Is case made out only against Bharti Cellular or can beneficiary companies also be prosecuted, CBI asks AG

A sharp divergence of opinion has emerged over prosecuting the public servants and three cellular companies booked by the Central Bureau of Investigation in a case of alleged irregularities in the award of additional spectrum in January 2002. The differences have been revealed in a report forwarded by the CBI to the Department of Personnel and Training (DoPT), seeking legal opinion from the Attorney General of India.

The agency had, about a year ago, registered the case naming Bharti Cellular Limited (now Bharti Airtel Limited), Hutchison Max Private Limited (now Vodafone Essar) and Sterling Cellular Limited (now Vodafone Essar Mobile Services ) besides the then Telecom Commission Chairman and Department of Telecom Secretary Shyamal Ghosh, the then DoT Deputy Director General Jagdish Rai Gupta and other unknown officials of the department.

According to the CBI, Bharti Airtel — the largest beneficiary — gained Rs. 418.50 crore and Vodafone, Rs.279.36 crore, from additional spectrum allocations, while an undue pecuniary advantage of about Rs.508.22 crore accrued to the beneficiary companies, causing a corresponding loss to the exchequer.

The report mentions a difference of opinion between the Investigating Officer (IO), his supervisors, the Senior Public Prosecutor and the Special Public Prosecutor on the issue of prosecution of the accused persons and companies. While the Special PP has opined that no case is made out against any of the accused companies or their promoters, which has been endorsed by the CBI Director of Prosecution, he has recommended prosecution against one accused public servant and the then Minister for Communications Pramod Mahajan, who is no more and hence has to be named in the column 12 of the charge sheet.

The IO and the Senior PP have recommended prosecution of one accused public servant, one private person of an accused telecom company and unknown officials of two accused companies, besides three accused firms. No action has been recommended against a second public servant, citing him as a prosecution witness. In disagreement with the IO and the Senior PP, senior CBI officers have not recommended action against the other two accused companies.

In view of the divergence of opinion, the CBI has sought the Attorney General’s opinion on whether a case is made out against Bharti Cellular alone or whether the other two beneficiary companies can also be prosecuted through authorised representatives. It has also asked whether a case is made out against the promoter of Bharti Cellular along with the accused public servants as recommended by the Senior PP and various CBI officers, and if not, whether Bharti Cellular can alone be prosecuted through authorised representatives. Further, the agency has sought to know whether the present companies formed after amalgamations are liable for the alleged criminal liabilities of the three erstwhile accused companies.

The agency found that while the technical committee of the DoT recommended allotment of additional spectrum beyond 6.2 MHz only after the operator had reached a subscriber base of 9 lakh, the requirement was scaled down by the accused government officials to 4 lakh for applying for additional spectrum and 5 lakh for actual allocation.

The IO’s findings allege that the accused companies were party to the criminal conspiracy and where two per cent Adjusted Gross Revenue (AGR) should have been charged for the extra allocation, only one per cent was charged. The CBI points out that this reduced subscriber base of 4-5 lakh was well within reach of Sterling Cellular and Bharti Cellular in Delhi and of Hutchison Max in Mumbai.

The accused companies were the first to be allocated additional spectrum beyond 6.2 MHz up to 8 MHz in 2002 and subsequently up to 10 MHz in 2003.

In the letter to the DoPT, the agency claims to have found evidence purportedly indicating that the conspiracy was hatched mainly to benefit Bharti Cellular, although the decision to allocate extra spectrum benefited many telecom companies.

Only Bharti Cellular had reached the subscriber base of 4 lakh by December 2001 and 5 lakh on January 31, 2002, the day it was decided to allocate additional spectrum. The agency states that close to the decision date, applications seeking additional spectrum were received from Bharti Cellular.

The agency has pointed out that the accused public servants did not wait for a report prepared by a joint team of DoT and Bharti Cellular officials, set up to examine the issue of congestion and service quality in Bharti Cellular network, which had given “adverse” findings. The accused officers did not consider the findings before taking the decision on January 31, 2002, alleges the CBI.

The CBI also claims to have found evidence against Shyamal Ghosh, pointing to his purported role in the conspiracy. It has alleged that Mr. Ghosh took decisions overlooking set procedures and even discarded his earlier decisions in this matter. The agency also alleges to have found an undue haste on the part of the then Minister for Communications in taking the decision for allowing additional spectrum.