2G scam loss: CBI quizzes Trai for speaking in dual tone

New games are being played in the high-stake 2G spectrum scam, where big business names are involved.

At the centre of it all is the Telecom Regulatory Authority of India (Trai), which was asked by the Central Bureau of Investigation (CBI) to give its techno-commercial estimate of the revenue loss resulting from keeping spectrum prices unchanged between 2001 and 2008. In January 2008, Communications Minister Andimuthu Raja awarded a host of telecom licences and spectrum to many parties, allegedly through a non-transparent process.

The Trai expert group came up with benchmark revenue loss figures that strengthened CBI estimate of a loss of Rs 22,000 crore. But, in a surprising twist, Trai also sent a covering note suggesting that the loss could be “zero”. This is exactly what Communications Minister Kapil Sibal prematurely claimed in January this year. He said there was no loss, no scam.

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[caption id=“attachment_79202” align=“alignleft” width=“380” caption=“The CBI wanted to check if its estimation of a loss of Rs 22,000 crore would stand Trai’s expert group evaluation. Reuters”]  [/caption]

Did Trai tweak its covering note to please its boss in the ministry while giving out a more realistic benchmark figure to the CBI?

The CBI lost face on 22 August when Raja made the Trai forwarding note public during hearings at the special court that is trying to frame charges against him. Among other things, the Trai note - which is different from the expert group report submitted to the CBI - says spectrum sold at 2001 prices was part of policy.

An India Today report quotes the forwarding note from Trai secretary RK Arnold to CBI’s DIG SK Palsania thus: “T_he grant of licence at Rs 1,659 crore was a matter of policy. While revenue generation is no doubt significant, the New Telecom Policy (NTP) of 1999 underlines the need for providing telecom services at affordable rates. The low telecom tariffs in this country have fuelled the rapid growth of telecom services and helped different sections of society access these services. It is against this backdrop that Trai did not recommend auctions or any increase in entry fee for new players.”_

If Raja felt exonerated by this note, the CBI has now struck back at Trai for the volte face. It has asked whether the decision to sell spectrum at the old rate was a conscious decision of the government.

Citing para 2.73 of a Trai report dated 28 August 2007, the CBI asks Trai to clarify whether it stood by what it had recommended then. Para 2.73 reads: “In today’s dynamism and unprecedented growth of the telecom sector, the entry fee determined then (2001) is also not a realistic price for obtaining a licence. Perhaps it needs to be reassessed through a market mechanism.''

This para from the 2007 Trai report clearly reflects the fact that the entry fee needed to be reassessed through a market mechanism for obtaining a telecom licence. The CBI is understood to have also sent a file noting of the Department of Telecom and the finance ministry, both of which had warned against selling 2G spectrum at 2001 prices.

The communications ministry allocates spectrum to private parties only after the payment of entry fees and grant of licence. A Raja and and his predecessor Dayanidhi Maran continued to sell spectrum at 2001 prices and thus caused substantial losses to the exchequer. The CBI, in its charge-sheet against Raja, had mentioned the loss was about Rs 22,000 crore, while its Director, AP Singh, had told the Joint Parliamentary Committee (JPC) that the loss was in vicinity of Rs 50,000 crore. Singh had also dismissed Sibal’s claim of “zero loss” as wrong when quizzed by the JPC.

Following the 2G scam, Trai had set up an expert group in May 2010 to determine spectrum pricing on the basis of techno-commercial parameters. The CBI saw an opportunity to strengthen its 2G scam case and requested the group to also determine the ‘benchmark’ price of 2G spectrum on the basis of techno-commercial parameters between January 2001 and January 2008.

The CBI wanted to check if its estimation of a loss of Rs 22,000 crore would stand Trai’s expert group evaluation. But when Trai submitted its report, the CBI was pleasantly surprised to find that it had suggested a much higher benchmark price for 2G spectrum between January 2001 and January 2008 than what the CBI itself had estimated! It was higher than Rs 22,000 crore.

The CBI submitted the report to the Supreme Court during hearings on the bail pleas of Unitech’s Sanjay Chandra and Swan Telecom’s Director Vinod Goenka in the 2G spectrum scam.

However, Trai also sent a two-page letter along with the expert report. Interestingly, this forwarding letter echoes the zero-loss theory of Sibal in order to mitigate the political fallout of the spectrum scandal.

It was this forwarding note that the lawyers of Raja and Sanjay Chandra were keen to present to the Supreme Court.

The CBI did not submit the forwarding note to the Supreme Court but has, instead, written to Trai to substantiate its note.

The expert group report submitted to the Supreme Court does not mention zero-loss anywhere. “It is mischievous to send a two-page forwarding letter which doesn’t even sum up the expert committee’s report. On the contrary, it throws up an entirely different theory to derail the 2G spectrum investigations,” Trai sources said.

When asked about it by Firstpost, Kapil Sibal’s office said it didn’t know anything about it, since the matter concerned two independent agencies. Firstpost has also sent a mail to Trai secretary RK Arnold for clarifications. His reply is awaited.