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]

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]

2G Spectrum Scandal : A.Raja - Nira Radia conspiracies : TAPPED and TRAPPED

TAPPED and TRAPPED

Govt taps PR honcho’s phone, gets clinching evidence against Raja

The cat is finally out of the bag. The CBI has acquired clinching evidence showing that a high-profile woman public relations lobbyist acted as powerbroker in the mutli-crore 2G spectrum scam and that she was in regular touch with Telecom Minister A Raja.

The investigating agency unearthed damning evidence of wheeling-dealing in the spectrum scam by authorised tapping of telephones of several persons, including Nira Radia, who runs several public relations and consultancy companies — like Vaishnavi Corporate Consultants, Noesis Strategic Consulting Services, Vitcom Consulting and Neucom Consulting.

All these companies are filled with retired bureaucrats, who ostensibly lobby with the Government on behalf of different companies. Radia is an NRI, who landed in India in early 2000 for some liaison work for aviation companies. Of the nine companies that benefited from the dubious spectrum allocation by Raja, the CBI found that four companies were “serviced” by Radia.

Highly-placed sources said the CBI was denied permission by top authorities to interrogate Radia even though the telephone intercepts clearly exposed her role in the scam, which cost an estimated Rs 1,00,000 crore to the exchequer.

A communication between the Income Tax Department and the CBI shows that nine phone lines were tapped by the I-T Department’s investigation wing. The first phase of 120 days of tapping started on August 20, 2008, and the second phase of 180 days on May 11, 2009.

Sources in the CBI said that in addition to Radia’s, the telephone lines of several other influential businessmen, politicians and advertising professionals were tapped for uncovering the extent of lobbying in the scam.

Sources said that the first-phase conversation tapping, lasting 120 days, exposed the parking of ill-gotten money from the spectrum scam in the form of real estates holdings, company shares and derivates within the country and in tax havens like Mauritius.

Documents available with The Pioneer show that Central Bureau of Investigation DIG Vineet Agarwal had on November 16, 2009, sought call detail records of Nira Radia from Director General of Income Tax (Investigation) Milap Jain. “It has been reliably learnt that certain middlemen, including one Ms Nira Radia of M/s Noesis Consultancy, were actively involved in the above-mentioned (spectrum scam) criminal conspiracy,” Agarwal’s letter to Jain, seeking the detailed call records, stated.

On November 20, 2009, as per Jain’s instructions, Joint Director of Income Tax Ashish Abrol provided the details of conversation between Radia and key players in the spectrum scam, including A Raja.

“There are some direct conversations between Ms Radia and the Telecom Minister. In some other conservations, Ms Radia boasts of having helped some of the telecom operators in their efforts to obtain licences/spectrums. Ms Radia has also been in regular touch with Shri Chandolia,” confirmed Abrol to the CBI. RK Chandolia was Raja’s private secretary during the time of spectrum allocation and has since been elevated as an economic adviser in the Department of Telecommunication.

“On the basis of specific information received from CBDT, the telephone lines of Ms Nira Radia and some of her associates were put under observation after obtaining permission from the Home Secretary,” Abrol wrote to Agarwal in a letter, marked “Strictly confidential and top secret”.

“The intercept provides the conversation of the target and associates indicating laundering and structured payoffs, transactions and liaison for projects of telecom, petroleum and also the media,” the I-T Department communication to the CBI stated.

Radia’s companies are involved in consulting in telecom, power, aviation and infrastructure. These entities not only managed the media but, as per the recorded conversations, apparently tried to influence policy changes and decisions of various Government departments to suit the commercial requirements of their clients, confirmed the Income Tax Department’s investigation wing to the CBI after analysing the telephone conservations.

“From these conversations, it appears that Ms Nira Radia might have had some role with regards to the award of telecom licences. In a conversation, she guided a new telecom operator on the need to delay the inflow of funds from the overseas investor and not to give the impression to the Government that there has been any ‘windfall’ profit,” the letter added.

In the conversation details available with The Pioneer, Radia was talking about arranging huge money from abroad for Unitech Wireless, which is a major beneficiary in the spectrum scam.

According to CBI sources, Radia got information about the agency’s moves against her from her vast network in the South and North Blocks and left for London in February to avoid arrest for criminal conspiracy in the spectrum scam.

“The detailed telephone transcripts of Radia clearly show how our politicians and bureaucrats were hand in glove with the corporates in looting the public exchequer,” a top CBI official said.

Raja-Radia links go back 4 years

Telecom Minister A Raja had offered to help a woman public relations lobbyist, Nira Radia, four years ago get CCEA clearance for starting an airline -- a proposal that was shot down by other Ministers. But it was just the beginning. Later, Raja helped her get environmental clearance for some housing projects launched by two corporate giants. The telephone intercepts of Radia, as reported by The Pioneer on Wednesday, show that she was in touch with Raja regarding the 2G spectrum deal too.

Radia first got in touch with Raja through a woman politician in January 2006, when he was the Environment Minister. The woman who introduced Radia to Raja later became a Rajya Sabha member. Radia reportedly wanted Raja's support for lobbying with the Cabinet members in CCEA for getting approval to start an airlines company, known as Magic Airlines.

According to sources, Raja contacted three members of the CCEA to help out Radia. But they refused to back him. "It was a funny project. A real non-transparent project. There were lots of discrepancies in the mode of foreign investment," one such Minister told The Pioneer on Wednesday.

According to Environment Ministry sources, Radia became a frequent visitor and struck a big deal by getting environmental clearance for the pan-India project of housing development for the two big companies. This deal onwards, Radia's clout increased in the Environment Ministry. Due to the unceremonious exit of Dayanidhi Maran in May 2007, Raja landed in Telecom Ministry and Radia become a power centre as most of her big clients were key players in the sector. According to sources, the CBI investigated her role in the 2G spectrum scandal on the basis of confession of top DoT officials.

Sources said the CBI had evidence that just a few days before the spectrum allotment on January 10, 2008, a "criminal conspiracy" took place involving Radia and Raja. Of the allotted nine companies, four were served by Radia.

"The meeting between Raja and Radia along with the woman MP took place at Taj Mansingh hotel. The room was booked in the name of Radia. According to log book details of the official car and as per confessional statements by top DoT officials, the Minister's arrival at the hotel has been proven," said a senior CBI official.

The CBI sought permission to interrogate Radia after tapping her phone for over 300 days, but it was not allowed to do so by "highest authorities", said sources. Fearing her arrest, Radia left for London in February this year.

[The writer is Special Correspondent of ‘The Pioneer’ daily. The articles are published in the newspaper on April 28, 29 – 2010]

More Murky Twists to Raja Tale

[Arun Dalmia (extreme right), arrested by CBI along with Chief Postmaster General MS Bali for accepting a Rs 2-crore bribe from a builder, is seen with Telecom Minister A Raja on his birthday on October 26, 2008, at his official residence in New Delhi]

In February this year, the CBI probe unit handling the spectrum scam laid its hands on highly incriminating evidence that indicated transfer of scam money to secret accounts in Switzerland and other countries, but under political pressure the ‘lead' has been conveniently buried.

The CBI stumbled upon damning evidence of money transfer in the spectrum case while probing the arrest of Maharashtra and Goa Chief Postmaster General (CPMG) MS Bali for accepting a bribe of Rs 2 crore from a builder for issuing a No-Objection Certificate (NoC) for granting construction permission on postal land at a prime spot in Mumbai.

Bali was caught red-handed in a Mumbai hotel late on February 24 along with Arun Dalmia, a frequent visitor to Telecom Minister A Raja's office and residence for five years. Dalmia's son Harsh was also arrested from the spot.

During interrogation, Dalmia told the sleuths about his two Swiss accounts and property details and high-volume cash transactions flowing into bank accounts in Delhi, Chennai, Singapore, Dubai, Malaysia and other tax havens abroad. Dalmia was for years on the
radar of the Intelligence Bureau and RAW, who had informed the CBI that this middle-aged man was a broker for a Chinese telecom equipment vendor. Raja's plan to grant an over Rs 20,000-crore deal to a Chinese telecom vendor for supplying GSM lines to BSNL was thwarted by the security concerns raised by these agencies.

Sources said the CBI suspected a link between the spectrum scam and the arrest of the duo when it learnt that Raja's private secretary RK Chandolia had asked Bali to visit the hotel and collect the bribe from the builder. "When Dalmia told us about their Swiss bank
accounts and hawala transactions, we knew we had laid our hands on a high-value catch," said a Central Bureau of Investigation officer. Chandolia was elevated to the post of economic adviser in the Department of Telecom by Raja and his role in the spectrum scam and money transfer was already being probed by the CBI.

According to sources close to Bali, the CPMG spilled the beans on the very first night of interrogation. Confirming this, a CBI officer told The Pioneer: "Bali told us that he got a call from Chandolia around 6 pm to go to the hotel along with Dalmia and collect the
money."

But, shockingly, the role of Chandolia in fixing the deal never came up in the statements recorded by the CBI. "Bali became a scapegoat," sources said, adding that senior Dalmia also confirmed the role of Raja's office in fixing this deal.

After the CBI's Mumbai unit alerted its Delhi counterparts the following day about the confession made by Bali and Dalmia and the possible link between the spectrum scam and Bali, a CBI team airdashed to Mumbai to interrogate the duo.

"But when we reached Delhi, our bosses got instructions from ‘highest authorities' to delink the Mumbai case from our ongoing investigation. The Mumbai unit also got instruction to limit the case to Bali and Dalmias," said a CBI official, adding that they were denied permission to verify the transaction details of the two Swiss accounts of the Dalmias.

According to Ministry insiders, Dalmia could be a key player in the spectrum scam. He arrived in early 2005 in Raja's office in Paryavaran Bhavan, when the latter was Environment Minister. Dalmia was accompanied by two young women and his visiting card showed him to be the Honorary Consular General of a little-known African country, Ministry sources said. "We checked with the External Affairs Ministry and found that he was a fraud. But, in the meantime, he established direct contact with the Minister," insiders said.

Sources recalled that Dalmia was always escorted by young women whom he introduced as his secretaries. His fortunes shone when Raja became the Communications and IT Minister. Dalmia became the liaison man for a Chinese telecom giant in India, which had a significant presence in the southern and western regions of the country. He operated a slew of financial consultancy services across India and tax havens abroad.

The CBI team found concrete evidence, including photographs, to establish the Minister's close link with Dalmia in the two-day-long searches at his house. Finding evidence of several high-volume foreign transactions, the Central Bureau of Investigation brought the
matter to the notice of the Enforcement Directorate, but to date no progress has been made in the case.

"We were told to stay away from Raja and his men," a senior agency official maintained.

[The writer is Special Correspondent of ‘The Pioneer’ daily. The report published on the newspaper on May 3, 2010]

BSNL's Murky WiMax Deals

In shortlisting WiMax franchisees, the BSNL has violated its own guidelines which make it mandatory for the eligible bidder to have Rs 100-crore turnover per year for two consecutive years. Neither the shortlisted company, Ampoules & Auto Pvt Ltd, nor its re-born entity Starnet communication Pvt Ltd meets the criteria.

When Ampoules & Auto Pvt Ltd submitted the bid in June 2009, the company was non-functional. The company filed its last annual returns in 2004, which showed the pathetic situation of this firm engaged in automobile spare parts and medical supply. No money flow was shown in the last annual returns and the company said on affidavit that it was in the category of companies with less than Rs10-crore annual turnover.

During the bidding process in November 2009, the name of Ampoules was changed to Starnet Communications Pvt Ltd and six years of pending annual returns were filed in just two days. All these returns showed little money on the company balance sheet. Once again, in the mandatory affidavit filed before the Registrar of Companies (RoC), West Bengal, they admitted it belonged to the category of companies with below Rs10-crore turnover.

According to highly placed officials of the BSNL, they were under pressure from the Telecom Ministry’s “political master” to accept the manipulated annual returns showing inflated figures above Rs 100 crore per year.

Incidentally, in a rejoinder to an earlier report of The Pioneer on this subject, the BSNL said that, “The company (Ampoules & Auto Pvt Ltd) has submitted certified copies of balance sheet of last two years and has requisite turnover.” The rejoinder was issued by AGM (Adm & Legal) of BSNL Chennai unit.

This is not the end of the story. Raja’s men virtually took over the new-born Starnet Communications Pvt Ltd. One of its directors is 40-year-old Rajesh Ishwarbhai Bhatt, popularly known as Rajesh Bhatt, hailing from Mumbai. He is an engineer, now in Malaysia, and currently working as vice-president of Raja’s favorite company Wellcom Communications of Malaysia.

Raja had first tried to grant WiMax franchise to Wellcom Communications, after lobbying by its owner Dato Vijayakumar Ratnavelu, for Delhi and Chennai. Dato Vijayakumar, a Tamil-origin Malaysian, floated Wellcom Communications India Pvt Ltd with 15 per cent share of Raja’s close aide T Silvarajoo.

T Silvarajoo is a frequenter at Raja’s office/home and a sub-contractor of CPWD. Hailing from Raja’s home town Peramballur, Silvarajoo is also the manager of Dr C Krishnamoorthy’s quarry mine, which supplies pellets to the CPWD. Before becoming an MP, Raja operated his legal office in Krishnamoorhty’s building in his hometown.

Raja had also faced allegations of calling Justice Reghupathy of Madras High Court in June 2009 for granting bail to Krishnamoorthy in a criminal case.

Another director of Starnet is one Manoharan Shanmugasundaram of Chennai and reportedly close to Silvarajoo. This is his first corporate venture. The company had already filed application to change its registered office to Chennai.

The Pioneer’s previous expose about Raja’s link with Silvarajoo and Wellcom aborted his ploy to grant them WiMax franchise and the BSNL was forced to cancel the bidding process.

After the Malaysian link was exposed, Raja took a different route. BSNL was forced to short list a set of five shell companies floated by another power broker Sanjay Kapoor. These five companies floated on a single date, same witnesses, same notary were filled with Sanjay Kapoor’s wife, father in law, mother in law and even his driver. When this strategy was reported in The Pioneer, the PMO ordered cancellation of the entire procedures in Jun 2009.

The new tender was floated with the criteria of Rs 100-crore turnover for bidding. That process has also now got into controversy with Raja trying to bring his favourite Wellcom Communications via Starnet Communications via Ampoules & Auto Private Limited.

Incidentally, the fraud of changing Ampoules name to Starnet took place during the same period in November 2009, when CBI had launched a countrywide probe to in connection with the 2G Spectrum scam.

[The writer is a Special Correspondent of “The Pioneer” newspaper. This report is based on the series of reports appeared on Jan 27 – Feb 1 : 2010]

Raja defied PM, ignored Bhardwaj’s noting

[The Pioneer, October 28, 2009]

The 2G spectrum scam might not have taken place but for the clout that A Raja wielded in the UPA-I Government, when his party (the DMK) — as a major ally of the Congress — called the shots at the Centre. Documents available with The Pioneer show how the Telecom Minister got away with serious misdemeanour: He flouted Manmohan Singh’s written directions to take the PM’s clearance before acting on the matter; contemptuously dismissed a crucial suggestion by then Law Minister H R Bhardwaj for an EGoM to decide on spectrum licence auctioning; and claimed to have been enlightened (to go ahead in the manner he did) in a deliberation with senior Congress leader Pranab Mukherjee.

Bhardwaj was perhaps the first senior Minister then to smell a rat in Raja’s decision on spectrum allotment. On November 1, 2007, he forcefully advocated that an Empowered Group of Ministers (EGoM) be formed to decide the formalities in allotting the spectrum. Bhardwaj wrote, “In view of the importance of the case (2G spectrum allocation) and various options indicated in the statement of the case, it is necessary that the whole issue is first considered by an Empowered Group of Ministers and, in that process, the legal opinion of A-G (Attorney General) can be obtained.”

The then Union Law Minister was responding to an opinion sought by the Telecom Ministry on going ahead with the allocation of 2G spectrum on first-come-first-served basis and on prices fixed in 2001.

This sensible suggestion did not go down well with Raja. Without wasting time - on the following day, November 2, 2007 — a furious Raja wrote to the Prime Minister and questioned Bhardwaj’s wisdom in asking for setting up an EGoM.

The Telecom Minister’s letter is a classic example of arrogance. He wrote, “The Ministry of Law and Justice, instead of examining the legal tenability of these alternative procedures, suggested referring the matter to EGoM. Since generally new major policy decisions of a department or inter-departmental issues are referred to the GoM, and needless to say that the present issues relate to procedures, the suggestion of the Law Ministry is totally out of context.” (The emphasis is as in the letter.)

Raja also informed the Prime Minister that he wished to advance the cut-off date for the receipt of applications for the spectrum/licence from October 1, 2007, to September 25, 2007.

This was on the morning of November 2, 2007. The same afternoon, the Prime Minister — alerted by Bhardwaj’s noting on the mega scam-in-the-making — wrote back to the Telecom Minister and cautioned him against taking any measures without informing him. This was clearly a directive to freeze all action on 2G spectrum allotment.

“I would request you to give urgent consideration to the issues being raised with a view to ensuring fairness and transparency and let me know of the position before you take any further action in this regard,” the Prime Minister said.

In the two-page letter, Manmohan Singh also objected to Raja’s proposal to go ahead with the first-come-first-served model and cheap pricing. Singh instructed the Minister to adopt “correct pricing of spectrum and revision of entry fee”. The Prime Minister also asked Raja to clarify on the objections raised by TRAI over the first-come-first-served basis and the 2001 pricing for sale in 2008.

The unambiguity appeared lost on the Telecom Minister. Responding to the Prime Minister, Raja offered an evasive reply, though drooping with courtesy. The same evening, he wrote in his second missive to the Prime Minister, “I would like to assure you that all my decisions and endeavours are honestly aimed at the development of the telecom sector….” He then launched into a technical background on the telecom sector in the country. But not one word did he utter on the Prime Minister’s instructions to refrain from taking any decision without informing him (the PM). He also remained silent on the issue of auctioning.

After this flurry of exchanges, Raja suddenly went into a shell. Finally, breaking his silence 50 days after his last note to the Prime Minister, Raja wrote another letter to him on December 26, 2007. Therein, he claimed that he had received consent from the then External Affairs Minister Pranab Mukherjee and the then Solicitor General (currently Attorney General) Goolam Vahanvati to go ahead with the spectrum allocation.

It is here that the Telecom Minister got enlightened. “In these circumstances, the discussions with External Affairs Minister and Solicitor General of India have further enlightened me to take a pre-emptive and pro-active decision on these issues as per the guidelines and rules framed thereunder to avoid any further confusion and delay,” a grateful Raja stated.

It remains a mystery why Raja quoted Mukherjee and Vahanvati as both have no locus standi in allotting the 2G spectrum. The Prime Minister routinely acknowledged the letter on January 3, 2008, but said nothing more. Certainly, he never supported or endorsed Raja’s decisions, as the Telecom Minister is claiming ad nauseum.

Ironically, while Bhardwaj is out of the Cabinet in UPA-II, Raja continues in the Ministry, defending what is increasingly becoming an indefensible position.

[The writer is Special Correspondent of 'The Pioneer' daily]