Saturday, January 15, 2011

Violations, Timeline in 2G Spectrum Scam

I am just outlining the violations/timeline of the 2G Spectrum Scam and other related telecom scandals. This is just a synopsis of the biggest scam the country witnessed.

# A Raja becomes Union Minister for Environment and Forests in May 2004 and shifts to Ministry of Communications and IT on May 16, 2007. Raja’s friendly real estate companies want to become telecom operators and he informs his decision to Telecom Secretary DS Mathur for granting new licenses and spectrum to new players. But Mathur objects and argues for transparent auction and competitive pricing (as recommended by TRAI from 2003 onwards). Raja wants to grant licenses as per First-Come-First-Serve method (in a peculiar way – who first pays license fee and not who first applied) and old pricing fixed in 2001. In 2001, there were only four million mobile subscribers and it crossed 350 million in mid 2007. So Manju Madhvan, Member (Finance) of DoT, Finance Ministry also pointed out new competitive prices. But all ignored by Raja and he sent the file to Law Ministry for opinion and started procedures.

# On September 24, 2007 DoT issues a press release (released in the late evening and appeared in next day newspapers), citing the last date of application (cut-off date) fixing to October 1, 2007.

#Without Cabinet approval Raja allots Dual Policy or Cross Technology to Reliance Communications, Tata Teleservices and Shyam Telecom in October 2007 at a rate fixed in 2001. This technology allows CDMA operators to change to much wanted GSM Technology. CDMA operators were in bad shape and Raja’s decision became a boon to them. Here the corruption part is on allowing the much wanted GSM license at a six year old price. This move is Raja’s first major corruption in Telecom, which gave him courage to go ahead with 2G Spectrum allocation to new companies.

# On Nov 1, 2007, the Law Minister HR Bhardwaj rejects Raja’s plan and directs to constitute an Empowered Group of Ministers (eGoM) to form transparent procedures for 2G Spectrum allocation and new licenses.

# Next day on Nov 2, 2007, by 8pm Raja wrote a letter to Prime Minister, objecting on Bhardwaj’s direction. “Law Ministry is out of context,” wrote Raja. This letter was delivered to PM’s residence

# Within an hour (9pm), same day (Nov 2, 2007) – might be alerted by Bhardwaj- PM wrote to Raja to stop all procedures and directs him to get his concurrence in all future actions. This letter was delivered to Raja’s residence. Citing several wrong practices in the past, PM directs Raja to adopt transparent method by auction and new pricing.

# In the mid night, Raja gave an evasive rely to PM, hushing up the directions for auction, competitive pricing. This letter dated Nov 2, 2007 was also delivered to PM’s residence

# A very senior Law Officer (doing all unlawful activities and advisor to all illegal activities) was present in Raja’s residence on Nov 2, 2007 from 7pm to 11:30pm. He drafted all the two letters to Prime Minister by Raja. He was elevated in UPA-2 due to his nexus with all unholy elements in politics and corporate world. How a Law officer can advise against Law Minister’s direction? Rule 8(1)(e) of Law Officers (Conditions of Service) Rules 1972 says : “A Law Officer ( includes AG/SG/ASG or any other law officer) shall not advise any Ministry or Department of Government of India or any statutory organization or any PSU unless the proposal or a reference in this regard is received through Ministry of Law and Justice, Department of Legal Affairs.

# Finance Secretary Mr. D. Subba Rao wrote to Telecom Secretary Mr. DS Mathur on November 22, 2007 – objecting the pricing policy of 2G Spectrum and arguing for auction. In the letter the Finance Secretary objected the dual policy (cross technology) implemented (2\Oct 2007) to help CDMA operators like Reliance and TATA to more revenue earning GSM technology at a cheap rate fixed in 2001, without cabinet approval.

# Regarding this controversial allotment of dual policy (This was Raja’s first big corruption in Telecom Ministry), in the November 2, 2007 late night letter PM said to Raja : “I came thorough the media on the allotment of dual policy or cross technology)

The CAG report says around Rs.36,000 crore lost over this allotment of dual policy which benefited mainly Reliance and TATA. There is a separate headline : “undue influence to Reliance” in the CAG report which figures the total loss to Rs.1.76 Lakh crores, including the loss on the dual technology.

# Strong resistance by Telecom Secretary DS Mathur and Manju Madhavan prevents Raja from moving ahead. For suggesting series of steps for auction, Raja snubs Manju Madhvan, in an internal note dated Dec 4, 2007 who took VRS soon.(she applied well earlier).

# After 50 days, on Dec 26, 2007, Raja wrote a letter to PM, saying that he was “further enlightened” by Pranab Mukherjee (then External Affairs Minister) and G Vahanvati (then Solicitor General) to go ahead with “pre-emptive and pro-active” decision to allot 2G Spectrum and new licenses. In these letters also Raja argues for reversing the cut-off date o limit the players. PM did not reply, but simply gave a routine acknowledgement on Jan 3, 2008.

# On Dec 31, 2007, DS Mathur retires. Raja brings his trusted man Siddarth Behura as new Telecom Secretary, who worked as an Addl. Secretary with him Ministry of Environment and Forests. Within 10 days (Jan 10, 2008) at 2:45pm DoT uploads a press release saying that cut-off date was reversed from October 1, 2007 to September 25, 2007. The press release asked the new players to remit fee (huge money ranging from Rs.1500 cr- Rs.1600 cr) between 3:30pm -4:30pm on same day. It is a mystery that how Nine new companies made and remitted huge fee by demand draft within 45 minutes.

#Here is the conspiracy angle. All the nine company owners/brokers were had a meeting with Raja on Jan 9, 2008 at his residence. All were informed by Minister 24 hours before the issue of press release. The cut-off date was reversed to September 25, 2007, because of Raja’s favorite company Unitech applied on Sept 24. Another favourite company Shyam Telelink also applied on Sept 24.

# On Jan 10, 2008, the CEOs Swan and Unitech (most favoured companies of Raja) sit at Private Secretary RK Chandolia’s cabin in Sanchar Bhavan. DDG Access Service (AK Srivastava) directs officials to go Chandolia’s cabin at 3pm. Chandolia asks official o collect application and demand draft from CEOs and directs to give No : 1 status to Swan and No : 2 status to Unitech. Then only counter was opened at eighth floor of Sanachar Bhavan to receive application/ fee from other seven companies. There was a mad rush to become first in the queue and physical fight taken place between rivals. Bouncers were brought. CEOs were quarreled each other some telecom officers were manhandled.. Though police arrived, no case was registered by instruction of Chandolia.

#TRAI Chairman Mr. Nripendra Misra’s letter to Telecom Secretary Siddharth Behura on January 14, 2008 – objecting the policy, reversal of cut-off date and manipulating his recommendations. Later in the media Misra described DoT had “cherry picked” his recommendations.

#As per the Sec 11(1)(a)(ii) and Sec 11(1)(d) of the TRAI Act, DoT is mandated to get the recommendation of TRAI, if they issue license to new operators. But Raja never sought recommendation of TRAI when he allotted license to new operators like Swan Telecom – changed name to Etisalat DB Telecom, Unitech group companies changed name to Uninor, Loop Telecom (license was granted in the name of Shipping Stop Dotcom India Pvt Ltd!!!!!), Datacom – changed name to Videocon, STel and Allainz Infra (merged/amalgamated with Etisalat later with their license in 2 circles…any smell of corruption or conspiracy?. Let CBI or ED investigate)

#DoT allots spectrum/licenses (including additional spectrum to existing players to settle anger) on March/April 2008. All files were signed by Raja. Unitech applied licenses in different names - Unitech Infrastructure, Unitech Builders and Estates, Aska Projects, Nahan Properties, Hudson Properties, Volga Properties, Adonis Projects and Azare Properties. Later Unitech Group forms eight companies – Unitech Wireless (Tamil Nadu), Unitech Wireless (North), Unitech Wireless (South), Unitech Wireless (Kolkata), Unitech Wireless (Delhi), Unitech Wireless (East), Unitech Wireless (Mumbai), Unitech Wireless (West).

#Dubious order was issued by Siddhart Behura on April 22, 2008 for facilitating merger (leaving the word acquisition). This helped Unitech to merge all their licenses and helped all to waive the mandatory three year lock-in-period in selling of their shares.

# On Sept 13, 2008, Raja forces BSNL CMD Kuldip Goyal to enter into a un-precedented MoU with Swan, known as Intra-Circle Roaming Agreement. This MoU will help Swan to use all infrastructure (Towers, optical network etc) of BSNL. This MoU was executed just a week before, Swan’s Rs.4500 Cr deal (sale of 45 per cent shares) with Etisalat. Swan gives unsolicited application to BSNL. The BSNL management committee demands 52 paise/call from Swan. But this clause was absent in the MoU. Raja also transfers senior officials in WPC (Joint Wireless Adviser RJS Kushwaha and Deputy Wireless Adviser D Jha) for objecting Swan’s proposals to BSNL and DoT.

# In Sept/October 2008 – Swan offloads 45 per cent shares to UAE based Etisalat for Rs.4500 Cr. (Swan got license for Rs.1530Cr). Etisalat invested Swan through its Mauritius unit. Unitech offloads 60 per cent of shares to Norway based Telenor for Rs.6200Cr. (Unitech got license for Rs.1621 cr). Telenor invested through its South-Asia division. Telenor is a major operator in Pakistan and Bangladesh.

# On Nov 4 2008, Swan informs DoT that - it allotted Rs.380Cr worth shares (9.9%) to a Chennai based newly floated company Genex Exim. This is believed to the kick back from Swan to Raja. Genex was incorporated on September 17, 2008, with two directors — Mohammed Hassan (58) and Ahamed Shakir (41). The company was represented by Ahmed Syed Salahuddin (32) on the board of Swan. The three belong to Kilukarai, a small coastal village in Ramanathapuram district of Tamil Nadu. The Tamil Nadu link now gets strengthened. Ahmed Syed Salahuddin is the younger son of Syed Mohammed Salahuddin, an NRI business tycoon heading the Dubai-based real estate conglomerate, ETA Ascon Star Group. This was part of the letter to DoT informing the Rs.4500 crore deal with Etisalat.

# ETA Group had several real estate projects cleared (on in Bangalore) during Raja’s stint in Environment Ministry. More over the ETA owner Syed Mohammed Salahuddin is having four decade long association with Tamil Nadu Chief Minister M.Karunanidhi. Most of the Fly Overs, new Secretariat complex were built by this man, who was also a distributor of Karunanidhi’s films. Star Health Insurance, owned by this man is running the state government’s group health insurance scheme. Sayed Salahuddin was also named in Justice Sarkaria Commission report in 1976. The Commission was instituted by Prime Minister Indira Gandhi, after dismissing Karunanidhi for gross corruption.

# On May 29, 2009 (48 hours after Raja sworn in again as Telecom Minister), Delhi High Court (Justice Mukul Mudgal and Justice Valmiki Mehta) on hearing the PIL against First-Come-First-Serve (FCFS) policy observed: “It is like selling cinema tickets. We find it very strange that public exchequer and valuable resources have been involved and misused in this way. We are completely astounded.”. The Delhi High Court in 1994 termed the FCFS policy as a barbarian and said not a suitable one to a democratic government]

# July 1, 2009 – Justice GS Sistani of Delhi High Court quashed the DoT’s decision to reverse the cut-off date. The case was filed by STel. On Nov 24, 2009 – Delhi HC Chief Justice upheld the Single Bench verdict and rejected the appeal of DoT. Shockingly in these two courts DoT filed an affidavit that Raja got Prime Minister’s concurrence. How Law Ministry and Attorney General GE Vahanvati vetted such an affidavit? The affidavit filed by Telecom Department (mentioned in the Para No : 5 of the verdict given by Delhi HC Chief Justice) only says Raja’s letter to PM on Nov 2, 2007 seeking his consent for reversing the cut off date (last date of application). But the Telecom Department, Minister Raja and the Attorney General Vahanvati cleverly and criminally hushed up PM’s objections and directions to Raja on the same date.

This wrong affidavit was not included in the SLP in the Supreme Court, when The Pioneer reported on misquoting PM in the Delhi High.

# DoT approaches Supreme Court through SLP to quash the HC verdicts. Janata Party President Subramanian Swamy impleads into the case. Sensing danger, Raja wanted the STel to withdraw from the case. On March 5, 2010, Friday evening after office hours, DoT issues an order asking STel to close its operation in three states, citing security reasons. There was no show cause was issued to STel and later Home Ministry revealed that they never raised any sort of security concern. Arm twisted STel surrendered before Raja on March 8, 2010 on Monday and declared that they have no troubles with DoT policy. Vahanvati produced STel’s surrender letter to Supreme Court, which was rejected and directed the company to file an affidavit. Due to Subramanian Swamy’s presence, Raja’s design failed and court said that thy will not interfere into the HC order declaring the change of cut off date as illegal.

# It must be remembered that STel offered to DoT and later to Prime Minister Rs.17,752 crore (mentioned in the Para No : 11 of the verdict of Delhi HC Chief Justice) for pan-Indian license/spectrum. But they got only three circles, due to change of cut-off date. Raja sold out Pan Indian license/spectrum for just Rs.1651 crore, the value fixed in 2001. The figure/rate quoted by STel in letters to DoT, Minister Raja and PM exposes the actual rates of 2G Spectrum in 2007-08 and huge loss to exchequer by Raja’s fraudulent action. This huge offer of STel became one of the basic factor for CAG in assessing the loss happened in 2G Spectrum allocation, including Dual Policy to Reliance and Tata

The figure Rs.17,752 crore offered by STel, mentioned the judgments is typographical error. The actual figure is Rs.13,752 according to CAG, after verifying the DoT papers.

#On October 14, 2009, Central Vigilance Commissioner Pratyush Sinha orders to CBI to probe the spectrum scam under Sec 120B of IPC (criminal conspiracy) and Sec 13d of Prevention of Corruption Act. CBI registers FIR on October 21, 2009. The FIR said the loss was Rs.23,000 crore. Later Enforcement Directorate also registers cases. Nothing happened till the Supreme Court intervened in September 2010 on the PIL filed by Prashant Bhushan, leading to the Supreme Court monitoring of the investigation. How can CBI and ED act, when Raja was kept on power till November 2010?

# By September 2010, the cases filed in Supreme Court by Subramanian Swamy and Prashant Bhushan started in the Bench of Justice GS Sighvi and AK Ganguly. Thankfully the mindset of the courts changed after SH Kapadia became the Chief Justice of India Raja finally submits resignation on November 14, 2010.

# The CAG found that out of the 122 licenses, 85 licenses are illegal according to the DoT guidelines itself, amounting to immediate cancellation at any point of time.
CAG found that the licenses given to Swan (13), Unitech(22), Loop(21), Datacom(21) STel(6) and Allianz Infra (2) are totally illegal according to DoT guidelines itself, apart from violations in Companies Act. The CAG tabled the report in Parliament on November 16, 2010 – finding a presumptive loss up to Rs.1.76 lak crore due to the illegal allotment of 2G spectrum including Dual Policy.

[Cartoon Courtesy: Times of India]

Thursday, January 13, 2011

Public Sector Banks' Rs.26000 Crore Bonanza to Spectrum Scam Tainted Companies

The Pioneer November 29, 2010

5 dodgy firms received Rs 26,000-cr bank loan

The loans provided by public sector banks to 2G scam-tainted companies are not limited to Unitech and STel. Investigations carried out by The Pioneer show that many more companies were liberally funded by these banks even when the Central Bureau of Investigation (CBI) was probing criminal conspiracy in allotment of telecom licences to these firms.

Records available at the Registrar of Companies show that public sector banks provided loans worth more than Rs 26,000 crore to five companies involved in the 2G spectrum scandal.

Most of these loans were disbursed by these banks after the CVC and Central Bureau of Investigation had started investigating the spectrum scandal in mid-2009. The CAG has since then recommended cancellation of the “illegal licences” of all these five companies — Swan Telecom, Unitech, Loop, Datacom (Videocon) and STel.

According to the documents available with The Pioneer, Swan Telecom got Rs1,917 crore from the Punjab National Bank and the Bank of Baroda. Shockingly, Swan — currently known as Etisalat DB India — managed to get around Rs 2,000 crore in loans even before it was awarded the telecom licence. The company’s statements to the Registrar of Companies show that the SBI provided to it the maximum loan of Rs 747 crore, followed by Punjab National Bank (`500 crore), Bank of Baroda (Rs 400 crore), IDFC (Rs 200 crore) and IL&FS (Rs 70 crore).

In a clear indication that strings were pulled to manage these loans, records show that when the banks funded Swan between October 20 and October 24, 2007, the company had not even received the licence and spectrum.

The final allotment of spectrum and licence came three months after last instalment of the loan amount was disbursed.

Incidentally, these loans were granted within days of the DB Reality owners, Shahid Balwa and Vinod Goenka, taking control of Swan from Anil Ambani’s Reliance Telecom.

In the ongoing investigation of loan-for-bribery scam, the CBI is also probing into the loans provided to DB Reality. The agency has not yet linked this case with the huge loans to the spectrum-tainted companies by the public sector banks.

The Pioneer had on Sunday reported that Unitech got a loan of Rs 10,000 crore from various pubic sector banks, including the SBI which doled out more than Rs 8,000 crore.

The Unitech also made hypothecation agreement with SBI Cap Trustee Company, a Government of India company, for Rs 2,500 crore in November 2009. Another company, STel, got the loan from IDBI and its associates for Rs 1,538 crore.

Videocon, which got the licence in the name of Datacom, got a loan of more than Rs 8,000 crore, of which SBI provided Rs 1,000 crore and the SBI Cap Trustees Rs 7,150 crore.

Another scam-tainted company, Loop Telecom, got Rs 400 crore from SBI.

It is still a mystery how these public sector banks granted loans to these tainted companies when investigations were being conducted under the provisions of criminal conspiracy (Section 120 B of IPC) and Section 13 D of the Prevention of Corruption Act, besides several court cases going on for the past two years on the validity of these telecom licences.

The banks had provided huge loans to these companies based only on the telecom licence paper.

The Department of Telecom is a party to most of these loans and controversial officers AK Srivastava and PK Mittal, who are under the CBI radar, are the signatories to these high-volume deals. “Without the consent of political masters, these officials won’t become signatories to such high-volume loans,” said a top DoT official.

According to the CAG report, the telecom licences and spectrum allotted to Swan (15), Unitech (22), Datacom (21), Loop (21) and STel (six) are illegal and require immediate cancellation as per the Department of Telecom guidelines.

The Pioneer, November 28, 2010

Ignoring risk, banks funded 2G scam

With CVC case already registered and CBI probe on, these banks lent over Rs 11,500 cr to 2G-scam tainted companies

In the midst of the loan-for-bribery scam, the role of major public sector banks in providing finance to two 2G spectrum scam-linked real estate companies has now come to the fore. The banks provided loans, worth over Rs 11,500 crore, to Unitech and STel by completely ignoring the risk factors — given that the Central Vigilance Commission (CVC) had already registered a case in the 2G scam and the CBI had begun its probe.

According to the documents available with The Pioneer, the public sector banks allotted Rs 10,000 crore to Unitech and Rs 1,538 crore to STel, based just on the licence papers issued by the Department of Telecom (DoT). The licences to the two are among the 85 licences declared illegal by the Comptroller and Auditor General (CAG).

Shockingly, the loans were disbursed by the public sector banks after the CVC registered the case in the 2G spectrum scam in May 2009. It clearly showed that the public sector banks brazenly ignored the risk factors, which are the main basis of all loan disbursements.

Further, it is also a million dollar question as to why the public sector banks granted loans to these companies even after the CBI registered an FIR in connection with the 2G scam and searched the premises of these companies in October 2009.

Out of the Rs 10, 000-crore loan to the Unitech, the major portion was disbursed by the State Bank of India (SBI). The SBI made available a whopping Rs 8,050 crore to the Unitech during 2009-2010.

According to the records of Registrar of Companies, the other banks which lent to the Unitech are: Corporation Bank (Rs 500 crore), Allahabad Bank (Rs 500 crore), South Indian Bank (Rs 400 crore), Canara Bank (Rs120 crore), Oriental Bank (Rs 70 crore), Central Bank of India (Rs 70 crore), Punjab National Bank (Rs 120 crore), Standard Chartered Bank (Rs 100 crore) and Yes Bank (Rs 70 crore).

Unitech also made hypothecation agreement with SBI Cap Trustee Company, a Government of India entity for Rs 2,500 crore in November 2009. All these high volume banking deals were through tripartite agreements, where DoT is a party. DoT officials AK Srivastava and PK Mittal are signatories to these loan agreements. These two officers are on the CBI's radar in the spectrum scam.

According to the CAG report, the Unitech licences and spectrum allotment are totally illegal and calls for immediate cancellation according to the DoT guidelines.

On its part, STel got the Rs 1538-crore loan from IDBI and IDBI Trusteeship Services Limited, during the period between July to November 2009. The licences and spectrum allotted to STel were also found illegal by CAG.

“The entire loan granted to Unitech and STel by these banks was based on the DoT licence papers. No other security was obtained by the banks,” a top official of a bank said.

“Why were no major private sector banks ready to give them even a penny? The entire world knows about the spectrum scam. How can then the public sector banks disburse loans to the companies involved in the scam? The reasons are obvious, now that the loan-for-bribery scam is before all of us,” said the official.

The Pioneer has learned that the CBI is aware of these huge loan disbursements by the public sector banks to these dubious companies. But the probe agency has so far shown no inclination in looking into these angles.

[The writer is Special Correspondent of The Pioneer daily]

Wednesday, January 12, 2011

The Man Who Felled A King

The Pioneer, November 16, 2010

The man who felled a king
Chandan Mitra New Delhi

The Pioneer felicitates J Gopikrishnan, who unearthed the spectrum scam

For a long time, I did not even know that J Gopikrishnan was a stringer based in Thiruvananthapuram working for The Pioneer’s now-aborted Kochi edition. So when he came to Delhi pleading for a job at the headquarters once the Kochi edition shut in 2007, I was rather sceptical. I told Bureau chief Navin Upadhyay that although I had noticed a few bylined stories by him, Gopi had no exposure to Delhi and, therefore, was unlikely to have any worthwhile contacts here. Navin, however, persuaded me to try him out for three months. In fact, the letter of appointment specifically mentioned this along with a “stipend” that was truly laughable by Delhi standards.

Gopi did not break any earth-shaking stories during the trial period. But his sincerity, diligence, dogged pursuit of stories and pleasing personality made up for that. He was given a proper appointment letter after three months although his salary remained rather low. My opinion began to change after friends in Left parties began to mention him to me in Parliament’s Central Hall, pointing to the depth of his knowledge of the telecom sector. Officially, he was on the Left beat so I still did not attach too much significance to that.

Then the cascade began. Starting mid-2008, he broke one story after another on scandalous ramifications of the 2G spectrum allotment. The issue was complex and most people don’t understand its intricacies even now. But Gopi had cracked the scandal.

And as one exclusive report followed another, information flowed to him like a magnet attracting pins. Navin worked hard on these reports, filling up missing links, polishing them and quoting relevant documents. The 2G scam was Gopi’s passion and he scoured the Net, apart from visiting officers in their offices and homes, gathering material. He had friends across the political “spectrum”; Gopi, despite his Kerala origins, was ideology-neutral.

I don’t know how much pressure he came under and from which quarters. But I faced more pressure over these reports than anything else in my 27 years of journalism, of which nearly 20 have been spent in senior editorial positions. I am proud to have withstood them. But even more proud that I gave a dynamic young man from Kerala a break in the national media, a break he used to do the nation a sterling service. J Gopikrishnan has made history and The Pioneer basks in his achievement.

The Pioneer Investigative Team asked Gopi to unravel his journey from a fledgling political reporter to giant killer. Excerpts from a chat:

Q: How did you come across the 2G scam story?

A: We sensed a scam when Swan and Unitech started offloading shares at whopping prices of Rs.4,500 crore and Rs.6,200 crore in September 2008. Bureau chief Navin Upadhyay asked me to dig for information and luckily we got a great whistleblower, who knew the ins and outs of the Telecom Ministry. He once told me the PM was totally unhappy with Raja and had summoned him to ask what was going on.

Slowly, the whistleblower narrated the entire range of corruption in the Ministry. Those days, Minister Raja was making false claims that he had followed his predecessors. This young Government officer told me about the parking of funds in front companies by the Minister and his associates in the name of relatives. He told me who the actual beneficiaries of the scam were, including corporates, politicians and lobbyists.

This officer asked me to talk to my Editor and get his consent and only then would he reveal further. The Editor told me to go ahead and the whistleblower became a goldmine of hidden information for The Pioneer. Days and nights of discussion and checking the authenticity of facts happened in his office and at many crowded places in the city, once it became important to avoid detection.

Q: Which was the first story you did and what was the reaction?

A: After finding out the gamut of front companies dealing in real estate, we decided to expose Raja’s ill-gotten wealth. Chandan Mitra and Navin Upadhyay saw all documents and decided to go ahead with the series. The first story appeared on December 11, 2008, on Raja’s main real estate front company, Green House Promoters. The details of other companies and hidden irregularities in the spectrum scam were published over the following days.

Q: Did you come under pressure to stop the campaign? How did you ward them off?

A: I met Raja after the first report, as directed by the Editor. He alleged that I was being funded by his rivals in the party and even told me some names. He was visibly shaken asking me how I got the details of his personal assets. He requested me to avoid writing. My reply was that I had been deputed by the Editor only to take his version, nothing else. Raja agreed to speak, but repeatedly requested me to stop writing further on this. Similarly, many corporate groups were after me with the same plea. I must say none threatened or behaved badly.

Those days, Raja was planning to conduct the 3G auction at cheap base rates without Cabinet’s approval. Many agents from the corporate sector requested us to stop our series of exposes, saying our reports would force the Government to refer the 3G auction to an EGoM. We told them that was exactly what we wanted. But I must say some friends with contacts in high places warned me I may be targeted. It was a hidden warning, which I ridiculed. It would not be fair to reveal what kind of offers were made by different entities to avoid the 3G issue going to an EGoM. But finally, the Cabinet referred it to an EGoM, which put Raja out of the picture and the nation netted Rs.1.06 lakh crore.

Q: Did any political or corporate entity offer you financial inducements to stop writing on this?

A: Yes, they did. The figures were mind-boggling. Corporate lobbyists and Raja’s people even asked me to stop informing the Editor and end the series abruptly. I told them even the meeting with them was in the knowledge of the Editor and the Bureau chief. Some shameless fellows tried to access Raja, claiming friendship with me. Some were acting as double agents. One top lobbyist was actually a double agent. That person was leaking information against Raja while providing information to him too. Pressure on the whistleblower was enormous by now, but he stood by us fearlessly. There were several politicians who enlightened and encouraged me. Some bureaucrats and police officials also guided our investigations.

Q: Do you think the matter will end with Raja’s resignation or will more heads roll?

A: I personally feel the court cases filed by Subramanian Swamy and Prashant Bhushan would come to logical conclusions, leading to the cancellation of all licences which were found illegal by CAG. The court may direct auctions to be held like the old petrol pump scam of Satish Sharma. I don’t expect anything from the Government in this matter. Some persons, including Raja, may face the wrath of the law. I don’t think anything harsh will happen to corporates from the Government’s side. After the CAG report and PAC findings, if the Government has the willpower, it can -- by executive order -- cancel all licences and order auction, which will definitely fetch around Rs.2-3 lakh crore.

Q: How do you think the Government can make the spectrum policy transparent and above board?

A: Spectrum management should be handed over to ISRO, but no politician would like that for obvious reasons. In India, spectrum is not yet audited. No one knows how much spectrum is available. This was purposefully done for making easy money. First the Government should ask an organisation like ISRO to audit spectrum availability in all departments. Only then will transparency come.

Q: After Telecom what? Do you have more targets in mind?

A: No idea. I felt totally exhausted upon learning of Raja’s resignation. I was expecting good news on Sunday, when sources told me Pranab Mukherjee had firmly asked Karunanidhi at 11.30 am to remove Raja. This was doubly confirmed when they later said Raja was forced to sign the papers around 5.30 pm. Anyway, no idea what’s for me next…life will go on. I was covering Health and Left (parties) those days. By a stroke of luck, Raja came on our radar…

The Towering Corruptions in NAFED

The Pioneer – August 9, 2010

NAFED’s crores used on Husains, beauty pageants
Centre silent even 20 months after receiving inquiry report

The Centre is sitting over a shocking inquiry report, submitted 20 months ago, on the blatant corruption in the National Agricultural Cooperative Marketing Federation of India Ltd (NAFED). The inquiry committee headed by Justice RR Misra has exposed allotment of more than Rs.5,000 crore to private firms by NAFED’s Board of Directors for the “unauthorised” business ranging from iron ore export, diamond, mobiles, and petro products import, international trade, sponsoring of beauty contests.

To top it all, according to the report available with The Pioneer, a huge sum of Rs.37 crore has been ‘illegally’ used by the NAFED’s business partner Swarup Group of Industries (SGI) for purchasing 25 paintings of MF Husain. This dubious deal, which has nothing to do with agriculture, took place in early 2006, when thousands of farmers committed suicide across the country.

The NAFED’s board granted Rs.236 crore to the Mumbai-based SGI for iron ore export, basically from the Bellary mines to China. According to the inquiry report of Justice Misra and Dr VK Agarwal, only around Rs.52 crore was used for iron ore export and the rest was diverted for purchasing space in Mumbai’s Mega Mall and paintings.

“Thus, it is apparent from the aforesaid report and other papers on the files that NAFED had by September 13, 2006 the knowledge that SGI had diverted the funds received for exporting iron ore to the purchases of space in Mega Mall and paintings of MF Husain,” said the inquiry report.

Currently these paintings worth Rs.37 crore are kept in the locker of Indusind Bank’s Lokhandwala branch in Mumbai, under the joint custody of NAFED and SGI.

The report details how the NAFED lost over Rs.1,600 cr through default on the allotment of `5,000 cr during the past six years on unauthorised business deals. Of the 29 firms, major defaulters are Delhi-based Earth Tek Enterprise (Rs.550 cr), SGI (Rs.150 cr) Cuttack-based Zenith Mining (Rs.180 cr) and AP-based Handum Industries (Rs.95 cr).

The NAFED, country’s biggest cooperative, is ruled mainly by a clutch of powerful politicians of all hues.

The NAFED started “illegal business” in early 2004 by allotting funds for non-farm activities. Later, the Central Registrar of Co-operative Societies approved these dubious deals in December 2004 by allowing change in bylaws to facilitate its engagement in non-agriculture activities.

The report pinpoints the role of the directors for approving such questionable deals. The report also holds responsible then MD Alok Ranjan (IAS) and AMD Homi Rajvansh (IRS) for the heavy loss to the organisation.

The only action taken by the Government was changing the officials and instituting CBI investigations, which have reached nowhere. Alok Ranjan is currently the Principal Secretary in the Urban Development department in Uttar Pradesh Government and Homi Rajvansh is posted as I-T Commissioner in Kolkata.

No action has been taken against the Board of Directors comprising the powerful political leaders who authorised such illegal deals. On November 2009, the Government appointed CV Ananda Bose, IAS, as Managing Director to cleanse the NAFED. But in July 2010, the Board of Directors passed an “illegal” resolution to expel the Managing Director, selected by the Appointments Committee of the Cabinet.

Though Agriculture Minister Sharad Pawar backed Bose and sought the Board to cancel their “illegal” resolution, nothing happened. According to sources, the Government faced severe pressure from the powerful co-operative lobby, cutting across all political lines, not to take any action against the Board. In the first week of August, the Government appointed another IAS officer Sanjeev Chopra as new Managing Director.

“The corrupt Board of Directors feared Ananda Bose when he started acting on the Justice Misra probe report. Some officials have already gone to jail and the Board members feel they will also have to face the music. Bose had objected the one-time settlement plan of Rs.1,650 crore of debt at a heavy discount by some Board of Directors and selling and leasing prime properties in Mumbai and Delhi to cover up the huge loss,” say employees of NAFED.

The Pioneer August 10, 2010

NAFED funds fictitious iron ore exports in hurry

The rot in NAFED runs deep. The nation’s premier agriculture cooperative body seems to be doing everything other than following its basic charter of helping farmers. An explosive inquiry report submitted by Justice RR Misra shows how NAFED opened its coffers to all and sundry, including sham iron ore exporters and petroleum importers, who had nothing to do with farmers.

The report reveals that NAFED’s board of directors released huge funds to private companies for iron ore export, which never took place. The report, which runs to over 550 pages, pegs such illegal diversions at Rs.600 crore. The amount was disbursed within hours after production of fabricated shipping bills by several companies with the knowledge of NAFED top officials.

According to the report, these companies produced fake shipping bills for iron ore consignments to China from Bellay mines and NAFED “immediately” disbursed huge money without any proper verification.

Examining the fake bills and consignment details and verifying the actual shipping records, Justice Misra said it was “humanely impossible” to undertake “such huge quantity of export of iron ore in the short span of time”.

Delhi-based Earth Tek Enterprises, Mumbai-based Swarup Group of Industries and Cuttak-based Zenith Mining were the main players involved in the fraud.

The Pioneer had on Monday reported that the Swarup Group of Industries had diverted funds for purchasing 80,000 sq ft space in Mega Mall, Mumbai, and 25 paintings of MF Husain at Rs.37 crore. The funds were also used for sponsoring beauty contests.

Similar fund diversion also took place in the import of petroleum products. The inquiry report blames NAFED for funding international trade involving “third” country business, which was financed by the Indian firms funded by NAFED. The report “wonders” how NAFED allocated huge funds for such Merchanting Trade Transactions (MTT) to “friendly” private firms. The report also exposes the violation of RBI rules to provide funds for products which never touched Indian shores. The biggest defaulter is Earth Tek Enterprises, which owes NAFED Rs.550 crore. This firm is a major player in financing third-party international trade.

Sources said NAFED’s board of directors started sanctioning such “illegal business” in early 2004, while its bylaws permitted release of fund for agricultural purpose alone. “Those were the days of Lok Sabha elections and several directors of NAFED were contesting. They needed money,” they said.

In early 2004, NAFED allotted funds to Earth Tek Enterprise for import of superior kerosene oil and showed a profit of Rs.12.5 lakh. Citing this profit, the board of directors decided to go for public-private partnership and joined non-agricultural activities. This was objected to by then managing director PK Agarwal, but the board of directors — comprising powerful politicians – overruled him.

After allotting more than Rs.2,000 crore for such non-agricultural activities, NAFED approached the Central Registrar of Co-Operative Societies in December 2004 to change its bylaws to legalise such ventures.

“Since the Co-Operative Act prevents approval on retrospective business, it is still a mystery how the Registrar approved the change of bylaws. It seems that the Registrar, a Joint Secretary-level IAS officer, faced political pressure,” the sources said.

Meanwhile, in mid-2007, then chairman Ajit Singh (who was also an MP from Bihar) died in a car accident. Bijendar Singh, a Congress MLA from Delhi, became the chairman. He is also a director with several big co-operative organisations, including the National Consumer Co-Operative Federation (NCCF).

Justice Misra submitted the report to the Registrar on December 2009. Interestingly, the Registrar sends the inquiry report to the same board of directors who were primarily responsible for the “illegal business”.

But the board of directors curiously replied to the Registrar that they were “not responsible” as they were “not involved in the day-to-day business”.

The Central Government obviously accepted this explanation and took no action against the board of directors, which authorised the “illegal business” of Rs.5,000 crore and led to a bad debt of Rs.1,650 crore.

NAFED’s board of directors comprises powerful politicians cutting across political lines. NAFED’s vice-chairman Chander Pal Singh Yadav is a former MP and also vice-chairman of the world’s biggest fertiliser co-operative KRIBHCO. NAFED’s chairman Bijendar Singh is also a director of this behemoth. Virendra Singh, director of NAFED, is also the chairman of NCCF. Most of the directors of NAFED have also been on the boards of big co-operative organisations for decades. The dynastic politics is seen in all these organisations.

According to sources, the Central Government is shying away from taking action against the board of directors, mainly due to the pressure from the co-operative lobby. At one point, the Government had reportedly made up its mind to dismiss the board and appoint an administrator to cleanse the mess, but the idea was shelved due to political pressure, said the sources.

The Pioneer – August 11,2010

Registrar tells NAFED to explain bad debt

The Central Registrar of Co-operative Societies has issued showcause notices to 29 persons, including National Agricultural Co-operative Marketing Federation of India Ltd (NAFED) chairman Bijender Singh, other directors and officials, directing them to appear before him on September 16 in connection with the blatant violations and diversion of funds, leading to bad debt of Rs 1,625 crore.

Reacting to The Pioneer reports, newly-appointed managing director of NAFED Sanjeev Chopra said the one-time settlement (OTS) scheme to clear the bad debt would be formulated only according to the Reserve Bank of India’s guidelines.

Claiming that the Centre was not sitting over the inquiry report submitted by Justice RR Misra, the MD said the Central Registrar has already initiated necessary action in the matter.

He has served showcause notices on July 15 to as many as 29 persons — including some members of the board of directors, former managing directors, former additional managing director, consultants and officers of NAFED — and directed them to submit their reply within eight weeks. They have also been told to appear before him on September 16 to show cause as to why they should not be proceeded against further.

The inquiry report was submitted by Justice Misra to the Central Registrar on November 2008. The 550-page report in three volumes exposes the allotment of around `4,000 crore by NAFED to private companies for non-agricultural deals, including iron ore export, import of petroleum products, diamonds, timber wood, metal scrap and mobile phones.

Refuting The Pioneer report that NAFED had funded Rs.5,000 crore to private firms for unauthorised business deals, the MD pegged the amount at Rs 3,945 crore.

The NAFED managing director said they had filed criminal cases against all the defaulting firms. Investigation by CBI and Economic Offence Wing of Delhi Police is also ongoing.

“NAFED has filed a claim for recovery of outstanding dues from all the 29 parties by initiating arbitration proceedings. NAFED succeeded in obtaining final award/interim awards in seven cases. In addition, NAFED has also filed 167 cases under Section 138 of the Negotiable Instrument Act for recovery of an amount of RS 712 crore,” Chopra added.

Reacting to the controversies concerning the board of directors’ attempt settle the huge defaults at heavy discounts through the OTS scheme, the NAFED managing director said the scheme would be implemented only according to the RBI guidelines.

“Since the recovery through legal channels is a long-drawn process and there are some defaulters who have shown keenness to resolve the issue outside the court, NAFED — at the behest of the Department of Agriculture and Co-operation — has put in place a comprehensive OTS policy based on RBI guidelines,” Chopra noted.

[The writer is Special Correspondent of The Pioneer daily. The above articles appeared in The Pioneer's series on blatant corruptions in NAFED, published on August 2010]