Continuing its investigations into irregularities in licence awards by the Department of Telecommunications (DoT) to nine operators in 2008, the Central Bureau of Investigation (CBI) today searched more premises, including the offices of leading telecom companies
A CBI spokesperson confirmed that searches were undertaken in 19 premises but declined to comment on whether telecom companies were raided. Sources say all operators that received licences for 2G or second-generation telecom services after 2001 were queried and asked to give copies of their original letters of intent. They say the effort would be to verify whether there were discrepancies between the original letters and those on DoT's files.
Reacting to the CBI action, Communications Minister A Raja told agencies that DoT had followed all the procedures laid down by telecom regulator Trai and all decisions were taken after consultations with the prime minister.
Demands for Raja’s resignation, however, became louder today with both the Bharatiya Janata Party (BJP) and the Communist Party of India(M) joining the party. The CPI(M) in a statement said the minister could not evade responsibility and involvement in the issue when all his explanations for adopting the "first come, first serve" policy in awarding telecom licences in preference to an auction have proved baseless.
Undeterred, Raja ruled out resigning, pointing out that the CBI had not named him personally. Raja belongs to the Dravida Munnetra Kazhagam (DMK), the third-largest ally with 18 seats in the UPA’s nine-party governing alliance.
Raja also received support from the Congress with party spokesman Manish Tewari said: "Since the FIR names only officials, the question of propriety does not arise...CBI has registered a case against some officials and the whole matter is still under investigation."
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Asked if the allegations had impacted the UPA's image and whether the Congress was defending its ally, Tewari said: "I have nothing to add to what I said...The matter of propriety only rests there (with those named in FIR)".
Barrring Reliance Telecommunications, which categorically denied any raids, the other companies declined to comment on whether the CBI had searched their premises.
A spokesman for Unitech Wireless, in which the promoters had sold part of their stake soon after acquiring a licence, said the company had no comment to offer. So did Loop Telecom, a company promoted by the Ruias of Essar, the shipping-to-steel conglomerate, and their associates.
Yesterday, a CBI press release said it registered a case on 21 October against “unknown” DoT officials and “unknown private persons and companies and others” under the Prevention of Corruption Act. The press release also did not specify who made the complaints.
The CBI statement says it received information of a criminal conspiracy between certain DoT officials and “private persons and companies and others” to award licences to these companies by putting a cap on the number of applicants, which contradicted Trai recommendations.
Also, the licences were awarded to private companies on a first-come-first-serve basis at 2001 fee rates without any competitive bidding.
Searches were conducted at the Wireless Planning Cell (WPC) and in the office of Deputy Director General (Access Services) at Sanchar Bhawan, DoT’s headquarters.
The move revives allegations against Raja who was criticised by telecom companies and political parties for awarding licences to new operators 2001 rates. These operators, in turn, sold part of their stakes to foreign companies soon after and made a killing.
Raja's critics said this method of awarding licences caused the government to forfeit revenue worth over Rs 40,000 crore as a result.
Suspicions arose last year when two new players -- Unitech Wireless Services and Swan Telecom -- sold part of their stake in their companies at huge premiums within weeks of acquiring the licences.
While Swan sold 45 per cent stake to Etisalat for Rs 4 300 crore, Sanjay Chandra -promoted Unitech group sold 74 per cent to Telenor for over Rs 6,100 crore.
DoT justified the sale on grounds that they were equity expansions, not stake sales, which carry a three-year lock-in.
| LICENSED FOR A KILLING? (The nine operators that received licences in 2008) | |
| Company | Promoter |
| Swan Telecom | Etisalat (UAE) and Dynamix Balwas Group |
| Datacom Solutions | Mahendra Nahata and Dhoot of Videocon Group |
| Unitech Wireless | Unitech Group and Telenor (Norway) |
| Loop Telecom | Ruias and associates |
| Shyam Sistema | Mts (Russia) and Shyam Group |
| S-Tel | Batelco (Bahrain) and C Sivasankaran |
| Allianz Infratech | Ajay Singh (promoter of Spicejet) Ashish Deora and Associates |
| Reliance Communications | Anil Ambani |
| Tata Teleservices | Tatas |
| These companies, which were offering Cdma services, were given dual licences allowing them to enter Gsm services | |
DoT was also criticised for the first-come-first-serve basis for allocating spectrum, radio frequencies that enable mobile communications, even though the number of bidders outnumbered the number of licences that were issued -- there were 575 bidders for 120 licences.
DoT also imposed a cut-off deadline of 25 October, 2007 to consider applications. The deadline was imposed suddenly and without explanation, deterring many bidders.
CBI’s investigations come a week after Finance Minister Pranab Mukherjee admonished Raja in a strongly-worded letter over delays in auctions of 3G licences from December this year to June next year. DoT said it had delayed 3G auctions on grounds that the defence ministry had deferred releasing spectrum on schedule as it had promised.