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Enter The Dragnet

A ‘bold’ CBI goes after the top guns in business over the 2G licences

Enter The Dragnet
Enter The Dragnet

CBI Chargesheet & The Aftermath

In The Chargesheet

  • A. Raja is clearly in the dock, accused of favouring a few cos
  • Swan, Unitech charged, could even lose their licences
  • Trouble for ADAG as the force behind Swan violated rules

Up Next

  • Additional chargesheets will name Loop. Datacom, Idea also likely.
  • Essar Telecom will figure, as CBI is convinced about its role in Loop
  • RCom, Tata Tele, HFCL and Shyam Tele will be named as beneficiaries of Raja's dual-tech policy

Unanswered Questions

  • Will CBI implicate DMK’s Kanimozhi in the DB Group investment in Kalaignar TV?
  • What happens to the investments of foreign telcos Etisalat and Telenor?
  • Will Tata Group’s largesse to DMK and Raja’s hometown be considered quid pro quo?
  • Will lobbyist Niira Radia, who clearly knew what A. Raja was up to, be charged?


Conspiracy theorists had plenty to say about the timing of the first chargesheet filed by the CBI in the 2G telecom scam. It was the day India won the cricket World Cup, relegating all other news to the sidelines. But experts, not of the cricketing variety, have been quick to pronounce a victory for the CBI too. In what is being termed as its “boldest” move in a long time, the investigative agency has implicated an ex-Union minister and a few blue-chip companies. That’s big.

The optimists say a healthy precedent has been set, helped by the mandate provided by the Supreme Court, which is supervising the investigations. “They are not going to let go—more names will come out now,” says corporate watcher Gurcharan Das. “They have established the money trail, so the members of the DMK first family will come into this.” The pessimists feel the CBI has attacked the low-hanging fruit, and will topple as the trail goes higher. “The CBI can’t escape from government domination in the case. There are many areas where investigations have not happened,” avers activist S. Gurumurthy.

As for the CBI, it insists it has more to serve up. Indeed, the severity and clarity of charges made against prominent players shows that it means business. The case against former telecom minister A. Raja is a strong one, implicating him on numerous counts: for instance, changing the cut-off date of applications, manipulating the first-come, first-served policy, allowing dual technology and granting licences to ineligible companies. The CBI has done well to point out the nexus between Raja and the promoters of DB Realty (Swan Telecom) and Unitech (Uninor) to manipulate policy and rules to benefit them.

Then there’s ADAG’s RCom, which too has come in for unequivocally harsh treatment. Three of its officials—ADAG MD Gautam Doshi, Sr VP Hari Nair and group president Surendra Pipara—have been charged with conspiracy. The agency has said that contrary to RCom’s claim that it owned less than 10 per cent equity in Swan, Reliance ADAG completely funded and owned the company. RCom could face severe penalties and the officials named in the chargesheet may be arrested.

“They are not going to let go. With the money trail established, the the DMK first family will come into this.”
Gurcharan Das, Corporate watcher

By now, it’s fairly certain that Swan and Unitech are in deep trouble, as the CBI is learnt to be pushing for a cancellation of their licences. But what happens to the interests of their foreign partners (Etisalat and Telenor, respectively)? The buzz is that the government might offer them a way out by allowing them to tie up with another Indian telecom company. With unconfirmed reports of companies like RCom and Idea Cellular looking for suitors, that shouldn’t be difficult. Media reports suggest Idea is talking to South Africa’s mtn, which has three failed attempts to get into the Indian market.

By all indications, the investigating agency is also looking at the Rs 200-crore payment made by a company of the DB Group to Kalaignar TV where Tamil Nadu chief minister Karunanidhi’s daughter Kanimozhi (who is an MP) has a stake (as does Karunanidhi’s wife Dayaluammal). This is sure to bring the DMK right into the muddle. While the current chargesheet has little on this, one can expect explosive stuff in the cbi’s next chargesheet that’s likely to come out by April-end, conveniently timed after the Tamil Nadu state assembly elections are over. Or so we think.

On another front, the issue of pricing of licence and start-up spectrum is sure to attract the apex court’s attention as the chargesheet clearly puts Raja in the dock on this. He “deliberately and dishonestly did not consider auction or revision of entry fee, and gave away licences at same fee, which was discovered in 2001”, it said. Sources say the CBI may push for a notional auction of spectrum where market price for spectrum held by each player is established. Going by the CBI’s estimate of losses, that would mean the licence-holders would have to pay, in toto, Rs 22,000 crore to the exchequer.

While it all depends on how the Supreme Court views the charges, this route might sit well with everything considering it is unlikely to go for a mass cancellation of licences granted in 2008. But that doesn’t mean the CBI will not look at all 85 licences that the CAG held as invalid on qualifications. Contentious cases like that of Essar Telecom’s holding in Loop Telecom will certainly attract attention—and action.

“The CBI can’t escape from government domination. There are many areas which have not been investigated.”
S. Gurumurthy, Author-activist

The CBI has not bought Essar’s argument that it did not have more than 10 per cent stake in Loop Telecom. In its status report filed on March 29, the CBI had also said that Loop Telecom was used as a front company by Essar to corner spectrum. It will also go after companies like Datacom (now Videocon Mobile) on issues related to shareholding pattern and equity.

That brings us to the curious case of Tata Teleservices. The CBI has exonerated the company—which too had gained from Raja’s dual-technology policy along with RCom, HFCL and Shyam Tele. The chargesheet says that preference was given to other companies and Tata Tele’s application was pushed behind. But if the CBI and the Supreme Court take objection to the way dual-technology usage was pushed in by Raja, Tata Tele would end up paying penalties—as would the other beneficiary companies. Interestingly, there is also not much on Tata Group loans to Unitech. The group’s largesse to the DMK and a hospital in Raja’s hometown Perambalur, as revealed in the Radia tapes, could also come under scrutiny and censure in the CBI’s next dose of charges.

But all that is in the future. As they say in cricket, you’re only as good as your previous innings. The CBI has more batting to do—let’s see how it takes advantage of the Powerplay.

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