Nice Try, But...

• Protect A. Raja, DMK as well as Prime Minister Manmohan Singh
• Absolve Raja/DoT officials of criminal offence; limit prosecution to procedural irregularities
• Make it impossible to get further revenue from 2G licences
• Benefit companies which got licences, help them escape any monetary penalties
• Set a precedent against future prosecutions in this case.

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Like any competent lawyer, telecom minister Kapil Sibal stuck to a carefully calibrated brief. The problem, however, is the brief: defending the indefensible. Expectedly then, there have been waves of indignation ever since Sibal made a statement in early January declaring the 2G issue to be one of “procedural irregularities” primarily, and causing no loss to the exchequer.

In November, the Comptroller and Auditor General of India (CAG) had announced that the nation lost a staggering Rs 1.76 lakh crore on account of irregularities in the issue of licences and 2G spectrum. By declaring in public that the government lost no revenue at all, Sibal is clearly trying to protect A. Raja and the UPA government, which kept quiet even as the former telecom minister twisted rules. Sibal’s defence has obviously been pushed by the party high command in keeping with the Congress’s sensitive equation with ally DMK. It also seeks to shift the heat away from Prime Minister Manmohan Singh, whose inaction on Raja has come in for severe criticism.

Sibal has tried to prove that the government and Raja followed established principles and their actions were aimed mainly at public welfare, not at maximising government revenues. But few are buying his argument. Says Rajya Sabha member Rajeev Chandrasekhar: “This looks like an attempt to establish that there is no loss, so there is no crime, and no criminals. Then why is there an investigation into the matter?”

It is also being deemed as grossly unfair that Sibal should say the nation did not lose any revenue in 2G licences when the CAG report, citing facts and figures, points in a totally different direction. While the CAG’s loss calculations were clearly “presumptive” and riddled with assumptions, there’s no denying a huge loss. “It was a very substantive loss to the exchequer,” says Mahesh Uppal, telecom analyst and director at telecom consultancy Com First. “One may quibble about the exact amount as there is no way to find out how much the government lost on this count, but to suggest there was no loss is an exaggeration.”

Sibal’s argument is flawed intrinsically. The fact that DoT under Raja stuck to the 2001 price of Rs 1,651 crore for licences and spectrum awarded in 2008 has monetary implications. The 2001 price was discovered in a nascent market with little competition and low teledensity. But by the time licences were given in 2007-08, the market had matured and its trajectory in coming years clearly visible.

This was also when the government was asserting repeatedly that spectrum was a scarce commodity. With companies willing to pay for it, the government could have made a killing. Yet, Raja and the government paid no heed to these market realities. Even then trai chairman Nripendra Mishra had told Outlook that looking at market conditions in 2007-08, the price per licence should have been in the region of at least Rs 6,000-10,000 crore.

Sibal’s defence that spectrum was not auctioned so as to provide a level playing field to new entrants also does not hold good. In 2010, the government garnered over Rs 65,000 crore from the 3G auctions. In 2008, through its 2G licensing policy, the government got just around Rs 9,000 crore. Says Uppal: “If these licences were not such a bargain, why would so many people have applied for it? The licence and spectrum had value.” This, of course, was well established by the sale of equity by Swan Telecom and Unitech within months of getting their licence. This values each licence with a pan-India spectrum at around Rs 10,000 crore. Taking that as the market rate, the total loss to the government could be calculated at anything between Rs 50,000 crore and Rs 75,000 crore.

Sibal’s premise also falls flat considering that over the past few years, the ministry under Raja has been subject to many investigations, including CVC questioning and even the CBI raiding the Sanchar Bhavan headquarters of the ministry. These would not have happened without any revenue implications at all.

The only person to toe Sibal’s line was former telecom minister Arun Shourie. Presumptive figures were always misleading, he maintained, even as his party, the BJP, attacked Sibal. But Shourie’s support for Sibal was influenced by the latter’s attack on the NDA government which, he said, had cost the nation Rs 1.5 lakh crore due to changes in telecom revenue policy. This, Shourie has said, was also a presumptive figure. Shourie refused to talk to Outlook when contacted.

By and large, there are few takers for Sibal’s argument. Chandrasekhar has shot off a letter to the PM saying Sibal’s statement could become legal defence for anyone chargesheeted by the CBI in the matter. Rubbishing Sibal’s call, he says: “Almost every argument made by Sibal is in the affidavit presented by DoT. Despite that, the Supreme Court ordered an investigation into the matter.”

Sibal could also be on weak ground in attacking the CAG. According to the rules of parliamentary procedure, if a matter is under consideration of a parliamentary committee, no person—including an MP—should comment on it. So, Sibal’s outburst when the PAC is looking at the issue could amount to impropriety and even contempt of the House. “Either he hasn’t done his homework or he’s indulging in total falsehood for the sake of Raja and the UPA government,” says BJP spokesperson Ravi Shankar Prasad.

The CAG, in stating that any calculation of loss in hindsight would be presumptive, had clearly left a door open, something the clever lawyer in Sibal took advantage of. And despite all the flak, he could still find an escape route by saying that it was his own interpretation of the issue. In any case, Sibal knows he is a short-timer in the ministry, someone who, in cricketing parlance, is the night watchman in the telecom ministry’s hour of darkness.