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Fruit of the poisonous tree

2 February 2012

When the rot runs deep, partial remedies won't do. By cancelling the 122 licences for 2G spectrum that were the product of an illegal policy process that was contrary to public interest and violative of constitutional principles, the Supreme Court has struck a blow for justice, transparency and ethical business practices. For those business houses used to bending or breaking laws to rake in excess profits, Thursday's verdict is a lesson that will forever remain etched in their institutional memory. The present case may relate to the telecom sector but there is hardly any industry in India today where unscrupulous companies have not sought to use their nexus with elected leaders and government officials to get ahead in their quest for quick and easy profits. Influence peddling and rent seeking have been the bane of the Indian economy and reforms do not seem to have reduced their incidence. The lesson for corporate India from the Supreme Court's landmark judgment is that there is little to be gained and a lot to be lost from doing business this way. Senior ministers have gone out of their way to highlight the fact that Thursday's judgment places former Telecom minister A. Raja at the centre of the 2G scam. The Court also records how he disregarded the advice of the Prime Minister and the Finance Ministry at various points during the formulation and implementation of the policy of first come, first served. But even if the letters and notes cited in the judgment provide adequate legal cover for Dr. Manmohan Singh and Finance Minister P. Chidambaram two weeks from now, the trial court will rule on whether the latter has anything to answer for the United Progressive Alliance government cannot escape political culpability. Here was a case where Mr. Raja went against the stated advice of the Prime Minister. The fact that several companies were cherry-picked from the pool of spectrum applicants was known, as was the fact that some made huge profits by quickly disposing of the precious national resource they had been allocated so cheaply. Even if we accept that Mr. Raja took the UPA leadership for a ride, what is inexplicable and unforgivable is the government's failure immediately to investigate the scam despite its broad contours being so visible. Even after the Comptroller & Auditor General's magisterial report exposed what had transpired, senior ministers refused to accept the fact that there had been any loss to the exchequer. If today the UPA stands politically exposed, it is as much for the way it has dealt with the post-scam fallout as for the original sin of failing to sell spectrum through a transparent process.

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