2G Verdict: Now That The Accused Are Acquitted, Can They Respond To SC’s Questions From 2012?

All those acquitted in the 2G verdict by a Special Central Bureau of Investigation (CBI) court this morning (21 December) are gloating about propaganda to topple the United Progressive Alliance (UPA) government with false allegations of a scam in allotting spectrum. Alleged irregularities in spectrum auctions in 2007 unfolded when much later, the Comptroller and Auditor General said there was a notional loss to the exchequer due to these allotments, to the tune of Rs 1.76 lakh crore. A figure which was subsequently whittled down by the CBI to a mere Rs 30,000 crore; but allegations of a scam never subsided.

In February 2012, a two-judge bench of the Supreme Court comprising Justices A K Ganguly and G S Singhvi, had cancelled 122 telecom licences given out by Andimuthu Raja, communications minister in the UPA government, on grounds of illegality and “arbitrary exercise of power”. But the CBI court today allowed all the 19 accused to walk free on a weak case prepared by the prosecution. Buoyed by the verdict, former prime minister Manmohan Singh, his telecom minister Raja and several top corporate honchos are now seeking to turn the narrative from alleged irregularities in allocation of a scarce natural resource to that of a political witch hunt. So where exactly did the Supreme Court and CBI court differ?

This piece lists out observations made by the special CBI court while acquitting all of the accused. In brief, the court has not only slammed the prosecution for failing to prove the charges, but has also said that 1) When no one from the Prime Minister’s Office was examined and no relevant file with processing notes have been presented before the court, how can one say that facts were misrepresented or the prime minister misled? 2) Spectrum norms were unclear, framed in a language which even telecom department officials found hard to grasp. The CBI court’s observations hinge on insufficient evidence before it to prosecute anyone, says the piece quoted above.

But the Supreme Court judgement of 2012 on the 2G spectrum allocation is rather detailed, making scathing observations on each and every stakeholder after quoting extensive communication between them. It criticised telecom regulator TRAI, officials of the Telecom Department and others in the events leading up to the grant of telecom licenses to certain preferred parties in 2007, but reserved its harshest criticism for A Raja.

Here are excerpts of what the Supreme Court said back then, quoting communication between Raja, prime minister Manmohan Singh, Telecom Department, Telecom Commission and the Law Ministry. These observations leave little doubt of large-scale wrongdoing:

*** The Telecom Department said on 24 September 2007 that as on that date, 167 applications had been received from 12 companies for 22 service areas and opined that it may be difficult to handle such a large number of applications at any point of time. 10 October was suggested as the cutoff date for receipt of further new UAS licence applications. But Raja brought this cutoff data forward to 1 October and a press note saying this was issued on 24 September itself.

The judges go on to note that Vodafone Essar Spacetel had made an application for a license three years back in 2004, while three other telecom companies (Idea Cellular, Tata Teleservices and Aircel) made similar applications in 2006. Instead of disposing these applications, the Telecom Department included them in the list of 167. Further, between 24 September and 1 October, 300 applications for licences were received.

Question: Why did applications made much before 2007 not get a response before the new cutoff date was announced? Why was the cutoff date advanced?

*** When faced with so many license requests, the Telecom Department sought the Law Ministry’s view. The latter said the entire issue should be considered by a group of ministers. But what did Raja do then? He first noted “discuss please” on this observation by the Law Ministry and then went ahead and authorised the allotment of letter of intent to applications received before 25 September. Simultaneously, he also wrote to the prime minister criticising the stance taken by the Law Ministry.

Raja also said the Telecom Department had decided to continue with the policy of ‘first come, first served’ for processing licence applications received up to 25 September. The Supreme Court judgement quotes relevant paragraphs from the letter Raja wrote to Manmohan Singh.

Question: Why should ‘FCFS’ be a policy to allot a scarce national resource, and why did Raja apply this only for licence applications before 25 September?

*** But when the prime minister wrote back mentioning a number of issues relating to allocation of spectrum having been raised by telecom companies as well as in sections of the media, Raja brushed aside these concerns. The letter by the prime minister has been quoted in the judgement. The prime minister has mentioned issues related to enhancement of subscriber-linked spectrum allocation criteria, permission to CDMA service providers to also provide services on the GSM standard and be eligible for spectrum in the GSM service band, and the processing of a large number of applications received for fresh licences against the backdrop of inadequate spectrum to cater to overall demand. Raja said it would be unfair and arbitrary to now auction the spectrum.

Question: Why were issues not placed before a GoM, and why were none raised by the prime minister addressed?

*** On TRAI’s role too, the apex court was quite candid. “To say the least, the entire approach adopted by TRAI was lopsided and contrary to the decision taken by the Council of Ministers and its recommendations became a handle for the then the Minister of C&IT and the officers of the DoT who virtually gifted away the important national asset at throw away prices by willfully ignoring the concerns raised from various quarters including the Prime Minister, Ministry of Finance and also some of its own officers. This becomes clear from the fact that soon after obtaining the licences, some of the beneficiaries off-loaded their stakes to others, in the name of transfer of equity or infusion of fresh capital by foreign companies, and thereby made huge profits. We have no doubt that if the method of auction had been adopted for grant of licence which could be the only rational transparent method for distribution of national wealth, the nation would have been enriched by many thousand crores.”

*** The judges note that soon after obtaining the letters of intent under Raja’s regime, three of the successful applicants offloaded their stakes for “thousands of crores in the name of infusing equity”. The judgement lists their details:

(i) Swan Telecom Capital Pvt Ltd (now known as Etisalat DB Telecom Pvt Ltd), which was incorporated on 13 July 2006 and got UAS Licence by paying a licence fee of Rs 1,537 crore, transferred 45 per cent (approximate) equity in favour of Etisalat Mauritius Limited, a wholly owned subsidiary of Emirates Telecommunications Corporation of UAE for over Rs 3,544 crore.

(ii) Unitech, which had obtained the licence for Rs 1,651 crore transferred 60 per cent equity in favour of Telenor Asia Pte Ltd, a part of Telenor Group (Norway) in the name of issue of fresh equity shares for Rs 6,120 crore between March 2009 and February 2010.

(iii) Tata Tele Services transferred 27.31 per cent of equity worth Rs 12,924 crore in favour of NTT DOCOMO, and Tata Tele Services (Maharashtra) transferred 20.25 per cent of equity worth Rs 949 crore in favour of NTT DOCOMO.

As the CBI goes for appeal, issues raised by the Supreme Court can again be in the spotlight.

Also Read:

A Comprehensive Timeline Of 2G Scam: How It All Started And As It Happened

Crony Capitalism Has Won: Perversity In The ‘Not Guilty’ Verdict Of The 2G Scam