CAG loops Raja, again PDF Print E-mail
Thursday, 14 October 2010 00:00
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That's why the telecom ministry wants to gag the CAG, with an opinion that's bad in law

72 of the 122 firms, like Loop, that got licenses, the CAG says, were not eligible even under the ministry's norms


The CAG’s attempts to prick holes in telecom minister A Raja’s defence just don’t seem to stop and that, of course, is why new telecom secretary R Chandrashekhar is trying to gag the CAG through an opinion that’s bad in law (more on this later), with the support of the law ministry. It appears that in its hurry to favour a few firms, the CAG says Raja’s ministry never even checked if these companies had got their paperwork right.

So, in the case of Loop Telecom, a software company, the CAG pointed out, while the company submitted its application on September 3, 2007, the company’s articles of association, which were altered to allow it to enter the telecom business, were registered with the Registrar of Companies (RoC) only on September 28, 2007—three days after the cutoff date of September 25, 2007. The resolution that allowed it to raise its capital from Rs 5.2 crore to the required Rs 131 crore was submitted to the RoC on October 29, 2007 and was certified by the company secretary only in December. The same thing happened in the case of others like Unitech and Allianz Infratech—as many as 72 licences of the 122 given out, the CAG says, were given to applicants who did not meet the eligibility criterion prescribed. Had they been asked to fulfil the criterion, this would have pushed them down the spectrum queue and, given the shortage, they’d never have got any.

What’s hilarious is the way the ministry has replied to the CAG’s comments. So why didn’t the ministry address the issue of getting the best price for the licences, the CAG asked? “Government treats the telecom sector as infrastructure sector where the broad policy of taxes and regulation…are promotional and where revenue considerations play a secondary role”; the issue of auctions to get the best entry fee is dismissed as “incidental entry fee”.

Wasn’t it unfair to allow Reliance Communications to get a GSM licence a day before the new dual technology policy was announced, more so given that Tata Telecom applied for the GSM licence only after the policy was announced and so never even got all the spectrum it applied for, the CAG asked. The ministry says the decision on dual technology was taken on October 17, 2007, Reliance, HFCL and Shyam Telecom got an in-principle approval on October 18 and the policy was announced on October 19, and then “since no application of M/s Tata Teleservices for dual technology was pending with the Department, it was not given LoI on 18/10/2007 along with others… in view of above it may be seen that no undue benefits were given to Reliance Communications...’! Really cute, huh?

What of the fact that the telecom secretary and the member finance were of the view a more detailed discussion was called for before handing out the licences on the cheap? The ministry’s reply to CAG says, “Hon’ble MoC&IT (that’s A Raja) observed on the file ‘...These types of continuous confusions observed on the file whoever be the officer concerned does not show any legitimacy and integrity but only their vested interest’…”

Were valuable national assetssquandered? What’s important, the ministry said, was that teledensity had improved dramatically. “It is pointed out that in March 2007, the rural tele-density was only about 6% and the total tele-density was about 18%…It is only after May, 2007 when Hon’ble MoC and IT took over … and particularly after the grant of new UAS licences in 2008, the teledensity … started increasing at an unprecedented rate … by June 2010, the rural teledensity has increased to about 26% and the all-India teledensity has reached 57%”. In other words, the ends justify the means. Well Trai data show new licensees like Loop, HFCL, Sistema, Unitech, STel and Videocon had just 18 mn of the country’s 635.5 mn subscribers at the end of June 2010. Sure Reliance and Tata, both beneficiaries of the new dual technology regime, had 111 mn and 72 mn respectively, but this is not out of line with their subscriber base growth before they got their new GSM licences, as well as the overall industry growth.

There is then the question of whether Chandrashekhar is right when he said the CAG has no jurisdiction to look at government policy.

Interestingly, when the CAG asked Raja’s ministry why it never asked an EGoM to look into the matter, the ministry said “the need for forming an EGoM arises when a new policy is being framed. Whereas, in this particular issue, no new policy…was being framed”! That is, Raja was just issuing licences as per the current practice. Well, all such licence issues can be appealed under Section 14 of the Trai Act.

What do the courts have to say about this? When, in 2001, the Telecom Dispute Settlement and Appellate Tribunal (TDSAT) said it could not examine the Wireless in Local Loop policy as its purview didn’t extend to government policy (the argument Chandrashekhar is making now), the SC said it was indeed part of the TDSAT’s jurisidiction—the lawyers for the cellular operators who had filed the case were P Chidambaram (currently home minister) and G Vahanvati (currently Attorney General).

In the current case, one of the aggrieved parties, STel, went to the high court, which ruled Raja’s actions were wrong. The court’s division bench upheld the judgement, and even the SC refused to turn down this judgment. What was STel appealing? The same decision that is now being called ‘policy’. Well, the highest court in the land thinks it can be appealed. So what is the ministry talking about?

Sir Walter Scott would have described it saying “Oh! What a tangled web we weave, When first we practice to deceive!” but I much prefer Raja’s “these types of continuous confusions observed on the file whoever be the officer concerned does not show any legitimacy and integrity but only their vested interest”.


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