KING'S RANSOM- INDIA TODAY

I

This story is three years old. It grabs your attention for the sheer audacity of Raja and the deafening silence of the prime minister. On January 3, 2008, just a week before Raja went ahead and collected cheques from these operators on a first come, first served basis, the prime minister gave his virtual assent to this loot. By acknowledging Raja's letter of December 26, 2007 he gave his stamp of approval, saying: "I have received your letter of December 26, 2007 regarding developments in the telecom sector."

Former Telecom Minister A. Raja

Singh had turned a blind eye to Raja's carefully orchestrated hijack through 7, Race Course Road. What Raja managed to do in that week beginning January 3 and ending January 10, 2008 continues to reverberate in the corridors of power in Delhi. In his letter to the prime minister dated December 26, 2007, Raja pretty much laid down the action plan. It was a brilliant stratagem. He wrote, "My efforts in this sector are intended to give lower tariffs to the consumer and to bring higher teledensity... more specifically in rural areas.

In these circumstances, the discussions with the external affairs minister and solicitor general have further enlightened me to take pre-emptive and pro-active decisions on these issues as per the guidelines and the rules framed thereunder to avoid any further confusion and delay." Strong-arm tactics that the prime minister was unable to resist.

Forget that the Cabinet was never brought into this loop, and the Government of India's Business Rules were contravened. For instance, when you disinvest in a public sector company which is government property, you first seek Cabinet approval. Similarly, spectrum is a scarce national resource and thus government property.

Raja's genius is that he conjured billions out of thin air. After all, what is spectrum? It is a section of the electromagnetic frequency scale, a lode of natural channels used by cellphones.

Raja nearly got away till he was singed due to the Government's 3G auction conducted through a price discovery mechanism which queered the pitch for him. As the CAG report says, "The Honourable Minister of Communications and IT for no apparent logical or valid reasons ignored the advice of Ministry of Law, 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. TRAI, the regulator, also stood by as a helpless spectator when its recommendations were being either ignored or misused."

The prime minister has much to answer for. Why hasn't he ever asked for the file on 2G and shown his displeasure? How did he allow this unfortunate decision to go through? Why didn't the terms of reference (TOR) for the GOM on spectrum availability not include spectrum pricing? It is learnt that 22 in the original TOR, this was very much there, but was dropped under DMK pressure at the last moment. Why were the companies which won licences allowed to sell significant equity shortly after being given Letters of Intent (LoI) resulting in trading of spectrum, an illegal act? If on November 2, 2007 Singh told Raja to use the transparent mechanism of auction to ensure discovery of the correct price of spectrum, why is it that on January 3, he looked the other way? What happened between November 2, 2007 and January 3, 2008? Was the DMK pressure too much? It's a question the Supreme Court is vexed by. As Justices G.S. Singhvi and A.K. Ganguly said: "The sanctioning authority can say I am not inclined to give sanction. But we find the alleged inaction and silence troubling." Says senior Supreme Court advocate Dushyant Dave: "The Supreme Court will see through this and take action."

Why is it that key members of the executive failed to take any action whatsoever on a loss that is eight times India's total health budget and three times the education budget? Equivalent to 3 per cent of our GDP, equal to our defence budget and a third of our annual tax revenues? Former BPL Mobile chairman and Rajya Sabha MP Rajeev Chandrasekhar says, "Almost 16 years after telecom was liberalised in India, we haven't managed to evolve a policy on how to licence spectrum." Then law minister H.R. Bhardwaj and his secretary T.K. Viswanathan passed the buck, asking for the setting up of an EGoM and obtaining legal opinion from the Attorney General (see box). Raja blocked; he complained to Singh about the law minister, calling his suggestion out of context. TRAI wrote three letters on October 15, 2007, October 19, 2007 and January 14, 2008, all before the licences were given and the first two before the LOIS were issued, requesting Raja not to cherry-pick their recommendations and ensure that legal implementation of statutory recommendations was kept intact. Raja brazened it out yet again. He snubbed TRAI and went ahead to issue LOIS and subsequently issued licences without referring the matter back to TRAI. DOT secretary D.S. Mathur and Member (finance) Manju Madhavan wrote a four-page note, strongly recommending auction. Raja once again ignored the note.

Mathur refused to sign the LoIs but ultimately retired on December 31, 2007. LoIs were issued within 10 days after getting signatures of new DoT Secretary Siddhartha Behura on January 10, 2008. Behura was brought in from Raja's erstwhile Ministry of Environment and Forests. Finally, the then finance secretary D. Subba Rao wrote to secretary DOT questioning the pricing for licensing. He instructed an immediate halt of processing of LoIs, but again Raja went ahead and issued the LoIs and collected the cheques on January 10, 2008.

The scam started coming together in May 2007 with a palace coup: communications minister Dayanidhi Maran was ousted and environment minister Raja, a Karunanidhi family loyalist, was crowned. Along with him came his personal secretary R.K. Chandolia. Assisted by DDG (Access Services) A.K. Srivastava within DoT, they crafted a scam to make Harshad Mehta look amateurish. Raja announced closure on the applications for spectrum even though TRAI had recommended 'no cap' in the number of licences. Even though 575 applications were received, the Government had spectrum for 150-odd licences. Anybody else would have resorted to a market-based auction process knowing that companies would give an arm and leg for precious spectrum.

But Raja did the opposite. He carefully designed a public relations campaign and sent out multiple press releases, posturing to implement TRAI recommendations on 'no cap'. Instead, he surreptitiously imposed a definitive cap by issuing only 122 licences on a first come, first served basis to companies using an arbitrary cut-off date, leaving over 300 entities in the lurch and benefiting nine (see box). Telecom analyst Mahesh Uppal says, "Of course it was a loot, but it can be easily reversed. You just need to take back the spectrum from these operators and reverse the process. Agreed there will be litigation and consequential losses, but you need to be prepared." Uppal gave the analogy of getting a DDA flat in the Capital through a public auction. He said, "If it is proved that I got this by misrepresenting facts and the allocation was mala fide, then the flat may be taken away from me."

As Raja's ouster hung in the air, an SMS campaign rode spectrum across the nation: A narco test is in order for Raja… He would sing: "One for my master, one for my dame and one for the Singh boy whose government is now lame." Raja, who may yet cost it an arm, is exultant, an embattled Singh is struggling to retain an image of integrity, and the Opposition senses a kill. Will there be blood?