team anna report
TRANSCRIPT
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Index
S. No. Name Page No.
1. Mr. Manmohan Singh 2-42. Mr. P Chidambaram 5-293. Mr. Pranab Mukherjee 30-334. Mr. Sharad Pawar 34-375. Mr. S M Krishna 38-406. Mr. Kamal Nath 41-437. Mr. Praful Patel 44-488. Mr. Vilasrao Deshmukh 49-529. Mr. Virbhadra Singh 53-54
10. Mr. Kapil Sibal 55-5811. Mr. Salman Khurshid 59-6312. Mr. G K Vasan 64-6513. Mr. Farooq Abdullah 6614. Mr. M K Alagiri 6715. Mr. S K Shinde 68-79
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Dr. Manmohan Singh
Dr. Manmohan Singh is the Prime Minister since May 2004 and was
personally in-charge of the Coal Ministry from November 2006 to May
2009. Under his watch a major coal allocation scam took place which
allowed private firms to make windfall gains, as is clear from the facts that
are now out in the public domain and the report of the CAG.
The average allotment of coal blocks was 3-4 per year until a few years
back. But this number shot up drastically to 22-24 during 2006-09 when
Dr. Singh was in charge, raising questions about the manner in which
these allotments were made. All the allotments were made without
transparency, without protecting the interest of public exchequer, and
without any competitive process.
A comprehensive note on competitive bidding for the allocation of coal
blocks was given by the Coal Secretary to the Minister of State for Coal on
16 July 2004. It noted the substantial difference between the price of coal
supplied by Coal India Limited (CIL) and the cost of coal produced through
captive mining. This ensured a "windfall gain" to the party which was
allocated a captive block. That same month, the Minister of State sought
clarification on what he feared would be "likely opposition from the power
sector". The Coal Secretary was explicit that the existing system of
allocation, even with modifications, would not be able to achieve the
objectives of revenue maximisation, transparency and objectivity in the
allocation process. However, rather than accept this advice, in September2004, the PMO forwarded a note detailing what it claimed were certain
disadvantages of the proposed system. Subsequently, the Coal Secretary
remarked that "there was hardly any merit in the objections raised" by the
PMO. The secretary also highlighted some of the "pulls and pressures"
experienced by the screening committee during the decision making
process and stressed that all pending applications were recommended on
the basis of competitive bidding, and that allocations should be made on
such a basis. This recommendation was ignored by the PMO.
The CAG draft report remarked that steps could have been taken to
allocate coal blocks through competitive bidding well in September 2004
itself.
In October 2004, the MoS again argued that the proposal for competitive
bidding may not be pursued as the Coal Mines (Nationalisation)
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Amendment Bill 2000 was pending in the Rajya Sabha with stiff opposition
from trade unions. He also disagreed with the opinion that the screening
committee could not ensure transparent decision making. He said that this
was "not an adequate ground for switching over (to) a new mechanism".
The matter was once again put before the PMO, after which, 28 June 2004
was decided as the cut-off date for considering applications as per the
current policy rather than the proposed policy.
In March 2005, the Coal Secretary again put up a note to the PM stating
that if the revised system was not put in place quickly enough, pressure
would again mount on the government for continuing with the existing
procedure. Subsequently, the PMO in August 2005 asked the coal ministryto amend the Coal Mines (Nationalisation) Act 1973 before the new system
became operational. "Since this was likely to take considerable time it was
decided that the coal ministry would continue to allot coal blocks for
captive mining through extant screening committee procedure till the new
competitive bidding procedure became operational," the note states. Again
in November 2005, the MoS said that the PMO had taken a view to amend
the Coal Mines (Nationalisation) Act, which was a "time consumingexercise and as such allowed the department to proceed with the existing
system" ... "there was no immediacy..."
In April 2006, it was decided to amend the MMDR Act so that the system
of competitive bidding could be made applicable to all minerals. Later on,
delaying the matter further, the MoS opined that the issue of amendment
should be "revisited" as it had the potential to become controversial.
Finally, the bill to amend the MMDR Act was introduced in Parliament in
October 2008 and passed in August 2010.
While the amendment to ensure coal allocation by auction remained in
abeyance because of the Dr. Singhs interventions as head of the Cabinet
and in-charge of the coal ministry, 24 blocks were allocated in 2005, 53 in
2006, 52 in 2007, 24 in 2008 and 16 in 2009. Interestingly, post-
amendments, only one coal block was allocated in 2010, and not even one
in 2011.
Obviously there was a rush for coal blocks allocated under the old, non-
competitive, system. As on June 2004, only 39 coal blocks stood allocated.
"But since July 2004, 155 coal blocks were allocated to government and
private parties following the existing process. The CAG in its draft report
has pegged the losses running in lakhs of crores. A copy of the relevant
chapter of the report is annexed as Annexure A. It is understood the final
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report is similar to the draft report. The final report though has been
submitted to the Government, the Government chose not table it in the
Budget session of Parliament.
The above facts clearly show that the Dr. Singh abused his position to give
huge pecuniary benefits to private parties, which is an offence under
Section 13 of the Prevention of Corruption Act. Therefore the said matter
needs a thorough independent investigation.
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Mr. P Chidambaram
Mr. P Chidambaram was the Finance Minister from May 2004 to November
2008 and has been Home Minister since December 2008.
This note against him is divided into 5 heads:
1. Pricing of 2G Spectrum2. Allowing sale of equity by Swan and Unitech3. FIPB approval of Hutch-Vodafone4. FIPB approval of Aircel-Maxis5. Unwarranted attempts to withdraw prosecution
1. PRICING OF 2G SPECTRUM
Mr. Chidambaram as Finance Minister overruled the officers of his own
Ministry who favoured auction / market-based pricing of spectrum, and
instead allowed the 2G scam to take place. He also, in no time, revised his
position from giving away 4.4 Mhz of spectrum at 2001 prices, to giving
away 6.2 Mhz of spectrum at 2001 prices thus forcing an additional loss
on the exchequer.
The Finance Secretary in a letter dated November 22, 2007 (Annexure A1)
to the Telecom Secretary had stayed any further allocation of spectrum.
The communication states, Meanwhile, all further action to implement the
above licenses (cross-over technology) may please be stayed. A copy of
this letter was marked to Mr K.M. Chandrasekhar, Cabinet Secretary, and
Mr Rohit Kansal, PS to Mr. Chidambaram. On November 29, 2007(Annexure A2), Telecom Secretary replied to Finance Secretary justifying
the issuance of cross-technology licenses on 2001 rates. On this letter, an
officer in Finance Ministry noted, No reply as to why a matter with
financial implications has not been referred to MoF.
On 7th December 2007, an agenda for the meeting of the full Telecom
Commission was prepared, which did not list spectrum pricing as an item.
However, this meeting was not held. On 12.12.2007, the MoF officers
wrote to the DoT, seeking details/documents related to the letter of the
DoT Secretary dated 29th November 2007. On 13th December 2007, in
response to a letter from the Director (Infra)-MoF, the DoT replied
(Annexure A3), enclosing copies of: The cabinet note of 2003; the cabinet
decision in this regard; the DO from the DoT Secretary to the Finance
Secretary of November 2007. The Cabinet note and decision with regard to
spectrum pricing, which had been cited by the DoT Secretary on 29 th
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November 2008 was received by the MoF. Section 2.1.2(3) clearly stated:
The Department of Telecom and the Ministry of Finance would discuss and
finalize spectrum pricing formula, which would include incentive for efficient
use of spectrum as well as disincentive for sub-optimal usages.From the
above, it was clear that the MoF officials were fully aware that unless such
concurrence based on discussion and finalization of spectrum pricing
formula between the DoT and the MoF had been established, the DoT
could not move ahead and allocate spectrum at 2001 rates in 2007/08.
Alarmed by press reports between October and December 2007 of Raja's
potential manipulation of cut-off date, FCFS, and the imminent issuance
of LoIs, MoF officials prepared a Position Paper on Spectrum Policy dated
January 3, 2008, which was attached to a covering note dated January 9,
2008 (Annexure A4) of the Additional Secretary (EA), Finance Ministry.
This paper was to be presented in the Telecom Commission meeting that
was to take place on January 9, 2008, which was postponed to January
15, 2008 at the last minute. In the paper, the Finance Ministry had
recognized that 575 applications were pending and therefore had insisted
that the price of spectrum must reflect spectrums scarcity value
determined through auction. The relevant parts of this note are
reproduced below: -
Extracts of notes dated January 9, 2008 of Additional
Secretary (EA), of Finance Ministry
6.3 Given the fact that there are reportedly over 575
applications pending with DoT (including 45 new applicants) there
is a case for reviewing the entry fee fixed in 2001. This is anadministratively fixed fee. Therefore any change should be
governed by transparent and objective criteria applicable
uniformly to all new entrants.
8.1 The most contentious issue relates to spectrum allocation.
There is no disagreement that the price charged for spectrum
should be based on its scarcity value, efficient usage and that the
process of allocation should be transparent and fair. The payment
is for a real economic resource. It is not a fee. According to DoT it is
closer to royalty charged on Coal, Crude and Natural Gas.
8.4 The most transparent method of allocation of spectrum
would be by auction. However, there are two caveats to the
auction method.
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(a) The ways in which the existing licensees in GSM and CDMA
would be eligible to participate in the auction vis-a-vis the new
entrants; and
(b) The advantages and disadvantages of the method itself. A
detailed table is placed at Annexure V.
The possible non-optimal outcomes can be taken care of by
prescribing suitable rules of auction before the bid in a transparent
manner applicable to all eligible bidders. Any other method for
allocating spectrum, being a scarce resource, would be
economically inefficient.
9.1 . Nevertheless, regardless of the allocation criteria, auction
has been recommended with transparent rules as the most suitable
method of allocating spectrum. The quantum, of spectrum available for
auction in 2G is to be decided by DoT.
Also, the above said note clearly states that Mr. Chidambaram was
personally keeping a watch on the spectrum issues through the media
reports. The note stated that, FM had instructed that the prolific Press
reports over the last two months relating to pricing of spectrum and the
"Telecom Wars" may be tracked. A sample of the press reports of that time
that had complete blown the lid over the manipulations and illegalities
that were being done by the DoT much before the issue of LoIs are
annexed as Annexure A5. There were tens of other similar reports
appearing in the press during October 2007 to January 2008. So, Mr.Chidambaram was fully aware of the complete developments that were
taking place in the Department of Telecommunications (DoT). He was also
aware that the TRAI recommendations (that DoT claimed to be following)
were never approved by the full Telecom Commission of which Finance
Secretary is a Member. Additionally, that Member (Finance) on the
Telecom Commission had objected to Mr. Raja's moves by opposing the
2001 entry fee vide her note on file dated 30th November 2007.
The DoT issued 122 Letter of Intents (LOIs) for Universal Access Service
(UAS) licenses on January 10, 2008; these LOIs were converted into
licenses only during February 27, 2008 to March 7, 2008; and the
spectrum allocation started only from April 22, 2008 and completed on
May 6, 2009 (Annexure A6). During this period, Mr. Chidambaram had
enough time to stop the scam. However, instead, he facilitated the same by
silencing the stand of his officers on the issue of spectrum pricing.
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Just before the Telecom Commission meeting that was scheduled for
January 15, 2008, Mr. Chidambaram wrote a note for the Prime Minister
(Annexure A7). Instead of being straightforward, Mr. Chidambarams note
was aimed to hide the illegalities in the award of licenses. In this regard,
the relevant extract of the note where he categorically exempts the revision
of entry fee is reproduced below: -
9. This note does not deal with the need, if any, to revise
entry fee or the rate of revenue share. This note deals with
spectrum charges for 2G spectrum.
10. Spectrum is a scarce resource. The price of spectrum should be
based on scarcity value and efficiency of usage. The most
transparent method of allocating spectrum would be through
auction. The method of auction will face least legal challenge.
If the government is able to provide sufficient information on
availability of spectrum, that would minimize the risks and
consequently, fetch better prices at the auction. The design of the
auction should include a reserve price.
Through the above note, Mr. Chidambaram also put a lid on the issue of
entry fee for start-up spectrum and of payment by existing operators
towards excess spectrum from a retrospective date, probably to appease
them so that they do not raise the issue of the scam in awarding new
licenses. In this regard, the relevant extract of the note is reproduced
below: -13. This leaves the question about licensees who hold spectrum
over and above the start up spectrum. In such cases, the past may be
treated as a closed chapter and payments made in the past for
additional spectrum (over and above the start up spectrum) may be
treated as the charges for spectrum for that period. However,
prospectively, licensee should pay for the additional spectrum that
they hold, over and above the start-up spectrum, at the price
discovered in the auction. This will place old licensees, existing
licensee seeking additional spectrum and new licensees on par so far
as spectrum charges are concerned.
Thereafter, both Mr. Chidambaram and Mr. A Raja met on January 30,
2008 (Annexure A8) to discuss the issue of licensing and spectrum
pricing. In this meeting, Mr. Chidambaram announced the closure of the
issue of reviewing the Entry Fee of 122 LoIs already issued by DoT. Even
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after issuance of LoIs, A Raja did not convert the LoIs into licenses until he
got clearance from Mr. Chidambaram. The gist of the discussions is as
follows:
4. It was noted that there is a mismatch in the demand and
supply of spectrum across circles. Redressing this mismatch will
be another policy imperative;
5. FM said that for now we are not seeking to revisit the current
regimes for entry fee or for revenue share.
However, in the meantime, since the issue of spectrum pricing was
apparently not settled at the Telecom Commission level, the officers in
both the ministries (Telecom and Finance) kept the discussions on. The
Secretaries of both the ministries had four rounds of discussions in
February 2008. In this regard, on February 8, 2008 Telecom Secretary
sent an Approach Paper on Spectrum Charges to Finance Secretary
(Annexure A9). This note revealed that the Finance Ministry officials were
keen to stop the allocation of spectrum to the LoI holders. Also, the DoTs
position was: i) that it agreed with the MoF that it was legally possible to
auction start-up spectrum (Para 2.1); ii) that license conditions imply that
start-up spectrum of 4.4 MHz would be available contractually (Para 2.1.1,
2.1.2); and iii) that it agreed with the MoF that spectrum beyond 4.4 MHz
until 6.2 MHz (additional 1.8 MHz) could be charged at a pro-rata basis.
The relevant part of this note is reproduced below: -
Extract of Telecom Secretarys letter dated February 8,
2008 to Finance Secretary
2.1 Secretary (Finance) was of the opinion that auctioning islegally possible for initial allotment of spectrum of 4.4 MHz.
Secretary (DoT) explained that auction of spectrum of 4.4 MHz
though may be legally possible but it would not be practical
proposition to auction or fixing a price for 4.4 MHz spectrum due to
following:
2.1.1 As per clause 43.5 (i) of UAS License, which provides that:
initially a cumulative maximum ofupto 4.4 MHz +4.4 MHz shall
be allocated in the case of GSM based systems. It implies that
when a service provider signs UAS License he understands that
and contractually he is eligible for initially a cumulative maximum
of 4.4 MHz subject to availability.
2.1.2 120 LOIs have been issued and the Department is
contractually obliged to give them start up spectrum of 4.4 MHz
under UASL.
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3.1.4 It is however, proposed to price the spectrum of 1.8 MHz
beyond 4.4 MHz upto 6.2 MHz.
3.1.5 The Department is of the view that it would be appropriate to a
levy the charge for enhancement of the quantum of spectrum beyond
the initial 4.4 MHz. For an additional spectrum of 1.8 MHz making a
total of 6.2 MHz spectrum acquisition charge may be on pro-rata basis
i.e. Rs. 378 crores pan-India. It will be charged only to new allottees as
the existing ones have got the spectrum as per license agreement.
On receiving the note of 8th February 2008, the MoF officials knew that the
DoTs representation of contractual rights of LoI holders (Para 2.1.1,
2.1.2) was farcical and a gross misrepresentation simply because LoI
holders were neither licensees nor did they hold licenses until 27th
February 2008. After the above stated letter from Telecom Secretary, the
officials in the Finance Ministry to counter the above also made an internal
note dated February 11, 2008 (Annexure A10) reiterating their stand of
market-based spectrum pricing of 4.4 MHz spectrum agreed to be allotted
to 122 LoI holders. The relevant part of this note is reproduced below: -
30. Ministry of Finance differs from the above position of DoT.
There is no contractual obligation to allot a start-up
spectrum of 4.4 MHz to every licencee free of cost. The
entire range of the spectrum allotted should be priced. The
issue of level playing field can be addressed by charging this
price even on existing operators.
31. Moreover, the differentiated pricing suggested by DoT, viz.one price for spectrum between 4.4 and 6.2 MHz and a different
price for spectrum beyond 6.2 MHz will be clumsy, non-
transparent and legally questionable. It will be neat and
transparent to fix a single circle-specific price for spectrum across
the entire bandwidth.
Between 27th February and 7th March 2008, even as MoF officials fought a
valiant battle to protect the exchequers revenue, not just with the DoT but
with their own Minister, Mr Raja went ahead and issued 122 licenses. This
could have easily been prevented by the FM if only he had stood by his
officials. But all his notes and agreements (15th January and 30th January
2008) were against revising entry fee.
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On 7th April 2008, the Finance Secretary discussed with the DoT Secy and
the FM the note on the issue of entry fee/spectrum pricing (Annexure
A11). He noted that:
Pricing of spectrum:DoT is agreeable to pricing of spectrum beyond
4.4 MHz but wants this to be deferred till auction of 3G and WiMax is
completed. In our note, we suggested pricing of all spectrum including
spectrum already allocated. Is there a case for deferring this decision?
Is there merit in disclosing the pricing intention right now if actual
implementation is deferred?
It is thus clear that the Finance Secretary was uncomfortable about
diluting the MoFs position and more so on the merits in disclosing the
pricing intention right now if the actual implementation is to be deferred.
The Finance Secretary also noted on the covering letter: I have only
communicated the gist of this to Secretary, Department of Telecom. The FM
said that he will also speak to Minister ofCommunications.
On the same day of 07.04.2008 , the FS noted on a file noting (Annexure
A12) continued from 3rd April 2008 that:
2. FM agreed that spectrum usage charge should be increased
reflecting the scarcity value of spectrum as indicated in our note of
11thFebruary, 2008. 3. On pricing of spectrum, FMs view is that we
must insist, in principle, on pricing spectrum (beyond 4.4 MHz)
although details can be worked out after the auction of 3G spectrum.
This was the first clear dilution of the MoF officers position on specificallypricing start-up spectrum on the instructions of Mr. Chidambaram.
Mysteriously, Mr. Raja did not start the process of allocating spectrum at
this stage. Clearly, he needed a written confirmation from the MoF to begin
the process of allocating 4.4 MHz of start-up spectrum at 2001 rates.
On 8th April 2008, one month after licenses had been awarded, an OM
(Annexure A13) which reflected the MoFs original position of 11th
February 2008 on the issue of subjecting the entire spectrum to specific
pricing was issued to the DoT Secretary by the Director, MoF. This note
came to light in the media on 9thApril 2008, and the DoTs position vis--
vis that of the MoFs view were highlighted. Immediately on seeing the
media coverage, the officer was reprimanded and was forced to withdraw
and re-draft the said OM (Annexure A14). The difference between what
the original OM stated and what the officer was directed to re-draft could
not have been more stark. The original OM required the entire range of
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spectrum to be specifically priced. The revised OM, which was prepared on
9th April 2008 but presented with a date of 8 th April 2008, specifically
sought to exclude start-up spectrum upto 4.4 MHz from being specifically
charged, therefore ensuring that the entry fee of 2001 that was fixed by
telecom Minister in 2008 was not revised. The contrast is as below:
New OM dated April 8,
2008
Original OM dated April 8, 2008
4(1) Any allotments of
spectrum to access
subscriber licensees under
UASL regime beyond the
initial start up allocation of
4.4. MHzmay henceforth be
specifically priced and
charged for. Details in this
regard can be worked out.
4(1) Any Allotments of Spectrum to access
subscriber licensees under UASL regime
may henceforth be specifically priced and
charged for. The charge may be determined,
Circle wise, by adopting the Entry Fee, fixed
for that circle in 2003-04, and thereafter
inflating it by the multiplier, which
represents the growth in aggregate AGR per
MHz between 2003-04 and 2007-08; hence,
for a Pan India operator, the Circle fee fixed
in 2003-04 (Rs. 375 Crore per MHz) would
be inflated by a multiple of 3.5 (which
represents the growth in AGR/MHz between
2003-04 and 2007-08) to yield the new
Spectrum price of Rs. 1,312 Crore per MHz
(approximately).
4(3) The price determined as
above may be madeapplicable to both the new
and existing operators; such
operators who do not intend
to pay the new charges may
be given the option of
surrendering the spectrum
allotted to them.
4(2) The price determined as above may be
made applicable to both the new andexisting operators; moreover, the entire
range of spectrum allotted may be charged,
for both new and existing operators; such
operators who do not intend to pay the new
charges may be given the option of
surrendering the Spectrum allotted to them.
On 10th April 2008, not only was the officer who sent the original OM made
to apologize in writing, but in fact seemed to be severely reprimanded and
forced to provide a detailed explanation to the FM as to why the original
OM, which reflected the views of the MoF officers/note of 11th February
2008, was sent out (Annexure A15). The note also reveals how the OM
was personally delivered by the officer to the Wireless Advisor in the DoT,
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who received it on behalf of the DoT Secretary. The DoT then did not to
process the original version of the OM in the DoT file. The Joint Secretary
(Infra) in the MoF spoke personally to the DoT Secretary asking for the
withdrawal of the original OM and the request was exceeded to by DoT
Secretary Shri Behura. While all this occurred on 9 th April 2008, the new
diluted/modified OM was mysteriously pre-dated one day earlier to 8 th
April 2008 to give an appearance that DoTs records and files were in
order. On the above note, on 16th April 2008, the FM wrote a 3-para note
accepting the apology of the officer but only pointed to nomenclature and
title mistakes in the OM. He wrote: That apart, the draft note received
from DoT was indeed considered by me on 11.3.2008. Thereafter, that file
containing the draft note from DoT and the proposed OM was not put up to
me. What was considered was only a non-paper given to me by the Minister
of Telecommunications on which I had been informed by the FS that the DEA
would send a non-paper containing our views. It is in this context that the
note for discussion was prepared: a discussion took place; and I had
indicated my views on the margin of that note. Logically this should have
been followed by sending a non-paper to DoT. However, if there was an
intention to send a formal OM containing our views on the draft note for
Cabinet received from DoT, the file should have been put up to me and my
signature obtained. I may note that I was in office on 8.4.2008 and
9.4.2008. Such errors should be avoided in future.
Having forced the officers to replace the original OM and change the MoFs
position, Mr. Chidambaram on April 21, 2008 forwarded a non-paper
indicating the views of the Ministry of Finance on spectrum related mattersto Mr. A Raja (Annexure A16). This non-paper was silent about on the
issue of entry fee for start-up spectrum for 122 licenses already issued.
The discussion conveniently shifted to charging for spectrum beyond 4.4
MHz. In this letter, he proposed a meeting with Mr. Raja before
communicating their conclusion to the Prime Minister. That means, till
then the two ministers had already decided not to charge for spectrum for
122 Licenses already issued.
Extracts of Mr. Chidambarams letter dated April 21, 2008 to
A Raja
As you are aware, based on your non-paper on spectrum charges,
Finance Secretary has held discussions with Secretary, Ministry of
Communications & Information Technology. Based on those
discussions, I enclose a non-paper containing our views on issues
relating to 2G spectrum and issues relating to 3G / WiMax
Spectrum.
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2. After you have had an opportunity to examine the same,
may we meet and discuss and reach some conclusions? These
conclusions could then be presented to the Hon'ble Prime Minister.
Pricing of 2G spectrum
DoT is agreeable to pricing of spectrum beyond 4.4 MHz but wants this
deferred until auction of 3G and WiMax is completed. An in-principle
decision on this issue may be taken at this stage itself, with details to
be worked out later.
Immediately after the above note, the DoT started allocating start-up
spectrum of 4.4 MHz to all the new operators from April 22, 2008.
Thereafter, Mr. Chidambaram instructed the Finance Secretary to meet the
Telecom Secretary to carry forward the discussion. The two met on April
24, 2008. After this meeting, strangely, Finance Ministry took a u-turn and
agreed not to charge even for spectrum allocated upto 6.2 MHz. . This
meant an additional 1.8 MHz over and above the 4.4 MHz as an additional
concession against the explicitly terms between the DoT and the MoF
officials in their letters of 8th and 11th February 2008. The Finance
Secretary issued an updated note on this on April 29, 2008 (Annexure
A17), a copy of which he handed over to Mr. Chidambaram. The same
position is reflected in a Brief Note dated May 28, 2008 prepared by the
MoF for Mr. Chidambaram before his meeting with Mr. Raja on May 29,
2008. They then met on May 29, 2008 and again on June 12, 2008.
Thereafter, on July 4, 2008, Mr. Chidambaram, Mr. Raja, TelecomSecretary, and Finance Secretary had a joint meeting with the Prime
Minister. This was their first ever meeting on the spectrum issue after the
award of 2G scam. By this time, LOIs were already issued (Jan 10, 2008),
LoIs were converted into Licenses (Feb 27, 2008 to Mar 7, 2008), and the
allocation of start-up spectrum was already started (from April 22, 2008).
In the meeting, a note was submitted to the Prime Minister, which was
more in the nature of informing him what was already agreed and done. No
further approvals were required, as has become clear from the PMs
statement in the Rajya Sabha on 24th February 2011. The specifics of the
discussion are reflected in the Finance Secretarys note of July 6, 2008
(Annexure A18). Relevant part of the note dated July 6, 2008 states,
It is legally and administratively tenable to impose a two part
tariff for Spectrum: a fixed, one-time "upfront" spectrum price for
allowing the allottees to use a public resource for private profit;
and, a recurring spectrum usage charge, whereby Government
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shares the profits accruing to the operator. However, due to
historical legacy reasons, spectrum allocations upto 6.2 MHz for
GSM (5 MHz for CDMA) shall not be charged both from new and
existing operators.
The change in stand by Mr. Chidambaram has also been adversely
commented by the CAG in its report dated November 16, 2010 that states:
The Hon'ble Finance Minister also held the view (15 January 2008)
that Spectrum is a scarce resource. The price for spectrum should be
based on its scarcity value and efficiency of usage and the most
transparent method of allocating spectrum would be through auction.
However, the Hon'ble Finance Minister after the issue of 121 LOIs by
the DoT suggested in January 2008 to treat the previous issue of
licences as a closed chapter and recommended that the price of
spectrum be discovered through an auction process in future.
Relevant extract from the CAG report is annexed as Annexure A19.
On February 16, 2011 (Annexure A20) the Prime Minister held a briefing
with select media persons in which he confirmed that the two ministers
were in agreement with each other. The briefing states,
And this was also discussed with the Finance Ministry because
in terms of the Cabinet decision of 2003 the pricing and allocation
of spectrum was to be settled between the Ministry of Finance and
the Telecom Dept. Initially, of course, the Finance Ministry did ask
for a high price of spectrum but after many discussions, the two
ministries agreed that as far as 2G is concerned, we have to livewith the present system particularly with regard to the amount of
spectrum that is built and embedded into a license agreement. So
this is the background why I did not proceed further with this
matter of pricing of spectrum, because if the Ministry of Finance
and Ministry of Telecom both agree and they have the obligation of
the Cabinet Decision of 2003 to decide on the matter and also
since TRAI is an expert body and Telecom Commission has
experts, if all of them are of the same view, I did not feel I was in a
position to insist that auctions must be insisted.
Prime Minister also told Rajya Sabha on 24.02.2011 that The government
policy on pricing of spectrum was taken on basis of the Cabinet decision of
2003, which specifically left this issue to be determined by the Ministry of
Finance and the Ministry of Telecommunications. He further added the
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two Ministers had agreed because of legacy considerations and I accepted
the recommendation.
Former Finance Secretary in his statement on March 5, 2011 (Annexure
A21) to the CBI has confirmed the entire sequence of events and the
relevant file notings. Thereafter, on March 25, 2011 (Annexure A22), the
finance ministry under its new minister, released an O.M. to the Prime
Minister Office titled, Chronology of basic facts related to pricing and
allocation of 2G spectrum. This paper (that was drafted after inter -
ministerial consultations and refers to about 40 documents) indicts the
then Finance Minister in clear terms and confirms the events as are
documented above in this application, including (in Para 17) the fact that
even after licenses had been issued, the 2G scam could have been
prevented by invoking Clause 5.1 of the UAS license.
Firstly, the said O.M. notes that Mr. Chidambaram had four months to
stop the scam even after the issuance of 122 Letter of Intents (LoIs) by
telecom ministry on January 10, 2008. The LOIs were converted into
licenses during February 27 to March 7, 2008, while the spectrum was
allocated only from April 2008 onwards. Secondly, in the meeting of
Telecom Commission held on January 15, 2008, the representative of the
finance ministry did not bring up the revision of the 2001 entry fee for
start-up spectrum. Thirdly, simultaneously, in a secret note of January 15,
2008 to the PM, P Chidambaram had stated that this note was not seeking
to revise the entry fee, and that in future all spectrum beyond start -up
should be auctioned, and the spectrum allocated in the past be treated asa closed chapter. Fourthly, Mr. Chidambaram had a meeting with the
accused Mr. Raja on January 30, 2008, in which Mr. Chidambaram
specifically stated that he was not seeking to revisit the current regime for
entry fees and revenue share. Fifthly, in February 2008, the FS informed
the Secretary, DoT that auctioning start-up spectrum was legally possible.
Sixthly, on February 11, 2008 the MoF officers rejected the DoTs proposal
of 8th February 2008 and instead proposed to charge the entire range of
spectrum for all telecom operators, new or old, by indexing it with the
increase in telecom revenues during the period 2003-04 to 2007-08.
Seventhly, the FM forced the FS to change the MoFs position with regard
to specific charge/auction of spectrum till 4.4 MHz based on which the
MoF took a u-turn and wrote a modified OM to the DoT on 9 th April 2008
(but dated 8th April, 2008), agreeing to specifically price spectrum only
beyond 4.4 MHz toeing Mr. Chidambarams line. Eightly, on April 21,
2008 Mr. Chidambaram had written to Mr Raja, and in this letter, he
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mentioned only about pricing of spectrum beyond 4.4 MHz. And finally,
even this agreement between the DoT and the MoF was reversed within 3
days, and it was decided to price spectrum only beyond 6.2 MHz, thus
placing an additional approximate 500 MHz (280 licenses x 1.8 MHz)
outside the pricing range, in spite of this being an offer by the DoT itself
vide its letter of 8th February 2008. In that, the MoF was forced to grant
concessions even ahead of the DoTs own proposals.
The Government of India issued a press release on 10.12.2011 (contrary to
the PMs media statement of 16th February 2011, and his statement in the
Rajya Sabha on 24th February 2011, and the DoT affidavit of 11th
November 2010) strongly defending Mr. Chidambaram by stating: It will
be clear from the foregoing sequence of events that Shri P Chidambaram
was in no way responsible for the issue of LoIs on January 10, 2008 or the
charging of entry fee of about Rs.1650 crore. In fact, the record will show
that the Ministry of Finance had no knowledge that the LoIs would be issued
on January 10, 2008. A copy of the said official press release is annexed
as Annexure A23. The fact that Government took a false defense shows
that it has a lot to hide and therefore further investigation becomes
imperative.
It is to be noted that Mr. Raja has been charge-sheeted by the CBI for
fixing low spectrum price. Mr. Chidambaram, as the above facts show, was
equally guilty of the same.
2. Allowing sale of equity by Swan and Unitech
Both Swan and Unitech had obtained 2G licenses and spectrum in 2008 at
throwaway prices because of the connivance of Mr. Chidambaram and the
then Telecom Minister Mr. Raja. That was the first part of the 2G scam.
The second part of the 2G scam took place later in 2008. Mr.
Chidambaram allowed the companies like Swan and Unitech to sell off
their stakes, without charging any Governments share of its premium on
account of spectrum valuation and without enforcing his own agreement
with the then Telecom Minister dated 30.01.2008.
On 30.01.2008, Mr. Chidambaram and Mr. Raja met and concluded that
14 operators were too many for the Indian market and that several of the
new entrants had come in for speculative reasons. Further, they knew full
well that these companies would enter into M&As and make windfall
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profits because of the premium linked to the spectrum that they had
received in 2008 at 2001 prices. They made detailed notings and
agreements about how such premium resulting from M&As, being linked
almost entirely to the value of spectrum, must be appropriately subjected
to a governments share and after proper and official valuations. No M&A
in the telecom sector can take place without the consent of the DoT, as per
the license conditions.
On 30th January 2008, in his documented meeting (annexed above)with
Mr. Raja 20 days after the 2G scam took place and LoIs had been granted,
but no licenses or spectrum allocated yet, a detailed discussion on
spectrum and M&As occurred. The notes from the meeting between the
FM, the MoCIT, and attended by the Finance Secretary and the DoT
Secretary concluded on the issue of M&As, speculative operators, and
protecting government revenues that:
2.4. In case of M&A, getting part of thevaluation for government as
premium for spectrum, to avoid hoarding as well as spectrum trading:
In view of very large number of new operators, it is expected that
some of these companies might have obtained licenses as
speculative venture. Hence, some mergers and acquisitions (M&As)
are likely to take place after some time, which de facto, would amount
to spectrum trading, as large part of such companys valuation may
be on account of the spectrum held by them. This spectrum trading is
not desirable and needs to be regulated.
Besides, the general conditions in service license and other guidelinesfor M&As, clear detailed Guidelines needed to be evolved and
announced regarding the M&As, especially the amount of spectrum
which the merged entity would be allowed to retain alongwith other
criteria such as other details in this regard; companys valuation by
consultants/valuers appointed by govts
approval/consent/concurrence; and then payment of a part of the
valuation to govt. as premium for spectrum, etc.
The above clearly shows that both ministers were specifically aware that
M&As would lead to windfall gains for these companies. In fact, the
Supreme Court, in its judgment dated 2nd February 2011 in WPC
423/2010 cited as ((2012) 3 SCC 1) while cancelling the 2G licenses has
held on the issue of sale of stakes by these companies that:
This becomes clear from the fact that soon after obtaining licenses,
some of the beneficiaries off-loaded their stakes to others in the name
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of transfer of equity or infusion of fresh capital by foreign companies,
and thereby made huge profits. We have no doubt that if the method
of auction had been adopted for grant of licenses which could have
been the only rational transparent method for distribution of national
wealth, the nation would have been enriched by many thousand
crores.
In fact, the CBI, in its charge sheet of 2nd April 2011 in the 2G scam
matter, has, in Section C (dual technology approvals and spectrum
allocation), clearly specified a gain of Rs. 2,342 crores to the promoters of
Unitech Wireless,and in the case of Swan-Etisalat, it specifies a premium
of Rs. 275.7178 on each share. The CBI itself, as a part of the criminal
conspiracy, has shown massive profits made by these companies. Further,
the same has been accepted by the Learned Special Judge of the CBI Court
in the order framing charges of 22nd October 2011, where he has
concluded: ...M/s Swan Private Limited and M/s Unitech Limited, and
thereby two companies obtained pecuniary advantage to the tune of Rs.
7,105 crore by offloading their shares....
On 8th February 2008, the DoT submitted an approach paper (annexed
above) in which it also specifically addressed the issue of M&As, in that:
In view of this we need to have clear guidelines relating to M&A. We
also need to consider fees on account of transfer of spectrum to a
merged entity. In the event of M&A, the transfer charge to the
government has not been considered by TRAI in their recommendation
of August 2007. This is a complex issue requiring detailed deliberationand consultation. Therefore, the issue of quantum of fees that
the government would get on account of transfer of spectrum
during M&As need to be referred to TRAI. Based on the
recommendations of TRAI on the above issue, DoT will take
appropriate decisions within a specified period and issue clear and
transparent guidelines for M&A including transfer charges for
spectrum.
On 11th February 2008, in the DoTs internal note (annexed above)
prepared based on the meeting between the FM and the MoCIT on 30 th
January 2008, three rounds of discussions between the FS and the DoT
Secretary as well as the approach paper of the DoT dated 8th February
2008, it was concluded that M&As were expected and that the government
must find a way to protect its revenues. It specifically stated that:
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One question that arises is whether the government should get
premium out of an M&A transaction. Since spectrum has not been
auctioned but priced heuristically, it is likely that rent if any, involved
in the price of spectrum will form part of the M&A transaction.
On 28th May 2008, one day before a scheduled meeting between Shri
Chidambaram and Shri Raja, a briefing note was prepared for the FM
(Annexure A24) in which, again, on the issue of government revenue from
M&As, it was stated that:
10. DoT have issued notification on April 22, 2007 on guidelines for
intra circle merger of cellular mobile telephone service (CMTS)/unified
access service (UAS) licenses (copy attached). The guidelines
mandate: a) Spectrum transfer charge to be payable as specified by
government.
11. DoT may be advised that the fixation of spectrum transfer
charges shall be in consultation with DEA.
It is a matter of record that Mr. Chidambaram and Mr. Raja met on 29th
May 2008, on 12th June 2008 and finally with the PM jointly on 4th July
2008. However, from the notes of this meeting dated 6th July 2008, it is
clear that the entire issue of subjecting M&As to the governments share of
the premium from the sale of spectrum / spectrum transfer charge was
specifically left out of the discussion.
On 23rd September 2008, Swan Telecom, which had received spectrum in
only 9 out of the 13 circles in which it had received licenses, entered intoan M&A transaction with Etisalat International. Similarly, on 29th October
2008, Unitech entered into an M&A transaction with Telenor even though
it had received spectrum in only 13 out of the 22 circles. In the days
following these transactions, several press clippings appeared exposing the
loss to the exchequer, and questioning the governments move of allocating
spectrum at 2001 prices, including the false promise of doing so under the
pretext of affordability and increasing teledensity etc. The articles clearly
questioned the loss to the exchequer. A sample of these press clippings is
annexed as Annexure A25 (colly).
On 4th November 2008, under pressure from the media, Swan and Unitech
were forced to report about the transactions to the DoT (Annexure A26
and Annexure A27 respectively). The intimation of the two companies
showed that the only asset that they possessed at the time of the massive
valuations during the M&A was the promise of spectrum. They did not
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even have spectrum in all their circles, and consequently, did not have any
telecom infrastructure or equipment either. They had no customers and
therefore no revenues either. It was clear from their own letters that the
entire valuation and the pecuniary advantage was linked to the price of
spectrum in 2008. This, in fact, is exactly what had been expected and
documented in the conclusions reached between the FM and Mr. Raja in
their meeting of 30th January 2008 which were then repeated in the
DoTs and MoFs notes/letters of 8th February, 11th February, and 28th May
2008.
Under continued pressure from the media, Mr Raja held a meeting with
the FM and the PM. In this meeting, he obviously received the support of
the FM. In a complete U-turn of their earlier agreement of 30 th January
2008, documents suggest that the FM passed off these transactions as
mere infusion of equity under the FDI rules. This free passage for Swan
and Unitech became a cause of additional and massive loss to the
exchequer. On 5th November 2008, Mr Raja penned down a one-page note
(Annexure A28), describing his meeting with the FM and the PM. In face
of the media articles pointing to the unlawful enrichment and specified
that:
In a meeting, the Hon'ble Finance Minister clarified that the dilution
of share to attract foreign investment for business expansion did not
amount to sale of license and as such these companies did their share
dilution as per corporate laws.Nevertheless, I suggest that in order to
remove suspicious clouds in the minds of media and people, Telecom
Commission may deliberate this issue and restrict outright sale oflicenses and selling of stake by promoters to second party for money.
Thereafter on November 7, 2008 the DoT in a Press Release (Annexure
A29) justified the part-equity sale of Swan and Unitech to Etisalat and
Uninor. They claimed This matter has been discussed and clarified with
the Finance Minister. The same thing is mentioned in a note dated
November 7, 2008 (Annexure A30) that was prepared by the DoT for Full
Telecom Commission meeting.
Thus Mr. Chidambaram, apart from giving spectrum to shady companies
at low prices, also allowed them to sell it off at many times the said price,
thus allowing them to make windfall gains. The above facts clearly
demonstrate that the actions of Mr. Chidambaram led to massive loss to
the public exchequer and a corresponding gain to a few private companies
and individuals, and those decisions were also detrimental to public
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interest. Therefore, he clearly abused his position to the benefit a few
private parties, which is a clear offence under Section 13 (1) (d) of the
Prevention of Corruption Act.
3. FIPB approval to Hutch-Vodafone
The Government had capped the Foreign investment in Indian telecom
operating companies through direct and indirect route at 74 per cent.
However, Hutchison Essar Limited (HEL), an operator that provided
telecom services across India, breached this condition with Foreign
Investment in HEL as high as 89 per cent. Hutchison Telecommunications
International Limited (HTIL), a Hong Kong based company, had 67 per
cent in HEL while Essar through its Mauritius based companies had 22
per cent equity in HEL. HTIL though had 67 per cent foreign investment
but it had declared to Indian authorities that it had only 52 per cent. The
remaining 15 per cent it held through three Indian entities (Mr Analjit
Singh, Mr Asim Ghosh, and IDFC).
The above breach came to light only when HTIL announced the sale of its
entire equity of 67 per cent to Vodafone of UK on February 11, 2007. This
is revealed in Vodafones Press release dated February 11, 2007 (Annexure
A31), and also Hutchison announcement on Hong Kong Stock Exchange
through a presentation paper dated February 22, 2007 (Annexure A32).
Telecom Watchdog, an NGO, immediately brought this to the notice of the
concerned agencies in India including the Enforcement Directorate
(Annexure A33). Thereafter, the Department of Economic Affairs (DEA)
under Ministry of Finance held detailed discussions with all the concerned
partiesHutchison, Vodafone, and all the three Name Lenders. Vodafone
vide its letter dated March 14, 2007 confirmed its intention to acquire 67
per cent stake (Annexure A34). The DEA also sought the opinion of RBI
and Law Ministry on this issue. It circulated the details to all the Members
of the Foreign Investment Promotion Board (FIPB) for their comments.
However, all the other Members of the FIPB authorized DEA to investigate.
At this stage, Hutch realized the gravity of this situation. On March 15,
2007 Hutch agreed to pay $415 million to Essar in a conditional
Settlement Agreement with Essar (Annexure A35). This was primarily to
secure Government permissions. Out of this 90 per cent ($373.5 million)
was immediately paid and the balance 10 per cent ($41.5 mn) was to be
paid later.
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On the other hand, responding to DEAs queries, the RBI in its letter dated
March 20, 2007 called this as a serious violation, and said it requires
further investigation (Annexure A36). However, Law Ministry gave a
different opinion and said it was not in violation of FIPB. With all these
inputs, including that of Law Ministrys opinion, the DEA on April 26,
2007 had concluded that HTIL had 15 per cent benami shares. However,
on April 27, 2007, the Finance Minister Mr P Chidambaram called these
DEA officers in his office including the Finance Secretary. Later, on the
same evening, the FIPB held a meeting. Most of the Members of FIPB
recorded their serious observation, but allowed transfer of only 52 per cent
of Hutch to Vodafone, while it rejected 15 per cent share transfer to
Vodafone. Under pressure, it did not act and remained silent on the
benami holding. This is revealed in the notings of DEA received under the
RTI Act (Annexure A37).
On May 7, 2007 the FIPB gave conditional permission to Vodafone to
purchase 52 per cent of Hutch while putting restriction on the sale of
benami 15 per cent (Annexure A38). However, without caring for this
condition, Vodafone executed the purchase as per original plans and
purchased the entire 67 per cent. This violation too was again immediately
brought to the government agencies including Mr A Raja, the then Telecom
Minister (Annexure A39). However, no action was taken.
Later on, Vodafone also entered into another agreement with Essar called
Amended and restated Shareholders Term Sheet dated August 24, 2007 by
way of which it has fixed how to share cost if at a later stage the
Government finds that the shareholding is benami (Annexure A40). This
agreement has capped Essars liability to $415 million that it has received
from Hutch under the above stated conditional Settlement Agreement. In
other words, if Essar is unable to secure the complete go through, it must
return $415 million to Vodafone. For extending support, Vodafone also
arranged a loan of $3.5 billion Term Loan on its sureties for Essar. For
this, Essar, Vodafone, and banks entered into agreement in September
2007 (Annexure A41). This agreement also reveals that Vodafone has
purchased 67 per cent from Hutch. It also elaborates how to deal with a
situation when the Government finds that they have 15 per cent benami
shares.
Later, on February 13, 2009, the government relaxed Foreign Investment
cap through Press Release No. 2 of 2009. This allowed further formal
taking over of another 6 per cent by Vodafone from the Name Lenders Mr
Asim Ghosh (2.29 pc) and Mr Analjit Singh (3.71 pc) out of the total 15 per
cent benami by paying them a substantial money for lending their names.
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Vodafone paid Mr Asim Ghosh Rs 329.5 crore and Mr Analjit Singh Rs
533.3 crore. Thus, together they sold 6 per cent for Rs 862.8 crore. This
works out to be Rs 143.8 crore per one per cent of HEL/VEL. This means
the valuation of 100 per cent of HEL/VEL was just Rs 14,380 crore. This is
highly undervalued. This substantiates the allegation that these are just
Name Lenders, and the payment was made by Vodafone to them as their
booty for lending their Names.
Thus, from the above it is clear that the Finance Ministry officials
maintained the same position even just a day before the FIPB meeting was
scheduled for April 27, 2007. On that morning, Mr P Chidambaram called
these officers in his chamber, and after that these officers took u-turn and
granted permission Vodafone to buy only 52%. The FIPB communicated
this to Vodafone in May 2007. But, Vodafone continued with its
acquisition plan of 67%. The Government did not do anything despite the
complaints.
It is also clear that, in March 2007, Hutchison, in an agreement with
Essar, agreed to pay $415 million to Essar for arranging government
permissions. This agreement was restated by Vodafone after they
purchased 67% equity, and Essar agreed to return all the money in case it
fails to do so. So, this was apparently the bribe money ($425 mn) that was
prima facie used by Essar to purchase permissions. These above facts
therefore undoubtedly need a thorough independent investigation.
4. FIPB approval to Aircel-Maxis
Under the law, foreign share holding of a telecom company cannot be more
than 74%. Any foreign investment of 50% or more have to be cleared by
the Foreign Investment Promotion Board (FIPB) which is headed by the
Finance Minister. The first job of the FIPB is to ensure that the FDI cap of
74% is not violated.
Maxis, a Malaysian company, purchased an Indian telecom company
called Aircel and its investment was almost 100%. But to circumvent FDI
cap of 74%, it routed the balance investments through Chennai based
Reddy Group (Apollo Hospital). To the Indian authorities, Maxis
maintained that it has only 74% in Aircel. This FDI violation can also be
established from the fact that Maxis invested several thousand crores of
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Rupees in Aircel, whereas Reddys investment is just Rs 34.17 crore for a
stake as high as 26% in Aircel.
CBI has now filed an FIR on the above transaction (Annexure A42). The
said FIR states:
M/s Aircel was taken over by M/s Maxis Communications through its
subsidiary M/s Global Communications along with its India partner
M/s Sindiya Securities vide a complex equity structure giving them
74% and 26% stake in M/s Aircel Televentures Ltd. respectively.
Whereas the investment made by them were US $ 792.41 million and
US $ 7.59 million respectively thereby giving M/s Global
Communications an economic interest of 99.3% in M/s Aircel
Televentures Ltd.
Even to the Bursa Malaysia Stock Exchange, Maxis in its quarterly report
ended March 31, 2006 has declared that it has 99.3% investment in Aircel.
(Annexure A43)
But despite the above well-known facts Mr. Chidambaram went ahead and
accorded FIPB clearance on 03.10.2006. (Annexure A44). Also after
complaints were filed regarding this FDI cap violation, no inquiry was done
or ordered by Mr. Chidambaram or the DoT.
After the Maxis took control over Aircel, Mr. Maran got spectrum pricing
out of agenda of the Group of Ministers (GoM). The record shows the
Finance Ministry under Mr. Chidambaram maintained a temporary silenceon the issue of spectrum pricing being dropped from the GoM between
February 2006 and February 2007. This was the same period in which
Maxis received two sets of FIPB clearances in January-March and
September-October 2006, followed by 14 licences between December 5 and
14, 2006, along with the promise of linked 2G spectrum at 2001 rates on a
first come, first served basis. Aircel paid Rs. 1,399 crore for these 14
licences which the CAG, in 2010, valued at roughly Rs. 13,000 crore. Once
Aircel had secured its licences, the Finance Ministry suddenly went back
to arguing that spectrum pricing be included in the ToRs of the GoM on
spectrum.
While the above was happening, Mr. Karti Chidambaram (son of Mr.
Chidambaram)s company M/s Advantage Strategic Consulting gave a
mysterious loan of Rs. 26 lakhs to Aircel. Around this time there was a 5%
(Rs 18 lakhs) increase in Aircels share capital. These shares were
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apparently allotted to companies linked with Mr. Karti Chidambaram.
Documents on this along with a summary are annexed as Annexure A45.
After the above facts came to light, Mr. Chidambaram argued that Karti's
Ausbridge came to Advantage Strategic Consulting only in 2008/2009 by
taking 67% shares. The Loans and Advances to Aircel took place
somewhere before 31 March 2006 and at that time Mr. Karti had no role in
M/s Advantage. But the Attached Annual Return 2006-2007 of Karti's
Ausbridge Holdings (where Mr. Karti holds 94% share) shows that their
email id as: [email protected] (Annexure A46). And Advantage
Strategic Consulting's Letter Head available at RoC says their website is
www.advantconsult.com(Annexure A47).
The above facts leave no room for doubt that a thorough and impartial
investigation is necessary in this case.
5. UNWARRANTED ATTEMPTS TO WITHDRAW PROSECUTION
Mr. Chidambaram was known to one Mr. S P Gupta, a Delhi based
hotelier. Mr. Chidambaram had also appeared for him several times a
lawyer, including in cases where Mr. Gupta had sought quashing of FIRs
against him. Mr. Chidambaram had appeared for him till 2004 when he
became a minister. As many as four FIRs were registered against Mr.
Gupta and others. In all the cases Delhi Police had filed detailed
chargesheets leveling serious charges against Mr. Gupta and the trialcourt had taken cognizance. Mr. Gupta had gone right up to the Supreme
Court to get the investigations and/or the chargesheets quashed. His all
petitions and appeals had been rejected. But as soon as Mr. Chidambaram
took over as Home Minister, Mr. Gupta wrote to his Ministry seeking
withdrawal of the cases against him. Soon thereafter, Mr. Chidambaram
instructed the Delhi Police (which works under him) to withdraw all the
cases against Mr. Gupta. This is a clear case of abuse of ministerial power
to benefit an industrialist facing 4 chargesheets. After the above facts
became a big public scandal, the order to withdraw the prosecution has
been revoked.
There are four cases registered by Delhi Police against Mr. S P Gupta and
other private individuals. In all the four cases, chargesheets had been filed,
the trial court had taken cognizance, and the High Court and Supreme
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Court had dismissed challenges to the FIR & chargesheets. Facts of the
case are as follows:
FIR No. 90/2000
a) FIR was registered on 14.02.2000b) Chargesheet was filed on 17.01.2003 u/s
420/406/409/468/471/477-A/120-B IPC: It charged Mr. S P
Gupta and others of M/s Sunair Hotels, Barakhamba Road, New
Delhi with cheating, criminal breach of trust, forgery, falsification
of accounts and criminal conspiracy.
c)Trial Court took cognizance of chargesheet and issued summons toaccused on 18.01.2003
d) Notice was issued on 04.03.2003 by Delhi High Court on petitionchallenging chargesheet
e) Supplementary Chargesheet was filed on 18.08.2005f) HC petition challenging chargesheet withdrawn on 04.03.2010g) HC petition challenging summons dismissed on 04.06.2010: The HC
order states Learned counsel for the petitioner states that they
should be permitted to question and to challenge the summoning
order which was passed on 18.01.2003 on merits. I do not think
this should be permitted. As noticed above, the summoning order
was challenged in petitions which had remained pending in this
court from 2003/2006/2007 till 04.03.2010. The petitioner then
withdrew these petitions as pointed out above. It will not be proper
to allow the petitioner to once again raise the same questions after
they had withdrawn the petitions, which had remained pending inthe High Court for 3-6 years. In these circumstances the petition is
dismissed.
h) SC dismissed appeal and upholds above HC order on 09.08.2010
FIR No. 99/2002
a) FIR was registered on 19.02.2002b) HC dismissed petition against the FIR on 24.03.2005c) SC dismissed appeal challenging above HC order on 03.07.2006d) Chargesheet was filed on 16.01.2007 u/s 420/406/409/424/467/
468/471/471A/120-B IPC It charged Mr. S P Gupta and others
of M/s Sunair Hotels, Barakhamba Road, New Delhi with
cheating, fraud, criminal breach of trust, forgery, falsification of
accounts and criminal conspiracy.
e)Trial Court took cognizance and issued summons to accused on12.03.2007
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f) HC petition challenging chargesheet was withdrawn on 04.03.2010
FIR No. 148/2002
a) FIR was registered on 28.02.2002b) Chargesheet was filed on 17.01.2006 u/s
384/406/409/417/422/465/468/471/ 500/120-B IPC: It
charged S.P. Gupta and others for extortion, criminal breach of
trust, cheating, fraud, forgery and criminal conspiracy
c)Trial Court takes cognizance and issues summons to accused on13.02.2006
d) Supplementary Chargesheet was filed on 22.10.2007e) HC dismisses petition challenging summons on 02.07.2009f) SC dismisses appeal against the above HC order on 29.01.2010g) HC petition challenging FIR was withdrawn on 04.03.2010
FIR No. 315/2005
a) HC directs registration of FIR on 24.08.2005. The HC order states:It is submitted that certain official files regarding the Department
of Company Affairs have been recovered from the accused persons
but no action has been taken by the police Having heard counsel
for the petitioner, in the event, during investigation and
search/seizure, any document or register is seized relating to
Department of Company Affairs and cognizable offence is
disclosed, the police, shall register an FIR and proceed in
accordance with law.
b) Petition seeking quashing of FIR dismissed as withdrawn by HC on04.03.2010
c) Chargesheet filed on 30.08.2011 u/s 380/411/120-B IPC: Itcharged S. P Gupta and others for committing theft and criminal
conspiracy.
d)Trial Court takes cognizance and issues summons on 15.09.2011
Mr. S P Gupta and others had been chargesheeted by the Delhi Police of
which trial court had taken cognizance for inter-alia:
a) Misusing the names of Mr. Rajiv Gandhi and Mrs. Sonia
Ganhi on the letter-heads.
b) Forging letters of many Members of Parliament
c) Stealing of 21 files from Ministry of Corporate Affairs
d) Many instances of cheating, forgery and fraud
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Chidambaram seems to have put pressure on the Delhi government to
drop three FIRs against Mr Gupta. An application was filed on behalf of the
Delhi Government to withdraw some of these cases. However, the
application for withdrawal was itself withdrawn after this scandal hit the
media. He thus abused his position as the Home Minister to get cases
against his erstwhile client withdrawn after his client failed to have them
quashed through the courts. Copies of the newspaper reports are annexed
as (Annexure A48). This also amounts to criminal misconduct and needs
a thorough investigation.
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Mr. Pranab Mukherjee
In July 2005, the Indian Express published a report that some documents
belonging to the Navy were leaked through a pen drive. This pen drive was
later found in the house of a Navy officer Wing Commander SL Surve.
These documents had been shared with Mr. Abhishek Verma, Mr. Ravi
Shankaran and Mr. Kulbhushan Prashar accused in various defense
scams. In its investigations the Navy found three commanders, Mr.
Bijender Rana, Mr. Vinod Kumar Jha and Captain Kashyap Kumar, guilty
and they were sacked in December 2005. The investigation revealed that
the officers had leaked sensitive information about countrys naval strategy
and therefore put the security of the nation under threat. Despite the
findings of the Navys investigation no action was taken against the trio
Mr. Abhishek Verma, Mr. Ravi Shankaran and Mr. Kulbhushan Prashar.
Neither was the case handed over to the CBI. The matter was closed.
The Outlook in 2006 came out with its stories stating that the leaked
documents also contained information about the money exchanged as
commission in Scorpene submarine. During the investigation of the Navy
document leak many emails were also found which indicate that the deal
to procure the Scorpene submarines which was entered into between the
UOI and Thales (a French Company) on 7th October 2005 was mediated by
the middlemen who have negotiated substantial commissions in the deal
extensively on behalf of persons in the Government and the ruling party in
total violation of the policy of the Defense Ministry which prohibits
involvement of any un-registered middlemen in any Defense deal. Copies of
the stories published in Outlook Magazine on 20th Feb. 2006 and 27th Feb.
2006 are enclosed herewith as Annexure A (Colly).In one of the emails, Mr. Verma wrote to chief of Thales (the French
company which had bagged the contract for the Scorpene submarine) in
response to his questions:
Question 1: He would like to talk to a person nominated by the government
like a treasurer of the Congress party or any similar person. Because four
per cent commission was impossible.
To which Mr. Verma replied:
After meeting those two people he would have to talk to me. I hope Thales
doesnt feel that Congress party has some shop and he is talking to them. I
will represent them (Congress) in the entire deal. According to Thales how
much are they willing to spend on the project?
On July 13, 2005, chief of Thales sent a mail to Mr. Verma which
elaborates on the graft money given to him as commission.
Below is the email:
Dear Abhishek,
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We have made arrangements for paying 4% commission to your
representatives on the Scorpene deal. Please tell your lawyers to contact us
for the paper work.
Jean PaulPerrier
Despite such incriminating evidence of graft and putting the security of the
nation in danger the then defense minister Sh. Pranab Mukherjee didnt
give orders for investigation into the Scorpene submarine deal. Ironically,
the government gave orders to CBI to investigate how the documents got
leaked but didnt ask it to investigate the corruption charges in those
documents. Copies of some of these emails are enclosed herewith as
Annexure B (Colly).
Ironically, on 12th February 2006, Mr. Pranab Mukherjee, who was then
Defense Minister, said in a TV interview that there was no need to act
against these men as the information that was leaked pertained to the
commercial activities of the Navy. According to him it was commonplace
for brokers to indulge in such acts in order to gain information pertaining
to commercial activities. Copy of the interview telecast on a TV channel is
enclosed herewith as Annexure C.
After this, Mr. Ravi Shankaran was even given permission to leave the
country. After much hue and cry, the government was forced to order the
CBI inquiry in Navy War Room leak case but again Sh. Pranab Mukherjee
made a statement in the Parliament that this inquiry was not in respect of
Scorpene Submarines. Copy of the statement made by Sh. Mukherjee in
the Parliament on 18th Feb. 2006 is enclosed herewith as Annexure D.
In its charge sheet against Abhishek Verma and other accused in Navy
War Room leak case, the CBI clearly stated that the information that wasleaked was sensitive and could have posed a threat to nations security.
The documents contained information about the future purchases and
preparedness of the Indian Navy.
Even though no investigation regarding Scorpene deal has been done by
the CBI, the facts which have emerged from the said charge-sheets of the
CBI corroborate many of the aforementioned allegations.
As per the charge sheet, Abhsihek Verma was associated with Atlas Group
of companies, which deal in defense supplies and whose main source of
income is through foreign remittances. It says that he received pecuniary
benefits from the foreign companies having interest in various defense
procurements. It has been clearly established that Ravi Shankaran,
Kulbhushan Parashar and Abhishek Verma were very close to each other
and all of them were associated with Atlas group of companies which deal
in defense supplies. It has been established by both the chargesheets that
Abhishek Verma, Kulbhushan Parashar and Ravi Shankaran were three
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civilian beneficiaries of War room Leak. One of the most revealing finding
in the second charge-sheet is the business connection of M/s Atlas
Defense Systems with Thales Group of companies. Further, the second
Charge sheet also proves that Abhishek Verma has connection with Ms.
Gwendolyn Berger who was acting as International Liaison Officer for
Thales as apparent from her business card. It appears from the 1st charge-
sheet that much of the evidence was destroyed because of delay in
ordering an investigation. Copies of the charge sheets filed in Navy War
Room leak case are enclosed herewith as Annexure E (Colly).
A Public Interest Litigation was filed by an organization viz. Centre for
Public Interest Litigation in the Delhi High Court seeking an independent
investigation into the allegations of payment of commission in the
Scorpene submarine deal. Pursuant to the High Court order the CBI
conducted a preliminary enquiry and filed a report before the court. It
appears that the CBI did not do any investigation into the emails, phone
records of the accused etc. and closed the case saying that no evidence
was found. The petitioner in the said PIL specifically asked for the CBI
report but the same was denied by the CBI claiming privilege. However it
appears from the email of C Edmonds Allen dated 16th April 2012 that the
aforementioned report was given to Abhishek Verma who was one of the
accused. Copy of C Edmonds Allen email dated 16th April 2012 along with
its attachments is enclosed as Annexure F(Colly)
Thus, the involvement of Mr. Pranab Mukherjee in the Scorpene scam is
apparent from the following facts:
He was the defense minister who signed the Scorpene submarinecontract, and seems to have allowed Abhishek Verma to operate as amiddleman in this deal even though the official policy of the
government was to bar the middlemen in such contracts.
After the Navy war room leak was discovered, and the question aroseabout the action being taken against the civilians like Abhishek
Verma, Ravi Shankaran and Kulbushan Parashar, who were
involved in the leak Pranab Mukherjee sought to downplay by falsely
stating that the leaked information was only of commercial nature.
He took not steps to prevent the civilians involved in the leak fromleaving the country and they were allowed to leave the country
He did not order any investigation in the Scorpene deal despite theOutlook magazines detailed expose on the issue.
Under his watch, the CBI did a whitewashing preliminary enquiry,and claimed privilege over the preliminary enquiry report while
secretly sharing it with the accused Abhishek Verma.
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Despite Abhishek Vermas partner Edmonds writing to the ED andthe CBI agreeing to share a lot of incriminating evidence against
Abhishek Verma and his role as a defense middleman, Mr. Pranab
Mukherjee took no steps to have the matter investigated.
The aforementioned facts prima facie constitute an offence under the
Prevention of Corruption Act and therefore a thorough and fair
investigation is required.
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Mr. Sharad Pawar
Accused of having close ties with some of the most dangerous
criminals of the country:
In 2002 and 2003, Mr. Sudhakar Rao then minister in Maharashtra
alleged that Mr. Pawar asked him to be lenient against gangster Papu
Kalania criminal turned politician. Mr. Rao also alleged that Mr. Kalani
and Mr. Hitendra Thakur were given tickets at the behest of Mr. Pawar.
Annexure A
He was also accused of having relations with underworld don Dawood
Ibrahim in the past and currently he is accused of having ties with 2G
scam accused Shahid Balwa. Copy of the Indian Express report, Outlook
report and excerpts of the book Lucknow Boy written by Vinod Mehta is
annexed as Annexure B (Colly)
Abdul Karim Telgithe prime accused in the Telgi scamhad admitted
during the Narco-analysis test that the Rs 60,000 scam was a brain child
of Mr. Pawar. Copies of the newspaper reports are annexed hereto as
Annexure C (Colly).
Wheat Import Scam: - Mr. Pawar is accused of having given permission to
private and international companies to directly buy wheat from the
farmers. This led to a complete sell out of the FCI stock, and there was
nothing left to distribute through the ration shops. Therefore, the wheat for
consumption of common people had to be imported. While the government
had set a price of Rs 850 per ton for procuring from farmers; it went ahead
and imported wheat at more than Rs 1400 per ton and mostly through
select private companies. The government did not purchase wheat at
higher prices from the farmers directly. A copy of the detailed not on thisscam which had been issued in 2007 by Dr Kirit Somaiya who also sent a
complaint to CVC on this is annexed as Annexure D. Ironically, wheat
imported from these companies was rotten and not fit for human
consumption. Copy of the lab reports of State Public Health Laboratory of
May-Jun 2008 confirming the same are annexed as Annexure E.
Politicians across all parties raised a hue and cry on the issue, but no
investigation was initiated into the scam.
Pulses Import Scam: The Government of India in order to bridge the gap
between demand and production of pulses introduced two schemes for
import and distribution of pulses in the year 2006 and 2008. This was to
be done through four public agencies viz. NAFED, MMTC, PEC Ltd. and
STC. The import would have also checked the rise in the price of pulses.
However, it was found that this policy ended up benefitting four big private
traders at the cost of the public trading companies. As much as 6.08 lakh
MT of pulses were sold to these private companies. According to the CAG
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report the public trading agencies incurred total loss of Rs 1201 Crore in
importing pulses but domestic prices did not fall as supplies were not
promptly made to the market. The CAG report further pointed out that the
Ministry of Consumer Affairs Food and Public Distribution headed by
Sharad Pawar failed to identify appropriate channels for the distribution of
imported pulses.
Instead of selling the imported pulses to people through the public
distribution system, they were sold to private companies at a rate lower
than the buying price and these companies in return sold the pulses at the
higher market rates.
Out of the total loss of Rs 1201 Crore, loss of Rs 897 Crore was incurred
due to the import of Yellow Peas in 2007 as it was imported without much
deliberation. The Government decided to import Yellow Peas on the ground
that they were reasonably good substitute for other types of pulses and
there prices were comparatively lower. However, the peas did not find
many takers in the domestic market and were sold after considerable
leading to aforementioned heavy losses to the importing agencies. Despite
this, the agencies continued to import the peas during the subsequent
years even when they had huge unsold stocks.
Copies of the India Today report is annexed as Annexure F and relevant
CAG report is enclosed herewith as Annexure G.
LAVASA Scam
Lavasa is a massive 25,000 acre hill station, valued at tens of thousands of
Crore, is being developed in the eco sensitive areas of Western Ghats. The
Ministry of Environment and Forests, New Delhi in its order 17th January,
2011 concluded as under:"The discussions and analysis clearly brings out the fact that M/s LCL
is in violation of the (i) of the EIA Notification, 1994 (ii) EIA Notification,
as amended in 2004; and (iii) the EIA Notification of 2006. The site
visit Report has brought out the nature and magnitude of the
environmental damage caused by the project. As such, the
construction activity is unauthorized, being in violation of the
above three Notifications and is also environmentally damaging."
Copy of the Order dated 17th January, 2011 of the Ministry of Environment
and Forests is annexed as Annexure H
In this reference, among many other serious issues, the following points
become apparent:
1.The initial directors of Lavasa Corporation, inter alia, were SupriyaSule, daughter of Sharad Pawar and her Husband Sadanand Sule
having about 21 per cent shares. Supriya Sule has been Member of
Parliament for two terms. There were certain other persons who are
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known to be close to Sharad Pawar who too were Directors of the
Company. This clearly shows the intimate connection of Sharad
Pawar with Lavasa whose construction has been declared to be
unauthorized by no less than a statutory entity.
2. Supriya Sule her husband sold their shares around the year 2006on highly undervalued rates. This is apparent from the fact that the
net worth of Sule as declared before the Election Commission did
not undergo a major quantum of change between the year 2004 and
2009. For a massive company having enormous land assets, the
worth of such shares were hundreds of Crores which were not
reflected in the property declaration before the Election Commission.
3. When the illegal construction was going on, Sharad Pawar who hadno statutory role to play in the construction since he was a Central
Minister, held a meeting in Lavasa where many concessions were
granted. When the project was unauthorized and which has been
declared illegal through a statutory order, this interference of Sharad
Pawar in the matter was highly disturbing. The minutes of the
meeting held are enclosed as Annexure I
4. Precious land of the irrigation department was given to Lavasa at apittance, without any auction, by the then Irrigation Minister and
now Deputy Chief Minister Ajit Pawar, who is a nephew of Sharad
Pawar and in blatant violation of the Maharashtra Land Revenue
(Disposal of Government Land) Rules, 1971. Stern objections were
raised by the conscientious Revenue Secretary Ramesh Kumar, on
which no action was taken. The office note in this reference is being
obtained. For the reason of this stand taken by whistle-blower ShriRamesh Kumar, Government of Maharashtra has victimized Ramesh
Kumar by refusing to go ahead in his appointment as Member
Maharashtra Administrative Tribunal even though the statutory
Selection Committee recommended his name.
5. It is also a known fact that Sharad Pawar personally took up thematter, with the Environment Minister Ms. Jyanti Natrajan on
Lavasa, immediately after the uncompromising minister Jayram
Ramesh left the government. Ms. Natrajan obliged Pawar and
granted Environment Clearance under highly suspicious
circumstances. Ms. Natrajan took the unprecedented act of granting
Environment Clearance on a construction project where the
Competent Authority for granting Environment Clearance on
construction projects is the Maharashtra State Level Environment
Impact Assessment Authority and not the Ministry of Environment
and Forests, New Delhi. She also made the unprecedented order,
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where she granted Environment Clearance without Lavasa following
the due procedure of public hearing and when the Ministry of
Environment and Forests, New Delhi order itself stated that the
construction took place in violation of the Environment Impact
Assessment of 1994, where there was no provision to grant
Environment Clearance without public hearing. It was misuse of
political power apparent allover
6.The Environment Department of Government of Maharashtra, underthe control of Environment Secretary, Valsa Nair Singh, extended an
enormous favour to Sharad Pawar by launching prosecution against
the Lavasa Corporation and its current Directors only. Ms. Valsa
spared Supriya Sule from prosecution even though when the
violation took place around the year 2004, Ms. Sule was the Director
of Lavasa. Incidentally, Ms. Valsa is also involved in the Adarsh
scam and the CAG has blamed the conduct of Environment
Department as 'wilful'. Ms. Valsa as the Chairperson of the
Maharashtra Coastal Zone Management Authority, had got a show
cause notice issued against Adarsh on a complaint made in August,
2008 and then she sat over the matter till the scam became open in
late 2010. Notwithstanding the favour bestowed on Lavasa, Ms.
Valsa has not only been spared from action in the Adarsh case, but
has also been allowed to stay as Environment Secretary for more
than 3 years when the law as contained in the Maharashtra
Government Servants Regulation of Transfer and Prevention of Delay
in Discharge of Official Duties Act, 2005, stipulates that an officer
need to be transferred in 3 years. In this way, during the illegallyex