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 176,379 crore (US$38.27 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 Swamy's complaints on record [With Case
type: Writ Petition (Civil),Case No:10, Year:2011]. The case details of the main PIL filed
with the supreme court is Typewritten Petition (Civil),Case No:423, Year:2010.
In 2008, the Income Tax department, after orders from the ministry of Home and the
PMO, began tapping the phones of Niira Radia. This was done to help with an ongoing
investigation into a case where it was alleged that Niira Radia had acted as a spy.
Some of the many conversations recorded over 300 days were leaked to the media. The
intense controversy around the leaked tapes, became known in the media as the Radia
tapes controversy. The tapes featured some explosive conversations between Politicians,
Journalists and Corporate Houses. Politicians from Karunanidhi to Arun Jaitley, journalists
like Barkha Dutt and Vir Sanghvi and Industrial groups like the Tata's were either participants
or mentioned in these explosive tapes.
Manmohan Singh, - Prime Minister of India from heading the ruling UPA government led
by the Congress, who is accused of not acting on removing Raja, the main accused in the
scam in spite of Finance minister Chidambaram's warning to him .In a note to the PM on
January 15, 2008, Chidambaram had reiterated the finance ministry's suggestion to auction
spectrum as the price would be based on scarcity value. He then went on to suggest this
could be used as one-time for additional spectrum.
A. Raja - the Ex-Minister of Communications and Information Technology who was the
minister when the controversial second round of spectrum allocations took place. Mr.
MP of the Dravida Munnetra Kazhagam from the Nilgiris constituency, was forced to resign
following the public outcry.
Arun Shourie - the minister for Telecom during 2003 in the previous BJP regime. It was
Arun Shourie who introduced the controversial technology neutral "Unified Access(both Basic
& Cellular) Services License", which allowed fixed line operators who had paid much lower
license fees to offer mobile phone services, at first in the limited WLL mode (Wireless local
loop) and later, following an out of court settlement between mobile operators and the BJP
govt, full mobility. This gave an advantage to players like Reliance and Tata Teleservices who
managed to get mobile spectrum without paying the hefty fees that earlier operators like BPL
Mobile had paid.
Siddhartha Behura - former telecom secretary who served in the DOT at
the time of the 2G allocation.
Pradip Baijal - a bureaucrat who is alleged to have implemented policies that
favored certain Telecom companies when he was heading the TRAI. Post
retirement, Baijal joined Noesis, a consulting firm. Raja has made references to
Baijal's decisions in 2003 as the basis for his decisions in 2008. The houses and
offices of the bureaucrat were recently when raided by the Central Bureau of
Investigation as part of their investigations.
R K Chandolia - private secretary of Raja during UPA-I when the licences were
awarded. He was an Indian Economic Service officer of the 1984 batch
cadre. When Raja became the Telecom Minister once again in UPA-II, Chandolia
had been promoted to the Joint Secretary rank. Raja re-designated him Economic
Adviser, that gave him the charge of all important policy-related work. Chandolia
interacted with all the licensees. It is said that it was Chandolia who, from DDG-
access services A K Srivastava's room, had handed out letters of intent to
representatives of various companies
Sistema Shyam Mobile
Anil Ambani - Reliance
Shahid Balwa - DB Realty
and DB Etisalat (formerly
Prashant Ruia - Essar
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. Raja's 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. Some media sources
have speculated that these companies will receive large fines but not have their licenses
revoked, as they are currently providing some consumer service.
In response to the various allegations , the Govt of India has replaced the then
incumbent Telecom minister ,A Raja with Kapil Sibal who has taken up this charge in addition
to being the Union minister for Human Resources Development. Mr Sibal contends that the
"notional" losses quoted are a result of erroneous calculations and insists that the actual
losses are nil.
The CBI conducted raids on Raja and four other telecom officials - former telecom
secretary Siddharth Behura, Raja's personal secretary R K Chandolia, member telecom K
Sridhar and DoT deputy director general A K Srivastava on 8 December 2010.
Raja, Behura and Chandolia were arrested on Feb 2nd 2011.
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 Karunanidhi's
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
Ambani's 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 Maran's recent takeover of Spicejet