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2G SCAM

WHAT IS SPECTRUM SCAM? 2G licenses issued to private telecom players at throwaway prices in 2008 CAG: Spectrum scam has cost the government Rs. 1.76 lakh crore CAG: Rules and procedures flouted while issuing licenses 120 licenses were issued in a single day. 85 out of the 122 licenses issued in 2008 were issued to companies that did not satisfy the eligibility criteria set by The Department of Telecommunication, these licenses were issued to companies which were not directly involved in telecommunication sector and who sold major share of their corporate or in many cases, resold licenses to other telecommunication companies for higher rates. Arbitrary changes were made by the Department of Telecommunication in the cut off date, which led to cutting off many companies out of competition in the run to obtain license. WHAT ARE THE CHARGES ON FORMER TELECOM MINISTER A RAJA? Allegation In a joint investigation report prepared by Central Bureau of Investigation (CBI) and Income Tax Department the agencies allege that A.Raja could have received 3,000 crore (US$546 million) as bribe for bringing forward the cut-off date for applications for spectrum from the initial 1 October 2007 to 25 September 2007. The deadline switch eliminated many applications, enabling Raja to favour a few with spectrum. The agencies also alleged that he used bank accounts under his wife's name in Mauritius and Seychelles to channelize the kickbacks he received. A chargesheet filed by CBI alleges that Raja conspired with the accused, subverted the first-come first-served (FCFS) policy and waywardly redefined it to ensure that Swan and Unitech got 2G licences. He didnt auction the 2G spectrum or adopt some other market-determined methodology to determine its real valuation and instead benchmarked it to a rate discovered in 2001, when the telecom sector was at a nascent stage. NO PROCEDURES FOLLOWED Rules changed after the game had begun Cut-off date for applications advanced by a week Licenses issued on a first-come-first-served basis No proper auction process followed, no bids invited Raja ignored advice of TRAI, Law Ministry, Finance Ministry TRAI had recommended auctioning of spectrum at market rates FAVOURITISM, CORPORATES ENCASH PREMIUM Unitech, Swan Telecom got licenses without any prior telecom experience Swan Telecom given license even though it did not meet eligibility criteria Swan got license for Rs. 1537 crore, sold 45% stake to Etisalat forRs. 4200 crore Unitech Wireless got license for Rs. 1661 crore, sold 60% stake forRs. 6200 crore All nine companies paid DoT only Rs. 10,772 crore for 2G licences

MMS(B) |ROLL NO. 106

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