New Delhi, November 16
“A scarce and finite national asset” was allocated at less than its true value and on flexible criteria and procedures adopted to benefit a few operators. The regulator stood by as a helpless spectator while its recommendations were being either ignored or misused, says the damning performance audit report on the allocation of 2G Spectrum by the Comptroller and Auditor General of India. The report was tabled in both Houses of the Parliament today.

In one of the harshest and possibly unprecedented indictment of a Union Minister, the 77-page report censures the former Telecom and IT minister, A. Raja, for ignoring the advice of Ministry of Law, Ministry of Finance “ for no apparent logical or valid reasons”.

“ We have not given a clean chit to anybody. We have only based our report on the basis of documents at our disposal,” declared the Deputy Comptroller and Auditor General Ms Lekha Gupta when asked on what basis the other ministries, the Prime Minister and the Cabinet were absolved. In response to queries, the Department of Telecommunication, she admitted, had cited the letter written by Raja to the Prime Minister to inform the CAG that the Prime Minister’s Office was kept informed of the decisions.

In another first, the CAG report carries notings of the Cabinet minister in an annexure. Raja’s personal notings are part of the report and indicates how he had altered the ‘First-come-first-served’ policy. Contrary to established practice of determining seniority according to the date and serial number of receiving an application, Raja ordered that seniority be decided on the basis of who first complied with conditions of the Letter of Intent, such as bank guarantee and entry fee.

Auditors discovered that at least 13 applicants were ready with the Demand Drafts and some had even managed to secure bank guarantees although the Ministry had issued a press release at 2.45 pm on January 10, 2008, asking all applicants to assemble at DoT Headquarters within 45 minutes, by 3.30 pm, and collect letters in response to their application.

Compliance of the terms and conditions in case of 78 applications were made the same day and the remaining on the following day.

“Evidently, these applicants had advance information which enabled them to take advance action” although the time-limit for compliance was changed from 15 days to about half a day.

While the ministry or the DoT had no mechanism to ascertain the share-holding pattern of the applicants, the matter was not referred to the Department of Company Affairs , as was advised by the finance wing of the Department of Telecommunication itself.

Although the guidelines laid down that no entity could hold more than 10 per cent stake in two telecom service providers operating in the same Circle, Reliance Communication had shares far in excess in Swan Telecom, which concealed the fact. The application should have been rejected on that ground but Swan Telecom was allowed to re-submit a revised stake-holding pattern nine months from the date of application and declare that Reliance Telecom had divested their entire stakes in the company.