Probe the Rs 60000 crore spectrum scam: CPI

Probe the Rs. 60,000 crore spectrum 'scam': CPI

Party demands enquiry in the manner 2G spectrum was allocated by the communications ministry

Thursday, November 06, 2008

NEW DELHI, INDIA: The The Communist Party of India (Marxist) has demanded an immediate enquiry into what the party termed as Rs. 60,000 crore financial scam involving the manner in which 2G spectrum was allocated by the Union ministry of communication.

In a statement, available on its the party website, CPI (M) alleges that gross more than Rs.. 60,000 crore has been lost to the national exchequer by giving away scarce spectrum at a fraction of the market price.

"It is now clear from the sale of shares by Swan and Unitech that more than Rs.. 60,000 crore has been lost to the national exchequer by giving away scarce spectrum at a fraction of the market price. The CPI(M) is shocked that the UPA government, instead of addressing the huge scam that has taken place on the allocation of the fourth licence in 2G mobile services has taken the position that nothing needs to be done," alleges the party.

"For the release of the fourth licence and the spectrum required, the Communications Ministry adopted a completely inexplicable principle of `first come first served’ for allocating the licence as well as a licence fee based on 2001 price. These 2G licences were priced at 2001 levels allegedly to keep the costs low for the consumers. However, this was not ensured through the licence terms and conditions. As a result, the parties who had secured these licences have sold or are selling their shares at huge profits" adds the statemt

The party also questions the veracity deal between UAE’s telecom operator Etisalat and Swan Telecom, and Unitech and Talenor (of Norway) ,

"The deal between UAE’s telecom operator Etisalat and Swan Telecom, and Unitech and Talenor (of Norway) has brought out the magnitude of largesee that has been doled out. Swan Telecom bought a licence for 13 circles along with the necessary 2G spectrum for a paltry Rs.. 1,537 crore. Subsequently, it has sold 45 per cent of its stake to Etisalat for $900 million, taking its book value to $2 billion. This is without putting up any infrastructure, let alone starting operations," says the statement.

"The Unitech-Talenor deal is no different. Unitech like Swan had not spent a single paisa for executing its licence. It has now sold 60 per cent of its stake to Talenor for Rs.. 6,120 crores while paying only Rs.. 1,651 crore as licence fee. The government has actually got only one-sixth of what it would have got, had it gone through a fresh auction route – a loss of Rs.. 10,000 crore to the exchequer on Swan and Unitech licences alone," adds the statement.

The leftists have alleged a total loss of over Rs.. 60,000 crore to the exchequer of giving away 2G GSM spectrum in this way, including to the CDMA operators

" It must rank as one of the biggest financial scam of all times in the country," the party statement alleges.

"Instead of redressing what has become an open scandal, the Government has dealt with the question as to whether these companies can sell their shares legally. This is not the issue. The issue is if scarce national resources are given away at throwaway prices and these are then sold at many times that price, what should the Government do? It should either invoke fair trade practice/anti-monopoly sections, or look at other operative sections of the licence to see how this can be prevented," adds the party.

"If no other recourse is available, it must levy a windfall tax on such speculative transactions. The CPI(M) demands the holding of an enquiry to find out how a scam of this magnitude could be carried out and to put in measures in the licences so that this does not recur in the future," adds the statement.

The Polit Bureau of the party has also warned the government to adress properly 3G licence issue, Otherwise, the party claims, government will lose huge revenue shares from the existing 2G licensees, as they switch from 2G and 3G spectrum.

"Already, one company is reported to be using the difference of revenue shares between different applications –mobile, long distance and internet – to under report its earnings in some segments. This is seriously impacting Government’s revenue share. The 3G licence has similar potential. With the 2G experience, the Government must ensure that adequate provisions are now put into the licence terms and conditions so that another fiasco can be avoided", concludes the statement.

©CIOL Bureau