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Presented By:-

Mohammad Younis group

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What IS 2G ?y 2G means second-generation wireless

telephone technology.

y Second generation 2G cellular telecomnetworks were commercially launched onthe GSM standard in Finland in 1991.

y 2G introduced data services for mobile,

starting with SMS text messages.

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What IS Spectrum Scam ?Acc. To comptroller and auditor general(CAG)

o 2G licenses issued to private telecom players atthrowaway prices in 2008.

o 2G spectrum allocation had caused revenue loss of Rs1.76 lakh crore

o Rules and procedures flouted while issuing licenses.

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Parties involved

y Politiciansy Bureaucrats

y Corporations

y Media persons and Lobbyists

y Petitioners

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Politiciansy A. Raja, the Ex-Minister of Communications

and Information Technologywho was theminister when the controversial second roundof spectrum allocations took place.

y

Arun Shourie, the minister for Telecom during2003 in the previous BJP regime. It was himwho introduced the controversial technology,which allowed fixed line operators who hadpaid much lower license fees to offer mobile

phone services.y This gave an advantage to players like Reliance

and Tata Teleservices who managed to getmobile spectrum without paying the hefty feesthat earlier operators like BPL Mobile had paid

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Cont.y Pramod Mahajan, the minister for Telecom between 1999 and2003. Mr.Mahajan was the minister when the BJP Governmenttook the controversial decision to shift from a license fee based

regime to a revenue sharing model which was roundlycondemned both by political parties and by economic expert

y The biggest beneficiary of this abrupt shift in policy was RelianceInfocomm who gained thousands of crores of spectrum withoutpaying a dime in additional license fees.

y Pramod Mahajan and his friends and relatives are reported tohave received benami shares of Reliance Industries as a "gift"

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Bureaucrats involvedy Siddhartha behura, former telecom secretary who

served in the DOT at the time of the 2G allocation.

y P

radip Baijal, a bureaucrat who is alleged to haveimplemented policies that favored certain Telecomcompanies when he was heading the TRAI PradipBaijal, a bureaucrat who is alleged to haveimplemented policies that favored certain Telecom

companies when he was heading the TRAI .y Raja has made references to Baijal's decisions in 2003

as the basis for his decisions in 2008.

y R K Chandolia, private secretary of Raja.

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Corporations involved

y Unitech Group a real estate company entering the telecomindustry with its 2G bid; sold 60% of its company stake at hugeprofit to Telenor after buying licensing.

y Swan Telecom sold 45% of its company stake at huge profit toEmirates Telecommunications Corporation (Etisalat) afterbuying licensing.

y Loop Mobile

y Videocon Telecommunications Limited

y S Tel

y

Reliance Communicationsy Sistema Shyam Mobile (MTS) Sistema Mobile Russia

y Tata Communications

y Vodafone Essar

y Dishnet Wireless

y Allianz Infra.

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Media persons and Lobbyists

involvedy Nira Radia, whose conversations with politicians and

corporate entities were recorded by the government

authorities and leaked creating theN

ira Radia tapescontroversy.

y Barkha Dutt, anNDTVjournalist alleged to havelobbied for A. Raja's appointment as minister.

y

Vir Sanghvi, a Hindustan Times editor alleged to haveedited articles to reduce blame in the Nira Radia tapes.

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Petitionersy Subramaniam Swamy, activist lawyer and politician.

y Paranjoy Guha Thakurta, a journalist who was one

among the very first to write on the irregularities inthe awarding of2G spectrum allocation.

y Prashant Bhushan, on behalf of the Centre for PublicInterest Litigation.

y Anil Kumar, on behalf of the civil societyorganisationTelecom Watchdog

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What is CAG

The CAG is a typical file-based government auditingagency. It stresses on reporting deviations from set

procedures and policies .

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CAG Report on G Scam

Here are some of the points made by the CAG Report:y 85 firms suppressed facts, gave fictitious papers to DoTy DoT kept spectrum pricing issue out of GoM's purviewy A Raja ignored Prime Minister's, FM's and Law Ministry's

advicey Spectrum was rare national asset, should have been

auctionedy 2G spectrum allocated to new players at throwaway pricesy Undue advantage to Swan Telecom in allocation of

spectrumy Email ID of Swan Telecom shown as that of a Reliance ADA

group official

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Contd

y Spectrum allocated beyond contracted quantity to 9 firmsincluding Bharti, Vodafone, Idea, BSNL, Reliance, Aircel

y Idea and Spice not given spectrum on grounds of proposed

merger- this was against the rulesy Allocation of2G spectrum led to loss of Rs. 1.76 lakh crorey DoT did not follow its own practise of first-come-first-serve

in letter and spirity Calculation of loss based on 3G auction earlier this year

y Cut-off date for license letters advanced arbitrarily by aweek

y This went against time-tested procedures of governmentfunctioning

y Entire process lacked transparency

y Undertaken in arbitrary and inequitable manner

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CAG Reporty 2G licenses at throw away prices

y Rules bent, no procedures followed.

y Cut-off date advanced

y Swan telecom license 1537 crore, sold 45% stake : 4200crore

y Unitech Wireless license 1661 crore, sold 60% stake :6200 crore

y Licenses issued in 2008 , pegged at 2001 pricesy Law ministry, Finance ministry, TRAI advice ignored

y Government Revenue- 2G : 10,772 crore

3G : 1 lakh crore

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CAG indicts

Unitech Wirelessy Unitech has got license for 22 circles and it paid the

Rs.1661 crore license fees for each circle but the

company sale their 67.25% equity for Rs.6200 crore tothe Telenor a company ofNorway.

y Similarly Swan bought the licenses of 13 circles for Rs1537 crore and sold 45 per cent of equity to Etisalat for

Rs 4200 crore.y CAG said that if we see this deal then the fees for the

allotment of licence is between Rs.7758 crore to Rs.9100crore on the other way if it was not their then the govt.

will get the fees between Rs.58000 crore to Rs.68000crore for the 122 licence.

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Who is A. Raja?y Andimuthu Raja has come a long way from being a

lawyer in rural Tamil Nadu.

yThe former Communication minister who make the2G spectrum scam

y Allotted the licence which are given in 2008 at 2001prices of Rs. 1,658 crore.

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WHAT ARE THE CHARGES ON

FORMER TELECOM MINISTER ARAJA?

y CHEAPTELECOM LICENSES-

y

Entry fee for spectrum licenses in 2008 pegged at 2001prices.

y Mobile subscriber base had shot up to 350 million in2008 from 4 million in 2001.

y NOPROCEDURE

S FOLLOWED

-y Rules changed after the game had begun

y Cut-off date for applications advanced by a week

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Contd.y Licenses issued on a first-come-first-served basis

y No proper auction process followed, no bids invited

y Raja ignored advice of TRAI, Law Ministry, Finance Ministry

y TRAI had recommended auctioning of spectrum at marketrates

y FAVOURITISM, CORPORATES ENCASHPREMIUM-

y Unitech, Swan Telecom got licenses without any prior telecom

experience.y Swan Telecom given license even though it did not meet

eligibility criteria

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Contd.y Swan got license for 1537 crore, sold 45% stake to

Etisalat for 4200 crore.

y U

nitech Wireless got license for 1661 crore, sold67.25% stake for 6200 crore.

y All nine companies paid DoT only 10,772 crore for 2Glicences

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Response to scamy In earlyNovember 2010Jayalalithaa accused the Tamil Nadu

state chief minister M Karunanidhi of protecting A. Raja fromcorruption charges and called for A. Raja's resignation.] By mid

November A. Raja resigned.y In response, the Govt of India has replaced A Raja with Kapil

Sibal.He contends that the "notional" losses quoted are a resultof erroneous calculations and insists that the actual losses arenil.

y The CBI conducted raids on Raja and four other telecom officials- former telecom secretary Siddharth Behura, Raja's personalsecretary R K Chandolia, member telecom K Sridhar and DoTdeputy director general A K Srivastava on 8th December 201.

y

Raja, Behura and Chandolia were arrested on Feb 2nd 2011

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INDIA IN WORLDS EYES

y Foreign investors may view corruption in India as thecost of doing business.

y2G scandal is unlikely to hurt Indias investmentglobally.

y Corruption is Heterogeneous & multifaceted.

y Politicians, the civil service or even the judiciary in

select cases have not earned the necessary credibilityfor the job.

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The questions remain:

y Will companies that received undue favours lose the2G licenses?

y Raja is arrested for abusing official position to favourtelecom companies. Will there be criminalproceedings against them?

y Will the government admit that first come, first servedpolicy is f lawed and switch to auctions?

y Will the government probe the windfall stake sales oforiginal 2G bid winners?

y Will the government now admit that there was loss ofrevenue in 2G?

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