2G scam: 85 ineligible applicants got licenses

NEW DELHI, INDIA: The CAG report on the 2 spectrum allocation, which was tabled in parliament today, said that 85 ineligible applicants were given UAS licence and the process followed by the DoT for verification of applications for UAS licences for confirming their eligibility lacked due diligence, fairness and transparency.

Eighty-five out of the 122 licenses issued in 2008 were found to be issued to companies which did not satisfy the basic eligibility conditions set by the DoT and had suppressed facts, disclosed incomplete information and submitted fictitious documents for getting UAS licenses and thereby access to spectrum, the report added.

“85 licenses were issued to companies which suppressed facts, disclosed incomplete information and submitted fictitious documents to DoT and thus used fraudulent means of getting licenses and thereby access to spectrum," said the CAG.

It also said the Department of Telecom did not implement the licensing regime as approved by the Cabinet while allotting 2G spectrum, which resulted in DoT valuing, quite erroneously, the spectrum in 2008 at 2001 prices.

Ministry of Finance was authorized by the Cabinet decision of 2003 to participate in the discussion for efficient allocation of spectrum and price fixation but DoT decided not to associate the Ministry of Finance, said the report. Also the department ignored the advice of Ministry of Law and Justice and did not follow the suggestion of the Prime Minister.

“The Hon'ble Prime Minister had stressed on the need for a fair and transparent allocation of spectrum, and the Ministry of Finance had sought for the decision regarding spectrum pricing to be considered by an EGoM. Brushing aside their concerns and advices, the Department of Telecommunications, in 2008, proceeded to issue 122 new licences for 2G spectrum at 2001 prices, by flouting every cannon of financial propriety, rules and procedures. The DoT did not follow its own guidelines on eligibility conditions, arbitrarily changed the cut off date for receipt of applications post facto and altered the conditions of the FCFS procedure at crucial junctures without valid and cogent reasons, which gave unfair advantage to certain companies over others,” it added.

The CAG report also said that Swan Telecom, now Etisalat DB Telecom, was acting as a front company for Reliance Communications, the telecom arm of Anil Dhirubhai Ambani Group ( ADAG) group.

In the report, the CAG said the figure of the presumptive loss has been determined on the basis of various indicators like 3G auction and a price offered by an operator in 2007, besides scarcity value, nature of competition, business plans envisaged, number of operators and growth of sector.

After the report was tabled on parliament, the CAG officials addressed a press conference to explain its report and to answer questions on it.