Former Telecom Minister A Raja’s bid to rope in Prime Minister Manmohan Singh and then Finance Minister P Chidamabaram in the 2G case was predicted accurately by a weekly newspaper, which is considered close to one of the telecom companies caught in the 2G scam, a week ago.
Siginificantly, Raja’s stand in the court came a day after the DMK leaders concluded a strategy session in Coimbatore, leaving their chief M Karunanidhi to decide on what to do next– regarding the Congress.
DMK insiders said Raja’s move had the backing of Karunanidhi whose daughter, kanimozhi, remains locked up in Tihar jail. This was his way of getting back at the Congress for his daughter’s plight, DMK insiders said.
Karunanidhi’s line is “you save my daughter and we save you” or else, the UPA government must be ready for a counter-attack.
So when Raja told the special CBI judge that the issue of sale of equity by spectrum licencees was discussed with the PM and Chidambaram, the government went into a tizzy.
Raja told Special CBI Judge O P Saini there was nothing wrong in his decision of not auctioning 2G spectrum and that he was merely following the policies pursued by his predecessors and the NDA government.
Senior Advocate Sushil Kumar appearing for Raja, now behind bars, said when Home Minister Chidambaram was the Finance Minister he had told the Prime Minister that dilution of shares by the accused licencees to attract FDI did not amount to sale of licence.
Arguing that sale of equity was not sale of licence, Kumar said Raja could not be accused of corruption in the controversial 2G spectrum allocation.
Raja’s deposition upset Chidambaram, who quickly sought to extricate himself by declaring that “the only issue examined by him as Finance Minister in 2007 and by the Prime Minister was if the two new telecom licencees Swan and Unitech were divesting i.e. selling their stake or diluting shares through issue of fresh equity.”
Chidambaram even went on to attack the BJP by saying the party was targeting the UPA ministers like him because he had take on the Hindu terrorist elements.
His son, Karthi Chidmabaram, went on Twitter to say there was “difference between dilution and divesting” even as his father was livid that BJP chief Nitin Gadkari did a televised press conference, asking him and the PM to resign.
Chidambaram said, “The question was whether it was divestment (sale) of promoter’s equity or dilution of equity by issue of fresh shares… This was examined by the Ministry of Finance.
“Both were cases of dilution of equity by issue of fresh shares. The Prime Minister wanted to know if it was a case of dilution of equity or divestment.
“I do not think there was any sale of spectrum. The spectrum was allocated to the company which got licence and the spectrum remained with the company. The company issued fresh shares,” he said.
No sooner, telecom minister Kapil Sibal was also directed by the PM to clear the air.
Why is the government rattled?
As the weekly newspaper, Sunday Guardian, which is edited by M J Akbar, reported eight days ago, Raja is relying his defence on a letter he had written to the Prime Minister on 26 December 2007, a fortnight before the allocation in January 2008.
Raja, according to his legal team, wants to prove that the decisions on 2G were “not taken exclusively” by him.
Quoting a letter written by Raja many months after the allocation on 7 November 2008, the BJP pressed for investigation of the role played by Chidambaram as the then Finance Minister in the 2G scam in facilitating a “cover-up”.
Raja’s letter to the PM, D.O. No. 260/M(C&IT)/VIP/2007, begins by significantly stressing the point that besides the correspondence, there have also been “personal discussions” with the PM on “issues related to telecom sector”.
Raja listed his decisions in an annexure to the letter to the PM which included the controversial first-cum-first-served policy for issuing Letter of Intent to the applicants for the licences. The PM had acknowledged the receipt of this correspondence on 3 January 2008, days before the decisions were implemented.
On the issue of Letter of Intent, Raja states in the letter, “DOT follows a policy of First-cum-First Served for granting LOI to the applicants for UAS licence, which means, an application received first will be processed first and if found eligible will be granted LOI.”
“The First-cum-First served policy is also applicable for grant of licence on compliance of LOI conditions,” the letter stated. “Therefore, any applicant who complies with the conditions of LOI first will be granted UAS licence first.”
“This issue never arose in the past as at one point of time only one application was processed and LOI was granted and enough time was given to him for compliance of conditions of LOI. However, since the government has adopted a policy of ‘No Cap’ on number of UAS licences, a large number of LOI’s are proposed to be issued simultaneously.”
“In these circumstances, an applicant who fulfils the conditions of LOI first will be granted licence first, although several applicants will be issued LOI simultaneously. The same has been concurred by the Solicitor General of India during the discussions,” the letter states.
“Since the file for issue of LOI to all eligible applicants was approved by me on 2-11-2007,” Raja states in the letter, “it is proposed to implement the decision without further delay and without any departure from existing guidelines.”
The PM’s acknowledgement of the letter on 3 January 2008, states that he had received the letter “regarding recent developments in the telecom sector”.
In this letter, Raja also refers to one of the crucial TRAI recommendations. “The recommendations of TRAI were received by DOT on 29-08-2007 which suggested that ‘No cap be placed on the number of access service providers in any service area’.”
“This recommendation was accepted by the department on 17-10-2007 in order to encourage more competition in the telecom sector and decided to grant new UAS licences,” the letter added.