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2G SCAM

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Priya Vinodanan 21B PGDM (HR)

MCS

2G SPECTRUM SCAM
The 2G spectrum scam involved officials 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. The shortfall between the money collected and the money which the law mandated to be collected is 1,76,379 crore rupees or USD 39 billion. The issuing of licenses occurred in 2008, but the scam came to public notice when the Indian Income Tax Department was investigating political lobbyist Nira Radia. The government's investigation and the government's reactions to the findings in the investigation was the subject of debate, as were the nature of the Indian media's reactions. The discussion around the reactions to the 2G spectrum scam became known in the media as the Nira Radia tapes controversy.

Parties accused of involvement

The selling of the licenses brought attention to three groups of entities - politicians who had the authority to sell licenses, corporations who were buying the licenses, and media professionals who mediated between the politicians and the corporations.
Politicians involved

A. Raja, the Minister of Communications and Information Technology who sold the licenses.

Corporations accused

Unitech Group a real estate company entering the telecom industry with its 2G bid; sold 60% of its company stake at huge profit to Telenor after buying licensing Swan Telecom sold 45% of its company stake at huge profit to Emirates Telecommunications Corporation (Etisalat) after buying licensing Loop Mobile Videocon Telecommunications Limited S Tel Reliance Communications

Media persons accused

Nira Radia, a corporate lobbyist whose conversations with politicians and corporate entities were recorded by the government and leaked creating the Nira Radia tapes controversy Barkha Dutt, an NDTV journalist alleged to have lobbied for A. Raja's appointment as minister Vir Sanghvi, a Hindustan Times editor alleged to have edited articles to reduce blame in the Nira Radia tapes Rajdeep Sardesai, a CNN IBN senior editor

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SPECTRUM SCAM

2G licenses issued to private telecom players at throw away prices in 2008 CAG: Spectrum scam has cost the government Rs. 1.76 lakh crore CAG: Rules and procedures flouted while issuing licenses

THE CHARGES ON FORMER TELECOM MINISTER A RAJA CHEAP TELECOM LICENSES

Entry fee for spectrum licenses in 2008 pegged at 2001 prices Mobile subscriber base had shot up to 350 million in 2008 from 4 million in 2001

NO PROCEDURES FOLLOWED

Rules changed after the game had begun Cut-off date for applications advanced by a week Licenses issued on a first-come-first-served basis No proper auction process followed, no bids invited Raja ignored advice of TRAI, Law Ministry, Finance Ministry TRAI had recommended auctioning of spectrum at market rates

FAVOURITISM, CORPORATES ENCASH PREMIUM

Unitech, Swan Telecom got licenses without any prior telecom experience Swan Telecom given license even though it did not meet eligibility criteria Swan got license for Rs. 1537 crore, sold 45% stake to Etisalat for Rs. 4200 crore Unitech Wireless got license for Rs. 1661 crore, sold 60% stake for Rs. 6200 crore All nine companies paid DoT only Rs. 10,772 crore for 2G licences

THE ROLE OF KALAIGNAR TV One of the companies named by the CBI in the 2G scam - Swan Telecom - allegedly sent Mr Raja a Rs. 214-crore kickback that was routed through a maze of companies but rested finally with Kalaignar TV channel in Chennai that is owned mainly by Kanimozhi and Dayalu Ammal. Together, they have 80% stake in the company. Sharad Kumar, the Managing Director of Kalaignar TV, owns the balance and has also been accused of conspiring with Mr Raja.

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