Dear Readers,

The 2G scam based on the misappropriate

allocation of 2G licenses under the

Ministry of former telecom Minister A.

Raja has cost the Government a whopping

sum of Rs. 1.74 crores (according to the

CAG report). Following the report Mr. A

Raja was forced to resign on 14th Nov.,

2010. Besides Raja-the main accused,

names of other politicians, corporate

lobbyist, big corporate houses, hawala

dealers started surfacing as they were

allegedly involved in the day light robbery!

The issue is even rocking the parliament

with opposition parties demanding a probe

by a Joint Parliamentary Committee (JPC)

and the UPA government adamant on

denying a JPC probe on 2G scam.

So what exactly is the 2G scam that led to

all these? In this newsletter we have

focused on this multicrore-scam issue that

is continuously making front-page

newspaper headline.

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infringement of copyright

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2G Spectrum Scam December 2010

Vol. 2 No.9

What is 2G Scam?

� In the year 2008, the Licences for 2nd generation (2G)

spectrum for GSM services were issued to private telecom

players at throwaway prices by the Ministry of

telecommunication held by Mr. A Raja

� Datacom Solutions, Yestel, Shyam Telelink, Loop

Telecom, Spice, Idea Cellular, Tata Teleservices, Swan

and Unitech were given 2G licenses. The total fee

generated by the Government for selling licenses to the

above 9 companies is 10,772 crore

� Rules and procedures were flouted while issuing Licences

and importance were given to favouritism

� Licences were issued to some companies who are totally

inexperienced in the telecom business

� Such a misappropriation in 2G Licence auction cost Rs

1.74 lakh crores to the exchequer

Severe irregularities in 2G-spectrum allocation

� In 2008 the spectrum Licences were allotted to the

private players at 2001 prices though the mobile

subscriber base had shot up to 350 million in 2008 from 4

million in 2001.

� Neither proper auction process was followed, nor any

bids were invited. Mr. A Raja ignored all advices of TRAI

(Telecom Regularity Authority of India), Law Ministry and

Finance Ministry.

� The last date to submit applications for 2G license was

announced to be 1st October 2007 by the ministry on

24th September. Later an artificial cut-off date, Sep 25,

2007, was created and applications received between Sep

25 and Oct 1 was summarily rejected.

� According to Mr. A Raja the Licences were issued on a

first cum first serve basis. Whereas TRAI head Mr. Mishra

had clarified in an interview (December 2008) that

nowhere in the guidelines or recommendations of TRAI it

had mentioned that Spectrum needs to be allotted on first

come first serve basis.

� Licences were issued to companies like Swan and Unitech

who do not have prior experience in mobile phone

services, broad band or any other related services.

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Sayantan Consultants Pvt Ltd.

Why PM is silent?

� Prime Minister Manmohan Singh is maintaining no

comment stance on Rs 1.74 crore scam which is even

more shocking than the scam itself!

� Janta Party Leader Subramanian Swamy wrote his first

letter to PM asking for sanction to proceed against

Telecom minister A. Raja in 2008. But no response

came.

� He kept on writing to PM on the same issue. Finally a

letter from PM’s Office came in response to Swamy’s

letter written on 8th March,2010. The letter informed

that it is premature to give sanction and refused to give

permission to prosecute Raja.

� Why it took 18 months to respond Swamy's public

interest litigation? Why PM is maintaining ‘no comment’

stance for so long?

� PM Manmohan Singh found himself in an unparalleled

crisis when Supreme Court asked for an affidavit

detailing his response on the plea to prosecute Raja and

the opposition saying his silence on the issue implied

consent.

The King (Raja) looted the public

exchequer!

The telecom ministry under A. Raja issued licenses to Swan Telecom to operate in 14 circles for an amount of 1537.01 crores while Unitech has obtained license to operate in 22 circles by paying 1651 crores. Within a matter of six months these two companies have sold majority of their stake to foreign companies. Swan Telecom had sold 45% of its shares for a whopping amount of 4050 crores to Etisalat a UAE based company due to which the valuation of Swan Telecom had increased to Rs. 9990.56 crores. Unitech had sold 60% of its stares to a Norway based company Telenor for Rs. 6120 crores due to which the valuation of Unitech had increased to a monstrous amount of 10,731 crores. Just by leveraging their ability to acquire Spectrum license, Swan and Unitech had made massive 700% return on their investment within six months. Raja’s ministry made Rs. 10,772.65 crores by selling 2G licenses to 9 companies whereas Swan and Unitech just by selling half of their stake had proved the fact that their license is worth more than 20,000 crores. If we consider the market value of these two companies, the Government by selling license to these nine companies should have generated 70, 022.42 crores as license fee. In that way our country has incurred a loss of over Rs. 60, 000 crores.

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December 2010

Vol. 2 No. 9

Faces behind the day light robbery!

The investigating agency unearthed important evidence of

wheeling-dealing in the spectrum scam by authorised tapping

of telephones of Niira Radia. The telephone transcript served as

a clinching evidence of wheeling-dealing in the spectrum scam

and unmasked many famous faces involved in the scam!

� Niira Radia, a high-profile woman public relations lobbyist;

owner of public relations and consultancy firms. She was in

regular contact with Raja and acted as powerbroker in the

mutli-crore scam. Radia herself admitted of liasoning for both

the Tata teleservices and Unitech Wireless with A Raja. She

was paid a whopping Rs 60 crore by both the telecom majors

for the work.

� Pradip Baijal, former TRAI chairman, an IAS officer of

Madhya Pradesh cadre, currently working with Radia's firm

Noesis. As the chairman of the regulatory body, which makes

recommendations to government, he had helped some

telecom firms in policy flip-flops.

December 2010

Vol. 2 No. 9

� Chennai based Jain brothers of JG Group, suspected as the

center of hawala dealing (funds were diverted through

channels – by hawala dealers and was again pumped back

into the country as foreign investment)

� CBI raided Tamil maiyam, an NGO. Kanimozhi the daughter

of Tamil Nadu CM Karunanidhi is the director of the NGO

� Kamaraj, the Chennai based associate editor of Tamil

magazine Nakkeran, is also in the list of suspects for

maintaining close circles with DMK

Besides these major accused, there are many mores whose

names were exposed in the scam via the telephone tapping.

More facts:

>CAG estimate of the loss as Rs

1,76,000 crore is based on the value

of 3G licences awarded earlier this

year.

>A more realistic figure is Rs 58,000

to Rs 66,000 crore based on the

equity sale by two licensees to

foreign companies

>The excerpts of the telephone

transcript of Radiae exposed in

public by a magazine Outlookindia

>Radia’s interface with A. Raja, DMK

MP Kanimozhi over the phone shows

how she successfully lobbied for

several cabinet berths

>Tata telecom service got UASL

(Unified Access Service Licence) in

new circles without going through

the auction process

>Radia’s firm Vaishnavi Corporate

Communications used to look after

the corporate communications of

Tata Group

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CBI ransacked the office and home of the suspects!

29th October, 2009 : The trail of the controversial auction of

2G spectrum has taken the CBI to the doorstep of Raja’s Office

for the first time.

8th December, 2010 : 1. CBI began searching Raja's homes

from early morning Wednesday. CBI team raided Raja’s Delhi

and Chennai residence including his house in the native village

at Velur, in Perambalur district

2.Another team of CBI searched the homes of his brother and

sister in Srirangam and Tiruvanaikaval in Tiruchirapalli district

on the same day.

15th December, 2010: The CBI swooped down at 34 places

including the homes and offices of business lobbyist Niira Radia

former telecom regulatory chief Pradeep Baijal and relatives of

former communications minister A Raja over the 2G spectrum

row.

Grilling sessions continues for Raja and Radia

On 21st December, 2010 Radia was quizzed by the CBI team on

her connection with the 2G scam.

On 24th December, 2010 Raja is grilled for 9 hrs by CBI

officials. More grilling sessions waiting for Raja and Radia – the prime

accused of the 2G scam.

CBI Scanner

� CBI lens on how funds flow through hawala

channels

� CBI will consider CVC’s (Central Vigilaence

and Commission) estimate Rs. 22000 crore

and not CAG’s (Comptroller and Auditor

general) figure on 2G loss

� Supreme Court asked CBI to investigate

public sector and other banks for granting

huge loans to little known telecom players

� CBI likely to grill those involved in policy

flip-flop charges; Baijal ex-TRAI chief

(2003-06) recommended converting limited

mobility into full mobility license

� CBI to investigate both the Department of

Telecom (DoT) and the Telecom

Regulatory Authority of India (TRAI) on

why they did not investigate the companies

who resold 2G licenses for massive profit

More to come . . . .

2G scam is the biggest scam the country has ever

faced. It has once again unmasked the faces of our

politicians and bureaucrats who were hand in glove

with the corporate in looting the public exchequer.

CBI probe into the matter will surely come up with

more clinching evidences against those who were

involved in the crime.

It is expected such evidences will reveal more truths

behind the scam. India, the republic, will wait and

watch what penalty the culprits receive for putting

the Nation on auction. What is more worrying is the

fact that 2G scandal signifies breakdown of state

institution and their capture by robber firms.

December 2010

Vol. 2 Issue 9

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