2 G scam


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2 G scam

  1. 1. 1
  2. 2. Group Members :- SlidesExplainedBikash (leader) 1-4Bhuvnesh Kothar 5-7Chirag Garg 8 - 10Pankaj Yadav 11 - 12Akshay Shukla 13 - 16Nitesh Kr. Rai 17 - 20 2
  3. 3. What is 2G•2G (or 2-G) is short for second-generation wireless telephone technology.Second generation 2G cellular telecom networks were commercially launched onthe GSM standard in Finland by Radiolinja (now part of Elisa Oyj) in 1991.•Three primary benefits of 2G networks over their predecessors were that1. phone conversations were digitally encrypted;2. 2G systems were significantly more efficient on the spectrum allowing for far greater mobile phone penetration levels; and3. 2G introduced data services for mobile, starting with SMS text messages.•After 2G was launched, the previous mobile telephone systems were retrospectivelydubbed 1G. While radio signals on 1G networks are analog, radio signals on 2Gnetworks are digital. 3
  4. 4. What is 2-G Scam? The 2G spectrum scam involved officials and ministers 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. According to a report submitted by the Comptroller and Auditor General based on money collected from 3G licenses, the loss to the exchequer was 176,645 crore (US$35.24 billion). The issuing of the 2G licenses occurred in 2008, but the scam came to public notice when the Indian Income Tax Department investigated political lobbyist Niira Radia and the Supreme Court of India took Subramaniam Swamys complaints on record. 4
  5. 5. Parties Accused Of InvolvementPoliticians Involved :1. A. RajaAllegation - In a joint investigation report prepared by Central Bureau ofInvestigation (CBI) and Income Tax Department the agencies allege that A.Rajacould have received 3,000 crore (US$598.5 million) as bribe for bringing forwardthe cut-off date for applications for spectrum from the initial 1 October 2007 to 25September 2007.Charges - Criminal breach of trust by a public servant under section 409, criminalconspiracy under section 120-B, cheating under section 420 & forgery undersections 468 and 471. Booked under the Prevention of Corruption Act for acceptingillegal gratification. 5
  6. 6. 2. M. K. Kanimozhi :Allegation -•As per the chargesheet filed by CBI Kanimozhi has 20% stake in her familyowned Kalaignar TV, her step-mother Dayalu Ammal owns 60% stake in the samechannel.•CBI alleges that Kanimozhi was an "active brain" behind the channelsoperations and she worked along with former telecom minister A. Raja to get DBRealty promoter Shahid Balwa to circuitously route 200 crore (US$39.9million) to Kalaignar TV.•According to CBI, Kanimozhi was in regular touch with A Raja regarding launchingof Kalaignar TV channel and its other pending works.Charges - Criminal conspiracy to cause criminal breach of trust by a publicservant, criminal conspiracy under section 120-B, cheating under section 420 &forgery under sections 468 and 471. Booked under the Prevention of Corruption Act. 6
  7. 7. There were also many corporate executive involved like1. Sanjay Chandra (former MD, Unitech Wireless)2. Gautam Doshi (group MD, Relaince Anil Dhirubhai Ambani Group)3. Hari Nair (Senior Vice- President, Reliance Anil Dhirubhai Ambani Group)4. Vinod Goenka (promoter and MD, DB Realty & Swan Telecom)5. Sharath Kumar (MD, Kalaingnar TV)and many more were involved. 7
  8. 8. Corporations Involved :Unitech Group: A real estate company entering the telecom industry with its 2G bid;sold 60% of its company stake at huge profit to Telenor after buyinglicensing (Including land values properties for towers).Swan Telecom:It sold 45% of its company stake at huge profit to EmiratesTelecommunications Corporation (Etisalat) after buying licensing.Videocon Telecommunications LimitedReliance CommunicationsSistema Shyam Mobile (MTS) – Sistema Mobile RussiaTata CommunicationsVodafone EssarLoop MobileS TelDishnet WirelessAllianz Infra 8
  9. 9. Media persons and Lobbyists involvedNira Radia, a former airline entrepreneur turned corporate lobbyist whoseconversations with politicians and corporate entities were recorded by thegovernment authorities and leaked creating the “Nira Radia tapescontroversy” 9
  10. 10. Barkha Dutt, an NDTV journalist alleged to have lobbied for A.Rajas appointment as minister.Vir Sanghvi, a Hindustan Times editor allegedto have edited articles to reduce blame in theNira Radia Tapes. 10
  11. 11. WHAT ARE THE CHARGES ON FORMER TELECOMMINISTER A RAJA? CHEAP TELECOM LICENSES Entry fee for spectrum licenses in 2008 pegged at 2001 prices Mobile subscriber base had shot up to 350 million in 2008 from 4million in 2001. NO PROCEDURES FOLLOWED • Rules changed after the game had begun. • Cut-off date for applications advanced by a week. • Licenses issued on a first-come-first-served basis. • No proper auction process followed. • Raja ignored advice of TRAI, Law Ministry, Finance Ministry. • TRAI had recommended auctioning of spectrum at market rates 11
  12. 12. Impact on stock markets • The first casualty in Stock Markets once Raja was arrested was DB Realty. • DB Realty had given 200+ crores to Kalaignar TV (owned by Karunanidhis Wife) . • The news led to 20% fall in the stock prices of DB Realty. • Sun TV had its shares fall by 10% on the next day following rumours of Kalanidhi Maran having stake in Kalaignar TV. • Sun TV COO refused the allegations. Swan Telecom Chief Balwa was arrested on Feb 8 and this led to rumours of links with Anil Ambanis Reliance ADAG and it led to 20% fall of his stocks. Its reported that nearly 2 Billion USD was eroded from his stocks .Spicejet stocks went down after reports of investigation on Marans recent takeover of Spicejet. 12
  13. 13. Shortfall of money A. Raja arranged the sale of the 2G spectrum licenses below their market value. Swan Telecom, a new company with few assets, bought a license for 1,537 crore (US$333.53 million). Shortly thereafter, the board sold 45% of the company to Etisalat for 4,200 crore (US$911.4 million). Similarly, a company formerly invested in real estate and not telecom, the Unitech Group, purchased a license for 1,661 crore (US$360.44 million) and the company board soon after sold a 60% stake in their wireless division for 6,200 crore (US$1.35 billion) to Telenor. 13
  14. 14. Supreme Court JudgementOn 2 February 2012 Supreme Court of India delivered judgement onpetitions filed by Subramanian Swamy and Centre for Public InterestLitigation (CPIL) which had challenged allotment of 2G licenses granted in2008.The Supreme Court said in its order that then telecom minister A. Raja “wanted to favour some companies at the cost of the public exchequer" andlisted seven steps he took to ensure this happened. According to the SupremeCourt of India the seven steps were :1. After taking over as telecom minister, Raja directed that all applications received for UAS licences should be kept pending till receipt of the Trais recommendations.2. The recommendations made by Trai on 28 August 2007, were not placed before the full Telecom Commission which would have included the finance secretary.3. The DoT officers who attended the Telecom Commission meeting held on 10 October 2007, had no choice but to approve Trais recommendations, since they would otherwise have "incurred" Rajas "wrath". 14
  15. 15. 4. Since Cabinet had approved recommendations made by the Group of Ministers, the DoT had to discuss the issue of spectrum pricing with the finance ministry.5. Raja brushed aside the law ministers suggestion that the matter should be placed before the empowered group of ministers. This arbitrary action of Raja "though appears to be innocuous was actually intended to benefit some of the real estate firms who did not have any experience in dealing with telecom services and who had made applications only on 24 September 2007, i.e. one day before the cut-off date fixed by the C&IT minister on his own". 15
  16. 16. 6. The cut-off date of 25 September 2007, decided by Raja on 2 November 2007, was not made public till 10 January 2008, and the first-come-first-served principle followed since 2003 was changed by him at the last moment through a press release dated 10 January 2008. "This enabled some of the applicants, who had access either to the minister or DoT officers, get bank drafts prepared towards performance guarantee of about Rs 1,600 crore".7. "The manner in which the exercise for grant of LoIs to the applicants was conducted on 10 January 2008 leaves no room for doubt that everything was stage managed to favour those who were able to know in advance change in the implementation of the first-come-first-served policy." As a result, some firms which had submitted applications in 2004 or 2006 were pushed down in the priority and those who had applied between August and September 2007 succeeded. 16
  17. 17. Response to scam  In early November 2010 Jayalalithaa accused the Tamil Nadu state chief minister M Karunanidhi of protecting A.Raja from corruption charges and called for A. Rajas resignation. By mid November A.Raja resigned.  In mid November the comptroller Vinod Rai issued show-cause notices to Unitech, S Tel, Loop Mobile, Datacom (Videocon), and Etisalat to respond to his assertion that all of the 85 licenses granted to these companies did not have the up-front capital required at the time of the application and were in other ways illegal. 17
  18. 18. In response to the various allegations , the Govt. of Indiahas replaced the then incumbent Telecom minister ,A Rajawith Kapil Sibal who has taken up this charge in additionto being the Union minister for Human ResourcesDevelopment. Mr. Sibal contends that the "notional" lossesquoted are a result of erroneous calculations and insiststhat the actual losses are nil. 18
  19. 19. Corrupted Administration Of India If we talk about the Administration of India we all must say it is not a well maintained or a well centralized Administration as comparison to other Asian countries.Poor Administration of India is just because of the poor political leaders of our country. They used to do some unofficial work for the sake of money, this makes Administration of India weaker. This is not the onlyexample which makes Administration of India affected badly there are lots of other factors which makes it worse. 19
  20. 20. Thank you 20