2G scam: PM gave ‘indirect green signal’ to Raja, says PAC

The PAC has, in a draft report on 2G scam, strongly indicted former telecom minister A Raja and came down heavily on the PMO and Cabinet Secretariat.

Updated: Apr 27, 2011, 23:52 PM IST

New Delhi: The Public Accounts Committee
(PAC) has, in a draft report on 2G scam, strongly indicted
former telecom minister A Raja and came down heavily on the
PMO and the Cabinet Secretariat for not taking "corrective
action" while not sparing even the Prime Minister for "some
unfortunate omissions".

The report circulated by PAC Chairman Murli Manohar
Joshi, which is most likely to be contested by members of the
ruling UPA, is also understood to have attacked the then
finance minister P Chidambaram for recommending to the Prime
Minister to "treat the matter as closed" instead of taking action
against those responsible for loss to the exchequer.

The voluminous report reportedly had some unpleasant
words for Prime Minister Manmohan Singh, who had kept his
office at "arm`s length" in 2G spectrum issue which helped
Raja "to execute his unfair, arbitrary and dubious designs".

The report says the Prime Minister on January 3, 2008
wanting to keep the PMO at "arm`s length" seemed to have given
an "indirect green signal" to Raja to go ahead and "execute
his unfair, arbitrary and dubious designs".

The controversial distribution of licences and spectrum
was taken by the DMK representative in the Cabinet on January
10, 2008, which the CAG had estimated a presumptive revenue
loss of over Rs 1.76 lakh crore.

The report, which will come up for consideration at
tomorrow`s meeting, said the PMO certainly either failed to
see the "forebodings or was rendered a mute spectator".

The committee said it was highly perturbed to note that
the considered and imperative advise given by the Prime
Minister and genuine concerns expressed by him on the
developments in the telecom sector in his November 2007 letter
to Raja was "just disregarded" by him.

"The Prime Minister was in fact misled when he was
informed by the minister (Raja) that the issue of auction of
spectrum was considered but not recommended by the Telecom
Commission and also not recommended by TRAI. The minister was
saying half truth, concealing the other half, concealing his
ulterior design," the report said.

In its criticism of the PMO, the report said the PMO`s
reply that no suggestion of the Law Minister to set up an
Empowered Group of Ministers was received by them does not
convince the committee.

"...the PMO was very much aware of Law Minister`s
suggestions but the counter view of the Communication Minister
got overriding preference to the Law Minister`s view for some
unknown reasons and thus no effort was made by the PMO to
initiate the process of constitution of the EGoM.

"The PMO certainly either failed to see the forebodings
or was rendered a mute spectator," the report said.

However, the report had a word of praise for the then
external affairs minister Pranab Mukherjee who had in a note
to the Prime Minister revealed that he had underlined the
responsibility of the government to frame, revise and change
the policy in a transparent manner and then follow it in
letter and spirit.

Mukherjee had also categorically remarked that while
keeping on issuing new licences, the criteria for grant of the
licences may be strengthened and put in public domain at the

Thus, it is evident that he did not give any wrong
advice to Raja who in turn "distorted the facts while writing
to the Prime Minister".

Not only that, Raja "arrogantly" termed the suggestions
of the Law Minister to refer the spectrum related matter to
EGoM as "out of context".

He audaciously informed the Prime Minister that the
cut-off date has been fixed at 25th September, 2007 on the
plea of shortage of spectrum whereas on another occasion he
had said that there was enough scope for allotment of spectrum
to few new operators.

"His (Raja) assurance to the Prime Minister that he was
not deviating from the established and existing procedures was
a blatant lie as he deformed and distorted the first-come,
first-serve (FCFS) policy," the draft report said.

Chidambaram criticized

In its comments on Chidambaram, the report said "the
committee are shocked and dismayed to note that the Finance
Minister, in his note dated February 15, 2008, acknowledged
that spectrum is a scarce resource and the price of spectrum
should be based on its scarcity value and efficiency of usage
but made unique and condescending suggestion that the matter
be treated as closed.

"The committee believed that ends of accountability
demand that any wrongful loss caused to the government is made
good and the guilty brought to justice.

"The committee views it most unfortunate that since the
Finance Minister, the guardian of the public exchequer and
entrusted with the principle task of mobilisation of resources
for public welfare, instead of initiating stringent and swift
action against all those responsible for the whopping loss to
the exchequer, pleaded with the Prime Minister to treat the
matter as closed," it said.

The committee found the Secretary of Department of
Economic Affairs deficient and wanting as he failed to bring
the matter to the notice of Cabinet Secretary or even in
writing to the Finance Minister even after irregularities
became public and there was public outcry for the huge loss to
the public exchequer.

It sought explanation from the then Secretary, DEA and
all those who chose to be silent bystander or rather
indulgently condescending and pleaded for forgetting the loss
and treating the chapter as closed.

The committee found that the procedures followed by
the DoT for issuance of 157 licences in 2007-08 smacked of
serious irregularities leading to staggering loss to the

Its examination has revealed gross violation of
established norms, rules and procedures, dereliction of duties
on the part of the ministries and departments concerned, scant
regards bordering on contempt for considered suggestions and
opinions of the people and organisations that matter.

The scrutiny revealed the flip-flop in implementation
of the UASL regime which was approved by the Cabinet in 2003
based on the recommendations of the TRAI.

The committee found that in the process of issuing
licences devising an efficient allocation formula for
allocation of spectrum along with an appropriate price
remained unachieved.

Delinking the price of spectrum from the issue of
licences was a given a go by disregarding the Cabinet

The committee was deeply distressed that due to
violation of Cabinet decision and as a consequence of such
deliberate omission, the issue of UAS licence and allocation
of spectrum in 2007-08 at the price discovered in 2001 caused
a staggering but wholly avoidable revenue loss.

Considering what happened in the spectrum allocation
under Raja, the report recommended a strong system of
monitoring and compliance of Cabinet decisions and firmly
putting in place by revisiting the transaction of business
rules in order to ensure that the Cabinet decisions are
implemented in letter and spirit and no undue advantage be
taken of the systemic loopholes by the "ravenous fly-by-night
operators" created as front companies by unscrupulous

On the telecom department overruling the views and
concerns of the Finance Ministry, the committee said it was
startled to observe the manner in which the then telecom
minister Dayanidhi Maran succeeded in getting revised the
terms of reference of the GoM issued by the Cabinet
Secretariat under the PMO in November 2006 excluding the
matter of spectrum pricing from the purview of Finance
Ministry and leaving it solely to DoT to decide.

The committee was shocked that as required under
transaction of business rules, modification in the Cabinet
decisions of October 2003 was never brought before the Cabinet
even for ex-post facto approval.

"The DoT owes explanation for such a gross dereliction
of duty. The Cabinet Secretary and the PMO knew about these
developments but did not take corrective action," it said.

The committee pointed out that the senior bureaucrats
in the DoT were not allowed to discharge their duties properly
and effectively as required for transparent governance.

"Obviously, the role of Cabinet Secretariat and the
PMO remains far from edifying in that they too overlooked the
need for compliance with the decision of the Cabinet," it

On the issue of work of GoM and its terms of
reference, the committee found that the PMO threw the ball in
the court of ministry and the Cabinet Secretariat washed off
hands by stating that the responsibility of ensuring
compliance with the directions of the Cabinet or its
committees rests with the ministry.

"What further irks the committee is the reply of the
PMO that there is no specific requirement for the PMO to
enforce Cabinet decisions and nor is this the general

"The committee wonders if it is not the duty of the PMO
or the Cabinet Secretariat to enforce the Cabinet decisions in
letter and spirit who else is entrusted with the
responsibility," it said.

The committee said that it was of the firm opinion
that if it was not a requirement earlier on the part of the
Cabinet Secretariat and the PMO to ensure the enforcement of
the Cabinet decision, the 2G scam should be an eye opener for
them to at least now start the practice and vigorously monitor
the effective compliance of every Cabinet decision.

On ignoring the advice of the Law Ministry by Raja,
the report deplored the "intemperate and indecorous" manner in
which the advice of the Law Ministry to refer to the EGoM such
and important matter like following a fair and transparent
procedure for handling the large number of applications for
grant of UASL was termed as out of context by the Telecom

"The DoT could not furnish any cogent explanation for
setting aside the advice of Law Minister nor could they
furnish the file containing the said draft letter.

"It is really surprising and shocking that the legal
opinion which was sought by the Department on its own volition
was rejected by the minister. Needless to say, by doing so the
benefits of discussion on important telecom matters in an
inter-ministerial forum were deliberately stymied," it said.

The committee was also shocked to note that contrary
to the advice of the Law Ministry, the Communication Ministry
made a direct reference to Solicitor General on January 7,
2008, seeking his opinion on the press release. The SG had
opined that the proposed course for issue of letter of intents
was "fair and reasonable and make for transparency".

"What is intriguing is that the SG gave advice on a
matter for which the Ministry of Law and Justice had advised
for reference to EGoM.

"The Law Secretary while deposing before the committee
has categorically stated that seeking direct opinion of SG
bypassing the Ministry of Law and Justice is not in line with
the rules and procedures prescribed in this regard," it said.

It noted that the Attorney General was of the opinion
that the minister should not make references to any law
officers directly.

"But it is quite intriguing that the Attorney General,
when he was the Solicitor General, has had himself entertained
a direct reference made by the Minister of Communication and
IT," it said.

The committee, therefore, recommended that a serious
view must be taken in the matter and said that the advice
given by the Law Ministry particularly on important matters
having wide ranging implications must be taken with the
seriousness that it deserves.

Where rejected, reasons must be furnished to the Law
Ministry under intimation to the Cabinet Secretariat. A
serious view must be taken against any deviation from the
established procedure and stringent action must be taken
against officials who violate the prescribed procedure.

The committee referred to the "glaring instance" of
Raja misleading the Prime Minister by his intimation about the
availability of spectrum in the 900 MHz band which was not
available then and was subject to vacation by the Defence

"His assurance to the Prime Minister that he was not
deviating from the established and existing procedures was a
blatant lie as he deformed and distorted the FCFS policy.

"...facts reinforce committee`s unmistakable
conclusion that the former Communications Minister
deliberately misled the Prime Minister in order to fulfil his
nefarious design leading to staggering loss of revenue which
also tarnished the image of the country," it said.