10 questions that Raja will still have to answer

Nearly six months in Tihar jail do not seem to have helped Andimuthu Raja. Reason: he wasted two valuable days of the special court by throwing red herrings all around and bringing forth arguments to suggest he was not guilty in the 2G scam. But beyond making headlines, he achieved little. In fact, he did not address the real charges levelled against him.

According to Raja, the Comptroller and Auditor General (CAG) is “legally illiterate”. The Central Bureau of Investigation (CBI) charge-sheet is nonsense. And Prime Minister Manmohan Singh, and then Finance Minister P Chidambaram, were aware of his decisions.

Some of these allegations may gain political traction, as they do point to lapses in governance, but they do not in any way exonerate Raja. His trial will begin in a month’s time and it’s time he focused on answering the questions raised by the CBI in his case. Here are 10 questions for him and his lawyer to ponder over.

Accusation 1: Raja ‘designed’ or ‘manipulated’ the priority list of licence applicants to unduly benefit Swan Telecom Pvt Ltd by allowing it to obtain precedence over other applicants in Delhi circle for spectrum.

CBI says:

• There was a spurt in new applications for scarce Unified Access Service Licences (UASLs) after Raja took over on 28 August 2007. Swan Telecom and Unitech Ltd were new entrants and the rules mandated that Raja should seek the recommendations of the Telecom Regulatory Authority of India (Trai) before the introduction of new operators in a service area. Raja didn’t follow this rule.

•Documentary evidence apparently shows that Raja and RK Chandolia directed telecom officials not to accept any application after the receipt of applications from Unitech Ltd on 24 September 2007. Later, he did issue a press release to announce a new cut-off date on 1 October 2007, but his intention was always to keep 24 September 2007, which he did.

• On 26 September 2007, Raja sent a note to the Ministry of Law and Justice, seeking its opinion on allocation of licences to new entrants and thus keeping 24 September 2007 as the cutoff date. The ministry said:“The matter being important needs to be considered by Empowered Committee of Ministers.” Raja ignored it and made 25 September 2007 as cutoff date.

Accusation 2: Raja misled Prime Minister Manmohan Singh.

CBI’s arguments:

• In a letter dated 2 November 2007 to the Prime Minister, Raja misrepresented the facts to justify his decision on the cutoff date. He writes: “On this date (25 September 2007), the announcement of cutoff date appeared in newspapers.” This is wrong.

• He referred to the opinion of the Ministry of Law and Justice out of context and thus suppressed information about his intention to allocate spectrum to new entrants by deviating from the rules.

• In a letter dated 26 December 2007 to the Prime Minister, he intentionally and deliberately misrepresented the facts about the first-come-first-served (FCFS) policy.

Accusation 3: Raja manipulated the FCFS principle. He created a situation where the physical ability to run to different counters became the main deciding factor for priority in complying with the conditions of the letters of interest (LOI) and entry fee for licences, making a mockery of the first-cum-first-served policy.

CBI’s arguments:

• The FCFS principle meant that applicants who had applied earlier should be allocated letters of intent (LOIs), licences and spectrum first. The LOI usually prescribes a time period of seven days for compliance/acceptance of the LOI and 15 days for the deposit of entry fees and performance bank guarantees (PBG). Since the applications were plenty and spectrum was scarce, it was decided to redraft the LOI guidelines. The draft LOI made payment of entry fee the priority date for the licence. Raja deleted this clause to help Swan and Unitech.

• A draft press release spelling out the new LOI guidelines was put to the Solicitor General for his opinion. The Solicitor General okayed it. But Raja made changes in the said press release after obtaining legal opinion. He struck off the last paragraph of the press release, which reads: “However, if more than one applicant complies with LOI condition on the same date, the inter se seniority would be decided by the date of application.” On the same note approved by the Solicitor General, he marked it as “press release approved as amended.” So he fraudulently portrayed the amended draft as having been approved by the Solicitor General (GE Vahanvati).

Accusation 4: The distribution of LOIs was manipulated to result in disorderly priority.

CBI’s arguments:

• The LOIs were distributed in a fraudulent manner at counters of DoT. It resulted in a reshuffling of the applicants from the date of application to the time of compliance, which had differences of a few minutes and completely changed the priority to benefit Swan and Unitech.

• After receiving LOIs on 10 January 2008, applicant companies were required to rush to the reception of Sanchar Bhavan to deposit the entry fee. Swan had prior knowledge of it and had thus kept the bank drafts ready as early as November 2007. And Unitech had kept drafts ready in October 2007.

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Accusation 5: Raja manipulated dual technology approval and spectrum allocation.

CBI’s arguments:

• Raja ignored Trai recommendations that were duly approved by the Telecom Commission and gave an okay for dual technology spectrum to Reliance Communication Ltd, HFCL Infotel Ltd and Shyam Telelinks Ltd on ground that “…for allocation of spectrum for dual technology, the date of payment of required fee should determine the seniority.”

• The Ministry of Law and Justice recommended that the matter be referred to the Empowered Committee of Ministers. Raja did not do it.

• Those who refused to toe his line, were transferred out of the department

• Raja allocated spectrum to Swan in Delhi circle, thus unreasonably depriving others, including Tata Teleservices, which had priority over Swan in terms of dual technology approvals and seniority over new applicants as per the date of application.

Accusation 6: Raja unauthorisedly amended the access service licence to make it mandatory for all service providers to allow inter-service area roaming arrangements with other service providers.

CBI’s arguments:

• This was against Trai rules and intended to facilitate Swan’s memorandum with public sector Bharat Sanchar Nigam Ltd on 13 October 2008.

Accusation 7: Swan, despite being the only company to receive spectrum in Delhi circle in 2008, didn’t roll out its services and failed to meet the rollout obligations.

CBI’s arguments:

•Etisalat (Mauritius) Ltd bought Swan shares for Rs 3,228 crore. Genex Exim Ventures Pvt Ltd bought Swan shares for Rs 380 crore. Swan had still not rolled out services.

• Similarly, Telenor invested in Unitech. Even Unitech had not rolled out its services on time.

Accusation 8: Lack of action against Reliance even after ministry of corporate affairs (MCA) confirms that Swan is linked to Reliance. Reliance Telecom and Reliance Communications had invested money in Swan.

CBI’s arguments

• Despite the MCA’s clarification on Reliance links, Raja did not take any action against Swan under corporate and telecom laws. Under the law, no existing operator in a circle can own a 10 percent stake or more in another operator in the same circle.

Accusation 9: Raja cheated government exchequer by not revising the entry fee.

CBI’s arguments

• The finance ministry recommended a revision of the spectrum fee for dual technology entry in a letter dated 22 November, 2007. CBI quotes the ministry’s letter: “It is not clear how the rate of Rs 1,650 crore, determined as far back as 2001 has been applied for a licence given in 2007 without any indexation, let alone current valuation. Moreover, in view of financial implications, the ministry of finance should have been consulted in the matter before you finalised the decision. I (Finance Secretary) request you to kindly review the matter and revert to us as soon as possible with responses to the above issue. Meanwhile, all further action to implement the above licences may please be stayed.”

Raja, however, did not consider auction or revision of the entry fee.

Accusation 10: There is a quid pro quo between Shahid Balwa, promoter of Swan and co-owner of DB Realty Ltd, and Kalaignar TV, promoted by Raja’s political party DMK. Dynamix Realty, a partnership firm of DB Realty and DB Group of companies, paid Rs 200 crore to Kalaignar TV Pvt Ltd between December 2008 and August 2009, following a circuitous route through Kusegaon Fruits & Vegetables Pvt Ltd (a DB Group Company) and Cineyug Films Pvt Ltd (DB Group has 49 percent stake in it).

This is still not the end for A Raja. Two charge-sheets filed so far in the 2G scam have named A Raja. The CBI is set to file a third charge-sheet by 30 August. This charge-sheet too names Raja for his alleged role in the allocation of spectrum to Loop Telecom. And the final (fourth) charge-sheet is also under way for favours allegedly done to Allianz Infratech, which was once promoted by Ajay Singh of SpiceJet and Ashish Deora, a Mumbai-based businessman, who was once allegedly close to Pramod Mahajan’s family. Raja is likely to be named in the fourth charge-sheet as well.