2G: Note that damns Chidu may have come from whistleblower

The PMO did not ask for a note from the finance ministry on the history of the 2G spectrum case. Who then drafted it? A whistleblower?

Raman Kirpal September 24, 2011 11:11:09 IST
2G: Note that damns Chidu may have come from whistleblower

On 11 March this year, long after Andimuthu Raja was safely in jail, a deputy director in the finance ministry's department of economic affairs prepared a factual dossier on the allocation and pricing of 2G spectrum from 2003 and sent it to the Prime Minister.

The document created a sensation on Thursday when news channels and Firstpost made references to it, as it seemed to suggest that the finance ministry's previous incumbent, P Chidambaram, could have stopped the issue of 2G spectrum on the dictates of Raja if he so wanted.

The document, ostensibly given out in response to a Right to Information (RTI) query just when Subramanian Swamy was requesting a CBI inquiry into Chidambaram's role in the 2G scam, has shaken the UPA government at a time when it could least afford it: both the PM and Finance Minister Pranab Mukherjee were away in the US, the former to attend the UN General Assembly session and the latter to attend the annual meetings of the World Bank and IMF.

Among other things, the document has raised questions about whether there is serious infighting in the UPA between the former and present finance ministers, and why Mukherjee's office would even want to damage Chidambaram's reputation now.

All three - the PM, Mukherjee and Chidambaram - are in damage control mode. While the PM has defended Chidambaram strongly, Mukherjee is rushing to New York to meet the PM to sort things out.

The question everyone is asking is this: why was the note, signed by PGS Rao, Deputy Director in the Infrastructure and Investment Division of the Department of Economic Affairs, written in the first place?

Did the PM's Office (PMO) ask for it? Unlikely, since whenever the PMO asks for a response from the finance ministry, the note would have been signed by someone at the rank of joint secretary or above. In most cases, the finance minister would himself sign off on notes sought by the PMO.

The note is accompanied by this information: "A copy of basic facts prepared on allocation and pricing of 2G spectrum is enclosed. This has been seen by the finance minister (Pranab Mukherjee)."

2G Note that damns Chidu may have come from whistleblower

The document has raised questions about whether there is serious infighting in the UPA between the former and present finance ministers, and why Mukherjee's office would even want to damage Chidambaram's reputation now. AFP

If the PM did not ask for the 10-page note, the FM himself is unlikely to have done it on his own. Moreover, by 11 March, Raja was already in the jail. On 2 March 2011, the Central Bureau of Investigation (CBI) had already filed its first charge-sheet in the 2G scam and the Supreme Court had begun monitoring it. A Joint Parliamentary Committee (JPC) had been set up to investigate the scam.

Then why this 'note'? Insiders in the ministry suggest that the note could have been prepared by a whistleblower who could be either PGS Rao himself or someone else who routed it through him. The discovery of the note through an RTI thus seems providential, for it spares no one by stating the facts.

The note just gives a chronology of developments regarding the telecom policy as implemented since 2003. However, it indicts Chidambaram the most. Even the CBI, which has collected all the evidence from the files of the ministries of finance and communications and even the PMO does not have this note. In fact, all the files concerning telecom policy matters and Raja's deals (till December 2010) are in the Supreme Court's safe custody.

The whistleblower, however, seems to have kept additional files on this matter. And he churned out a factual story that is difficult to refute.

The story starts from 2003. The note says: "In 2003, the Union cabinet decided that DoT (Department of Telecommunication) and ministry of finance would discuss and finalise spectrum pricing formulae, which would include incentive for efficient use of spectrum as wells as disincentive for sub-optimal usage." This move was initiated by the then Communications Minister Arun Shourie of the BJP and was approved by the then Finance Minister Jaswant Singh.

In 2005, the UPA was in power and Chidambaram was the finance minister. The Telecom Regulatory Authority of India (Trai), on 13 May 2005, recommended that spectrum charges should have two components: a one-time spectrum charge and annual spectrum charges. Chidambaram did not question Trai, but suggested that price discovery through auction may not be appropriate. Instead, he suggested a hybrid option of a base fee, combined with revenue share.

Chidambaram suggested that it should be put up for consideration to the committee of secretaries and then to the Group of Ministers (GoM). But his department of economic affairs (DAE) did not follow up on it, nor did DoT care about it.

The cabinet secretariat constituted a GoM on 23 February 2006 and subsequently DAE asked DoT to include issues relating to spectrum pricing within the ambit of the GoM. DoT, however, maintained that spectrum pricing was within the normal work of the ministry. On 18 May 2007, when Raja had replaced Dayanidhi Maran as communications minister, the finance secretary again requested that spectrum pricing be discussed and determined by the GoM.

DoT, however, responded that the use of spectrum was a dynamic issue and it had to be reviewed and considered from time to time in the context of changing technology in consultation with Trai. The finance ministry did not take up the issue further.

On 22 November 2007, Finance Secretary D Subbarao (now RBI Governor) argued for an auction of spectrum, but DoT argued against it on the ground that it would disturb the level playing field and existent spectrum holders, who had already paid entry fees in 2001, would go to court.

Against this backdrop, Raja issued 122 letter of intent (LOIs) on 10 January 2008, even when he knew that a Telecom Commission meeting was to be held to discuss the revision of entry fees on 15 January 2008.

Here comes the blow for P Chidambaram. The 11 March note from PGS Rao says: "...the fact that a Telecom Commission meeting on the issue was scheduled on 15 January 2008 was also mentioned; no response, however, was sent by DEA to DoT... Finally, a note was sent by the then finance minister (Chidambaram) to the Prime Minister on 15 January 2008... The note of the finance minister did not deal with the need, if any, to revise entry fee or the rate of revenue share.''

Firstpost was the first to put Chidambaram's 15 January note in the public domain, and this note had called for burying the past and suggested auctions of additional spectrum only in the future.

To prove the factual basis of how telecom policy evolved, the finance ministry whistleblower has listed 31 references in the annexure - 10 annexures about exchange of correspondence on the issues relating to spectrum pricing being a part of the GoM; and 21 annexures about correspondence between the PM and the finance ministry on 2G spectrum/licence matter from April 2003 onwards.

The Supreme Court on Thursday categorically asked the CBI if they had seen and examined the 15 January 2008 letter of Chidambaram. The CBI said 'yes' and insisted that they did not find anything discriminatory in it. It wasn't enough to charge Chidambaram with any criminal intent. But the CBI has not seen 11 March note of the whistleblower. Either it escaped the CBI's attention or it just wasn't there.

Watch video on the Chidambaram 2G controversy.

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