2G SPECTRUM SCAM

What In The 2G Spectrum All About The 2G spectrum scam involved officials and ministers in the Government of

India illegally undercharging mobile telephony companies for frequency allocation licenses,

which they would use to create 2G subscriptions for cell phones. According to a report

submitted by the Comptroller and Auditor General based on money collected

from 3G licenses, the loss to the exchequer was  176,379 crore (US$38.27 billion). The

issuing of the 2G licenses occurred in 2008, but the scam came to public notice when

the Indian Income Tax Department investigated political lobbyist Niira Radia and

the Supreme Court of India took Subramaniam Swamy's complaints on record [With Case

type: Writ Petition (Civil),Case No:10, Year:2011].[1] The case details of the main PIL filed

with the supreme court is Typewritten Petition (Civil),Case No:423, Year:2010.

In 2008, the Income Tax department, after orders from the ministry of Home and the

PMO, began tapping the phones of Niira Radia. This was done to help with an ongoing

investigation into a case where it was alleged that Niira Radia had acted as a spy.[3] Some of the many conversations recorded over 300 days were leaked to the media. The

intense controversy around the leaked tapes, became known in the media as the Radia

tapes controversy. The tapes featured some explosive conversations between Politicians,

Journalists and Corporate Houses. Politicians from Karunanidhi to Arun Jaitley, journalists

like Barkha Dutt and Vir Sanghvi and Industrial groups like the Tata's were either participants

or mentioned in these explosive tapes.

Politicians involved Manmohan Singh, - Prime Minister of India from heading the ruling UPA government led

by the Congress, who is accused of not acting on removing Raja, the main accused in the

scam in spite of Finance minister Chidambaram's warning to him .In a note to the PM on

January 15, 2008, Chidambaram had reiterated the finance ministry's suggestion to auction

spectrum as the price would be based on scarcity value. He then went on to suggest this

could be used as one-time for additional spectrum.

A. Raja - the Ex-Minister of Communications and Information Technology who was the

minister when the controversial second round of spectrum allocations took place. Mr. Raja, an

MP of the Dravida Munnetra Kazhagam from the Nilgiris constituency, was forced to resign

following the public outcry.

Arun Shourie - the minister for Telecom during 2003 in the previous BJP regime. It was

Arun Shourie who introduced the controversial technology neutral "Unified Access(both Basic

& Cellular) Services License", which allowed fixed line operators who had paid much lower

license fees to offer mobile phone services, at first in the limited WLL mode (Wireless local

loop) and later, following an out of court settlement between mobile operators and the BJP

govt, full mobility. This gave an advantage to players like Reliance and Tata Teleservices who

managed to get mobile spectrum without paying the hefty fees that earlier operators like BPL

Mobile had paid.

Bureaucrats involved

Siddhartha Behura - former telecom secretary who served in the DOT at

the time of the 2G allocation.

Pradip Baijal - a bureaucrat who is alleged to have implemented policies that

favored certain Telecom companies when he was heading the TRAI. Post

retirement, Baijal joined Noesis, a consulting firm. Raja has made references to

Baijal's decisions in 2003 as the basis for his decisions in 2008. The houses and

offices of the bureaucrat were recently when raided by the Central Bureau of

Investigation as part of their investigations.

R K Chandolia - private secretary of Raja during UPA-I when the licences were

awarded. He was an Indian Economic Service officer of the 1984 batch

cadre. When Raja became the Telecom Minister once again in UPA-II, Chandolia

had been promoted to the Joint Secretary rank. Raja re-designated him Economic

Adviser, that gave him the charge of all important policy-related work. Chandolia

interacted with all the licensees. It is said that it was Chandolia who, from DDG-

access services A K Srivastava's room, had handed out letters of intent to

representatives of various companies

Corporations Corporativeinvolved personalities involved

Unitech Swan Loop Mobile Videocon

Telecommunications S Tel Reliance Communications Sistema Shyam Mobile Tata Communications Vodafone Essar Dishnet Wireless Allianz Infra

Anil Ambani - Reliance Group (ADAG)

Shahid Balwa - DB Realty and DB Etisalat (formerly Swan Telecom)

Prashant Ruia - Essar Group

Response to Scam In early November 2010 Jayalalithaa accused the Tamil Nadu state chief

minister M Karunanidhi of protecting A. Raja from corruption charges and called for

A. Raja's resignation. By mid November A. Raja resigned.

In mid November the comptroller Vinod Rai issued show-cause notices to

Unitech, S Tel, Loop Mobile, Datacom (Videocon), and Etisalat to respond to his assertion

that all of the 85 licenses granted to these companies did not have the up-front capital

required at the time of the application and were in other ways illegal. Some media sources

have speculated that these companies will receive large fines but not have their licenses

revoked, as they are currently providing some consumer service.

In response to the various allegations , the Govt of India has replaced the then

incumbent Telecom minister ,A Raja with Kapil Sibal who has taken up this charge in addition

to being the Union minister for Human Resources Development. Mr Sibal contends that the

"notional" losses quoted are a result of erroneous calculations and insists that the actual

losses are nil.

The CBI conducted raids on Raja and four other telecom officials - former telecom

secretary Siddharth Behura, Raja's personal secretary R K Chandolia, member telecom K

Sridhar and DoT deputy director general A K Srivastava on 8 December 2010.

Raja, Behura and Chandolia were arrested on Feb 2nd 2011.

Impact on stock markets

The first casualty in Stock Markets once Raja was arrested was DB Realty.

DB Realty had given 200+ crores to Kalaignar TV( owned by Karunanidhi's

Wife) . The news led to 20% fall in the stock prices of DB Realty. Sun TV had its

shares fall by 10% on the next day following rumours of Kalanidhi Maran having

stake in Kalaignar TV. Sun TV COO refused the allegations. Swan Telecom

Chief Balwa was arrested on Feb 8 and this led to rumours of links with Anil

Ambani's Reliance ADAG and it led to 20% fall of his stocks . Its reported that

nearly 2 Billion USD was eroded from his stocks . Spicejet stocks went down

after reports of investigation on Maran's recent takeover of Spicejet

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