Thursday, March 8, 2012

Chidambaram in 2G radar

The Pioneer's series of reports on Home Minister P.Chidambaram's role in 2G Scam in September, 2011 - February 2012

CBI changing probe line to save PC ?
Sep 19, 2011

It seems to be a case of applying two yardsticks for two former Finance Ministers. The CBI, which has announced the need for questioning Jaswant Singh — the Finance Minister during the NDA regime — has apparently given a clean chit to P Chidambaram, who was the Finance Minister when the 2G spectrum scam occurred.

The investigating agency has admitted to lapses by the Finance Ministry under Chidambaram in 2G spectrum allocation and pricing but has asserted there’s “no criminal misconduct”. The agency has squarely blamed former Telecom Minister A Raja for the entire scam.

“Investigation in the matter so far has not disclosed criminal misconduct on the part of any public servant of the Ministry of Finance,” summed up CBI joint director Hitesh C Awasthy in his two-page response to Janata Party president Subramanian Swamy.

Chidambaram’s lawyer PP Rao had insisted before the Supreme Court that the CBI’s letter should be produced. The matter will come up before the Supreme Court on Tuesday, when it will consider Swamy’s petition seeking a CBI probe into Chidambaram’s role.

Swamy has in his petition alleged that Chidambaram “colluded with Raja” in fixing the spectrum pricing at lower level. It was after the Prime Minister rejected his petition to grant sanction for prosecution and the CBI turned down his petition that Swamy approached Supreme Court.

Objecting to Swamy’s arguments against Chidambaram on September 8 in the Supreme Court, the Government hired private lawyer Rao, who pressed for the production of these observations by the CBI.

Explaining the lapses of the Finance Ministry, the CBI said, “The Secretary, Finance (D Subbarao) took up this issue (spectrum pricing) with the Secretary, Department of Telecom and stressed the need to include spectrum pricing in the terms of teference of the GoM. This matter was again taken up by Secretary of Finance with Secretary, DoT, on November 22, 2007.”

It added, “However, DoT had by that time issued in-principle approval to three firms (Reliance Communications, Tata Teleservices and Shyam Telelink) for dual technology spectrum at prices determined in 2001. The Secretary, Finance, asked DoT to stay further implementation of the matter till the Ministry of Finance was consulted and a decision taken. The matter was taken up by Ministry of Finance with DoT on further occasions as well.”

Putting the entire blame on Raja, the CBI noted, “On January 10, 2008, DoT allocated 120 new licences at 2001 prices. Investigations has revealed that A Raja deliberately ignored advice of the Finance Ministry and other high offices for revision of entry fee or auction of spectrum, etc.”
Swamy challenged the rationale of the CBI in adopting different yardsticks in declaring to question Jaswant Singh and avoiding questioning of Chidambaram.

While telling the Supreme Court how far the probe had progressed, the CBI recently said that during the NDA regime, spectrum pricing was fixed by the GoM headed by the then Finance Minister Jaswant Singh and that it needed to question him for arriving at a final conclusion. But in case of Chidambaram, Finance Minister during the tenure of Telecom Minister Dayanidhi Maran and Raja, the CBI took a different yardstick.
As things stand, Prime Minister Manmohan Singh has had on different occasions, including in Parliament, said, “Though there were difference of opinion between the two ministers (Chidambaram and Raja) in the initial stage, later they were on the same page.” He even cited the meetings between the duo on the spectrum pricing. However, the Finance Ministry, now says, no minutes were prepared on the said meetings between Raja and Chidambaram.

Swamy in his petition also alleged that the controversial company Telenor, which is also operating in Pakistan and Bangladesh, got clearance from the Home Ministry, when Chidambaram assumed office. Demanding the intervention of the Supreme Court, he accused the CBI of going soft on Chidambaram, who cleared the sale of shares of the major scam beneficiaries Swan and Unitech to multinational companies at a whopping price.

Govt lied on PC-Raja meet
Sep 21, 2011

The Government’s claim that minutes of the meeting between former Telecom Minister A Raja and then Finance Minister P Chidambaram on January 30, 2008 were not maintained has turned out to be totally misleading.

Documents in possession of The Pioneer show that the minutes of the meeting were prepared and signed by none other than then Finance Secretary D Subbarao. The meeting, which took place 20 days after the controversial allotment of spectrum by Raja, reveals that Chidambaram said that there was no need to “revisit” the mode adopted by Raja for spectrum allotment.

“FM (Finance Minister) said that for now we are not seeking to revisit the current regimes for entry fee or revenue share,” said point No: 5 of the ‘hushed up’ minutes of the meeting between Raja and Chidambaram. This observation of Chidambaram clearly shows that he had overruled the then Finance Secretary who had issued directions to stay the allotment of telecom licences and spectrum at the entry fee of Rs 1,658 crore, a price fixed seven years ago. The Finance Secretary had directed the stay on the spectrum allocation on November 22, 2007.

Incidentally, on January 15, 2008 Chidambaram wrote to PM Manmohan Singh to treat Raja’s dubious spectrum allotment as a “closed chapter”. On several occasions and even in Parliament, the Prime Minister said that “there were initial differences between two Ministers” (Telecom and Finance) on the spectrum pricing, and “later they were on the same page.”

Singh even disclosed the dates of the meeting between Raja and Chidambaram, but Government managers, including Parliamentary Affairs Minister PK Bansal, said there were no minutes of the meeting. The Government also justified the non-preparation of the minutes, saying that it was not always possible for the Finance Minister to record what transpired with other Ministers.

The then Telecom Secretary, Siddharth Behura, currently in jail along with Raja, and Advisor (Wireless) PK Garg, who is a prosecution witness in the CBI case, were also present in the meeting.

As per the minutes, following are the gist of the discussion — the FM suggested that keeping in view of lessons of experience, allotment of licences and allocation of spectrum must be based on solid legal grounds.

It was agreed that the optimum number of operators per circle would be about seven.
It was noted that there is a mismatch in the demand and supply of spectrum across circles. Redressing this mismatch will be another policy imperative, said the details of the minutes of the meeting which took place after 20 days after the scam.

The meeting also discussed the changing of merger and acquisition rules in the telecom sector. “We also need to check the current rules and regulations governing withdrawal of spectrum in the event of: a) not rolling over, b) merger and acquisition, and c) trading away spectrum,” said the last point of discussion between Raja and Chidambaram.

Incidentally, after three months of this meeting, on April 2008, Raja dubiously issued an order changing the merger and acquisition rules, diluting the existing lock in period condition of three years. This new order facilitated the windfall gain to Swan and Unitech, who offloaded their shares to multinational telecom companies Etisalat and Telenor.

The minutes also disclose that Telecom Secretary would attend a meeting with Finance Ministry officials, scheduled for next day --- January 31, 2008.

The ‘hushed up’ minutes between Raja and Chidambaram showed that the jailed former Telecom Minister had discussed the matter in details with his counter part in the Finance Ministry.
According to the October 2003, Cabinet decision, the Finance Ministry is the ultimate authority in the spectrum pricing. But when controversies raged, Chidambaram always claimed that he argued for auction. The minutes exposes his claim.

On deposing before the Public Accounts Committee, the then Finance Secretary Subbarao said that he had informed Chidambaram, before issuing directive to stay the spectrum allocation. The minutes of the meeting between Raja and Chidambaram shows that Finance Secretary’s objections were overruled by Chidambaram. Perhaps that is why the Government always claimed no minutes was prepared at all.

Pranab points to PC taint

Sept 22, 2011

FinMin blames Chidambaram for failure to stop Raja move. The noose tightened around Home Minister P Chidambaram on Wednesday after the Finance Ministry submitted a memorandum, approved by Minister Pranab Mukherjee, to the Prime Minister’s Office, detailing the dereliction of duties and failures on the part of the then Finance Minister, P Chidambaram, in 2008 in stopping the controversial allocation of 2G spectrum by then Telecom Minister A Raja.

The note endorsed by Mukherjee is a detailed analysis of Finance Ministry’s role in spectrum pricing from 2003 to 2008. While it puts Chidambaram in the dock for failing to check Raja’s misdeeds, it also blames the Telecom Ministry for not cancelling the controversial licences. The note also brings to the fore the ongoing war between two heavyweights in the UPA Cabinet.

The 13-page note of the Finance Ministry was presented to th eSupreme Court on Wednesday by Janata Party president Subramanian Swamy during his argument seeking directions to the CBI to probe Chidambaram’s role in the 2G scam. This note was prepared by the Finance Ministry on March 25, 2011 to appraise the Prime Minister on the scam after the formulation of the Joint Parliamentary Committee to probe the 2G scam.
The Finance Ministry note shows that Chidambaram was aware of Raja’s ‘plan’ when his (Chidambaram’s) officials alerted him on January 9, 2008, just a day before the controversial allotment of licences and spectrum.

It also blames the Finance Ministry, then under Chidambaram, for keeping silent even after the DoT on November 29, 2007 had opposed the directive of Finance Secretary D Subbarao on November 22, 2007 to stay the award of licences to Tata Teleservices and Reliance Communication.

The note approved by Pranab Mukherjee also exposes the DoT lies, which claimed that the allotments were made in accordance with a 2003 Cabinet approval. Outlining the lapses of the Finance Ministry, and non-implementation of the stay order of Finance Secretary, the note said: “In response, DoT vide their letter dated November 29, 2007 indicated that the decision to allot the dual technology licences at the 2001 entry fee was justified on account of the decisions taken in the Cabinet meeting held on October 31, 2003 and TRAI recommendations of August 28, 2007.”

Puncturing the DoT’s claims, the note says the Finance Ministry was not consulted before giving the dual technology licences to Reliance Communication and Tata Teleservices. Moreover, the TRAI recommendations for giving licence to Reliance Comm and Tata Tele were not valid as it was not debated in the Full Telecom Commission, where Finance Ministry representatives are also a member.

Blaming Finance Ministry for not acting on the misleading DoT’s reply on the Finance Secretary’s stay order, the note said: “This was also not further responded to by DEA (Department of Economic Affairs). No follow up appears to have been done from DEA.”

Blaming the Finance Ministry under Chidambaram for inaction the note said the Ministry swung into action only on December 17 and the file reached before Chidambaram on January 9, 2009. Suspecting some foul play, the note says that the representative of the Finance Ministry never raised the issue of revising the seven-year old rate of entry fee in the Full Telecom Commission meeting, though the officials placed this demand before Chidambaram.

“The note recommended both revision of the entry fee fixed in 2003 as well as adoption of an auction methodology for determination of the spectrum usage charges. The position paper was prefaced with a note of the then AS (EA) [Additional Secretary - Economic Affairs] dated January 9, 2008, which inter alia mentioned that she had been directed to attend the meeting of the Full Telecom Commission, which had been scheduled to be held on January 9,” said the note.

Bringing Chidambaram under scanner for writing to Prime Minister to “treat the matter the spectrum allotment as a closed chapter”, the note says: “This position paper was used by the then FM (Chidambaram) as a basis of his ‘secret note’ to the Prime Minister on January 15, 2008 wherein, an auction based mechanism was recommended for future allocation of spectrum (beyond the start up spectrum), with the spectrum allocations having been made in the past to be treated as a closed chapter. The recommendation was in the context of spectrum usage charges and not with regard to the entry fee.”

The Finance Ministry’s note exposes that Chidambaram’s claims on arguing for auction was wrong. It further says that, in fact Chidambaram argued for auction almost a year after, that too after the controversial sale of Swan and Unitech to multinational companies Etisalat and Telenor at a whopping prices. “The note of the Finance Minister did not deal with the need, if any, to revise entry fee was taken up by the Ministry of Finance subsequently in November 11, 2008,” it said.
Clearly expressing dissatisfaction on Chidambaram’s observation to treat the matter as “closed chapter”, the memorandum to Prime Minister, approved by Mukherjee, argues that still the tainted licences can be cancelled and there would be no legal problem.

Clearly, the Finance minister is critical of Telecom Ministry’s inaction on taking action against the beneficiaries telecom companies even after CAG found the illegality of Raja’s 122 licences.
“There was a way out by invoking clause 5.1 of the UAS Licenses (Telecom Licenses), which inter alia, provide for modification at any time the terms and conditions of the license, if in the opinion of the Licensor (DoT) it is necessary or expedient to do so in public interest or in the interest of the security of state or for the proper conduct of the telegraphs. DoT could have invoked this clause for cancelling licenses in case Ministry of Finance had stuck to the stand of auctioning the spectrum,” said the Finance Ministry note.

Subbarao kept PC in loop
Sept 24, 2011

Several consultations with then FM on 2G, former Finance Secretary told PAC The UPA Government and the Congress may be defending Home Minister P Chidambaram against charges of complicity in the 2G scam, but former Finance Secretary D Subbarao’s deposition before the Public Accounts Committee (PAC) on February 3, 2011, clearly shows that he had “fairly and regularly” appraised the then Finance Minister about former Telecom Minister A Raja’s move to allot spectrum at seven-year-old price without auction.

Details available with The Pioneer show that on being grilled by the MPs on his communication and meeting with Chidambaram during the scam period, Subbarao told the PAC: “There were several consultations with the Finance Minister (Chidambaram) at several stages. So, I cannot recall exactly whether this particular letter (November 29, 2007 from DoT) was discussed on a stand-alone basis or together with other developments in the telecom sector, but I do recall that in that period (October 2007 onwards), I was discussing with the Finance Minister, fairly regularly on telecom sector issues.”

Meanwhile, Finance Minister Pranab Mukherjee is expected to meet Prime Minister Manmohan Singh on Sunday to thrash out the issues related to Ministry note on Chidambaram’s role in 2G spectrum allocation. In order to accommodate his unscheduled meeting with the PM, Mukherjee’s departure from Washington has been advanced by a few hours. Now he is expected to leave Washington early Sunday morning instead of afternoon.

Subbarao was responding to the volley of questions from several members of the PAC, on how his directive of November 22, 2007 — to stay the allotment of spectrum and GSM licences to Reliance Communication and Tata Teleservices at 2001 price — was not adhered to. The directive had also sought to find new market-based price for spectrum, and suggested auction. But on November 29, 2007, DoT wrote to Subbarao that they were going by the 2003 Cabinet approval for the spectrum allotment policy. After the DoT reply, the Finance Ministry kept quiet.

To the questions, whether he had consulted Chidambaram, the former Finance Secretary, who is currently the Reserve Bank Governor, reiterated: “On this letter of November 29 from the Telecom Secretary, I cannot specifically say that I had taken this particular letter to the FM, but I certainly was discussing with him on a regular basis.”

The recent note by the Finance Ministry to the PMO, and minutes of Raja and Chidambaram’s meeting, clearly show how Subbarao was overruled by Chidambaram to favour Raja’s controversial 2G spectrum allotment. These documents also substantiate Subbarao’s deposition before the PAC that Chidambaram was in the loop.

When Subbarao was pressed by MPs, to provide evidence about his communication and meeting with Chidambaram, he told the members and PAC Chairman Murli Manohar Joshi, “Sir, there may not be a paper trail, but there was certainly discussion going on. Sir, as you know — you have been a Minister yourself in the Government — not everything is on paper or reduced to writing. Maybe there were some file endorsements, but I cannot recall them because the note file is not here.”

To a question, whether he brought the violations and difference of opinion to the notice of the Cabinet Secretary or Chidambaram, Subbarao deposed, “I do not recall having said specifically that we should go back to the Cabinet. That I cannot really say without seeing the file. But I should have briefed the Finance Minister about the ongoing discussions.”

Indicating pressure from Chidambaram and Raja, why no auction of spectrum took place, even after he specifically suggested auction, Subbarao said: “…We (Government) were always arguing on the basis of level playing field rather than on the basis of any growth dimensions that might have subsidised. And if they (Ministers) have chosen so, then as a civil servant, I could not contest that.”

PC snubbed officers to help 2G scamsters

February 25, 2012

Fresh evidence of Home Minister P Chidambaram’s role in the 2G scam surfaced in the Supreme Court on Friday when noted lawyer Prashant Bhushan submitted extensive documents seeking a thorough CBI probe into Chidambaram’s alleged complicity in spectrum allocation during his tenure as Finance Minister.

The new documents submitted by Bhushan showed that Chidambaram not only consented to jailed former Telecom Minister A Raja’s designs, but he also overruled and snubbed the objections raised by top Finance Ministry officials, who tried to prevent the 2G spectrum scam.

The new documents, mostly communications of Finance Ministry, could be damning for Chidambaram. The communication between top officials of Finance Ministry reveal that they fought for more than five months, demanding intervention and cancellation of Letters of Intent (LoIs) issued by Raja on January 10, 2008.

A May 28, 2008 note prepared by Finance Secretary D Subbarao to Chidambaram said, “It is legally and administratively tenable to impose a two-part tariff for spectrum: a fixed, one-time “upfront” spectrum price for allowing the allottees of spectrum to use a public resource for private profit; and a recurring usage charge, whereby Government shares the profits accruing to the operator.”

On the new diluted merger and acquisition guidelines of Raja, the note said, “DoT may be advised that fixation of ‘spectrum transfer charges’ shall be in consultation with DEA.” This was the last ditch effort by the Finance Ministry officials before they gave in.

Forty days later, Raja had his way. The July 6, 2008 note from Subbarao is particularly revealing. It shows that the matter was settled at the level of Prime Minister in the meeting with Raja and Chidambaram on July 4, 2008. The objections of the Ministry were overruled in that meeting. Before the meeting the Prime Minister, Raja and Chidambaram had discussed the matter thrice.

“All the issues have been agreed to as in the note. In particular, it was also decided that the proposal to extend licences for the spectrum overhang period (to make the licence coterminous with the last tranche of spectrum allotted) as discussed in para 12 (on spectrum pricing) of the note will not be pursued because it is administratively and conceptually clumsy and potentially problematic from the legal angle,” Subbarao wrote.

Two months after Raja allotted the Letter of Intent for licence on January 10, a Finance Ministry note of March 11 said that Chidambaram had agreed to their observations and decided to take the matter to Cabinet Committee on Economic Affairs (CCEA) for fixing the price of the spectrum.

The note produced by Bhushan in the Supreme Court starts: “Finance Minister approves suggestion of Finance Secretary to use the Note for CCEA as an opportunity to raise basic issues of pricing of spectrum for the entire range of spectrum under commercial use.” But the fact of the matter is that Chidambaram never took up the matter to neither Cabinet nor CCEA.

Another damning evidence produced before the Supreme Court is that Chidambaram literally snubbed a Finance Ministry official for making an official communication with DoT in the form of an Office Memorandum. The officer argued for creating an Office Memorandum detailing the objections of the Finance Ministry with Telecom Ministry. But Chidambaram cleverly preferred to adopt the non-paper mechanism in communicating with spectrum related issues. The non-paper is an informal communication and an Office Memorandum is a valid communication.

Chidambaram, who was in London on April 10, 2008, snubbed the officer by pointing out the small errors, including spelling mistake in his communication. He directed for adopting non-paper mechanism of informal communication with DoT in controversial spectrum allotment issues.

The officers even apologised to Chidambaram for issuing the Office Memorandum: “In as far as the issuance of the wrong OM (Office Memorandum), in the first instance is concerned, the mistake, though inadvertent, is purely assignable to a lapse on the part of the undersigned. For this lapse, the undersigned is agreeable to bear the consequences of any action — disciplinary or otherwise — which the department may contemplate against him.”

After getting the apology from the officers, Chidambaram directed them to adopt only non-paper mechanism in communicating with DoT. “That apart, the draft note received from DoT was indeed considered by me on 11.03.2008. Thereafter, that file containing the draft note from DoT and the proposed OM was not put up to me. What was considered was only a non-paper given to me by the Minister of Telecommunications on which I had been informed by FS (Finance Secretary) that DEA would send a non-paper containing our views.

“It is in this context that the note for discussion was prepared; a discussion took place; and I had indicated my views on the margin of that note. Logically, this should have been followed by sending a non-paper to the DoT. However, if there was an intention to send a formal OM containing our views on the draft note for cabinet received from DoT, that file should have been put up to me and my signature obtained. I may note that I was in office on 8.4.2008 and 9.4.2008,” Chidambaram wrote from London.

Welcoming Bhushan’s petition, the 2G crusader and Janata Party president Subramanian Swamy, said: “I welcome Prashant’s move and congratulate him for digging more. It would be fine to fight battle with double barrel guns.”

It is expected that the Supreme Court will hear Swamy and Bhushan’s petitions on March third week.

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