2G Spectrum Scam: 85 companies got licenses by suppressing facts, says CAG

New Delhi: The latest revelations on the 2G scam suggest a careful confluence between the Telecom Ministry, when it was headed by A Raja, and a series of big business houses.

"85 of the 122 licenses were issued to companies which suppressed facts, disclosed incomplete information and submitted fictitious documents to DoT and thus used fraudulent means of getting licenses and thereby access to spectrum"  -this is one of the more biting conclusions of the report prepared by the government's auditor, the Comptroller and Auditor General (CAG). (Read: Report Highlights) | (Watch: CAG explains 2G report) | (Read: Full text of report)

The report -which was leaked to the media last week and forced Raja's resignation - was tabled in Parliament today.

It is unflinching in its indictment of Raja, blaming him for violating guidelines, indulging in favouritism and costing the government Rs. 1.76  lakh crores by mishandling the allocation of 2G spectrum in 2008. (Read: What is the 2G spectrum scam?) | (Who is A Raja?)

"2G spectrum was allocated beyond contracted quantity to 9 firms including Bharti, Vodafone, Idea, BSNL, Reliance, Aircel," the report said.

It says that the Department of Telecommunications (DoT) circumvented the rules to help Swan Telecom, which effectively acted as a front for Reliance Telecommunications.   The charges in the CAG report are that Swan should not have been considered for a license because Reliance Communications held 10.7% stake in Swan - and according to the rules, a telecom operator cannot own more than 10% stake in another telecom company operating in the same service area. "Email ID of Swan Telecom was shown as that of a Reliance ADA group official," said the report.

The application should have been rejected by the Department of Telecom (DoT), according to the CAG report. "DoT did not follow its own practise of first-come-first-serve in letter and spirit," it said.

The report also says that Reliance Telecommunications was among those who got undue benefits, and that Reliance was allotted spectrum ahead of the others.  According to CAG, Idea and Spice were wrongly denied spectrum on the grounds of a proposed merger.

Reacting to the charge, Reliance Communications spokesperson stated: "Our Group had no shareholding in Swan Telecom Ltd. (now known as Etisalat DB Ltd.) at the time of grant of license to them or any time thereafter, and that issue is accordingly not relevant to our Company. Reliance Communications has always been in full compliance with all applicable laws, rules and regulations, and there has been no violation of our license conditions at any stage on account of cross-holdings in excess of 10%."

CAG indicts Unitech Wireless

Another big beneficiary of the 2G spectrum allocation was Unitech Wireless, which had no experience in the telecommunication sector.

After Unitech got the license for a throwaway price of Rs 1,661 crore, it sold 60 per cent stake to Telenor Asia for a whopping Rs 6,200 crore.

In its report, CAG indicts Unitech saying the high value paid by Telenor was for the 2G spectrum, and not for other inputs as claimed by Unitech. It also says that such huge equity infusion, which should have accrued to the public exchequer, went as a favour to the new licensees for enriching their business.

Speaking to NDTV, the telecom giant Telenor said that its investment in Unitech Wireless conformed to all regulations. (Watch)

The political crisis continues

The stand-off between the government and the Opposition over 2G scam continues.  The Opposition wants a Joint Parliamentary Committee (JPC) to investigate the 2G scam.  The government has said there is no question of agreeing to this. (2G scam: Opposition chants 'we want JPC'; No, says Government)

Parliament has not functioned at all this winter session - the Opposition says it won't let the House get to work till a JPC is announced.  (Watch: Let the law take its course, says A Raja)

There were loud and angry scenes in Parliament once again today - the Lok Sabha has been adjourned till Thursday, since tomorrow is a national holiday for Eid.

A lunch meeting with Opposition leaders called by Finance Minister Pranab Mukherjee to try and end the deadlock, has ended without a breakthrough.  Mukherjee, who also met senior BJP leader LK Advani at the latter's Parliament office earlier, emerged from the lunch meeting to say, "We are for discussion. No solution has been found yet. They want a JPC."  (Read: No breakthrough at Pranab's lunch meet)

Raja Ignored PM's Advice, Says CAG Report

"The Honourable Minister of Communication & IT, for no apparent logical or valid reasons, ignored the advice of Ministry of Law and Ministry of Finance, avoided the deliberations of the Telecom Commission to allocate 2G spectrum, a scarce finite national asset at less than its true value on flexible criteria and procedures adopted to benefit a few operators."

The report also says Raja ignored the PM's advice. "The PM had stressed on the need for a fair and transparent allocation of spectrum..... Brushing aside the advice, the Department of Telecom (DoT) in 2008 proceeded to issue licenses for 2G spectrum at 2001 prices, flouting all rules and procedures," said the CAG report. (Report Highlights) | Read: CAG must ensure fair reports, says PM | Full text)

(Watch: Raja vs Opposition on his resignation) | The phone calls that led to Raja resigning)