2G scam: Why investigation may get lost in the forest

The more you dig, the murkier it gets. This has been the story of the 2G (second generation) telecom spectrum scam.

Friday’s newspapers brought in further dollops, with both The Indian Express and Business Standard bringing new angles to the story.

While The Indian Express story says that the probe into Swan Telecom’s ownership structure - which has implications for Anil Ambani’s involvement in it - has moved from Mauritius to Switzerland, the Business Standard report says that papers relating to the 1994 telecom policy, which brought in privatisation, have gone missing.

“These papers are crucial for the Joint Parliamentary Committee’s probe into losses caused by the BJP-led government’s decision to move from a fixed-licence fee regime to a revenue-share model,” the newspaper says.

More from Politics

Is Shashi Tharoor’s breakup with Congress inevitable? ‘Naxalism will end in India by March 2026’: Amit Shah at CRPF Raising Day parade

[caption id=“attachment_32079” align=“alignleft” width=“380” caption=“The real scam was the entry of Reliance into mobile telephony through the wireless-in-local-loop regime, which allowed it to pay lower fees.AFP”]  [/caption]

The common thread to both stories is that as the investigations get more complicated, the chances of finding out the truth recede.

Probing money trails in Switzerland will take months, if not years, by which time the action could have moved elsewhere- needing further letters rogatory (LRs) to be issued to more countries. To date, India has not managed to get anything out of the Swiss authorities, including the Bofors money.

According to the Express story, the “money trail for the Delphi Investment - the company to which the 9.9 percent stake held by Reliance Telecom in Swan was transferred in December 2007 - had now moved to Switzerland.”

The Anil Ambani link that is being probed is this: two months after bagging a licence to offer both CDMA and GSM mobile services, Reliance sold its entire equity of 1.07 crore shares in Swan to Delphi in Mauritius. The Central Bureau of Investigation (CBI) believes there is a link between this transaction and the licence given by jailed former Communications Minister A Raja to Reliance.

What this means is that even while months will be spent on deciphering what the boatloads of paper received from Mauritius mean, the trail will keep extending to other countries.

The Business Standard story also points to a similar potential dead-end. In its efforts to diffuse the focus of the 2G scam it had the DMK and the Congress in its cross-hairs. The government, while notifying the setting up of a Joint Parliamentary Committee to probe the 2G scam, has extended it to cover the NDA period of 1999-2004, when the late Pramod Mahajan and Arun Shourie were at the helm.

But, in doing so, the sharp focus on the Raja scam has got dissipated. Mahajan is widely believed to have favoured the Ambanis, who were making a late entry into mobile telephony. Among other things, Mahajan allowed the Ambanis to enter mobile telephony through the “fixed” wireless route - which involved lower licence fee payments.

This raised a furore, and the other mobile companies - who had paid huge fees for offering mobile services - cried foul and said that wireless was wireless. The artificial distinction between wireless and “fixed” wireless that allowed Ambani to pay less as licence fees made no sense.

Just before this happened, a new telecom policy was evolved in 1999 to ensure that skyhigh licence fees did not kill the nascent industry. A switch was made from fixed payments to fees that were related to a share of total revenues.

The country really saw three or four major telecom scams between the 1990s and 2007 - a Congress one in the early 1990s, a BJP one in the early 2000s, and a DMK-Congress one in 2004-08 when Dayanidhi Maran and A Raja were Communications Minister.

The 1994 scam involved the award of huge bids to (then) unknown firms like Himachal Futuristic at super-high licence fees, and then allowing them to wriggle out of their commitments by limiting the number of circles each could own. The Congress’ Sukh Ram as Communications Minister was found to have accumulated crores under his bed, and is still fighting that case.

Then there was a late 1990s policy change under the NDA that allowed licensees to migrate to a revenue-sharing norm. This, of course, was less a scam than a policy flip-flop that reduced revenues to the exchequer in the short-term, but probably laid the foundations for explosive future growth.

The real scam was the entry of Reliance into mobile telephony through the wireless-in-local-loop regime, which allowed it to pay lower fees, but this wrong was corrected by Arun Shourie, when he fined Reliance and levelled the playing field.

But by extending the scope of the probe to all kinds of policy wrinkles and time-periods, the Congress has probably succeeded in scuttling any real progress in the Raja scam, which is really the mother-of-all-scams.