What is 2G scam by the way?

Posted: October 3, 2011 in Politics
Tags: , , , , , ,

We are hearing about 2G scam and the developments happening in this case. But there are some people who doesn’t know what the exact issue is. One fine day I thought of reading about this and found a beautiful article in in.com, a part of which I am pasting here.

What is 2G?
Simply an abbreviation for second generation wireless telephone technology. In January 2008, 122 new licenses for the spectrum were issued to eight operators by the telecom ministry. However, when the auction of 3G services only two years later in 2010 fetched the government a whopping Rs 67,719 crore, questions began to be raised about why the 2G spectrum licenses hadn’t been auctioned off at market rates but at prices dating back to 2001.

Who were these operators?
Unitech, Swan Telecom, Loop Telecom, Videocon Telecommunications, STel, RCom, Vodafone Essar and MTS. Of these, Unitech and Swan received licenses despite having no prior experience in the telecom sector. Further, Swan Telecom who purchased the license for Rs 1537 crore, sold 45% stake to UAE-based telco Etisalat for Rs 4200 crore, and Unitech who purchased licenses for Rs. 1661 crore, sold 60% of the stake for Rs. 6200 crore to Telenor Asia. The hugely underpriced allocation of licenses is now believed to have caused the exchequer a loss of Rs 1.76 lakh crore.

How did the scam come to light?
Politician and leader of the Janata Party Subramanian Swamy first shot off letters to the Prime Minister demanding that action be taken against Raja after the corruption over allocation of the 2G licenses became apparent. Following inaction by the UPA, Swamy filed a criminal complaint with the Supreme Court and later suggested that the spectrum be reauctioned.

Who is A Raja?
At the time of the allocation of the 2G spectrum licences, A Raja, a politician from Tamil Nadu’s DMK party, was the Union Cabinet Minister for Communications and Information Technology. After investigations, it came to light that Raja had personally signed and approved a number of the questionable allocations of licenses and was thus charged with corruption for not issuing the licenses at current market rates and favouring some telcos over others. His personal aide RK Chandolia, and former telecom secretary Siddharth Behura were also arrested and Raja is currently being housed at Tihar jail in Delhi.

Who is Shahid Balwa?
He is India’s youngest billionaire, MD to India’s third largest real estate group DB Realty and promoter of Swan Telecom (renamed Etisalat DB), one of the companies that received licenses in the 2G spectrum allocation. He was arrested in February after investigations showed that Balwa had been responsible for channeling kickbacks for A Raja. The ministry of home affairs even alleged that Balwa had close link to underworld don Dawood Ibrahim. Shortly after his arrest, Balwa’s younger brother Asif and another DB group company head Rajeev Agarwal were also chargesheeted and subsequently arrested.

Who is Kanimozhi Karunanidhi?
She is DMK leader Karunanidhi’s daughter and a Rajya Sabha MP from Tamil Nadu. After the taped conversations between her and corporate lobbyist Niira Radia surfaced, the CBI investigations also revealed an apparent flow of Rs 214 crore (believed to be a kickback from the 2G allocations) from Balwa’s company to a Tamil language TV channel called Kalaignar TV where Kanimozhi owns a 20% stake and her mother Dayaluammal owns a 60% stake. She was chargesheeted by the CBI, her anticipatory bail plea was rejected on May 20 and she has now been sent to Tihar Jail.

Who is Niira Radia?
She’s a corporate lobbyist whose conversations with politicians, industrialists and journalists were made public. Transcripts of the calls Radia made to A Raja, Kanimozhi, Ratan Tata, Reliance Industries officials and other several high-ranking officials with telecom companies have been under investigation. It was alleged that Radia had a role to play in ensuring that Raja receive the portfolio of telecom minister and for helping at least four companies get 2G licenses because of her closeness to the then-telecom minister.

Barkha Dutt and Vir Sanghvi
Journalists Barkha Dutt and Vir Sanghvi were two of the many journalists whose conversations with Radia were part of the leaked transcripts. ‘Open’ and ‘Outlook’ printed transcripts of their chats with Radia, alleging that Barkha might have been passing on messages for Radia to politicians she was interacting with and that Sanghvi’s articles might have been directly influenced by suggestions that Radia made to suit her clients.

Why has P Chidambaram’s name come up?
A note sent to the Prime Minister’s office by Finance Minister Pranab Mukerjee earlier this year mentioned that Home Minister P Chidambaram could have prevented the 2G scam. Chidambaram, who was Finance Minister in 2008 at the time of the auction, has met party leader Sonia Gandhi and Manmohan Singh following the leak, and sources say that he even offered to resign. It is now up to the Supreme Court to decide if Chidambaram’s role in the scam is to be probed or not.


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