October 1, 2007: 575 applications from 46 firms were being received by Department of Telecom.
● November 2, 2007: Prime Minister assigned A. Raja to maintain fairness in license allocation and revise fees, Raja allegedly rejects several PM recommendations in a written response.
● November 22, 2007: Finance Ministry writes to Department of Telecom raising concerns over the procedure adopted.
● January 10, 2008: Department of Telecom decides to issue licenses on first-come-first-serve basis (FCFS), preponing cut-off date to September 25. Later in the day, DoT says those who apply between 3:30 and 4:30 pm would be issued licenses.
● 2008: Swan Telecom, Unitech and Tata Teleservices divested a portion of their stakes at significantly higher valuations to Etisalat, Telenor and DoCoMo respectively.
● 2009: CVC (Central Vigilance Commission) directs CBI to investigate the matter.
● November 14-15, 2010: A. Raja resigns as Telecom Minister. Kapil Sibal assigned additional responsibility of the Telecom Ministry.
● February 11, 2010: Supreme Court asks CBI to bring under its scanner corporate houses which were beneficiaries of the 2G spectrum. A. Raja remanded to CBI custody for four days by a special CBI court along with Balwa (Swan Telecom corporate promoter).
● February 17-18, 2011: Raja was remanded to judicial custody and sent to Tihar jail. Balwa too jailed.
● March 14, 2011: The Delhi High Court establishes a special court to handle 2G cases exclusively.
This alleged scam was touted as the biggest in India’s history and The CAG report estimating a national loss of Rs 1.76 lakh crore to national treasury.
Supreme Court’s Landmark Judgement (2012):
1) Cancellation of licenses: The Supreme Court canceled 122 telecom licenses issued during the allocation process, declaring the FCFS policy arbitrary and unconstitutional.
2) Policy Reforms: The hon’ble ordered that future spectrum allocations should be conducted through transparent auctions.
Trial in the Special CBI Court:
● Charges: A. Raja was accused of deliberately undervaluing spectrum licenses to benefit certain companies.
Kanimozhi was accused of receiving kickbacks through Kalaignar TV, a media company linked to DMK.
● Prosecution’s Argument: The prosecution alleged a nexus between politicians, bureaucrats, and corporate entities.
Evidence included recorded conversations, financial transactions, and internal communications.
● Defense’s Argument: The accused argued that the FCFS policy had been in place since 2001 and was not a new practice.
They denied any wrongdoing, claiming the allocation process was fair and transparent.
● December 21, 2017: Special Court acquits A. Raja, Kanimozhi and all other defendants in the case.
Special CBI judge OP Saini addressed a crowded courtroom: “I have absolutely no hesitation in holding that prosecution has completely failed to prove any charge against the accused, made in its well-choreographed charge-sheet”. Judge Saini sharply observed in a 2000 page ruling that “Some people created a scam by artfully arranging a few selected facts and exaggerating things beyond recognition to astronomical levels”.
In response, Finance Minister Arun Jaitley referred to the 2012 SC ruling: “That this was a corrupt, dishonest policy was upheld by the SC in February 2012. Each and every case of spectrum allocation was quashed by the SC as Unfair and arbitrary”.
Subramanian Swamy said ‘This is a bad judgement. On appeal, this judgement will be set aside’. Referring to Kapil Sibal’s zero loss theory, Subramanian said: “This isn’t final conclusion. Congress happiness is short-lived”. Swamy conveyed that “Judge OP Saini in his report said he failed to understand the point the CBI trying to establish”.
Economic Impact of this Scam:
1) Investor Confidence: The scam raised concerns about corruption in India, affecting investor confidence.
2) Policy Changes: The government adopted a competitive auction model for future spectrum allocations, ensuring greater transparency.
Conclusion
The 2G Spectrum scam case remains as one of the biggest scam and landmark case in the history of India. While the accused were acquitted, the case exposed systemic flaws in governance and resource allocation. The subsequent policy reforms, including the adoption of spectrum auctions, have set new standards for transparency and accountability.
Despite the controversies surrounding the loss estimates and legal proceedings, the case underscored the importance of vigilance in public administration and strengthened India’s democratic institutions.
FAQs
1) What was the 2G Spectrum Scam?
The 2G Spectrum case refers to the claims of massive corruption during the allocation of 2G mobile telecommunication licenses in India in 2008. It involved the underpricing of spectrum licenses, resulting in a significant loss to the national treasure.
2) What was the estimated loss caused by this scam?
The CAG of India estimated the loss to be around Rs 1.76 lakh crore. However, this figure was debated.
3) How this scam uncovered?
The scam came to light following media reports and investigations that highlighted irregularities
in the allocation of spectrum and licenses.
4) How this scam affected the telecom industry?
The scam led to the cancellation of 122 telecom licenses by the SC in 2012, causing disruptions in
the sector and affecting investor confidence.
5) What is the current status of this 2G Spectrum case?
Following the 2017 acquittals, the case is under appeal in the Delhi High Court, but as of now, no further convictions have been made.
