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Reliance Communications (RCom) has come under the scrutiny of the Supreme Court (SC) after the Central Bureau of Investigation (CBI) alleged that the company has submitted fudged data on subscriber numbers to the telecom regulator, the Trai, and to the stock exchanges to save on its licence fees.
The then telecom minister A Raja had said in the Lok Sabha in 2009 that RCom and its other subsidiaries had also under-reported revenue to the Trai during 2006-07 and 2007-08 to avoid payment of licence fees.
The under-reporting was estimated at Rs 1,000-1,500 crore, which could have caused Rs 250 crore loss to the government.
Telecom operators pay a percentage of their adjusted gross revenue (AGR) as licence fee. So, lower revenue attracts lower licence fee. In 2009, Trai had asked the department of telecommunications (DoT) to conduct special audits of financial accounts of five telecom operators for 2006-08, observing that the companies were under-reporting revenues to avoid payment of licence fee.
Later in 2009, the government appointed auditor alleged that RCom had evaded licence fee and spectrum fee of about Rs 315 crore during that period. The audit report also noted that RCom had fudged about Rs 379 crore by way of selling expired pre-paid cards to two of its own group companies —Macronet Pvt Ltd and Inference Systems Ltd.
It had also alleged that RCom could have had inflated revenues by Rs 2,915 crore in 2007-08. The special audit committee report, which was submitted to DoT in 2009, had noted that RCom had actually earned Rs 12,298 crore, while it had reported its revenue at Rs 15,213 crore to its shareholders.
At the time of the taped conversation between Niira Radia and Ratan Tata, the special audit had been conducted only on RCom, for under-reporting of revenues. But, over the next six to eight months, DoT had conducted similar special audits on all telecom companies through independent auditors.
In January 2012, DoT had issued notices to Bharti Airtel, Vodafone, RCom, Idea Cellular and Tata Teleservices for allegedly under-reporting revenues during 2006 to 2008. DoT had demanded about Rs 1,600 crore from five telecom operators, of which Rs 551 crore was on RCom.
All companies, however, appealed against the special audit, stating that they followed the most diligent reporting standards, and were subsequently given a stay order from the court.
RCom’s alleged involvement first came into public domain after the recorded tapes of Radia were published by by two magazines. The Comptroller and Auditor General of India (CAG) had, in 2010, also noted RCom’s link in the 2G-spectrum scam in its audit report.
The Radia tapes and the CBI’s investigation into the tapes have now become the basis for the SC ordering a probe by the CBI. A preliminary inquiry was filed last week on the issue.
One of the released tapes mentioned that RCom has fudged subscriber numbers to get additional spectrum. One of the released that the company has fudged subscriber numbers to get additional spectrum in certain telecom zone. Radia also alleged that RCom had fudged subscriber base by 50% to get additional spectrum (6.2MHz from 4.4MHz)
When contacted, a ADAG Group spokesperson said: “We welcome the independent time-bound enquiries by the CBI, monitored by the Supreme Court, which will clearly establish our bona fides, and once and for all prove beyond doubt that we have been the unfortunate victims of a mischievous campaign of calumny and vilification conducted at the behest of our unscrupulous corporate rivals over the past five years.”
“The alleged loss of revenue to the exchequer by RCOM relates to industry issues involving all telecom operators, including Bharti Airtel, Vodafone, Idea and Tata Telecom, and all operators have already been granted stay orders by the Courts against action by the DoT,” added the spokesperson.
The fudging of data is not the only issue which ADAG group is worried about. The group is also fighting allegations of financing Swan Telecom – one of the companies allotted licenses by Raja and later cancelled by the Supreme Court.
RCOM UNDER SCANNER
- 2009: Trai asks DoT for special audits of financial accounts of five operators for 2006-08, observing they seemed to be under-reporting revenues to avoid payment of licence fee
- 2009: DoT-appointed auditor says RCom was under-reporting
- 2009: Niira Radia tape becomes public
- 2010: CAG mentions RCom’s link in 2G spectrum scam, equity interest in Swan Telecom
- 2011: CBI says role of Anil Ambani being probed
- 2013: SC orders CBI probe based on Radia tapes; CBI registers an inquiry
