Leaning heavily on a secret note on 2G pricing prepared by the Union Finance Ministry and sent to the PMO with Finance Minister Pranab Mukherjee's approval, Janata Party president Subramanian Swamy on Wednesday urged the Supreme Court to order a CBI probe against Union Home Minister P. Chidambaram for his role in the sale of valuable spectrum at throwaway prices.
The 25 March 2011 document, written by P.G.S Rao, Deputy Director in the Finance Ministry, to Vini Mahajan, Joint Secretary in the PMO, on the allocation and pricing of 2G spectrum, broadly suggests that Mr. Chidambaram, who was Finance Minister at the time the spectrum was sold on a first come, first served basis by the former Telecom Minister, A. Raja, could have insisted that the valuable resource be auctioned. The covering letter to Mr. Rao's note says: “Finance Minister Pranab Mukherjee approved the note after personally inspecting the 11-page document.”
The document referred to a Department of Telecom (DoT) letter, dated November 29, 2007, recommending both the revision of the entry fee fixed in 2003 and the adoption of the auction methodology for determining spectrum usage charges. It said the position paper was prefaced with a note dated January 9, 2008, which inter alia mentioned that a meeting of the full Telecom Commission, scheduled for January 9, 2008, was postponed to January 15, 2008.
It said: “This position paper was used by the then Finance Minister [Mr. 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 DoT would have been forced to cancel the 2G licences that are now the subject of a criminal investigation had Mr. Chidambaram, as Finance Minister, stuck to his original demand for auctioning the initial ‘start-up spectrum' of 4.4 MHz each allotted to the 2008 licensees.
The document said that the Ministry “implicitly agreed to the imposition of the same entry fee as that prevailing in 2001 for licences allotted up to December 31, 2008.” This despite a November 22, 2007 note by the then Finance Secretary and present RBI Governor, D. Subbarao, that the 2001 mobile licence entry fee of Rs.1,650 crore was applied and not the market price at that time.
The note explained how there was a “consensus” between Mr. Raja, who is now at the centre of the CBI's investigations into the 2G scam, and Mr. Chidambaram not to charge more for spectrum up to 4.4 MHz.
The note to the PMO said the DEA was legally within its rights to revise the spectrum pricing, even though the Letters of Intent were already granted and though there was anticipation of litigation from companies which were already allocated 2G spectrum licences.
