life in financial markets: (part 2) indian telecom 2g spectrum scam cases have complexities

(part 1 of this series was posted yesterday, on 10 October 2011)

One major telecom-scam-cases-related news yesterday was a 2-judge Supreme Court bench (hearing Subramanian Swamy's application before it asking for investigation of P Chidambaram's role and also hearing Prashant Bhushan's application before it asking for appointment of independent observers to supervise the CBI probe) reserved its order. The 2-judge bench comprises of Justice G. S. Singhvi and Justice A. K. Ganguly.

Just before this news broke out among the media sites yesterday, I had stumbled upon a website called legallyindia.com which had a 4 October-dated report (unsubstantiated though) on a party thrown by Congress Party spokesperson and senior lawyer Abhishek Manu Singhvi in Delhi where lawyers and judges were invited. The report mentions, among other things, the attendance of Supreme Court judge Asok Kumar Ganguly in the party. The report stated that this judge was the junior member of the bench hearing the 2G case and that India's Law Minister, Salman Khursheed, was seen interacting with this judge in the party.

As per this Supreme Court website page on individual judges, among other things stated was given the information that Justice Asok Kumar Ganguly is due to retire on February 3, 2012. This date is less than four months away.

Anyway, I am giving below the legallyindia.com report on the party for legal fraternity thrown by Singhvi:

http://www.legallyindia.com/Supreme-Court-Postcards/supreme-court-insider-manu-singhvi-invites-to-party-delhi-bench-bar-politicos-answer

Supreme Court Insider: Manu Singhvi invites to party, Delhi bench, bar, politicos answer

Written by Supreme Court Insider  |  Tuesday, 04 October 2011 17:25

Congress Party spokesperson and senior lawyer Abhishek Manu Singhvi hosted a dinner for the upper echelons of the legal fraternity in Delhi on Saturday night. Found wining and dining at the seemingly non-descript but ultra-high profile occasion were judges of the Supreme Court and Delhi High Court, senior advocates and well-connected lawyers from the Delhi-Bombay Bar.

Significantly Jayant Bhushan, a senior lawyer in his own right, attended the dinner but the absence of his brother, Prashant and father Shanthi Bhushan (the former law minister) did not go unnoticed. Prashant and Shanti Bhushan are integral members of Team Anna of course, which is in stormy negotiations with a Parliamentary committee presiding over the Lokpal Bill headed by Congress’ Singhvi.

Law minister Salman Khursheed’s interaction with Supreme Court judge Asok Kumar Ganguly, who is the junior member of the bench hearing the 2G case, raised some eyebrows too.

2G or not 2G

Khursheed recently issued an opinion from his ministry on the definition of ‘associate’ companies - a move that bolsters the prospects of chargesheeted Reliance, Swan and their executives in the on-going criminal case before a trial court.

Ganguly along with his brother judge GS Singhvi had obliquely referred to the law ministry’s opinion last week during a hearing in the Supreme Court, saying that such interventions from government departments were “not appropriate”.

And so, with this as a backdrop on everybody’s mind, Khursheed and Ganguly sat together at a table and those assembled could only wonder what they spoke about.

Absent friends

All the other usual suspects were present, except of course members of the anti-Singhvi camp that includes the BJP's Arun Jaitley and Congress's Manish Tiwari.

Attorney General Goolam Vahanvati and Solicitor General Rohinton Nariman were absent, although the senior Nariman (Fali) made an early entry and exit. Senior advocates Mukul Rohatgi, Harish Salve, Rajiv Nayar, Gopal Subramanium and C. S. Sundaram did not attend.

Collegiate

Discussions on the controversial issue of judicial appointments and the collegium system, which is so strongly defended by the higher judiciary, were heard from various corners of the room.

This is not surprising since AM Singhvi’s parliamentary committee is also presiding over the Judicial Standards and Accountability Bill, which contains a recommendation to create a National Judicial Commission for the appointment of judges.

Another chapter in the constitutional war between Parliament and the Supreme Court might be in the offing if the government reclaims its right to preside over judicial appointments.

life in financial markets: (part 1) indian telecom 2g spectrum scam cases have complexities

This is the first part in a series on the Indian telecom sector's ongoing court cases in the 2G spectrum scam.

The article below is taken from a website called 2gscam.co.in and I am not immediately able to make up my mind about whether the contents are farily reliable or accurate. Nevertheless, the article taken from the website and presented below seems to prima-facie provide fairly insightful analysis of one aspect of the scam.

Here is the article:

http://www.2gscam.co.in/the-indian-telecom-sector.asp

The Indian Telecom Sector – Was it Ever 'Clean'?

Telecom scams are not new. In August 1996, the CBI registered an FIR against former telecom minister Sukh Ram after recovering 3.62 crore from his residences in Delhi and Himachal Pradesh .

Thirteen years later, in 2009, he was sentenced to three years of rigorous imprisonment for “criminal conspiracy” and spent time behind bars for a month before being released on bail.

A point to note here, is that unlike the case of Sukh Ram, who was released on bail, inspite of being sentenced, in the the current situation, the ‘accused’ are not being released on bail ,even though they have not been proven ‘guilty’.

During the BJP led NDA government, there was a major controversy when telecom companies were allowed to move from a licensing regime to a revenue-sharing one.

In July 1999, following the recommendation of a Group of Ministers headed by Jaswant Singh, the fixed licence fee regime was changed to a revenue share one. This was adversely commented on by the CAG.

According to Ratan Tata, if a hypothetical amount was to be calculated at that point of time, the loss to the exchequer would be about Rs. 50,000 crore.

Other ministers for communications during the NDA regime, including the late Pramod Mahajan, were accused of assisting Reliance Infocomm to become a nationwide operator offering “full mobility” in its cellular phone operations without paying the full licence fee. This decision of the DoTwas against TRAI recommendations and the resultant loss to the exchequer was said to be in the region of 1,100 crore.

Now : Over to the 2G Spectrum Scam. What is it in a nutshell?

The accusation by CBI is that millions of dollars were paid in bribes to ensure favors for certain firms in 2007-08 when the Telecom Ministry issued 122 new licenses to offer mobile phone services in the world’s fastest growing telecom market.

Raja claimed he was following precedents as well as policy guidelines that had been put in place by the earlier Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government and that he was adhering to the laws of the land.

Also, it is relevant to note that there is communication on record between him & the Prime Minister - Mr. Manmohan Singh, that proves that the Government was indeed aware & had also given him the go ahead to allocate licenses in a First Come First Serve manner. Even Mr. Chidambaram & Mr. Pranab Mukerjee were all aware of the same, as some communication material proves.

Shockingly, now, that this allocation basis of 2G spectrum has become controversial, the Congress is passing the buck to the DMK.

First Steps being taken towards Unearthing the Actual 2G Scam:

Five months into the preliminary inquiry (PE) relating to the allocation of 2G spectrum during 2001-07, finally, the Central Bureau of Investigation is now scrutinising documents, looking at the telecom policy and how the policy was implemented by successive Telecom Ministers during that time.

While 42 licences, including for basic services and Unified Access Service (UAS), were issued during 2001, as many as 51 licences were given during 2004-06. Telecom Ministers during 2001-07 were the late Pramod Mahajan and Arun Shourie during the NDA regime and Dayanidhi Maran and Mr. Raja were in charge of the Telecom portfolio from 2004 onwards when the Congress-led United Progressive Alliance assumed power.

What are the charges levied by CAG on the Telecom Ministry?

The CAG has contended that
(a) by underpricing second generation (2G) spectrum,
(b) By allowing companies to use two competing technologies — the global system of mobile (GSM) communications and the Code Division Multiple Access (CDMA) technology — using the same license and
(c) By allocating more spectrum to companies than what their licenses specified, the total loss to the country could be as much as Rs. 30,984.55 crore.

A tabular listing of all the companies involved in the loss to the country of Rs 30,984.55 crore as per CAG & CBI:

Company	Licenses Issued1	Share(Rs. in Crores)	% Share	Named in Charge-sheet
Tata	3 CDMA; 19 GSM (Dual)	4,930.66	15%	NO
Unitech Wireless	22 GSM	4,441.05	14%	Yes
Datacom	21 GSM	4,239.19	14%	NO
Loop	21 GSM	4,239.19	14%	NO
Reliance	14 GSM (Dual)	3,379.58	11%	NO
Shyam	21 CDMA; 1 GSM (Dual)	2,650.03	9%	NO
Swan	13 GSM	2,624.26	8%	Yes
Idea	9 GSM	1,816.80	6%	NO
S-Tel	6 GSM	1,211.20	4%	NO
Spice	4 GSM	807.46	3%	NO
Allianz	2 GSM	403.73	1%	NO
HFCL	1 GSM (Dual)	241.40	1%	NO
Total Amount (Rs./Crores)		30,984.552	100%

¹Source: As per CAG Report 2010, DoT issued 122 New Licenses and 35 Dual Technology Licenses in 2008. Number of licenses are also mentioned in CBI 1st Chargesheet of 2.4.2011 on Page 56 and Page 42.  

²Source: CBI 1st Chargesheet of 2.4.2011 (Page 60): New Licenses (Rs.22,535.6 crs) + Dual Technology Licenses (Rs.8,448.95 crs) = Total Amount (Rs.30,984.55 crs). CDMA license entitles 2.5MHz spectrum and GSM license entitles 4.4MHz spectrum. Amount of New Licenses (Rs.22,535.6 crs) and Dual Technology Licenses (Rs.8,448.95 crs) divided among companies in proportion of their spectrum entitlement based on number of licenses issued to them.

Unfortunately, due to the selective wheels of justice, it is a fact that:
Percentage share of Companies charge-sheeted – 22%
Percentage share of Companies not charge-sheeted – 78%

When will the rest of the companies get chargesheeted? Or, are they going to get away scot free now?

Icing on the Cake: Additional Spectrum Scam Involving the Existing Operators in 2007 which is being ignored Thus Far:

The CAG has also revealed that spectrum was provided in addition of the contracted 6.2 megahertz (MHZ) to nine existing operators in 2007 inspite of the fact that a number of applications were pending for new licenses.

These existing operators were Aircel, Bharti, BPL (Mumbai), the public sector undertakings Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), Idea, Reliance, Spice (Punjab) and Vodafone.

The biggest beneficiary of additional spectrum was BSNL (61.6 MHZ in 19 telecom circles) followed by Bharti (32.4 MHZ in 13 circles), Vodafone (19.6 MHZ in seven circles), Idea (12.6 MHZ in six circles), MTNL (124 MHZ in Delhi and Mumbai circles) and others.

Note: The total loss to the exchequer on account of allocation of additional spectrum at low prices: Rs. 36,993 crore!!!

So, when will these existing operator companies get chargesheeted by CBI?

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