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Whose Hand In The Pot?

It’s 14 months after the FIR, but the CBI raids may still uncover much

Whose Hand In The Pot?
Sanjay Rawat
Whose Hand In The Pot?

The 2G spectrum scam seems to be taking new twists by the day. The shrapnel is flying in the telecom industry, and the heat is being felt in political circles in Delhi and Chennai, where tainted former telecom minister A. Raja’s party, DMK, is headquartered. As the dreaded CBI swoop came, the big question in Tamil Nadu was, what does DMK supremo and chief minister M. Karunanidhi do with Raja? And how does he counter allegations that his family—particularly daughter Kanimozhi—is linked to the multi-crore scam. The whole thing is sure to be ratcheted up to fever pitch ahead of the assembly polls due in April.

The trails being traced by CBI may lead, it is hoped, to the money paid as kickback by the beneficiary companies.

Already, the issue has paralysed Parliament, with the opposition boycotting the winter session, refusing to relent in its demand for a JPC probe. The government, wary of finding itself effectively in a minority and crucially dependent on troublesome small parties if a JPC is constituted, has been holding out in a bloody battle of nerves. And even as new telecom minister Kapil Sibal did some loud thinking on ways to limit the damage with a new policy, the bloodletting spilled over to a new front late in the week as industrialist and Rajya Sabha MP Rajeev Chandrashekhar engaged Ratan Tata and his telecom firm in a public verbal duel. Parallelly, the buzz going around was the name of another Union minister is likely to surface as a beneficiary of the scam.

Then, on December 8, came the CBI raids in Delhi and Chennai on the houses and offices of Raja, his aides and associates—lending focus and urgency to the jumble of events. Among those raided was M. Sadiq Batcha, managing director of Greenhouse Promoters Pvt Ltd, a Chennai-based company in which Raja’s relatives are believed to have held senior positions. Batcha and his firm are thought to have had a role in laundering the spectrum scam money—the trail linking Batcha’s firm to Raja’s relatives is what the CBI will be specially interested in.

Also under the scanner are a series of companies thought to be fronts for Raja’s bank accounts/deposits in Malaysia. “Searches have been made at 14 places and incriminating documents recovered. The searches are still on,” said Binita Thakur, a CBI deputy inspector general. The agency is learnt to have laid its hands on diaries and documents—if they yield solid, irrefutable evidence, it will open a can of worms for the DMK and put serious pressure on its alliance with the Congress in the state and at the Centre.

One question being asked is, did the raids come too late? The CBI filed the fir in the 2G spectrum allocation case on October 21, 2009. The raids came after 14 months. Initially, the CBI was looking into how “certain officials of the department of telecom entered into a criminal conspiracy with private persons/companies and misused their official position in the grant of Unified Access Service Licence”.

The case primarily looks at the ways in which gains could have been made by several companies, especially when the dates for allocation of spectrum (the scarce frequency ranges used for telecommunications) were suddenly advanced, presumably to benefit them. The CBI believes “certain officials had selectively leaked the information to some applicants regarding the date of issuance of letter of intent”. This meant that in a first-come-first-serve basis allocation, a chosen few bidders (some of them with no background in telecom) made a killing. They later sold the spectrum at massive profits. Part of the money that was made went as kickbacks.

One of the biggest gainers in the process was M/s Swan, which was allotted licences for 13 circles for Rs 1,537 crore. Swan soon offloaded 45  per cent of its shares to the UAE-based Etisalat telecom company for Rs 4,200 crore. Similarly, M/s Unitech, which also made massive gains, was allotted a licence for 22 circles for Rs 1,658 crore. It soon sold 65 per cent of  its shares to Norwegian telecom operator M/s Telenor for Rs 6,100 crore—even before services were rolled out. According to the CBI, the estimated loss to the government from just these two deals was in the region of Rs 7,105 crore. Therefore, the CBI surmises, “on pro rata basis, the estimated loss for all 122 circles is more than Rs 22,000 crore”. The Comptroller and Auditor General of India (CAG), however, has tabulated the loss at Rs 1.76 lakh crore.

Besides Raja, other key players under suspicion are his personal aide R.K. Chandolia, an Indian Economic Services cadre official. The CBI alleges he is a key suspect and played a major role in awarding licences in a fraudulent manner. It believes that the deals took place in his office and he should know the money trail of the kickbacks. Similarly, the CBI also raided the premises of former telecom secretary Siddharth Behuria, K. Sridhara, a member (technology) of the telecom commission, and A.K. Srivastava, the deputy director-general of the telecom commission’s licensing cell.

A key to the investigation is Batcha, the MD of Greenhouse Promoters, an mba from Raja’s hometown, Perambalur, in Tamil Nadu. Batcha’s company was linked to a firm that benefited from the sale of shares by Swan to Etisalat. Ex-telecom secretary Behuria, whose premises were also raided on December 8, meanwhile told Parliament’s Public Accounts Committee that the decision on licences had been taken even before he had joined the ministry. The PAC, headed by BJP leader M.M. Joshi, is looking into the CAG report on the loss of Rs 1.76 lakh crore in the allocation of licences. It is also studying the Radia tapes (some of whose contents were published by Outlook).

The ambit of the scam appeared set to widen as the Supreme Court, hearing a PIL from lawyer Prashant Bhushan, said the CBI could also look at the role of the Vajpayee-led NDA government in the 2G affair, specifically into how licences were awarded in 2001, when the late Pramod Mahajan was minister. The court has also asked the CBI to probe the award of loans by several public and private banks to companies which seem to have benefited in the scam. Many of them were small-time operators but managed to secure huge loans by hypothecating the spectrum that they were sure would eventually come to them. There’s reason to suspect they were created to obtain spectrum and sell later at huge profits.

As the drama unfolds, it appears the sanction to conduct the raids on Raja and company came from Prime Minister Manmohan Singh. He apparently had no option but to act. The whole 2G imbroglio was getting out of hand.

By Saikat Datta in Delhi and Pushpa Iyengar in Chennai

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