Book Extract

2G: The scam that wasn’t     

TRAI, then headed by Nripendra Mishra, now Principal Secretary to Prime Minister Narendra Modi, had recommended against auction of 2G spectrum.

PTI Photo

Salman Khurshid and Daksha Sharma

What needs to be pertinently analysed is the proposition that whether auctioning the 2G spectrum and distributing it on a first-come-first-serve basis is to be considered an erroneous act, not to speak of corruption, given that government policy was greater penetration rather than earning revenue from an essential infrastructure for development.

If the answer is in the negative, then there is no further reason, rationality and legality that can be attributed to the arguments of corruption in this so-called scam. In the light of the circumstances objectively explained and in the absence of any material evidence of wrongdoing noted by the trial court, readers shall appreciate that the 2G spectrum issue was blown out of proportion by a few political parties as well as a section of the media. They compromised national interests to derive political mileage from this controversy.

The rumblings of trouble began in November 2010 with the leaked CAG report on the 2G Spectrum which suggested that Rs 1.76 lakh crore were lost (described as presumptive loss) to the government exchequer because of myopic, even legally questionable policies of the government in handing out valuable spectrum resource in 2007–08 at the 2001 price.

Our economic policies were obstructed, while our social policies were distorted to cause acute self-consciousness. It is ironic in the extreme that many policies that the NDA then opposed such as Aadhaar, Foreign Direct Investment (FDI) in Retail, Goods and Services Tax (GST), etc. are now being implemented (although with flaws) and being claimed as great achievements. Again, the unwholesome trend of disrupting parliamentary proceedings is haunting them despite their majority

First, newspapers and news channels took the bit and ran, only to be overtaken by the Parliament that comprised an Opposition desperate to capture power and deeply divided treasury Benches. The former had, for over a decade, failed to whip up religious sentiment beyond a point, while the latter was caught in maladjusted attitudes towards the duality of power between the party and the government, something that had appeared to be a master stroke when UPA-I trounced the BJP in 2004.

Session after session, week after week, Parliament was paralysed by an unrelenting and abrasive Opposition with chants of scam and demands for the resignation of important members of the government. The party and its allies that had returned to power with an increased majority and had outstanding and ambitious plans of inclusive development, were suddenly thrown into confusion and self-doubt followed by induced inaction or what was maliciously described as policy paralysis. While on the one hand the government was not allowed to work, it was, on the other, accused of being unable to do any work.

Our economic policies were obstructed, while our social policies were distorted to cause acute self-consciousness. It is ironic in the extreme that many policies that the NDA then opposed such as Aadhaar, Foreign Direct Investment (FDI) in Retail, Goods and Services Tax (GST), etc. are now being implemented (although with flaws) and being claimed as great achievements. Again, the unwholesome trend of disrupting parliamentary proceedings is haunting them despite their majority

The TRAI recommendations were made in August 2007. The 200-page report, in addition to playing a catalytic role in development, sought to balance accepting of ‘legacy and level playing field’ with ‘social good or consumer interests.

The Regulator pitched for auction in 3G and beyond but keeping the existing situation in mind opted to continue First Come First Serve for UAS 2G licences:

“The allocation of spectrum is after the payment of entry fee and grant of license. The entry fee as it exists today is, in fact, a result of the price discovered through a market based mechanism applicable for the grant of license to the 4th cellular operator...It is in this background that the Authority is not recommending the standard options pricing of spectrum, however, it has elsewhere in the recommendation made a strong case for adopting auction procedure in the allocation of all other spectrum bands except 800, 900 and 1800 MHz .”

It is interesting to note that the Chairman of TRAI was none other than Nripendra Mishra, presently principal secretary to PM Modi.

It is surprising therefore, that the CAG, CVC and CBI, not to mention the Supreme Court should have so easily persuaded themselves that not putting 2G spectrum to auction was a grievous infraction of the law and by implication, an act of corruption causing enormous loss to the country’s exchequer

Vinod Rai, a Kerala cadre IAS officer, was chosen by the UPA to be CAG over several other likely candidates at a late night intervention by the finance minister. Nothing about his record would have suggested that he would end up virtually destroying the government. He was friendly and communicative in the initial period of his tenure but with the Report he submitted, he became a hot potato.

If any statement continued to ring in one’s ears months after the hurly burly of the 2G implosion, it is the phrase used by my colleague and the then replacement Telecom Minister Kapil Sibal—‘zero loss’.

The assertion was made on very sound reasoning based on the Planning Commission Working Paper for the Tenth Five Year Plan (2002–2007) that identified territory penetration rather than revenue earning as national priority. But sadly, the statement turned out to be a red rag to the bull. A howl of protest went up in Parliament and outside, driving Sibal for cover.

What was indeed the truth spoken with responsibility became impudent denial for the public inquisition and we left the space undefended in the hope of cutting our losses, individually and collectively. The judgment of Judge O.P. Saini came as great relief to all of us and of course to Kapil Sibal, who lost a bit of time reiterating his red rag to the BJP bull. But, in a sense, this is a case of history vindicating us rather than being a valiant fight to overcome adversity.

The 2G judgement was pronounced on the day when the second judge, Justice AK Ganguly was to retire. The city was rife with rumours and innuendoes for weeks. The night before the judgement day someone left a copy at my gate in a sealed envelope.

I was shocked, to say the least, but there was little I could do in the middle of the night. Early next morning, I was scheduled for a trip to a southern state. I went through the business of the day, but asked for updates from Delhi. Some parts of the judgement as delivered in the court seemed different from the copy I had received. Upon my return to Delhi, I discovered that the judgement uploaded was different.

I immediately brought the matter up with Chief Justice Kapadia who promised to have the entire matter examined. Although I did not hear anything further, I am given to understand that some action was taken against a clerk of the court registry.

People might well have forgotten that there was a time when Justice G.S. Singhvi’s Bench was not only hearing the main 2G matter but was also monitoring the investigation. The Delhi High Court had refused to go the entire distance in the PIL filed before it, causing the petitioners to rush to the Supreme Court.

All courts, including the Delhi High Court whose constitutional duty was to supervise trial courts of Delhi, were directed not to hear any matter that was related to 2G. All bail applications therefore had to come directly to the Supreme Court and Section 482 became a dead letter. The Supreme Court even appointed the Special Public Prosecutor and upon the incumbent’s elevation to the Bench, chose his successor, Senior Advocate Anand Grover.

After Chief Justice Kapadia retired, unsuccessful attempts were made by parties to challenge the orders of Justice Singhvi’s court relating to the trial proceedings in the hope that the new Chief Justice Altamas Kabir might intervene. But that petition too was ultimately placed before Justice Singhvi and never reached a decision.

On 3 August 2012, after the Supreme Court directive, the government revised the base price for 5MHz 2G spectrum auctions to Rs 140 billion ($2.2 billion), raising its value to about Rs 28 billion ($440 million) per MHz (near the CAG’s estimate of Rs 33.5 billion [$520 million] per MHz). It is another matter that to a large extent there were no takers at that price and the reserve price had to be revised downwards.

Owing to the uncertainty caused by the Supreme Court decision, the disqualification of certain key players and paucity of bank funding available, the government was forced to auction the spectrum in instalments in order to balance supply and demand. The outcome of the first several rounds of auction was a clear indication of the enormous stress suffered by the sunshine sector.

The cancellation of the licences virtually pulled the rug from under the feet of the mobile telephony industry. Understandably, the court gave some time to unravel the existing system and conduct fresh auctions. The uncertainty about the future and the reluctance of banks to give further support hit productivity.

In view of the fact that spectrum might need to be allocated to individual entities from time to time in accordance with the criteria laid down by the government, such as subscriber base, availability of spectrum in a particular circle, inter se priority depending on whether the spectrum comprises the initial allocation or additional allocation, etc., it was felt that it may not always be possible to conduct an auction for the allocation of spectrum.

In view of the ground situation, the auctioning of spectrum in the 2G bands was to result in a situation where none of the licensees using the 2G bands of 800 MHz, 900 MHz and 1,800 MHz would have paid any separate upfront fee for the allocation of spectrum. Meanwhile, the government received various notices from companies based in other countries, invoking bilateral investment agreements and seeking damages against the Union of India by reason of the cancellation/threat of cancellation of the licences.

Many of those have matured into international arbitrations in which we have little chance of averting huge damages. The Ministry of Finance, once again under Chidambaram, reacted by deciding to renegotiate all Bilateral Investment Treaties (BITs), the immediate fallout of which was the treaty with Mauritius. But implications of the 2G judgement included actions by affected parties under the extant terms of BITs, still pending before International Arbitrators, which include Khaitan Holdings/India–Mauritius BIPA, India–UK BIPA and Sistema Joint Stock Financial Corporation/India–Russia BIPA.

Even as the heat and dust of 2G settles down, and truth—endorsed by trial—begins to displace the pall of falsehood and fake perceptions, the print lines and airwaves are getting crowded with talk of Vyapam, Rafael, Gujarat Land scam, Judge Loya’s death et al. There is no word on the much awaited Lokpal for which a relentless public agitation was engineered by the BJP and Anna Hazare towards the end of the UPA II tenure. Governments formed by parties who shouted themselves hoarse on combating corruption have done precious little to even take to logical conclusion the steps that we had taken before demitting office. What we do get to hear repeatedly are self-serving pronouncements of integrity. A lie spoken often enough is said to become true, we are told. Fortunately, the Congress had introduced the far-reaching Right to Information that has made an irreversible impact on our ability to access information in the State’s possession, information that affects our lives. Corruption

of course is not limited to financial matters and indeed moral corruption is an even greater threat to humanity. The repeated incidents of lynching for communal reasons and the growing incidence of heinous and violent crime against women and the girl child have blotted the face of our society. The public response from the top leadership is an inexplicable silence or belated, insipid regret. Meanwhile, lesser leaders continue making divisive and humiliating remarks about citizens who disagree with them. As the true patriots feel a sense of outrage, the nation holds its breath, not knowing what tomorrow holds for us.

As the noise and outrage grow across the country, the matter of the 2G judgement has retreated into routine oblivion and will rest there for a while till the High Court can find time to address it by way of an appeal. The fact is that there cannot be another trial now and it is only if the High Court finds that on the evidence produced before the Trial Court another view was possible, is compelling.

The dramatis personae of the 2G saga have quietly exited from the stage and returned to their normal existence. Only Raja chose to place his story and his point of view before the people in an autobiographical account, 2G Saga Unfolds. The former minister’s tone suggests that adversity has mellowed him somewhat but understandably, he has not forgiven Vinod Rai. ‘I sincerely hope that I have clearly and factually demonstrated Mr Rai in his unscrupulous quest for selfaggrandisement, betrayed the community confidence and committed condemnable sacrilege’. To borrow a phrase from Winston Churchill with an apology: ‘Never in the history of human endeavour would so much have been damaged and destroyed for so many by so few.’ Some of the physical debris has been cleared by time, some moved in salvage operations by the UPA and its successor NDA, but dust will not disappear till the last gavel of law concludes the electoral contest.

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