The real 2G scam: Bare-all book gives us the skinny

Even as ministers in the UPA - from the finance minister to the communications and information ministers - are busy claiming there was no Rs 1.76 lakh crore 2G scam as suggested by the Comptroller and Auditor General (CAG), the real 2G scam has been lost sight of. The government is clearly trying to bury the scam by shifting the debate to the CAG’s presumptive loss figures.

Bhupesh Bhandari’s book, Spectrum Grab: The Inside Story of the 2G Scam, helps us to correct this attempt at creating confusion as it takes us to the heart of the scam right in the first chapter. Even though the book was released in September this year, this is the right time to read it, when the failure of the recent spectrum auction has obfuscated the picture.

[caption id=“attachment_528169” align=“alignleft” width=“380”] Spectrum Grab: Inside Story of the 2G Scam, by Bhupesh Bhandari[/caption]

The 262-page book, which looks at the scam from its origins to now (when trials have begun against Andimuthu Raja and his cohorts) is a must-read for anyone who wants to know what it was all about. The CAG’s report also provides the same clarity in its own way, but since it has now become a political football, Bhandari’s book serves as a neutral corrective. The CAG report should be read together with Bhandari’s journalistic approach for anyone who wants the complete picture.

So what was the scam all about?

First, it was a clear attempt by A Raja to change the rules in the middle of the game in order to favour some applicants.

Second, once he had decided what he wanted to do, Raja created a process that was so outlandish as to count as a scam in itself.

Third, Raja bamboozled the government, including Prime Minister Manmohan Singh, and ensured that spectrum was sold at a price determined in 2001, even though in 2001 there were only four million mobile consumers, while in 2008 there were 250 million.

Bhandari explains how the scam was executed - by stealth and speed.

On 10 January 2008, Raja got a Deputy Director General in the Department of Telecom (Avdesh Kumar Srivastava) to put out a press release at 1.47 pm informing the public and telecom licence applicants that the cutoff date for giving letters of intent was 25 September 2007, and not 1 October 2007, as indicated earlier.

This automatically reduced the field to 15 applicants.

Then, Raja’s ministry made another not-so-subtle change in the rules. The press release said that unlike in the past, spectrum would be given not to those who applied first, but to those who fulfilled the conditions in his letters of intent (LoI) - that is rules decided by Raja and his ministry faithful.

And what did Raja’s new rules stipulate? Again, this was accomplished with information that was put out into the public domain all of a sudden. A press release was given out at 2.45 pm, about an hour after the earlier on LoIs, and it said that all 15 applicants who were eligible for the licences would assemble in Sanchar Bhavan’s Committee Room at 3.30 pm the same day, and once they had the LoIs in their possession, they had to rush to another room where, once again, Raja put in his own twist: the spectrum would not be allocated on the earlier first-come-first-served basis, but on who reached the Reception Room on the ground floor of Sanchar Bhavan first!

Says Bhandari: “The gates to the Reception Room were thrown open at 3.45 pm. One representative was allowed at a time; the next in the queue could go in only after the first had completed all formalities. But instead of imposing order into the process, it bred chaos. The rich and the powerful behaved no better than goons, pushing and shoving each other to get ahead.”

In short, the whole process was a joke where spectrum licences depended on industry representatives being sprint medalists and/or bouncers - since one had to rush from the Committee Room, which was on the second floor, to the Reception on the ground floor. And devil take the hindmost.

Writes Bhandari: “What followed was a scene straight out of a fish market. To fulfil the conditions in the LoI which they had just received, the applicants had to deposit the acceptance letter, demand draft and bank guarantee in the Reception Room which was on the ground floor of the same building. Under the new rules notified two hours earlier, those who got to the ground floor first would be ahead in the queue for spectrum.”

What a way to allocate spectrum! Even banana republics have behaved less arbitrarily.

The ridiculousness of Raja’s process can be gauged from the fact that RK Chandolia, Raja’s private secretary, wanted the men at the counters to note down the exact time of the receipt of application on each set of documents. “A digital clock had been purchased from Shankar Market, one of New Delhi’s busy markets, and installed in the Reception Room,” says Bhandari.

The paradox: for validating a crooked process, Raja & Co adopted the cover of clock-work transparency.

Noted Kumar Mangalam Birla, one of whose companies, Idea, went through the ignominy of this scrimmage to get its spectrum - all lost finally in last February’s Supreme Court verdict. “The press release of DoT, placed on the website around 2.45 pm on 10 January, asking applicants to assemble at Sanchar Bhavan at 3.30 pm to collect the letters of intent and the subsequent events of 10 January must be the most unusual practice ever followed by the government.”

When a Birla calls something unusual, ordinary people would call it a scam. “The grant of the wireless operating licence has to be dependent only on the date of the application. Doing otherwise would be contrary to the policy. It would amount to changing the policy from first-come-first-served (FCFS) to first-served-first-come (FSFC).”

This is the scam. FCFS became FSFC - Raja subverted the process and the Prime Minister and the UPA government were well aware of what he was upto.

They had several weeks to reverse Raja’s damage - since spectrum had not been actually allocated till the end of February 2008, but they preferred to sit on their hands.

Who may have made what kind of money for showing favour is a separate aspect of the scam. How much the government lost by way of revenue by using Raja’s arbitrary method of spectrum allocation is also a separate story.

But anyone reading merely the first chapter of Bhandari’s book will clearly come away with the impression that the events of 10 January 2008 rank high in the annals of skullduggery.

The revenue loss is difficult to estimate, but it is real. But the real loss is the complete destruction of the government’s credibility, brought on by Raja and his henchmen on cold January afternoon.

Spectrum Grab: Inside Story of the 2G Scam, by Bhupesh Bhandari, Senior Associate Editor, Business Standard. Published by BS Books. Price Rs 350. 262 pages.