CAG report tabled, indicts A Raja in 2G scam

The report was placed in both houses of the Parliament amid uproar by the Opposition which demanded a JPC probe into the alleged scam.

New Delhi: Government Tuesday tabled in
Parliament the CAG report on 2G spectrum allocation, whose
reported extracts have created a political storm and led to
the resignation of Telecom Minister A Raja.

The report was placed in the Lok Sabha and Rajya Sabha
amid uproar by the Opposition which demanded a Joint
Parliamentary Committee probe into the alleged scam.

It was tabled in the Lower House by Minister of State for
Finance S S Palanimanickam, who belongs to the DMK, and in the
Upper House by his ministerial colleague Namo Narayan Meena.

Raja, who is a member of the Lok Sabha, was not present in
the House when the report was tabled as soon as it reassembled
at noon after an hour-long adjournment.

The report has pegged the revenue loss to the exchequer - based on auction held for 3G radiowaves- at Rs 1.76 lakh crore due to non-auctioning of the spectrum.

Questioning the entire procedure employed, the CAG noted that the ministry of communication and IT "decided
to go ahead with arbitrarily deciding that the cut-off date
for issuance of Letters of Intent would be advanced to
September 25, 2007 and applications received would be decided
on FCFS (first-come first-served) basis."

In November, 2007, Prime Minister Manmohan Singh had
written to the telecom ministry suggesting introduction of
"transparent methodology" of auction, "revision of entry fee"
in the "back drop of inadequate spectrum and large number of
applications received for fresh licences."

The CAG highlighted that the Law Ministry had suggested
setting up of an Empowered Group of Ministers to discuss the
large number of applications and spectrum pricing, but the
telecom ministry rejected it saying "the need for forming and
EGoM arises when a new policy is being framed and in this
particular issue no new policy for grant of UASL (unified
access service licences) was being framed."

The auditor, however, said the "contention of the DoT is
untenable as the rejection of the advice" of the Law Minister
to have detailed deliberations on the issues in the EGoM on
the ground that changes in policy might lead to litigation
"goes against the well established and time-tested procedures
of functioning of the government and the collective
responsibility of the Union Cabinet."

The report said the presumptive loss caused to the
exchequer through spectrum allocation to 122 licencees and 35
dual technology licences in 2007-08 was Rs 1,76,645 crore. It
pegged the figures on the basis of 3G auction held earlier
this year in which the government mopped up over Rs 67,000 crore.

In the 77-page report, the CAG said the figure of the
presumptive loss has been determined on the basis of various
indicators like 3G auction and a price offered by an operator
in 2007, besides scarcity value, nature of competition,
business plans envisaged, number of operators and growth of

The auditor pointed out that spectrum was allotted by DoT
to the existing operators beyond the contracted limits (6.2
Mhz) without imposing any upfront charge for such allotment.

On the values determined through various indicators, the
presumptive value of 2G spectrum on account of grant of 157
licences in different circles during 2007-08 would be in the
range of approximately Rs 58,000 crore to Rs 1,52,038 crore.

The value of spectrum held by 13 operators for 51 circles
based on the 2001 rates works out to be Rs 2,561 crore, while
its value based on above indicators like 3G auction would be
Rs 12,000-37,000 crore.

The CAG said that 85 out of 122 new licences issued to 13
companies in 2008 were granted to ineligible companies as all
of them (85) did not have stipulated paid-up capital at the
time of application.

Further 45 out of 85 licencees were issued to companies
which failed to satisfy conditions of main object clause in
the memorandum of Association (MoA), the government auditor

The CAG said the process of giving dual technology
licences to leading telecom firms including Reliance
Communications and Tata Teleservices "lacked transparency and
fairness", and equal opportunity was denied to other similarly
placed operators who could apply for use of dual technology
only after formal announcement of the policy.

Noting that this approval (dual technology use) had
violated Cabinet decision of 2003 to allow additional spectrum
at 2001 prices, the auditor said, "Deviation from a Cabinet
decision should normally be with the approval of Cabinet.

"However, in the present case, such a crucial decision to
permit service providers to offer access using combination of
technologies (CDMA, GSM and/or any other) under the same
licence with dual spectrum allocation was taken without the
matter being referred to the Cabinet."

After the extracts of the report came out in the media last week,
the Opposition launched a blistering attack on the government
demanding Raja`s removal and a JPC probe.

Raja has maintained that he has done no wrong and
distributed the licenses as per the policies followed by his
predecessors since 1999.

He initially refused to resign but finally quit on Sunday
after intense pressure.

Parliament adjourned

The presentation of the report is expected to provide fresh fodder to the Opposition which is not satisfied with Raja’s resignation and is pressing for a Joint Parliamentary probe to unearth the entire scam, a demand rejected by the government.

However, the Lok Sabha was adjourned for the day and the Rajya Sabha, first till 2 pm and then later for the day.

The government has rejected as "meaningless" the demand
for setting up of a JPC.

Earlier, Opposition members in both Houses stormed the
well soon after they assembled for the day, raising slogans
`We want JPC`

The Congress members sought to counter the Opposition by
waving newspapers carrying reports of Karnataka Chief Minister
B S Yeddyurappa`s alleged involvement in allocation of land to
his sons.

BJP members, who stormed the well, were joined by those
from Shiv Sena, AIADMK, Samajwadi Party and RJD.

Later Pranab Mukherjee met leaders from across the political spectrum over lunch but he also failed to break the deadlock.


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