The 2G Spectrum Allocation Scam in India

Posted on November 16, 2022

2010 – a massive 2G scam shakes Indians. The scam which was of the magnitude of Rs. 1,76,000000 cr. was a political earthquake in India. It put a former telecom minister in jail and left accusations of wrongdoing on 17 high and mighty. It is said that this scam paved the way for BJP to grab power and left Congress in the dust. The storm it created in power circles of India had no precedence.

WHAT WAS THE SCAM?

In 2008 the Department of Telecommunication invited applications for allocation of 2G spectrum in India. The 2G spectrum is a range of frequencies mainly used for telecommunication. Telecom companies are the buyers of this utility and they use is for mobile communication and telephony.

The scam was the way the entire process was conducted. Usually DOT (Department of Telecommunication) does auction in an open market where the highest bidder gets license after due consideration. But this time the DOT took a First Come First Serve approach. DOT did not consult to Finance Minstry or PMO, reports suggest.

According to CAG, doing so resulted in loss of huge amount to exchequer. Allegations were made that cut-off dates were changed to favor certain companies. DOT did not give much time to companies to submit applications, this helped the companies who already knew the date and timings, again a case of favoritism, as per the allegations. When the licenses were allocated there were procedural lapses, favoring companies who did not submit the required documents. Reports of bribery to get the licenses also surfaced in newspapers.

Supreme Court later cancelled all the 122 licenses allocated to 46 companies.

TIMELINE OF THE ALLEGED SCAM

May 2007 – A.Raja gets the telecom minister portfolio.
Aug 2007 – Depart of Telecom (DOT) initiats the process of allotment of 2G spectrum.
Sep 2007 – Telecom ministry issues deadline for applications as 1st October 2007.
Oct 1, 2007 – Department of Telecommunications receives 575 applications from 46 firms.
Nov 2, 2007 – PMO writes to Raja to ensure fair allocation of licenses.
Nov 22, 2007 – Finance Ministry writes to Department of Telecommunications raising concern on the adopted procedure.
Jan 1, 2008 – Department of Telecommunication decides to issue licenses of First Come First Serve basis. Changes the cut-off date to 25th September.
10th January 2008 – A.K took decision on spectrum allocation in 60 minutes.
2009 – Central Vigilance Comission directs CBI to investigate the matter.
Nov 2010 – Raja resigns as telecom minister. Kapil Sibal given additional charge of telecom ministry.
Feb 2011 – The Supreme Court directs CBI to bring the corporate houses involved, under its scanner. Raja is remanded to CBI custoday for 4 days more by a special CBI court.
Feb 17, 2011 – Raja sent to Tihar jail.
March 2011 – The Delhi High Court sets up special court to handle the 2G case.

THE ACCUSATION

CAG report alleged that telecom minister distributed the spectrum arbitrarily. Telecom Commission, Finance Ministry, and Primite Minister’s Office were not informed of the decisions and advice was not sought.

It was alleged that A.K Raja was bribed Rs. 3000 cr. for changing the application date.

Telecom minister A.K. Raja advanced the last date of application from 1st October 2007 to 5th September 2007. This ensured that a lot of candidates could not apply.

There was no auction, but licenses were granted on a first come first serve basis, leaving money on the table.

There was accusation the 2008 licenses were distributed at 2001 rates.

It was alleged that she with Raja took Rs. 200 cr. as bribe from Swan TV for allocation of license.

It was alleged that one DB company paid Rs. 200 cr. to Kalayenger TV for license.

Companies were told to meet all the conditions within 15 days. According to CAG, some companies knew all the details beforehand and they were ready with required documents when time came.

Also according to CAG, some of the companies did not have the required documents, but were allocated license nevertheless.

CONSEQUENCE

Out of 46 only 9 companies were left for the last round. Total 122 licenses were distributed among 9 companies. Some of the companies who got license sold their licenses at premium to other companies.

The main accused in this case were telecom minister A. Raja and Kanimojhi of DMK. Raja was arrested on 2011 and put into jail, where he stayed for 15 months. A. Raja dragged the then Prime Minister manmohan singh also, saying that the prime minster was privy to every decision Raja took.

A. Raja tendered his resignation in November 2010 and was arrested on 2nd February 2011. He got bail in 15th May 2012.

The another characted who was accused in Kanimojhi. She is the daughter of Karunanidhi. Kanimojhi had 20% stake at Kalayenger TV.

Kanimojhi was arrested in 20th May 2011and she got bail on 28th November 2012. She was implicated due to her connection to Kalayenger TV.

Comptroller and Auditor General of India (CAG) estimated this alleged scam to be worth 1,76,000000 cr.

CBI said the actual value of the scam was Rs. 30,985 cr.

The Suprement Court cancelled all allocated licenses in 2012 citing procedural irregularities.

On December 2017, a special court aquitted all the 17 accused in this case citing lack of evidence. Judge O.P Saini of Delhi Patiala High Court did not find any merit to the accusations and let all the accused walk free.

SUPREME COURT ACTION

2012, Suprement Court adjourned all 122 licenses. The apex court also fined Unitech Wireless, Swan Telecom and TATA Teleservices Rs. 5 cr. each and Loop Telecom, S Tel, Allianz Infratech, Sistema Shyam Teleservice Ltd. Rs. 50 Lac. each.

THE AFTERMATH

This was the biggest financial scam in independent India. The wall street journal named the scam the 2nd largest after watergate scam.

On December 2017, a special CBI court chaired by judge O.P Saini aquitted all the 17 accused in this case. In his judgement he said that CBI failed to produce a single bit of evidence against the accused. The jest with which the central investigating agency started the case, went downhill with time.The scam did take place, but there was no admissible evidence against any of the accused.