From Wikipedia, the free encyclopedia The 2G spectrum scandal involved officials 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. The shortfall between the money collected and the money which the law mandated to be collected is estimated to be 1,76,379 crore (1.763 trillion) rupees (roughly equivalent to 39 billion US dollars) based on 3G auction prices. The issuing of licenses occurred in 2008, but the scam came to public notice when the Indian Income Tax Department was investigating political lobbyist Nira Radia. The government's investigation and the government's reactions to the findings in the investigation were the subject of debate, as were the nature of the Indian media's reactions. The discussion around the reactions to the 2G spectrum scam became known in the media as the Nira Radia tapes controversy. Much of the credit of bringing this whole scam into public light goes to J.Gopikrishnan, a reporter from The Pioneer. [1]

Contents
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1 Parties accused of involvement o 1.1 Politicians involved o 1.2 Bureaucrats involved o 1.3 Corporate Executives involved o 1.4 Film and Entertainment persons involved o 1.5 Corporations accused o 1.6 Media persons accused 2 Shortfall of money 3 Relationship between media and government o 3.1 Ratan Tata petitions over leak 4 Chronology of Events and Investigation 5 Response to scam 6 References 7 External Links

[edit] Parties accused of involvement

The selling of the licenses brought attention to three groups of entities - politicians and bureaucrats who had the authority to sell licenses, corporations who were buying the licenses and media professionals who mediated between the politicians and the corporations.

[edit] Politicians involved

A. Raja - the Minister of Communications and Information Technology who sold the licenses M. K. Kanimozhi - Rajya Sabha MP

[edit] Bureaucrats involved

Siddharth Behura - Former Telecom Secretary RK Chandolia - Raja's private secretary

[edit] Corporate Executives involved

Gautam Doshi - Managing Director of Reliance Anil Dhirubhai Ambani Group Surendra Pipara - senior vice- President of Anil Dhirubhai Ambani Group and senior vice-President of Anil Dhirubhai Ambani Group and Reliance Telecom Hari Nair - senior vice-president of Anil Dhirubhai Ambani Group Sanjay Chandra - Managing Director of Unitech Wireless (Tamil Nadu) Ltd Shahid Balwa - DB Realty promoter Vinod Goenka - DB Realty promoter Sharath Kumar - Managing Director of Kalaignar TV Rajiv Agarwal and Asif Balwa (younger brother of Shahid Balwa) - chief executives of Kusegaon Fruits and Vegetables

[edit] Film and Entertainment persons involved

Karim Morani - Cineyug Media and Entertainment Ltds Director

[edit] Corporations accused

Unitech Group a real estate company entering the telecom industry with its 2G bid; sold 60% of its company stake at huge profit to Telenor after buying licensing[2] Swan Telecom sold 45% of its company stake at huge profit to Emirates Telecommunications Corporation (Etisalat) after buying licensing[2] Loop Mobile Videocon Telecommunications Limited S Tel Reliance Communications

[edit] Media persons accused

Nira Radia, a corporate lobbyist whose conversations with politicians and corporate entities were recorded by the government and leaked creating the Nira Radia tapes controversy Barkha Dutt, an NDTV journalist alleged to have lobbied for A. Raja's appointment as minister Vir Sanghvi, a Hindustan Times editor alleged to have edited articles to reduce blame in the Nira Radia tapes

[edit] 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 Rs. 1537 crore.[3] Shortly thereafter, the board sold 45% of the company to Etisalat for Rs. 4200 crore. Similarly, a company formerly invested in real estate and not telecom, the Unitech Group, purchased a license for Rs. 1661 crore and the company board soon after sold a 60% stake in their wireless division for Rs. 6200 crore to Telenor.[3] The nature of the selling of the licenses was that licenses were to be sold at market value, and the fact that the licenses were quickly resold at a huge profit indicates that the selling agents issued the licenses below market value. Nine companies purchased licenses and collectively they paid the Ministry of Communications and Information Technology's telecommunications division Rs. 10,772 crore.[3] The amount of money expected for this licensing by the Comptroller and Auditor General of India was 1,76,700 crore.[4] The report on the details of the financials involved framed by CAG could be found at the website of Comptroller and auditor general of India (Supreme audit institution of Government of India).[5]

[edit] Relationship between media and government

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.[6] 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.[6]

[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, the Department of Telecommunication, and the Department of Information Technology as respondents in the petition.[7]

[edit] Chronology of Events and Investigation

May, 2007: A Raja takes over as Telecom Minister. [8] Aug, 2007: Process of allotment of 2G spectrum for telecom along with Universal Access Service (UAS) Licences initiated by the Department of Telecommunications (DoT). Sept 25, 2007: Telecom Ministry issues press note fixing deadline for application as October 1, 2007. Oct 1, 2007: DoT receives 575 applications for UAS licences of 46 companies. [9] Nov 2, 2007: The Prime Minister writes to Raja directing him to ensure allotment of 2G spectrum in a fair and transparent manner and to ensure that licence fee was properly revised. Raja writes back to the Prime Minister rejecting many of his recommendations. Nov 22, 2007: Finance Ministry writes to DoT raising concerns over the procedure adopted by it. Demand for review rejected. Jan 10, 2008: DoT decides to issue licences on first-come-first-serve basis, preponing the cut-off date to September 25, from October 1, 2007. Later on the same day, DoT

posted an announcement on its website saying those who apply between 3.30 pm and 4.30 pm would be issued licences in accordance with the said policy. [10][11] 2008: Swan Telecom, Unitech and Tata Teleservices sell off a part of their stakes at much higher rates to Etisalat, Telenor and DoCoMo, respectively.[12][13][14] May 4, 2009: An NGO Telecom Watchdog files complaint to the Central Vigilance Commission (CVC) on the illegalities in the spectrum allocation to Loop Telecom. May 19, 2009: Another complaint was filed to the CVC by Arun Agarwal, highlighting grant of spectrum to Swan Telecom at throwaway prices. 2009: CVC directs CBI to investigate the irregularities in allocation of 2G spectrum. July 1, 2009: Delhi HC holds advancing of cut-off date as illegal on a petition of telecom company S-Tel. [15] Oct 21, 2009: CBI registers a case and files an FIR against unknown officers of DoT and unknown private persons/companies under various provisions of IPC and Prevention of Corruption Act. Oct 22, 2009: CBI raids DoT offices. [16][17] [18] Nov 16, 2009: CBI seeks details of tapped conversation of corporate lobbyist Niira Radia to find out involvement of middlemen in the grant of spectrum to telecom companies. Mar 13, 2010: SC upholds Delhi HC verdict on cut off date advancement as illegal [19]
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Mar 31, 2010: CAG says that there was large scale irregularities in the spectrum allocation. Apr 2, 2010: CBI DIG Vineet Agarwal and DG I-T Milap Jain, who were investigating the case, transferred. May 6, 2010: Telephonic conversation between Raja and Niira Radia made public by the media. [21] May, 2010: NGO Centre for Public Interest litigation moves the Delhi High Court seeking investigation into the scam by SIT or CBI. May 25, 2010: Delhi HC dismisses the petition. Aug, 2010: Appeal filed in the Supreme Court against the High Courts order. Aug 18, 2010: HC refuses to direct the Prime Minister to decide on a complaint by Janata Party chief Swamy seeking sanction to prosecute Raja for his involvement in 2G scam. Sept 13, 2010: SC asks government, Raja to reply within 10 days to three petitions filed by CPIL and others alleging there was a Rs 70,000 crore scam in the grant of telecom licences in 2008. Sept 24, 2010: Swamy moves SC seeking direction to the PM to sanction prosecution of Raja. Sept 27, 2010: Enforcement Directorate informs SC of probe against firms suspected to have violated FEMA. Says cant deny or confirm now Rajas involvement in the scam. Oct 8, 2010: SC asks government to respond to CAG report about the scam. Oct 21, 2010: Draft reports of CAG placed before the Supreme Court. Oct 29, 2010: SC pulls up CBI for its tardy progress in the investigations into the scam.[22][23] Nov 10, 2010: CAG submits report on 2G spectrum to government stating loss of Rs 1.76 lakh crore to exchequer. Nov 11, 2010: DoT files affidavit in SC saying CAG did not have the authority to question the policy decision as per which licence were issued to new players in 2008. Nov 14, 2010: A Raja resigns as Telecom Minister [24] [25]

Nov 15, 2010: Kapil Sibal given additional charge of Telecom Ministry. [26][27] Nov 20, 2010: Affidavit on behalf of PM filed in Supreme Court. Rejects charge of inaction on Swamys complaint.[28][29][30] Nov 22, 2010: CBI tells SC it will file charge sheet in the case within three months. Nov 22, 2010: CBI tells SC role of corporate lobbyist Niira Radia would be questioned by it. Nov 24, 2010: SC reserves verdict on Swamys plea seeking direction to PM for grant of sanction to prosecute Raja. Nov 25, 2010: SC ticks off CBI for not questioning Raja. Nov 29, 2010: CBI files status report on 2G spectrum scam probe. Nov 30, 2010: SC questions CVC P J Thomass moral right to supervise CBIs probe into 3G spectrum scam as he himself was Telecom Secretary at that point of time. Dec 1, 2010: SC directs original tapes containing conversation between corporate lobbyist Niira Radia and others be handed over to it. Dec 1, 2010: Raja questions CAG findings in the SC. Dec 2, 2010: Government places recorded tapes in the SC. Dec 2, 2010: SC comes down heavily on Raja for bypassing and overruling PMs advice to defer allocation of 2G spectrum by a few days. Dec 8, 2010: SC favours including in the probe period since 2001 when first-comefirst-serve was the norm for spectrum allocation. Dec 8, 2010: SC asks Centre to consider setting up of a special court to try 2G spectrum scam case. Dec 8, 2010: ED submits report. Says money trail covers 10 countries, including Mauritius. Dec 14, 2010: Another PIL in SC seeking cancellation of new telecom licences and 2G spectrum allocated during Rajas tenure. Dec 15, 2010: Swamy files petition in a Delhi court seeking his inclusion as a public prosecutor in 2G spectrum case. Dec 15, 2010: Swamy mentions in complaint that Raja favoured ineligible private companies Swan Telecom Pvt Ltd and Unitech Wireless Ltd in allocating the spectrum. Dec 16, 2010: SC decides to monitor the CBI inquiry [31][32][33] Jan 4, 2011: Swamy moves SC seeking cancellation of 2G spectrum licences. Jan 10, 2011: Supreme Court issues notice to Centre on the plea seeking cancellation of 2G licenses. Also issues notices to 11 companies which allegedly did not fulfill the roll-out obligations or were ineligible. Jan 30, 2011: Governments decision to regularise licences of the companies which failed to meet the deadline for roll-out obligation challenged in the Supreme Court. Feb 2, 2011: Raja, former Telecom Secretary Siddartha Behura and Rajas former Personal Secretary R K Chandolia arrested and next day they were remanded in CBI custody. Feb 8, 2011: Raja remanded to two more days of CBI custody. Behura and Chandolia sent to judicial custody. Feb 8, 2011: Shahid Usman Balwa, promoter of Swan Telecom, arrested by CBI. Feb 10, 2011: SC asks the CBI to bring under its scanner corporate houses which were beneficiaries of the 2G spectrum. Raja remanded to CBI custody for four more days by a special CBI court along with Balwa. Feb 14, 2011: Rajas CBI custody extended for three more days. Balwas custody extended for four days. Feb 17, 2011: Raja sent to Tihar Jail under judicial custody.

Feb 18, 2011: Balwa sent to judicial custody. Feb 24, 2011: CBI tells a Delhi court that Balwa facilitated transaction to Kalaignar TV. Feb 28, 2011: Raja seeks judicial proceedings through video conferencing stating that he faces threat to life from fellow prisoners. Mar 1, 2011: CBI tells SC that 63 persons are under scanner. Raja allowed by CBI court to appear before it via video-conferencing. Mar 14, 2011: The Delhi High Court sets up special court to deal exclusively with 2G cases. Balwa also allowed to appear via video-conferencing. Mar 29, 2011: SC permits CBI to file charge sheet on April 2 instead of March 31. Two more persons Asif Balwa and Rajeev Agarwal arrested. Apr 2, 2011: The CBI files its first charge sheet in the 2G spectrum allocation scam.
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Apr 25, 2011: CBI files second charge sheet and court issues summons to Kanimozhi, Sharad Kumar and Karim Morani taking cognizance of the charge sheet.[37][38][39] May 6, 2011: Kanimozhi and Sharad Kumar appear before court and file bail pleas while Morani sought exemption from appearance on medical ground.[40][41][42] May 7, 2011: Court reserves order on Kanimozhi and Sharad Kumars bail applications. May 14, 2011: Court defers order on their bail pleas for May 20. May 20, 2011: Court rejects bail pleas of Kanimozhi and Sharad Kumar and orders their forthwith arrest. June 20, 2011: SC rejects Kanimozhis bail plea[43][44][45] July 25, 2011: Arguments on Charge begins. Raja seeks to make Prime Minister and former finance minister P Chidambaram as witness. Sept 22, 2011: CBI defends Chidambaram in SC, blames DoT for all wrongs. Sept 26, 2011: CBI moves plea for framing fresh charge for criminal breach of trust against Raja, Chandolia and Behura. [46][47] Sept 29, 2011: CBI says role of Anil Ambani being probed, gives a virtual clean chit to Tata and Videocon group. Oct 9, 2011: CBI files FIR against Maran and his brother. Oct 10, 2011: The Supreme Court reservs notice against Subramanian Swamys plea for a probe into Home Minister Chidambarams role in the 2G scam.[48] Oct 22, 2011: Court finds prima facie evidence to put on trial all 17 accused including Raja on various counts like criminal conspiracy, breach of trust, cheating and forgery.
[49]

HINDUSTAN TIMES

In 2007-08, when the government issued 122 new telecom licences, several rules were violated and bribes were paid to favour certain firms. Several licences were issued to firms with no prior experience in the telecom sector or were ineligible or had suppressed relevant facts, CAG report said.

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Balwa retracts from plea seeking to make PM as witness in 2G case

The violations cost the exchequer $39 billion in lost revenue, the auditor said, equivalent to India's defence budget. The telecom ministry's process of issuing licences "lacked transparency and was undertaken in an arbitrary, unfair and inequitable manner," the auditor said. Police have accused Andimuthu Raja, the then-telecom minister, of having taken bribes from two firms which are now the local joint venture partners of Telenor and Etisalat . What was the fallout? The report sparked political outrage and the main opposition Bharatiya Janata Party all-butshut an entire session of parliament demanding a special parliamentary probe. Raja was forced to resign and was arrested over the report. The telecom ministry is considering whether to cancel some 85 licences which the audit report says were issued to firms which were ineligible for them. Many of India's biggest business names have been questioned, including billionaires Anil Ambani, chairman of Reliance ADA group, and Prashant Ruia, chief executive of Essar Group. A parliamentary panel probing the scandal questioned Ratan Tata as well as Anil Ambani. What does it mean for politics? Singh and the ruling coalition have been weakened by the events, and the BJP is seen as having regained political momentum it had lost after defeat in the 2009 federal elections. The Supreme Court criticised Singh for not acting quickly enough against Raja, a rare censure that was picked up by the BJP to accuse the government of shielding corrupt officials. The attacks have nearly paralysed the government but it is not in danger of collapsing as its slim majority is not expected to see defections by coalition partners and no one, including the BJP, wants a federal election now. The scandal has also touched Raja's regional DMK party, a leading ally of the ruling Congress party. Police say some of the bribes were routed through the DMK's television channel, controlled by the wife and daughter of the DMK party chief. DMK rules the large southern Tamil Nadu state, which goes to polls in April. The corruption cases could affect the electoral performance of the DMK-Congress coalition there. What does this mean for investment in India? While corruption itself has been largely shrugged off by investors, the regulatory uncertainty from the review of past government decisions is a source of concern to investors. The benchmark Mumbai stock index ended the March quarter as the world's worst performer, weighed down in part by worries over fallout from a spate of scandals.

If the telecom ministry does decide to cancel some or all of the 85 licences it is scrutinising, questions will be raised on whether foreign investors can trust Indian government contracts. The licences under review include those now held by Telenor and Etisalat's local ventures. It is too early to know whether licences will be cancelled, but pressure will be on the government not to do so because operators have invested millions of dollars in rolling out networks and cancelling them will inconvenience subscribers. The telecom ministry is also mulling imposing charges for spectrum it granted to telecom firms in the past and has levied fines on newer firms for not rolling out networks quickly enough. For years, India gave operators spectrum beyond contracted levels free of cost as they added subscribers. If the spectrum charges are imposed, market leaders Bharti Airtel and Vodafone would have to pay hundreds of millions of dollars in back-charges. For newer entrants, hefty fines could strain their finances and force them to exit.