Tuesday, November 16, 2010

2G scam: CAG report tabled in Lok Sabha, indicts Raja

NEW DELHI: The Government on Tuesday tabled the much-talked about report of the Comptroller and Auditor General (CAG) on 2G spectrum allocation, whose reported extracts stirred a major political storm and forced resignation of telecom minister A Raja. 

The CAG indicted former telecom minister A Raja for ignoring the advice of Prime Minister, finance and law ministries to allocate 2G spectrum to new players in 2008 causing a whopping revenue loss of over Rs 1.76 lakh crore. 

The Performance Audit Report on the Issue of Licences and Allocation of 2G spectrum by the department of telecommunications was tabled in the Lok Sabha by finance minister Pranab Mukherjee. 

The report of the CAG, which lent an edge to the clamour for A Raja's ouster as telecom minister, has also come down hard on the corporates who benefited from the controversial 2G spectrum allocation. 

The report, which was tabled in Parliament on Tuesday, specifically focuses on how facts about a top industrialist's substantial stake in Swan Telecom — it far exceeded 10% — were concealed while applying for the 2G spectrum licence. 

According to the guidelines, no entity can hold more than 10% stake in two telecom service providers operating in the same circle. Since a telecom company controlled by the industrialist — who also has interests in energy and entertainment — has a pan-Indian presence, Swan should have been disqualified. Yet, it stayed in the ring and went on to pip several established contenders. The industrialist, one of India's richest, has denied any link with Swan. 

CAG's indictment of corporates for use of "fraudulent means" to qualify runs into several pages. The report lists not just companies but also the violations the auditor has found them guilty of. The licences issued to various companies floated by corporates such as Swan, Unitech, Loop and Datacom Allianz Infra involved several violations, the auditor has pointed out. As many as 85 of the 120 licences were illegal, the CAG has said. 

The auditor has held Raja guilty of favouring a select group of companies in the way he went about issuing a press release on January 10, 2008 at 2.47 pm, giving companies just 45 minutes to assemble at DoT to collect response letters to their applications. Raja's favourites, who knew of the press release in advance, were able to be ready with performance bank guarantees, financial bank guarantee and other requirements in time. What's more, the auditor found that 13 applicants were ready with demand drafts drawn on dates prior to the press release being issued, proof that they were aware of the minister's move. 

The report also demolishes Raja's claims that he went by the first-come-first-served (FCFS) concept followed in the past by the department of telecom, accusing him of tampering with even that system to favour select private companies. 

The CAG audit is unique in many ways. For perhaps the first time in the history of CAG, the auditor has provided as an annexure file the notings of a cabinet minister in order to indict him. Raja's personal notings that altered even the FCFS policy are part of the CAG report annexure. Under the approved FCFS practice, all applications were first received in the central registry section of DoT where the date of receipt and serial number are posted, and seniority was decided based on this. However, Raja altered this, by applying FCFS on the basis of who first complied with the Letter of Intent conditions such as bank guarantee and entry fee

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