2G spectrum: What, where and who of a scandal

The 2G spectrum scandal is turning out to be a multi-faced mystery with a new revelation surfacing every day. The latest shocker is the Finance Minister Pranab Mukherjee’s note to the prime minister, which seeks to highlight that the current Home Minister P Chidambaram, who was the finance minister then, could have prevented the illegal 2G spectrum allocations. The scam was enormous to begin with; it is getting bigger with the role of top ministers emerging. There are even hints that the prime minister’s office was in the know of the illegalities but preferred to stay a mute spectator. This brings Prime Minister Manmohan Singh into the picture. Firstpost gives you a quick recap of what the 2G case was really about, how it unfolded and who were the people initially implicated in the case. [caption id=“attachment_94702” align=“alignleft” width=“380” caption=“The former telecomm minister, the man who started it all. Reuters.”]  [/caption] The 2G spectrum licenses were announced in 2007 and according to the initial announcement made by the government, eight new companies were to be given telecom licences to start mobile services. The order to the effect stated that the allocation would be made on a ‘first-come-first-served’ basis. The licences were issued at the prices fixed in 2001 to keep tariffs low. The idea behind the policy was to provide cheaper services to the customers. But the major loophole, a point which was exploited by the companies later, was the lack of clarity on the terms and conditions on the firms and their shareholding pattern. Some successful bidders availed their licenses at lower prices and then sold them off at huge profits. Some companies were suspected to be proxies popped up by bigger players. They sold a majority of their shares immediately after availing the licenses. The flawed policy pointed to the complicity of the department of telecom itself. For instance, Swan Telecom bagged licence for 13 circles for Rs 1,537 crore and then offloaded 45 percent of shares to UAE based Etisalat for Rs 4,500 crore. The loss to the exchequer was precisely because the policy ensured that while the initial bidders got the licenses at cheaper prices; they got away with selling these at huge profits. According to the estimate of the Comptroller and Auditor General (CAG) of India, the presumptive loss from the 2G scam was Rs 1.76 lakh crore. The latest speculation is that while the bidders were selling off their shares to foreign companies, those sales were actually overseen by the finance ministry at that time. This is precisely why Chidambaram is being implicated in the scam now. People who’ve been implicated in the scam Former telecom minister A Raja, who is believed to have pushed this rather flaky policy. In his defence Raja is stating that the allotment of spectrum was made on basis of recommendations by TRAI. Raja was arrested on 2 February, and charged with criminal conspiracy, cheating, abuse of office and forgery. Siddhartha Behura, who was the secretary of the DoT then, has been charged with cheating and abuse of office. RK Chandolia, who was the personal secretary of A Raja has been charged with cheating and abuse of office too. On 8 February, the CBI also arrested Shahid Usman Balwa, Director of Swan Telecom Pvt Ltd, on charges of criminal conspiracy, cheating and forgery. Swan Telecom is believed to be front company for Anil Ambani’s Reliance Communications. In March, Asif Balwa, brother of Shahid Balwa, and Rajiv Agarwal from Kusegaon Fruits & Vegetables Pvt Ltd, were arrestd by the CBI. Balwa is alleged to have paid a bribe of nearly Rs 214 crore to A Raja for allotting licenses at throwaway prices. The bribe was paid through a circitous route which involved the Kusegaon Fruits and Vegetables Pvt Ltd company, Cineyug Films and Kalaignar Television in Chennai. In April, the CBI followed it with arrests of Vinod Goenka, Director, Swan Telecom Pvt Ltd, for criminal conspiracy, cheating and forgery, and the partner of Shahid Balwa in DB Realty, which had floated Swan Telecom in the first place. The other persons who were arrested in the case were Sanjay Chandra Director, Unitech, Gautam Doshi Group MD, Reliance ADAG, Hari Nair Company Secy, Reliance ADAG and Surendra Pipara Senior VP, Reliance ADAG charged with abetment to cheating, bribing government servants and forgery. Kalaingar Television is owned by Karunanidhi’s daughter Kanimozhi and his first wife Dayalu Ammal. While Kanimozhi was arrested when the CBI filed its second chargsheet, Dayalu Ammal was not because the CBI stated that she only speaks Tamil and thus could not be involved in the scam. Kanimozhi, is charged with cheating, criminal conspiracy and accepting bribes. Along with her, Sharad Kumar the Managing Director of Kalaignar TV was also arrested on the same charges. The 2G spectrum scam has thus revealed a major political and corporate nexus which ensured massive profits for those involved. As more details and the consequent name-calling goes on, it is clear that getting to the bottom of this scam is not going to be an easy task for the CBI. For a complete look at our 2G scam coverage click here.