2G spectrum scandal !!!!!!!!

All about the 2G spectrum scandal !!!!!!!!

The Central Bureau of Investigation (CBI) on Saturday charged former telecoms minister Andimuthu Raja, Reliance ADA Group and the Indian arm of Etisalat, in a multi-billion dollar telecoms licensing corruption scandal that has rocked the government and business establishments.

Here are some questions and answers on the case:

What is the issue all about?

The CBI say that in 2007-08, when the government issued 122 new telecoms licences, several rules were violated and bribes were paid to favour certain firms.

Several licences were issued to firms with no prior experience in the telecoms sector or were ineligible or had suppressed relevant facts, an auditor said in its report.

The violations cost the exchequer USD 39 billion in lost revenue, the auditor said, equivalent to the country's defence budget.

The telecoms ministry's process of issuing licences "lacked transparency and was undertaken in an arbitrary, unfair and inequitable manner," the auditor said.

Police have accused A Raja, the then-telecoms minister, of having taken bribes from two firms which are now the local joint venture partners of Telenor and Etisalat.

What was the fallout?

The report sparked political outrage and the main opposition Bharatiya Janata Party (BJP) all-but-shut an entire session of parliament demanding a special parliamentary probe.

Raja was forced to resign and was arrested over the report. The telecoms ministry is considering whether to cancel some 85 licences which the audit report says were issued to firms which were ineligible for them.

Many of India’s biggest business names have been questioned, including billionaires Anil Ambani, chairman of Reliance ADA group, and Prashant Ruia, chief executive of Essar Group.

A parliamentary panel probing the scandal will next week question Ratan Tata as well as Anil Ambani.

What does it mean politically?

Singh and the ruling coalition have been weakened by the events, and the BJP is seen as having regained political momentum it had lost after defeat in the 2009 federal elections.

The Supreme Court criticized Singh for not acting quickly enough against Raja, a rare censure that was picked up by the BJP to accuse the government of shielding corrupt officials.

The attacks have nearly paralysed the government but it is not in danger of collapsing as its slim majority is not expected to see defections by coalition partners and no one, including the BJP, wants general elections now.

The scandal has also touched Raja's DMK party, a leading ally of the ruling Congress party. The CBI say some of the bribes were routed through the DMK's television channel, controlled by the wife and daughter of the DMK party chief.

DMK rules Tamil Nadu, which goes to polls in April. The corruption cases could affect the electoral performance of the DMK-Congress coalition there.

What does this mean for investment in India?

While corruption itself has been largely shrugged off by investors, the regulatory uncertainty from the review of past government decisions is a source of concern to investors.

The benchmark BSE Sensex ended the March quarter as the world's worst performer, weighed down in part by worries over fallout from a spate of scandals.

If the telecoms ministry does decide to cancel some or all of the 85 licenses it is scrutinizing, questions will be raised on whether foreign investors can trust Indian government contracts.

The licenses under review include those now held by Telenor and Etisalat's local ventures.

It is too early to know whether licenses will be cancelled, but pressure will be on the government not to do so because operators have invested millions of dollars in rolling out networks and cancelling them will inconvenience subscribers.

The telecoms ministry is also mulling imposing charges for spectrum it granted to telecoms firms in the past and has levied fines on newer firms for not rolling out networks quickly enough.

For years, the government gave operators spectrum beyond contracted levels free of cost as they added subscribers.

If the spectrum charges are imposed, market leaders Bharti Airtel and Vodafone would have to pay hundreds of millions of dollars in back-charges. For newer entrants, hefty fines could strain their finances and force them to exit.

63 people under scanner in 2G spectrum case, CBI tells SC

NEW DELHI: Sixty-three persons, including promoters and CEOs of 10 telecom firms have come under its scanner in the 2G spectrum case, the CBI on Tuesday told the Supreme Court which expressed satisfaction over the ongoing probe.

The central government, which is also party to the case, informed a bench of justices G S Singhvi and A K Ganguly that it is in favour of setting up a special court to try the accused in the 2G case and the law minister has written a letter to the Delhi high court chief justice asking him to constitute a court and identify a judge for this purpose.

“The matter is under consideration,” additional solicitor general Indira Jaisingh told the bench, which wanted to know about the progress of investigation into the case.

Senior advocate K K Venugopal, representing the CBI, apprised the bench about the progress by the CBI and placed the probe status report in a sealed cover.

“63 persons including promoters and CEOs of 10 companies have come under the scanner of the CBI in its probe into the 2G spectrum scam,” Venugopal said.

The bench asked the CBI and the Enforcement Directorate to place before it their reports about the investigation by March 10 and posted the matter for further hearing on March 15.

Senior advocates Harish Salve, appearing for Tata group of companies, meanwhile, pleaded for in-camera proceedings.

Earlier on February 10, while hearing a plea by Centre for public interest litigation for probe into the 2G case, the Supreme Court had asked the CBI to widen its probe ambit and include into it high flying corporate honchos without getting influenced by their status.

While giving the CBI a free hand to probe the case, the court had also asked the government to set up a special court to exclusively try the spectrum scam case accused.

“We have a large number of persons who think themselves to be the law. Law must catch them. It should be done with greater expedition. Merely that they are on the Forbes list or they are millionaires does not make any difference,” the bench had remarked after perusing the CBI’s probe status report in which names of big corporate houses and their officials had been mentioned.

But Counsel Prashant Bhushan appearing for petitioner CPIL had pointed out to the court that the agencies have not questioned the heads of several companies including those of Swan Technology, which was controlled by Anil Ambani’s Reliance Group, when the spectrum was allocated.

At this, the bench said, “Top authorities of companies were not questioned. It is surprising that the managing directors were not summoned”.

Seeking to widen the CBI’s probe ambit, the apex court had said the agency’s freedom to investigate the matter should not be curtailed in any way and asked the agency to go beyond the role of the four persons, including former Telecom Minister A Raja, already arrested in the case.

“This investigation has led to prima-facie conclusion about the culpability of four persons. What about the beneficiaries. They are part of a larger conspiracy. We want to know about them. You (CBI) take instructions and tell us what action you are planning to take,” the bench had told the CBI.

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Tags: Central Bureau of Investigation, Andimuthu Raja, Reliance ADA Group, A Raja, Essar Group