One of the largest scams in India, the judgment will decide the fate of former Telecom Minister A Raja and DMK Rajya Sabha MP Kanimozhi.

2G Spectrum verdict All you need to know about the case that shook the UPA govt
news Explainer Wednesday, December 20, 2017 - 18:22

After nearly six years, a special CBI court in New Delhi’s Patiala House Court complex will pronounce its verdict on the 2G spectrum scam case on Thursday.

One of the largest scams in India, the judgment will decide the fate of former Telecom Minister A Raja, DMK’s Rajya Sabha MP Kanimozhi and others including bureaucrats and businessmen.

Special Judge OP Saini is hearing three cases – two being probed by the CBI and another by the Enforcement Directorate (ED).

The beginning of the scam

The case dates back to 2007 and relates to allegations of irregularities in the allocation of licenses to 2G telecom spectrum. With A Raja as Minister, the Telecom Ministry decided to invite applications for 2G spectrum license, setting a deadline of October 25, 2007.  

But on January 10, 2008 the Department of Telecom issued a press release stating it was issuing 2G licenses on a first-come-first-serve (FCFS) basis. This decision to allocate the “national asset” on FCFS rather than by way of auction, considered a more transparent process, was later slammed by the Supreme Court.   

Controversially, the DoT also decided to advance the cut-off date from October 1, 2007 to September 25 that year, making a number of applications ineligible.  

What’s more the 2G spectrum was given away at throwaway prices –at rates fixed in 2001.

CAG: Loss of Rs 1.76 lakh crore

It was in 2010 that the Comptroller and Auditor General (CAG) blew the lid off the 2G spectrum scam. The CAG tabled its report in Parliament, estimating that the 2G spectrum scam had cost the government a revenue loss of Rs 1.76 lakh crore due to non-auctioning. The presumptive loss of Rs 1.76 lakh crore was calculated based on the 3G auction held the same year.

The CAG also held then Telecom Minister A Raja responsible for flouting rules and procedures during the issuing of licenses and for favouring a select group of companies.  

Accused in CBI’s first case

In the first case filed by CBI, besides Raja and Kanimozhi, those involved include former Telecom Secretary Siddharth Behura, and Raja’s then Private Secretary RK Chandolia.

Among the businessmen on trial are Swan Telecom and DB Group promoters Shahid Usman Balwa and Vinod Goenka, Unitech Ltd Managing Director D Sanjay Chandra, Reliance Anil Dhirubhai Ambani Group executives Gautam Doshi, Surendra Pipara and Hari Nair.

The other accused in the case are Directors of Kusegaon Fruits and Vegetables Pvt Ltd Asif Balwa and Rajiv Agarwal, Kalaignar TV Director Sharad Kumar and Bollywood producer Karim Morani.

The three companies - Reliance Telecom Ltd, Swan Telecom Pvt Ltd and Unitech Wireless (Tamil Nadu) Pvt Ltd – have also been named in the case.

Quid pro quo allegations

In its first chargesheet filed in April 2011, the CBI had pegged the loss owing to the 2G spectrum scam at Rs 30,984 crore. The CBI’s investigation revealed that Unitech Wireless along with Swan Telecom were the two companies that were unduly favoured despite being ineligible for 2G spectrum allocation.

As quid pro quo for issuing a license to Swan Telecom, whose promoters Shahid Balwa and Vinod Goenka were top executives in the DB Group, a bribe of Rs 200 crore was allegedly routed to DMK mouthpiece Kalaignar TV, revealed the CBI.   

The CBI chargesheet stated that a firm of DB Group paid Rs 200 crore as bribe to Kalaignar TV Private Limited (on behalf of A Raja) between December 2008 and August 2009. The Rs 200 crore payment was allegedly made through a circuitous route, through Kusegaon Fruits Vegetable Pvt. Ltd, a DB Group company, and Cineyug Films Pvt. Ltd in which the DB Group holds 49% equity. 

‘Raja misrepresented facts to PM’

The chargesheet also alleged that Raja “knowingly misrepresented the facts and misled the Prime Minister (Manmohan Singh) while mentioning that the department was not deviating from the existing procedure in as much as the overriding principle of introducing new cellular operators subject to the availability of sufficient spectrum was flouted.” 

Kanimozhi was ‘co-conspirator’

It was in the second chargesheet filed in April 2011 that the CBI named DMK chief Karunanidhi’s daughter and Rajya Sabha MP Kanimozhi as a “co-conspirator” in the 2G spectrum case. With 20% stake in Kalaignar TV, the CBI chargesheet alleged that Kanimozhi acted as conduit to transfer the Rs 200 crore bribe. Kalaignar TV’s MD Sharath Kumar, who also had 20% stake, was named in the chargesheet. Karunanidhi’s second wife Dayalu Ammal, who holds 60% stake in the Tamil channel, however, did not figure in the chargesheet. The CBI had then stated that she did not sign any deals related to Kalaignar TV and was not involved in its day-to-day operations.

Raja, Behura face life term

In October 2011, the special court framed charges against the accused. The charges against the accused include criminal conspiracy, illegal gratification of public officials, cheating, forgery and criminal breach of trust.

As public servants, Raja and Behura also face a possible life term with the charge of criminal breach of trust (IPC section 409) slapped on them. The two have also been charged under the Prevention of Corruption Act for accepting illegal gratification. The other 12 accused have been charged with criminal conspiracy to cause criminal breach of trust by a public servant (IPC Section 120B read with section 409). 

 While framing charges, Special Judge OP Saini had in October 2011 stated, “I am prima facie satisfied that accused A Raja and Siddhartha Behura, being public servants, that is, political and administrative heads of the DoT respectively, were having dominion over valuable 2G spectrum, which was disposed of by them in violation of law and which resulted into unlawful gain to the accused companies and receipt of a bribe of Rs 200 crore by accused A Raja, which was received by Kalaignar TV on his behalf and accordingly, charge of conspiracy to commit criminal breach of trust by public servant is also made out against all accused and substantive offence of criminal breach of trust by public servant is made out only against accused A Raja and Siddhartha Behura.”

Case against Essar Group’s Ruias

The second case of the CBI involves one of India’s wealthiest persons – Essar group promoter Ravi Ruia. His nephew Anshuman Ruia, another Essar group promoter is also facing trial along with Loop Telecom promoters Kiran Khaitan, her husband IP Khaitan and Essar Group Director (Strategy and Planning) Vikash Saraf.

The CBI has also chargesheeted three firms Loop Telecom Ltd, Loop Mobile India Ltd and Essar Tele Holding Ltd (ETHL) in this case.

Loop Telecom was allocated 21 licenses in 2008 by then Telecom Minister A Raja. In its chargesheet, the CBI alleges that Essar Group used Loop Telecom as a front company to get licenses from the Department of Telecom despite being ineligible for the same. The Ruias and the Khaitans had violated telecom license guidelines.

While Vikas Saraf has been accused of cheating, all five have been charged with criminal conspiracy to commit cheating (section 120B read with section 420).

Money laundering case by ED

The third 2G spectrum case has been filed by the Enforcement Directorate (ED), and involves the charges of money laundering against A Raja, Kanimozhi and Karunanidhi’s second wife Dayalu Ammal and others.

In April 2014, the ED named 10 individuals and nine companies in its chargesheet. The case involves the alleged kickbacks of Rs 200 crore paid by Swan Telecom promoters to Kalaignar TV.

All accused have been charged with criminal conspiracy and under the provisions of the Money Laundering Act.

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