A belated resignation

Late on Sunday night, India’s communications and information technology minister Andimuthu Raja quit his post. That he was rather reluctant to resign was evident not only from his recalcitrant demeanour but also from the subsequent utterances of his mentor and party boss, DMK chief and Tamil Nadu Chief Minister Muthuvel Karunanidhi who said his “beloved brother” was being asked to put in his papers merely to facilitate the functioning of Parliament which has been paralysed for days because of the spectrum scam.

Whether those responsible for the fraud will be punished in the foreseeable future remains to be seen. But what is sure is that India’s biggest scandal will not disappear from public memory in a hurry. It involves a loss to the national exchequer that has been estimated at over Rs 1,70,000 crore, not just by journalists or politicians, but by government auditors in the office of the Comptroller and General (CAG) of India, a constitutional authority. And to place this figure in context, the amount is more than three times the annual budget set aside for implementing the Mahatma Gandhi National Rural Employment Guarantee Act, said to be the world’s largest social security scheme.

In fact what now transpires is that journalists (including this correspondent) and independent experts grossly underestimated the sheer magnitude of the scandal. The broad contours of the scam were well-known for nearly two years now — a number of newspapers (notably The New Indian Express) and television channels had been going hammer and tongs at the former minister. The CAG report (which is going to be presented in Parliament soon) has placed an official stamp on the evidence through meticulous research and access to authentic documents.

The CAG report categorically states that the Department of Telecommunications (DoT) under Raja actively colluded with a clutch of companies that included not just companies in the Unitech group, the Swan group and the Shyam group. Another set of corporate entities that are part of the Tata, Reliance, Bharti and Videocon groups, among others, also gained indirectly. There were three clear dimensions to the scam. Some companies gained because of undervaluation of spectrum. Others benefited from the DoT’s decision to have a ‘technology neutral’ licensing regime — wherein operators using either the Global System of Mobile (GSM) communications or the Code Division Multiple Access (CDMA) could use both technologies to provide telecom services. The third category of beneficiaries included existing operators — the so-called ‘cartel’ that Raja claims he tried to break — who received excess spectrum.

By adding up the losses to the exchequer under these three heads, the CAG arrived at the figure of Rs 1,76,379 cr. One bidder, S Tel, had offered Rs 13,752 cr for 6.2 MHz of spectrum against Rs 1,651 cr for 4.4 MHz of spectrum charged by the DoT. The CAG concluded that the government could have raised Rs 65,725 cr against Rs 9,013 cr that it actually obtained. Using the amounts obtained for third generation (3G) spectrum through a transparent public auction as yardsticks, the CAG concluded that the government could have got an extra Rs 1,11,511 cr.

If spectrum for dual technology firms (Reliance and Tata) was also auctioned, it would have fetched an additional Rs 37,153 cr. Finally, the third part of the scam is that if the government had charged incumbent operators (like Bharti) market rates for holding spectrum in excess of 6.2 Mhz, another Rs 36,729 cr would have accrued to the exchequer. The grand total was thus arrived at. The CAG not only highlighted the loss to the exchequer, its report described in excruciating detail what happened on the fateful day licences were issued on a first-come-first-served (FCFS) basis.

On January 10, 2008, the DoT issued a press note indicating its intent to provide letters of intent (LoIs) to all applicants who had applied before the arbitrarily forwarded cut-off date of September 25, 2007. The press release stated: “(The) DoT has been implementing a policy of FCFS for grant of UAS (unified access services) licences under which initially an application, which is received first will be processed first and thereafter if found eligible will be granted (an) LoI.” Thereafter, a new clause was inserted saying “…and then whosoever complies with the conditions of (the) LoI first will be granted (an) UAS licence.”

Later the same day, another press release was put out by the DoT asking all applicants to authorise one representative to collect LoIs thereby making irrelevant an earlier condition giving 15 days time to each applicant to deposit fees. The one who paid first was given a licence first. Swan was the first to make the payment followed by Unitech. From fourth and eighth position respectively, they jumped to the first and second positions in the long queue.

Another significant finding of the CAG was that over two-thirds of the applicants for LoIs should not have been allowed to apply in the first place for they did not meet the eligibility criteria specified by the DoT itself. What was worse was that in the name of breaking a cartel, Raja favoured particular companies who had no prior experience in telecommunications (including real estate concerns, Unitech and Swan). The CAG did not spare the regulator as well, the TRAI. Here’s how the damning last paragraph of the CAG’s report reads:

“The Hon’ble MoC&IT (meaning Raja) for no apparent logical or valid reasons ignored the advice of (the) Ministry of Law, and (the) Ministry of Finance, avoided the deliberations of the Telecom Commission to allocate 2G (second-generation) spectrum, a scarce, finite, national asset at less than its true value on flexible criteria and procedures adopted to benefit a few operators. (The) TRAI, the regulator, also stood by as a helpless spectator when its recommendations were being either ignored or misused.”

What really were the so-called ‘compulsions of coalition politics’ that made the Congress and Manmohan Singh continue with Raja in the council of ministers despite mounting evidence against his misdemeanours and despite him claiming that he did what he did with the consent and approval of the PM? The UPA led by the Congress needed the 18 MPs belonging to the DMK far less than the DMK needed the 34 Congress MLAs in Chennai.

Why then did the Congress high command wait till this weekend to arm-twist  Karunanidhi? Was it on account of the overall atmosphere in the country in the aftermath of the sacking of Maharashtra Chief Minister Ashok Chavan and Suresh Kalmadi’s wings getting clipped? Was it apprehension about how the Supreme Court would castigate the government in general and the CBI in particular for dragging its feet in investigating the scandal? Was it fear of the fallout of the CAG report after it is tabled in Parliament? Or a combination of all considerations?

About the author:                      

Paranjoy Guha Thakurta is a journalist with over 30 years experience in various media