Raja’s link is reported to be in Chennai, for Swan.
Highlighting irregularities in 2G spectrum allocation, the CAG has said Swan Telecom, one of the companies that got the licence, appeared to act as a “front company” on behalf of Anil Ambani-led Reliance Telecom and doubted the latter’s “intention”.
Related:
NEW DELHI: Highlighting gross irregularities in the allocation of 2G spectrum in 2008, the Comptroller and Auditor-General of India has said that “the entire process lacked transparency and was undertaken in an arbitrary, unfair and inequitable manner” causing a “presumptive loss” of over Rs.1.76-lakh crore to the exchequer. It indicts the former Communications and Information Technology Minister A. Raja for failing to adhere to laid guidelines and ignoring the concerns and advice of Prime Minister Manmohan Singh and the Union Finance and Law Ministries.
The CAG’s Performance Audit Report titled “Issue of Licences and Allocation of 2G Spectrum by the Department of Telecommunications (DoT)” was tabled in Parliament on Tuesday.
It said the DoT issued 122 new licences for 2G spectrum in 2008 at 2001 prices by flouting every canon of financial propriety, rules and procedures.
The DoT did not follow its own guidelines on eligibility conditions, arbitrarily changed the cut-off date for receipt of applications post-facto and altered the conditions of the FCFS (first-come first-served) procedure at crucial junctures without valid and cogent reasons, “thereby giving unfair advantage to certain companies over others,” the report said.
The CAG report blames Mr. Raja for violating the FCFS policy, but says the Prime Minister, the Minister of Law and Justice, the Finance Secretary, the DoT Secretary and the Member (Finance) in the Ministry were “not in favour of hasty allotment of licences without revision of spectrum prices.”
In a severe indictment of DoT, the CAG report said it failed to do the requisite due diligence in the examination of the applications submitted for the licences, leading to the grant of 85 out of 122 licences to “ineligible applicants.” These companies, created barely months ago, deliberately suppressed facts, disclosed incomplete information, submitted fictitious documents and used fraudulent means for getting licences and, thereby, access to spectrum, it pointed out. The companies that won licences despite being ineligible include Unitech, Datacom (now Videocon), S-Tel, Swan Telecom (now Etisalat DB) and Loop Telecom.
The CAG report said the owners of some of these licences, “obtained at unbelievably low price, have in turn sold significant stakes in their companies to the Indian/foreign companies at high premium within a short period of time. The premium earned by these new entrants to the telecom sector was nothing but the true value of the spectrum, which should have normally accrued to the public exchequer, had the transparent and fair market mechanism been followed for the allocation of UAS licences,” it added.
Underlining the need for fixing responsibility and enforcing accountability for the lapses, the CAG report said the entire process of allocation of 2G spectrum raises serious concern about the systems of governance in DoT, which need to be thoroughly reviewed and revamped.
In its report tabled in Parliament, the CAG said the Swan Telecom’s application was “in effect against the intent and spirit” of the Unified Access Service Licencing (UASL) guidelines as it was among those beneficiaries which “suppressed facts, disclosed incomplete information and submitted fictitious documents” to the Department of Telecom.
he audit by CAG found that the e-mail ID of the corporate as well as registered office of Swan Telecom Pvt Ltd in its application dated March 2, 2007 was shown as hari.nair@relianceada.com, the report said, adding the same e-mail ID was also given for the correspondence address and the authorised contact person of the applicant company.
The CAG said the Company Secretary Hari Nair had given a certificate while applying for a UAS licence for J&K service area in January 2007 that the Tigers Traders Private Limited held the shares of Swan (then Swan Capital Private Limited) as trustees of Indian Telecom Infrastructure Fund and these corporate beneficiaries are not part of Reliance ADA Group and neither Anil Ambani nor his family or Reliance ADA Group companies holds any shares in these companies.
However, “the total equity/stakes of Reliance Telecom Ltd (RTL) in Swan Telecom was of Rs 1002.79 crore against equity holding of Rs 98.22 crore by the majority share-holder Tigers Traders Pvt Ltd”, the CAG said, adding it “raises doubts about the intention of the RTL and the control it would exercise in a new company incorporated barely few months ago”, the audit report said.
Leave a Reply