By

Sreedeep Sinha

SCAM
 Contents
• About 2G.
• What is 2G spectrum scam?
• Who are Involved?
• Media Response.
• Market Response.
• Steps Taken by Govt.
• Political Response to Scam.
• Conclution & Your Thoughts.
 What is 2G?
• ‘2G’ means: “Second-Generation Wireless
Telephone Technology”

• 2G is relatively new technology in the field of mobile.

• 2G is not just a network but a good technology.

• 2G spectrum was the revolutionary technology in their

time,
it comes with some more benefits.
1. SMS facility was first started with network.
2. Safe for the use, means security level was high.
3. Environmental conditions was very good for this network & no
network shortage was there.
 History of 2G

• 2G spectrum technology was first launched

in 1991 in Finland only in the GSM mobile
phones but this is not the latest technology
that we are using. As 2G was launched in
1991 so many other technologies overcome it
with 2.5G, 2.75G technologies but the latest
technology in present world is 3G.
 India in the World's Eyes
Wharton's Singh feels foreign investors may view corruption in
India "as the cost of doing business." But the country would attract
more foreign investments and business interest if it had a stronger
reputation for being non-corrupt, he says. Investors are attracted
to India because "there are not too many other options that are
particularly attractive ... but this can change rather quickly,

The 2G scandal is unlikely to hurt India's investment appeal

globally, according to Alok Shende, principal analyst and founder
director of Ascentius Consulting. "Foreign investors may actually
perceive the role of courts and rule of law, the role and
independence of the CAG and the will of the vernment to unearth
this scam as a positive attempt to spring-clean all that was
wrong,"
 What do you mean by 2G scaN?
The 2G spectrum scan involved officials and ministers in the
Government of India illegally undercharging mobile telephony
companies for frequency allocation licenses, which they would use to
create 2G subscriptions for cell phones. According to a report submitted
by the Comptroller and Auditor General based on money collected from
3G licenses, the loss to the exchequer was

176,379 crore (US$38.27 billion). The issuing of the 2G licenses

occurred in 2008, but the scam came to public notice when the Indian
Income Tax Department investigated political lobbyist Niira Radia and
the Supreme Court of India took Subramaniam Swamy's complaints on
record [With Case type:Writ Petition (Civil),Case No:10, Year:2011].
The case details of the main PIL filed with the supreme court is
Type:Writ Petition (Civil),Case No:423, Year:2010.
 Who is this Person?

One of the main person behind the

India’s Largest Corporate Fraud.

A. Raja (Born May 10, 1963, Perambalur, Tamil Nadu, India) is an

Indian politician from the Dravida Munnetra Kazhagam(DMK) political
party. He is a member of the 15th Lok Sabha representing the Nilgiris
constituency of Tamil Nadu. Raja was first elected to the Lok Sabha in
1996 and first served as minister of state from 1999 to 2003. On being
re-elected to the Lok Sabha in 2004, he became a cabinet minister in
the UPA government. In 2007, he became cabinet minister for
communication and information technology. On being re-elected in
2009 he was again appointed cabinet minister for communication and
information technology until being tainted in the 2G spectrum scam
and resigning in 2010.
WHAT ARE THE CHARGES ON
FORMER TELECOM MINISTER A
RAJA?
CHEAP TELECOM LICENSES
 
Entry fee for spectrum licenses in 2008 pegged at 2001 prices
Mobile subscriber base had shot up to 350 million in 2008 from
4million in 2001.
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
for Rs.4200 crore.
• Unitech Wireless got license for Rs. 1661 crore, sold 60% stake
for Rs. 6200 crore.
• All nine companies paid DOT only Rs.10,772 crore for 2G
licences.
Corporate personalities involved

Anil Ambani - Reliance Group (ADAG)

Shahid Balwa - DB Realty and DB Etisalat (Swan Telecom)
Vinod Goenka - Dynamix Group
Venugopal Dhoot - Videocon Group
Prashant Ruia - Essar Group

All of them have either been question by the CBI or are

prospective suspects in the scam.
Media persons and Lobbyists involved

Nira Radia, a former airline entrepreneur turned

corporate lobbyist whose conversations with
politicians and corporate entities were recorded by
the government authorities and leaked creating
the “Nira Radia tapes controversy”.

Barkha Dutt, an NDTV journalist alleged to have

lobbied for A.Raja's appointment as minister.

Vir Sanghvi, a Hindustan Times editor alleged

to have edited articles to reduce blame in the Nira
Radia tapes.
 Impact on stock markets
• The first casualty in Stock Markets once Raja was arrested
was DB Realty.
• DB Realty had given 200+ crores to Kalaignar TV
(owned by Karunanidhi's Wife) .
• The news led to 20% fall in the stock prices of DB Realty.
• Sun TV had its shares fall by 10% on the next day following
rumours of Kalanidhi Maran having stake in Kalaignar TV.
• Sun TV COO refused the allegations. Swan Telecom Chief
Balwa was arrested on Feb 8 and this led to rumours of
links with Anil Ambani's Reliance ADAG and it led to 20%
fall of his stocks. Its reported that nearly 2 Billion USD
was eroded from his stocks .Spicejet stocks went down
after reports of investigation on Maran's recent takeover of
Spicejet.
 Shortfall of money

A. Raja arranged the sale of the 2G spectrum licenses below their

market value. Swan Telecom, a new company with few assets,
bought a license for 1,537 crore (US$333.53 million). [15] Shortly
thereafter, the board sold 45% of the company to Etisalat for
4,200 crore (US$911.4 million).

Similarly, a company formerly invested in real estate and not

telecom, the Unitech Group, purchased a license for 1,661 crore (
US$360.44 million) and the company board soon after sold a 60%
stake in their wireless division for 6,200 crore (US$1.35 billion) to
Telenor
 Relationship between media
&
government

Media sources such as OPEN and Outlook reported that

Barkha Dutt and Vir Sanghvi knew that corporate lobbyist
Nira Radia was influencing the decisions of A. Raja. The
critics alleged that Dutt and Sanghvi knew about corruption
between the government and the media industry, supported
this corrupt activity, and suppressed news reporting the
discovery of the corruption.
 Ratan Tata petitions over
Tape leak

The tapes leaked to the public include conversations between

Nira Radia and Ratan Tata. Tata petitioned the government to
acknowledge his right to privacy and demanded accountability
for the leak, with the Minister for Home Affairs, CBI,
Indian Income Tax Department, the
Department of Telecommunication, and the
Department of Information Technology as respondents in the
petition.
Persons involved in 2G Spectrum
Scam

• Nira Radia
• M.Karunanidhi
• A Raja (Telecom minister)
• Arun Jaitley
• Barkha dutt (Journalist)
• Arun Shourie
• Pramod Mahajan
 Corporations involved
Unitech Group:
A real estate company entering the telecom industry with its 2G bid; sold
60% of its company stake at huge profit to Telenor after buying licensing
(Including land values properties for towers).
Swan Telecom:
It sold 45% of its company stake at huge profit to Emirates
Telecommunications Corporation (Etisalat) after buying licensing.
Videocon Telecommunications Limited
Reliance Communications
Sistema Shyam Mobile (MTS) – Sistema Mobile Russia
Tata Communications
Vodafone Essar
Loop Mobile
S Tel
Dishnet Wireless
Allianz Infra
 Steps taken by Government
after Scam

Government of India take some important steps looking forward in

this Scan:
• Set up a special branch of CBI to look into the matter.
• Telecom Minister resigns his post after Scan.
• A Raja also arrested by the Police.
• CBI is also interacting with the brothers of A Raja and
also some business men.
 Response to scan

• In early November 2010 Jayalalithaa accused the Tamil

Nadu state chief minister M Karunanidhi of protecting
A.Raja from corruption charges and called for A. Raja's
resignation. By mid November A.Raja resigned.

• In mid November the comptroller Vinod Rai issued show-

cause notices to Unitech, S Tel, Loop Mobile, Datacom
(Videocon), and Etisalat to respond to his assertion that all
of the 85 licenses granted to these companies did not have
the up-front capital required at the time of the application
and were in other ways illegal.
 Response to scan

• In response to the various allegations , the Govt of

India has replaced the then incumbent Telecom
minister ,A Raja with Kapil Sibal who has taken up
this charge in addition to being the Union minister
for Human Resources Development.Mr Sibal
contends that the "notional" losses quoted are a
result of erroneous calculations and insists that the
actual losses are nil.
 Response to scan
• The CBI conducted raids on Raja and four other
telecom officials - former telecom secretary
Siddharth Behura, Raja's personal secretary R K
Chandolia, member telecom K Sridhar and DoT
deputy director general A K Srivastava on 8
December 2010.
• Raja, Behura and Chandolia were arrested on Feb
2nd 2011.
 Corrupted Administration Of India

If we talk about the Administration of India we all must say it is not a

well maintained or a well centralized Administration as comparison
to other Asian countries.

Poor Administration of India is just because of the poor political

leaders of our country. They used to do some unofficial work for the
sake of money, this makes Administration of India weaker. This is
not the only example which makes Administration of India affected
badly there are lots of other factors which makes it worse.
Thank you