Introduction

The 2G Spectrum Scandal, one of the biggest financial scams of the contemporary era, involved the alleged corrupt sale of telecommunications bandwidth to selected organisations at prices that understated the real market value of the asset in 2008. The sale is claimed to have occurred when A. Raja headed the Telecommunications and IT Ministry. It has been considered the largest political corruption case in modern Indian history, amounting to around ₹1,766.45 billion (US$28 billion) of lost income for the government of India.

Case Facts

After being appointed as telecom minister, A. Raja began the process of allotment of 2G Spectrum and licences. In October, Raja announced that on the recommendation of the Telecom Regulatory Authority of India, there would be no auction of spectrum, which would rather be allocated. DoT received 575 applications from 46 firms.

In January 2008, DoT decided to issue licences on a first-come, first-served basis with a retrospective cut-off date of 25 September 2007. After the Central Vigilance Commission (CVC) received a complaint from Telecom Watchdog, a non-government organisation, alleging illegalities in 2G spectrum allocation, it ordered a probe by the CBI.

In July, The Delhi High Court stated that the cut-off date for licence applications of 25 September 2007 is illegal and in October 2008, a first information report was filed by the CBI against “unknown officers” of DoT and unknown private persons/companies under various provisions of the Indian Penal Code (IPC) and Prevention of Corruption Act.

Investigation by the CBI

On 21st October 2009, CBI registered a case related to alleged irregularities in allocation of 2G Spectrum. The Supreme Court then went on to seek the government’s response on Comptroller and Auditor General’s or CAG’s report on the alleged scam. Vinod Rai was the CAG during the time when they faced a staggering loss to the exchequer at Rs.1.76 lakh crore.

On 14th November 2010, A Raja resigned as the Communications and Information Technology Minister and on 2nd February 2011 he got arrested.

On April 2011, an 80,000-page charge sheet was filed by CBI, out of which 4,400 pages contained only the testimonies of the 154 witnesses examined by CBI, including statements of Reliance ADA chairman Anil Ambani, his wife Tina Ambani and the then Attorney General of India, GE Vahanvati, which was also the first time when an AG appeared as a witness in a criminal case.

Again, on 25th April, CBI filed a second charge sheet naming DMK Chief M. Karunanidhi’s daughter, Kanimozhi, four others and the trail of the 2G scam begun.

On 11th December 2011, a third charge sheet had been filed by CBI, on Essar Group Promoters Anshuman and Ravi Ruia, the Director (Strategy and Planning) Vikas Saraf, Loop Telecom Promoters Kiran Khaitan and her husband I P Khaitan and Loop Telecom Pvt Ltd, Loop Mobile India Ltd and Essar Tele Holding.

Special Court cancelled 122 licenses granted during Raja’s tenure and directed auctioning of them in 4 months. During February 2012, Mr. Swamy’s plea to make former Finance Minister P Chidambaram a co-accused in 2G case was dismissed, and the plea for probe against Chidambaram in the 2G case was dismissed due to the absence of any prima facie material to show that Chidambaram got pecuniary benefits. The cancellation led to Etisalat, Sistema, S. Tel and Loop Telecom being forced to shut down operations while others like Telenor, which entered the Indian market by acquiring a 60% stake in Unitech Wireless, and Videocon ran up deep losses and accumulated debts.

Judgement

Nearly six years after the Supreme court cancelled the spectrum and the licences allocated to eight companies, holding that the process was flawed, a special CBI court on 29 December 2017, acquitted all accused in the infamous 2G scam case.

In the intervening years, several of the companies named in the 2008 case shut operations while Dravida Munnetra Kazhagam (DMK) politicians A. Raja and Kanimozhi, named among the accused, were forced into temporary political oblivion.

The other accused were Raja’s ex-private secretary R.K. Chandolia, Reliance Group’s Managing Director Gautam Doshi, its Senior Vice President Hari Nair, Group President Surendra Pipara, Swan Telecom Pvt. Ltd Promoter Vinod Goenka, Unitech Ltd.’s Managing Director Sanjay Chandra, Essar Group Promoters Anshuman and Ravi Ruia, its Director (strategy and planning) Vikas Saraf, Loop Telecom Pvt. Ltd Promoters Kiran Khaitan and I.P. Khaitan. Loop Telecom, Loop Mobile India Ltd and Essar Tele Holding Ltd were also tried.

In his judgment, CBI special judge O.P. Saini said, “I have no hesitation in holding that record is not sufficient and the prosecution has miserably failed in proving charges. All accused are acquitted.”

Censuring the Central Bureau of Investigation (CBI), Saini noted in his 2,000-page judgment, “People cannot be held guilty without evidence or evidence which is not legally admissible. High profile nature of a case cannot be used as a ground for holding people guilty without legal evidence. Lack of commercial prudence in execution of documents cannot be used as a ruse to hold people guilty of corruption. Since there were no ‘proceeds of crime’, there could be no offence of money-laundering, as nothing remained to be laundered. All accused were absolved of the charges under Prevention of Money Laundering Act as well.”

The Court directed all those acquitted to file a personal bail bond of ₹5 lakh each to ensure their presence during appeal. CBI was given 60 days to file an appeal. CBI officials said, on the condition of anonymity, that the agency will appeal against the judgment on the grounds that much of the evidence it had presented had not been considered.

The court verdict set off a war of words between the Congress, which may well believe the case had cost it the 2014 Lok Sabha elections, and Bharatiya Janata Party (BJP), whose stance that the Manmohan Singh government was complicit in allowing scams of this nature to take place under its watch, had received a bit of a blow.

Conclusion

The special CBI judge OP Saini has stated, “I waited for seven years in vain for evidence but there was no evidence of criminal conspiracy to be found.” While in Indian mind the 2G scam is ingrained deeply it has come as a shock to many that the scam never really happened.

If criminal conspiracy is set aside, then also there are glaring mistakes committed. These are committed due to improper understanding and arbitrary decision making. For example, the fact that if the policy is a single stage process or multi stage process is not clear. The cut-off date for applications had to be decided arbitrarily as DoT bureaucrats could not make up their mind. Further, there was “passing of buck” when policy appeared to have gone bad. Also, the fact that policy was not based on scientific facts but arbitrary fixing of values, led to suspicion that there was undercharging of fees. Moreover, if there was criminality, CBI could not build up evidence.

Overall, the fact that the companies who acquired spectrum were able to offload at much higher costs to other players, shows total lack of application by policymakers. It is evident that there was a loss to exchequer, exact amount still hard to figure out. But shoddy policymaking due to incapable state institutions led to loss of exchequer as well as dampened investment scene in India when Supreme Court had to cancel the arbitrary licences.

 

References

 

  1. Performance Audit Report on the Issue of Licences and Allocation of 2G Spectrum by the Department of Telecommunications Ministry of Communications and Information Technology