Special CBI court acquits all 19 accused, including Raja, Kanimozhi in 2G spectrum case: A look back at massive corruption scandal

The much-awaited judgment in the alleged multi-thousand crore rupees 2G spectrum scandal came as a big blow to the Central Bureau of Investigation as the court acquitted all 19 accused in what is being touted as biggest scam to rock Independent India. CBI special court judge OP Saini, who has been hearing two separate cases related to the alleged corruption in allotment of 2G spectrum licenses, heard the final arguments on 26 April. However, the case was deferred a few times as the judgement was not ready. [caption id=“attachment_1489311” align=“alignleft” width=“380”] File image of former telecom minister A Raja. Reuters[/caption] Among the big names associated with the case are former telecom minister A Raja, and the then Department of Telecom secretary, Siddartha Behura, as well as Raja’s former personal secretary RK Chandolia. Rajya Sabha MP and daughter of DMK chief M Karunanidhi, Kanimozhi is also accused of corruption in the case in what was termed the second biggest political scandal in world after the Watergate scandal by Time magazine. As reactions pour in from everywhere , here is a recapitulation of the multi-million rupees scam that’s recounted as one of the biggest scandals in the telecommunication industry. What is the scam all about The scam dates back to mid 2000’s when the then UPA government decided to allocate the airwaves to mobile service operators on a first-come-first-served basis. However, the scandal only gathered steam in 2010 when the Comptroller and Auditor General (CAG) of India in a report quantified and pegged the scam loss to Rs 1.76 lakh crore. The government announced the distribution of 2G spectrum licenses in 2007 and according to the order, eight new companies were to be given telecom licences to start mobile services. 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 applicable to the firms applying for licence 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 propped up by bigger players. Most of the players 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 CBI later linked back the company to Reliance ADA Group, alleging that Reliance Telecom had merely used Swan Telecom as a front company to get the 2G licences and the costly radio waves, The Times of India reported. That is just one example of the complex web of shell firms allegedly involved in the corruption scandal that shook the entire telecom industry. The scam was investigated by the Central Bureau of Investigation (CBI) and the Enforcement Directorate. The Enforcement Directorate has filed a separate case related to money laundering, alleging that a conspiracy was hatched by Raja, Kanimozhi, Ammal and others and that Rs 200 crore was the proceeds of the crime. Essar Group and Loop telecom are another set of firms named in the scandal. The CBI alleged that the promoters of the Essar Group were the real investors and beneficiaries of the spectrum and licences were issued to Loop Telecom, a front company of Essar to acquire 2G licences and spectrum in 2008. Essar and Loop promoters are facing trial for hatching a conspiracy to cheat the government for obtaining spectrum licence. Aftermath of the scandal: Who lost what? According to a report by _ The Wire, o_f the eight companies which lost licences after the scam broke out, only Idea Cellular survived the telecom sector storm. “The cancellation of licenses resulted in the closure of most of the companies with thousands of employees losing jobs. Banks are still grappling with the loans granted to these companies to buy equipment and licenses and spectrum,” the report said. The companies that lost their licenses included: Unitech, Sistema, Loop Mobile, Videocon, Etisalat-DB (Swan), Idea, S-Tel, and Tata Tele. Not to mention that the accused languished in jail for some time before they were let off on bail. The scandal cost Raja his ministerial portfolio as he was the then telecom minister. Allegations of inflated numbers The CAG report which pegged the losses at Rs 1.76 lakh crore was also caught up in a controversy . CAG based its estimates on the loss from 2G allocations in 2008 on the 3G spectrum allocations of 2010 and sought to prove by implication that spectrum was deliberately underpriced by the government to favour a few firms. However, subsequent auctions revealed that the government raised a mere Rs 9, 407 crore against an ambitious target of Rs 40,000 crore. Had it been a successful auction, the gains for the government still would not have been anywhere close Rs 1.76 lakh crore. In CBI’s March 2011 chargesheet, the total loss was pegged at Rs 30,000 crore even though the agency’s then director AP Singh claimed that the agency had not calculated the total loss. In 2009, the CVC had put the number at Rs 22,000 crore. The TRAI on the other hand , claimed that it was impossible to calculate the total loss to the exchequer as the auction was done on first come first serve basis.

  Many names scorched in the heat of the scam The CAG report directly blamed Raja for taking arbitrary decision while allocating the spectrum. The CAG had said 2G licenses were issued to telecom operators at throwaway prices. It said licences were issued to ineligible applicants who had deliberately suppressed facts, disclosed incomplete information, submitted fictitious documents and used fraudulent means to get access to spectrum. Then telecom minister Raja of the DMK — a constituent of the ruling UPA — became the face of the scam amid allegations that he bent the rules of auction to benefit a few and selective telecom players. Raja was arrested on 2 February 2011, and charged with criminal conspiracy, cheating, abuse of office and forgery. However, others in the government did not remain untouched.  

  Kanimozhi and DMK party supremo M Karunanidhi’s wife Dayalu Ammal are also accused of corruption. The CBI says that a Rs 200 crore bribe paid by a telecom to Raja was deposited in a TV channel in Chennai that is owned in part by Kanimozhi. However, she claimed that the amount was not a payoff but a loan that was to become equity, but the deal didn’t go through for various reasons. Dayalu Ammal was later let off because the CBI stated that she only speaks Tamil and thus could not be involved in the scam. Raja and Kanimozhi were close party colleagues, and the latter is alleged to have lobbied to get Raja into the ministry after the 2009 election. Then finance minister P Chidambaram also could not remain untouched. Former president Pranab Mukherjee who took over the finance portfolio from Chidambaram later allegedly sent a note to the prime minister suggesting Chidambaram could have prevented the illegal 2G spectrum allocations. It was widely speculated that while the bidders were selling off their shares to foreign companies, those sales were actually overseen by the finance ministry at that time. The matter was, however, dismissed by the Supreme Court, saying that no case could be made out against Chidambaram. Other accused Behura has been charged with cheating and abuse of office. Chandolia has been charged with cheating and abuse of office as well. On 8 February 2011, the CBI also arrested Shahid Usman Balwa, director of Swan Telecom Pvt Ltd, on charges of criminal conspiracy, cheating and forgery. Asif Balwa, brother of Shahid Balwa and and Rajiv Agarwal from Kusegaon Fruits & Vegetables Pvt Ltd, were also arrested by the CBI. The other persons who were arrested in the case were Sanjay Chandra director, Unitech, Gautam Doshi, group MD, Reliance ADAG, Hari Nair, company secretary, Reliance ADAG and Surendra Pipara, senior VP, Reliance ADAG charged with abetment to cheating, bribing government servants and forgery. Sharad Kumar, the managing director of Kalaignar TV was also arrested on the same charges. Ruias of Essar group and Bollywood producer Karim Moran are also accused in the case. All the accused are out on bail and are to be present on the day of the final verdict in the court. The accused have denied the charges.