Published On: Mon, Feb 6th, 2012

All you want to know about “The real 2G Spectrum Scam story”

2G-Scam-dailyjag

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The famous infamy 2G spectrum scam revisits the headlines as the Supreme Court cancels 122 licenses and gave verdicts about various ministers of the contemporary period. The basic summary of the entire scam is as compiled in a few questions and answers.

 

Q. What is 2G spectrum?

A. 2G spectrum is a worldwide protocol as specified by the International Telecommunication Union (ITU) and the starting releases of 3rd Generation Partnership Project (3GPP), in which the specifications of 2G is to offer voice and data in a given specification. The governments of countries following these protocols invite various telecom operators to bid for the spectrum according to the population and the area of the allotted terrain.

 

Q. What is the Indian 2G spectrum scam?

A. The 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 estimated to be Rs.1,76,645 crore (US$39 billion) as valued by the Comptroller and Auditor General (CAG) of India based on 3G and BWA spectrum auction prices which held in 2010. 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.

 

Q. What were the charges on former telecom minister A. Raja?

A. The licenses were auctioned at cheap telecom prices. The licenses auctioned in 2008 were based on the statistics of 2001. The mobile subscriber base had shot up to 350 million in 2008 from 4 million in 2001. Hence, the loss is estimated in such figures of crores which could have been compensated with current prices. No proper procedures were followed and the licenses were issued on first-come-first-served basis. No proper bids were invited and the auctioning process was not based on Market Price. Moreover, the recommendations of Telecom Regulatory Authority of India (TRAI) were ignored.

 

Q. Is it solely a single person’s mistake or fraud?

A. No, this is not only a single headed show. The governmental influence with many departments handling telecom ministry and the interwoven relationships with Department of Telecom (DoT), TRAI, law ministry, finance ministry and other departments make the process complex. The then Finance Minister P. Chidambaram was involved in the scam as well due to sheer negligence in the case. However, the Supreme Court gave him green flag in the case as the involvement of a ministerial post cannot be justified with the corruption under his staff.

 

Q. What are the other charges in the scam?

A. There was an extreme example of favoritism shown in the auctioning process. Unitech, Swan Telecom got licenses without prior experience in the industry. Swan Telecom didn’t even meet eligibility criteria, and as soon as they won the stake, they sold the 45% of the stake to Etisalat at a huge profit of Rs.2,700 crore on this. On the other hand, Unitech Wireless sold their 60% stake at a profit of Rs.4,600 crore approximately. The nine companies involved paid DoT a sum of Rs.10,772 crore which was much less than the actual market price.

 

Q. What is Kanimozhi’s role in the scam?

A. Swan Telecom sent A. Raja a sum of Rs.214 crore via kickback (i.e., a chain of companies selling stakes in such a way, that the source-sink company rests in the hand of the auctioneer, and he is the one who gains). The source was from Kalaignar TV channel in Chennai, whose stake of 80% rests with Kanimozhi itself. Hence, the conspiracy maze rests within the ministry itself.

 

Q. What is the current status of the scam?

A. The case is still in hearing process at the Supreme Court. The court cancelled 122 licenses sold during Raja’s ministerial period. The companies will have to pay a fine with certain values of monetary to compensate the market value loss for spectrums. Subramaniam Swamy’s plea about the same is still in the process and the court will give the verdict based on CAG’s report of the 2G spectrum scam.

 

Source- Based on reports available on official sites of Wikipedia, NDTV, The Hindu and The Economic Times

About the Author

- Lakshay Nanda, a strong believer of self-actualization, believes in positive cynicism and accepts all round opinions with strong premises. A theist by soul and a keen human expression deciphering mind, loves to read, write and walk on paths of philosophy and at times on transcendentalism.




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