News » National

Updated: February 18, 2012 00:42 IST

Chidambaram may not be out of 2G thicket yet

Shalini Singh
Comment (20)   ·   print   ·   T  T  
P. Chidambaram
P. Chidambaram

In this News Analysis, Shalini Singh says a long-drawn legal battle is likely ahead.

Last week, the Congress party celebrated CBI Judge O.P. Saini's decision rejecting a petition that demanded Union Home Minister P. Chidambaram be named an accused in the 2G spectrum case. But a deeper reading of the judge's order, as well as of case documents with The Hindu, suggests those celebrations may be premature.

While letting Mr. Chidambaram off the hook, Judge Saini categorically states that he was a party to two critical decisions taken by jailed ex-Telecom Minister A. Raja. This, paradoxically, draws the Union Home Minister even deeper into the 2G vortex.

Saini contradicts Chidambaram

For months now, Congress crisis managers and Mr. Chidambaram himself have been insisting that he had, as Finance Minister, opposed Mr. Raja's plans to give away spectrum in 2008 at 2001 prices. Simply put, their argument is that Mr. Raja acted alone.

In October 2011, Mr. Chidambaram told India Today magazine: “Even after the 121 letters of intent were issued on January 10, 2008, the Ministry of Finance continued to argue that auction was legally possible, explored alternatives to auctions in view of DoT's objections and suggested updating the entry fee, adopting one of two methods that would yield an additional Rs. 3,028 crore or Rs. 3,400 crore per licence which could be charged up front when the licensee applied for additional spectrum beyond the start-up spectrum.”

Yet, while exonerating Mr. Chidambaram, Judge Saini, in his February 4 Order, arrived at just the opposite conclusion: that “he [Mr. Chidambaram] agreed with Raja not to revise or revisit the entry fee or spectrum charge as discovered in 2001”. [Emphasis added].

The contradictions go deeper. Judge Saini's conclusion supports the Prime Minister, who, on February 24, 2011, told the Rajya Sabha that the two ministers had agreed on spectrum pricing. If there is indeed an agreement, when was it struck and is it on the files?

New questions on Swan, Unitech profits

Judge Saini also finds that, “In the end, Mr. P. Chidambaram was party to only two decisions, that is keeping the spectrum prices at 2001 levels and dilution of equity by the two companies.” Concluding in the Home Minister's favour, he held: “These two acts are not per se criminal.”

However, the Supreme Court does not treat the Swan and Unitech transactions as mere equity dilution or capital infusion. Instead, it affirms that the Swan and Unitech transactions were windfall gains, stating: “This becomes clear from the fact that soon after obtaining the licences, some of the beneficiaries offloaded their stakes to others in the name of transfer of equity or infusion of fresh capital by foreign companies and thereby made huge profits.”

Official documents from January–May 2008 in the possession of The Hindu show that the government anticipated huge spectrum-linked valuations and profits by way of “rent seeking” behaviour of companies involved in such M&A's, well in advance of the Swan/Unitech deals. In fact, within 20 days of the scam, in a meeting between Mr. Chidambaram and Mr. Raja on January 30, 2008, and attended by the Finance and DoT secretaries, it was agreed that these entities should be valued and the government must recover its share of premiums arising from “trade in spectrum.”

Against this backdrop, Judge Saini's finding that Mr. Chidambaram was party to the “dilution of equity by the two companies” raises a key question: Why did the Finance Ministry not insist the government get its “share of the premium” from the Swan and Unitech transactions, despite the “huge profits” being earned by the promoters?

Official memos, minutes of meetings, letters and internal notes with The Hindu written on February 8, 11, April 7, 8, 16, 21, 24 and May 28, 2008 reveal that while Finance Ministry officials initially fought Mr. Raja's illegal moves, they later progressively diluted their stance.

The Ministry first insisted that all spectrum — including start-up spectrum — can legally be auctioned. It then capitulated to the DoT's arguments, allowing 4.4 MHz of start-up spectrum to be given without any price revision. Not stopping at this, it then went on to concede up to 6.2 MHz of spectrum at the 2001 price.

The new documents reveal, but fail to explain why the Finance Ministry softened its stand in 2008, from January 10, the day of the scam itself, by backing off on market pricing for spectrum. This softening extended from the time the licences were issued in February/March, down to April, when the new M&A guidelines were announced and spectrum allocation began, all the way till September/October 2008, when Swan and Unitech finally offloaded their equity for a huge profit. Each successive dilution by the Finance Ministry meant that North Block was acquiescing to additional hits to legitimate government revenue.

Other questions also arise from the contentious Office Memorandum from the Finance Ministry to the PMO of March 25, 2011 which shows the Finance Ministry first standing up to Mr. Raja and then backing off, only to later, on November 11, 2008 again seek revision of entry fee for all future licences given after January, 2009. The Finance Ministry's special accommodation only for spectrum awarded by Mr. Raja is unexplained. This document has been attacked for “inaccuracies” by Congress representatives in the JPC on 2G but the government has so far failed to explain its contents, save for a short statement from Pranab Mukherjee distancing himself from “the inferences drawn.”

The contradictions between Judge Saini's Order, the public positions taken by Mr. Chidambaram and the Prime Minister, the Supreme Court verdict, and the revelations arising from these new documents all seem to suggest a long-drawn legal battle likely lies ahead.

Keywords: 2G scam

More In: National | News

Factual mistake in your article:

In your article you have written that:

Quote-- Why did the Finance Ministry not insist the government get its “share of the premium” from the Swan and Unitech transactions,
Despite the “huge profits” being earned by the promoters? --UnQuote

When the shares are diluted the money doesn’t goes to the promoters. The money goes to the company’s account. Unless this money is withdrawn from the company or unless the promoters have sold their shares, a windfall profit can not be said to have been made.

from:  Pon Jagannath
Posted on: Mar 9, 2012 at 03:34 IST

Does india truly have a S.C, A president, proper fast track courts. TOwhat extent can our courts be pressurised & influenced like this. Do we have suitable laws to tackle influential people.s.c decision in baba ramdev csae & rajbala, is so strange ,what is obvious & no one gets punished for death of peaceful protest watched by whole nation on tv ,24/7, no progress on 2g except for min raja being in tihar for a year ,& all others virtually going scot free so far whats going on india. Is it DEMOCRACY OR AUTOCRACY?

from:  BAPTY.S
Posted on: Feb 25, 2012 at 18:56 IST

"Judge Saini also finds that, “In the end, Mr. P. Chidambaram was party to only two decisions, that is keeping the spectrum prices at 2001 levels and dilution of equity by the two companies.” Concluding in the Home Minister's favour, he held: “These two acts are not per se criminal.”" The Judge forgets that Chidambaram himself, had warned MM Singh of Legal problems,that will have to be faced,if what was going on was allowed.And it was allowed.A lawyer himself, admitting that he is GUILTY.At least these two could have prevented the scam.And that is TREASON,for you,if not for Saini,as these two MISUSED the executive powers vested in them to HIDE the facts from the nation at large,and for the SCAM to GO ON UNIMPEDED.
In any other JUST nation these two will be cooling their heels in Jail/s.Also,mid-term polls for the Lok Sabha in order.But where is the President Of India?

from:  Sadasivan
Posted on: Feb 16, 2012 at 22:29 IST

Shalini Singh's yet another investigative ,deep diving & eye-brow raising analytical path-breaking approach ! Creditable attempt indeed.

from:  avtar chauhan
Posted on: Feb 16, 2012 at 20:06 IST

Thanks to Shalini for a wonderfully informative article. Common sense says The government is both totally corrupt and this has huge security, financial implications for the country. Its clear that MMS was overridden when he answered Raja "I read your letter" when the loot was happening. Obviously the whole Congress right from Sonia gandhi should be involved. Every minister is playing legal and perception battles to say PC is totally incompetent but he is not criminally liable etc.....Had it been any other self respecting nation, by now this government would have been thrown out. Majority of media is sold out and Congress is brazening everything out and still has the arrogance to do so. 40 Billion USD to bring down the dynasty would be good deal to clean the country up....The fate of the nation and its well being is squarely in the hands of Supreme Court

from:  Vijay
Posted on: Feb 16, 2012 at 19:49 IST

As Union Cabinet Minister since 2004, Chidambaram allegedly committed fraud/crime u/s 121B , other sections of IPC and also u/s 13 of prevention of corruption Act, which are in public domain, law of the land yet take cognizance of offence, no investigation undertaken by investigating agencies in the country. Some of alleged fraud committed by him are: .1. Chidambaram election to Loksabha in 2009: A petition challenging the election of P. Chidambaram to the Lok Sabha from Sivaganga constituency in Tamil Nadu was filed in the Madras High Court in September 2009 by his AIADMK rival Raja Kannappan. 2. 2G SCAM: The Union Cabinet in 2003 had authorized the Telecom Minister and the Finance Minister to jointly decide the pricing and mode of allocation of the 2G spectrum, which also implied that if they could not agree on these, they should go back to the cabinet. If Chidambaram the then Finance Minister had any disagreement with the Telecom minister, he should have taken the matter to the Cabinet. 3. Stock market manipulator: As a Finance Minister, it is alleged that Chidambaram manipulated Indian stock market with introducing the policy of “ participatory note cash ’’ which means that FII (Foreign Investment Institutes ) can participate in trading in Indian stock market without registering with SEBI and RBI. 4. Fake currency notes As finance minister, Chidambaram insisted RBI on buying paper used for printing Indian currency notes from a London (UK) firm i.e. De La Rue, which also supplied it to Pakistan. This posed the risk of Pakistan intelligence agency ISI circulating fake currency notes in India. .5. Fraud voda fone- hutch deal: which led to tax evasion at tune of Rs 14000 crores 6. Azad fake encounter:It is alleged that Chidambaram has ordered killing of moist leader in fake encounter in A.P. 7. Chidambaram has ordered Delhi govt. to withdrawal case against Hotelier in Delhi in conflict of interest case. 8. Chidambaram ordered Ramdev crackdown in June 4 at Midnight. According to Subramaniam Swamy , Chidambaram has Rs 50,000 crores in foreign banks and he claims he had evidence to prove his allegations.

from:  ppreedy
Posted on: Feb 16, 2012 at 18:39 IST

Dr Swamy filed petition before trial court for making Chidambaram as co-accused in 2G scam, for establishing prime-facie whether Chidambaram had involved in crime or not, he submitted certain documents, which establishes Chidambaram is a party to decision in which govt. given radio waves licenses to certain private firm in 2008 with 2001 prices, trial court judge O.P.Saini accepted the fact that Chidambaram is party to a govt. decision. As per CrPC next step shall be, he could have sought an investigation in to the matter, only after investigation, criminal culpability of Chidambaram if any could have been established, without investigation report dismissing the petition at this stage, on 4th February in 2012 is highly erroneous. Collecting the evidence is the job of investigating agency/prosecuting authority, not the duty of complainant, in this case prosecuting authority is Govt. of India, accused is Home Minister in Govt. of India. CrPC only empowers criminal investigating powers to police, in this case CBI, not to petitioner. The CBI u/s 161 CrPC has to record the statements of persons supposed to be acquainted with the facts and circumstances of the case. In 2G scam case CBI not even recorded statement of Chidambaram u/s 161 CrPC. The same CBI had recorded statements of former Telecom Minister and former Finance Minister i.e. Arun Shorie and Jaswant Singh respectively. Both were Ministers before 2004, where as the crime occurred in 2008. Hence free and fair investigation by CBI shall only possible if P. Chidambaram steps down as Union Home Minister.

from:  kshitishree
Posted on: Feb 16, 2012 at 18:33 IST

the hole nation is aware
that raja alone didnt act.
Like Mr. Swamy well said he
just received a small
percentage of the scam money
the balance went to italian
family and P.Chidambaram and
of course to Karunanidhi.
All the rest of these has to
be in tihar and the nation
is waiting for this moment.
All of them are criminals
looting Indian peoples money

from:  karthik
Posted on: Feb 16, 2012 at 17:18 IST

Even if the Supreme court abslves of all accusations there will be some more unsatisfied persons to brush aside . Only criticising PC will not help in any way.PC did not involve in auctions of spectrum. Only he is a party to attend the interdepartmental meeting.To involve PC in auction is the motive to involve PM.Before next Parliamentary elections the same matter will come repeatedly in different versions with the ulterior motive of destabilisation.If PC is a culprit what about NarendraModi in Gujarat riots case.Criminal culpability accountability moral probity applies to all not only to Congress and the UPA Govt.

from:  asokan.a
Posted on: Feb 16, 2012 at 15:56 IST

Soon after Judge Saini's judgment was pronounced, the electronic media was gleefully telling viewers that Mr.Chidambaram had been totally exonerated by the court. No other government in India has received so much support from large sections of the national media as the UPA 2 is receiving.

from:  K.Vijayakumar
Posted on: Feb 16, 2012 at 14:50 IST

That Mr Chidambaram is deeply involved is a settled fact notwithstanding the Judge Saini's clean chit. Appllete court can not be blind to the facts stated and correspondance available.PMs statement in parliament now stands contradicted.SC could not have scrapped the licences without weighing the pros and cons of the situation arising. SC remaks are very scathing and forthright. Any appellete authority can not be blind to these facts.
However long drawn the battle may be by 2014, Mr Chidambaram should be prosecuted.

from:  K P Sastry
Posted on: Feb 16, 2012 at 13:22 IST

With the available background information, I wish, the following questions answered. 1. What were the factual information and data that made the government accpet 'first come first served' policy against the earlier uggestion/recommenndation of the then Finance minister and the Prime Minister to the DOT to explore the auction route? 2. The government has now transferred the blame on to the concerned minister of DOT for wrongful implementation. Is there no moral/costitutional responsibility on the PM?

from:  S.Rajagopalan
Posted on: Feb 16, 2012 at 11:46 IST

Thank you for a well written article on the nuances of the case.

from:  gopiila
Posted on: Feb 16, 2012 at 10:03 IST

I have always admired Shalini Singh's incisive articles - specially on 2G imbroglio, which give some insight into the issue at large! Well done again, Ms Shalini! I find it hard to digest why the PM steadfastly supports the HM when the truth is not supportive for the cause! There is some soft peddling in the lower courts too, suggestive for commoners like I to wonder if the Government is exerting some pressure to go slow on this issue of 2G scam?!

from:  PS Nath
Posted on: Feb 16, 2012 at 08:09 IST

What is the government doing to recover the bribe money from A.Raja? Is Chidambaram helping to move the money for Raja and other cronies while Raja is the scapegoat? Has the government recovered any money from this or other scandals such as Kalmadi's?

from:  Gururaj
Posted on: Feb 16, 2012 at 07:38 IST

Thank you Hindu for publishing and the author Shalini Singh for a well-studied assessment of the 2G issue, leading to the conclusion that the legal battle is not yet over. In this context, we have also to express thanks to the one-man-army of Dr. Subramanian Swamy and Advocate Prasanth Bhushan, who appeared for The Centre for Public Interest Litigation, without the efforts of whom the general public would have been totally in the dark about the modus operandi of spectrum allocation.

from:  Dr. K.V.Mallan
Posted on: Feb 16, 2012 at 07:07 IST

Criminality was in the issue of licences to a favoured few by manipulating the First Come First Served principle. The decision to keep the entry fee at 2001 level was as per TRAI recommendation with a view to give a level playing field to the new entrants-and was in conformity with the New Telecom Policy 1999, which emphasised growth, affordability, competition and level playing field. TRAI was however, criticised by the Supreme Court for giving this advice. So in a way the Court was questioning the wisdom contained in the NTP 1999, on implementation of which only the tariff fell below 50 paise per min and the growth catapulted to 900 million. In fairness to TRAI, while it advised to keep 2G entry fee unchanged, it asked DoT to auction 3G. This was implemented by Raja in 2010 to fetch Rs 16750 cr for a pan-India licence as against Rs 1659 cr realised for 2G in 2001. As a high entry fee will lead to a high tariff and therefore auctioning goes against the interest of the subscribers.

from:  C S JACOB
Posted on: Feb 16, 2012 at 06:03 IST

In Saini's 70-para judgment, 67 paras are against P.Chidambaram. It is not "long-drawn legal battle likely lies ahead", but in a short while P.Chidambaram will be in Tihar.

from:  Narayan Viswam
Posted on: Feb 16, 2012 at 04:04 IST

I do not understand why such a long delay in a clear matter. PC wants to buy time and others are agreeing with it. Why ? Arrest him or exonerate -- what is the problem with all the evidence on hand ? Not only that why the Congress and the PM is afraid of PC and Kabil too.

from:  Mani Iyer
Posted on: Feb 16, 2012 at 03:53 IST

I was surprised to see this column in Hindu and looked for the author of the article. Ofcourse it is Shalini Singh, the same journalist who posted all the 2G scam articles in Times of India. I guess you moved to Hindu recently. Good luck and would love to see more of your articles. This scam would have been pushed under the carpet if not for few people like you who managed to bring into public domain. Thanks for writing a fine article. Wish things move faster on the judicial front.

from:  Chakri
Posted on: Feb 16, 2012 at 02:49 IST
Show all comments
This article is closed for comments.
Please Email the Editor

Tamil Nadu

Andhra Pradesh

Other States






Recent Article in National

External Affairs Minister Sushma Swaraj speaks in the Rajya Sabha in New Delhi on Wednesday.

Bill to ratify LBA with Bangladesh passed in Rajya Sabha

Union Minister for External Affairs Sushma Swaraj won the day for the government by reaching out to the Opposition »