A matter of business rivalry & abuse of power As investigations by CBI, examination by a joint parliamentary committee and court hearings on the colossal 2-G scam drag on to the New Year one is baffled by the maze of multiple interests that show up. Veteran journalist Malladi Rama Rao attempts to clear the maze behind the scam to present the big picture

Unlike the other sectors, which were opened up simultaneously, the telecom sector has remained in the eye of a storm right from day one. As telecom minister in the scandal-ridden Narasimha Rao government, Pandit Sukhram had set the stage for opening up of the sector in 1994, with the National Telecom Policy-94. He soon found himself embroiled in Rs. 60 crore scam by showering favours on three telecom companies - one each from Andhra Pradesh, Haryana, and his native Himachal Pradesh. He made headlines when the CBI found Rs 2.45 crore in cash from the puja room of his residence at 12, Safdarjung Lane in the Capital after the fall of Rao government. The 86-year-old leader has been convicted after a 15-year legal battle; he is presently out on bail.

Pandit Sukhram

   The second scam hit the telecom sector during the Vajpayee government. It unfolded in two-stages – one when, instead of agreed fee, the private operators were allowed to share their revenue with the government in the form of annual licence fee and spectrum charges, and two, when additional spectrum beyond 6.2 MHz (up to 10 MHz) was allotted to three companies, Bharti Airtel, Hutchison Max and Sterling Cellular (known as Vodafone Essar after merger) charging them one per cent of their annual gross revenues beyond 8 MHz. Had the telecom department charged the normal two per cent, the exchequer would have earned Rs 508 crore until 2007, when the decision was reversed, according to the CBI, which has woken up to the case now.
         The third scam resulted in a record Rs. 1.76 lakh crores ($40billion) loss to the exchequer, according to the Comptroller & Auditor General of India. And like the first big financial scandal of free India, the Mundra scandal (1950s), it has a Tamil connection.

   T. T. Krishnamachari became the finance minister in his own right in the Nehru cabinet and resigned after he was held ‘constitutionally responsible for the action taken by his secretary’ that had benefited Haridas Mundra, a Calcuttabased industrialist and stock speculator.

   Andimuthu Raja became the Minister for Communications and Information Technology in the Manmohan Singh government by virtue of being a loyalist of the first family of DMK. And his actions have earned him a place in “Top 10 Abuses of Power” list.

   TIME magazine, which prepared the list in 2011, ranked Raja’s scam at number two just behind the Watergate scandal. He resigned as minister on November 10, 2010 after a show of defiance. Arrested on February 2, 2011, he is presently languishing in Tihar jail.

   Wikipedia, the free encyclopaedia, sums up his crime in one sentence thus: He grossly undervalued telecom bandwidth and offered to a chosen few with vested interests, on a dubious 'First-Come-First- Served' basis. Telecom secretary Sidharth Behura of the day, and Raja’s personal secretary, RK Chandolia helped the game. The CBI and Enforcement Directorate estimate that Raja could have made as much as Rs 3,000 crore from the alleged bribes.

   The CAG report holds Raja personally responsible for the sale of 2G spectrum at 2001 rates in 2008 and grant of 122 new telecom licences, saying that he had personally signed and approved the majority of the questionable allocations to benefit several domestic companies with little or no experience in the telecom sector. The CAG word is not the last word since it ‘only attempted to arrive at a presumptive value’ of the loss, after factoring in the 3G spectrum auctions, and in the process went beyond its normal brief. A Joint Parliamentary Committee (JPC) is into an open-ended probe into Raja’s ‘irregularities’ and its verdict is likely to come some time in Feb 2012.

   As brought out by the CBI chargesheet, Swan got the licence for a mere Rs.1, 537 crore even though it did not meet eligibility criteria; it sold 45% stake to a foreign operator at nearly three times the amount within a few months. Unitech sold its 60% stake to a Norwegian company for over four times the licence fee (Rs.1, 650 crore) it had paid.

Andimuthu Raja

Swan Telecom, floated by Shahid Balwa, the promoter of DB Realty, alleges the CBI, sent Raja a Rs. 214-crore kickback that was routed through a maze of companies but rested finally with Kalaignar TV channel owned mainly by DMK Chief Karunanidhi’s wife, Dayalu Ammal, and daughter Kanimozhi. Together, they have 80% stake in the company. Sharad Kumar, the Managing Director of Kalaignar TV, owns the balance. Both he and Kanimozhi are accused of conspiring with Raja. And the two tasted life in Tihar jail.    Also in the dock are DMK leader, and former Communications Minister Dayanidhi Maran and his brother and Sun TV promoter Kalanithi Maran. The charge is that the Maran brothers had arm-twisted C. Sivasankaran of Aircel to sell a stake to Apollo owned Maxis before awarding Aircel 14 telecom licences. In an alleged quid pro quo, Maxis through Astro All Asia Networks Plc made an investment of around Rs. 600 crore in the Sun TV.

Anil Ambani’s Reliance Communications through the parent company, ADAG, is at the centre of the Spectrum mania/mess both directly and through front companies. Loop that ties the Khaitan family with the Ruias of Essar is also a front company, CBI says and chargsheeted the Khaitans and the Ruias. No case has been made out against Anil Ambani but his three top executives, Gautam Doshi, Hari Nair and Surendra Pipara have been made to see the inside of Tihar jail for several months. All the three owned up the crime, it is said. If it is indeed so, it reflects poorly on their owner, and the shareholders have every justification to turn the heat on the owner at the next AGM in what would be the first instance of calling for corporate responsibility.

Sharad Kumar and Kanimozhi

Subramanian Swamy

The House of Tatas is not an innocent by-stander in the rush for spectrum either though it doesn’t appear to have benefited. Radia tapes throw up enough light on the efforts of the Tata firms to curry favour with Raja and to put in a good word about him to the family that matters to him.    Like the Bofors scam, the Spectrum scandal has much to do with business rivalry. Otherwise, the Radia tapes (telephone conversations corporate lobbyist Niira Radia  had, while

   working for the House of Tatas, with the who is who of media and bureaucracy) of the I-Tax department, for instance, would not have ended up in the circulating library as a victim of one-upmanship games of a big business house, which had found itself bearing the cross.

   The irrepressible maverick, Dr Subramanian Swamy, finds in the Raja saga enough ammunition to settle his old scores and make the scam the UPA-II's nemesis. His dogged pursuit has made CBI to remove the ‘pause button’ it had hit on the case after registering the FIR in October 2009 on the directions of the Central Vigilance Commission.

   His latest goal is prosecution of Home Minister Palaniappan Chidambaram, who, as finance minister, he alleges, was in collusion with Raja. The government, as usual, is dismissive of his charge while the BJP-led opposition demand Chidambaram’s resignation.

   It is still too early to say we have heard the last word since the issue rakes up a larger question about the responsibility and role of the PMO.