2G Scam: Chidambaram on the Dock

UPA is sinking deeper and deeper into mire on the 2G case. It is now clear that the then Finance Minister, P. Chidambaram had indeed given his concurrence to pegging the license fees for 2G in 2008 to 2001 level. This is the core of the 2G scam that has led to a huge loss to the exchequer. It is not, as Kapil Sibal, the current Minister of Communications & IT would have us believe that the scam is merely of procedural violations in award of the licenses. In Kapil Sibal's scheme, there has been “no loss” to the exchequer, a claim repeated ad naseum by him and the Congress spokespersons; only some lapse in which some people jumped the queue and got licenses in preference to others.

 

It is now clear that the Finance Minister, after initial opposition to awarding license fees in 2008 at 2001 prices, had finally fallen in line with Raja and given his consent. This is now public – thanks to a RTI application. The Minutes of the Meeting on Allotment and Pricing of Spectrum between A. Raja and Chidambaram of January30, 2008 in its Point 5 states:

 

FM said that for now we are not seeking to revisit the current regime from entry fee or revenue share.

 

Finally, the admission that the Finance Ministry had given its consent to pricing of spectrum at throw away prices. If Chidambaram's involvement was in doubt, the Note of the Finance Ministry dated March 2011 makes it amply clear that the Finance Ministry had the possibility of stopping the issuing of licensees on a number of occasions. Though the LOI's were issued to the parties on 10th January 2008, the actual license agreements were signed after the meeting in which Chidambaram had given his consent and the allocation of spectrum took place only in April 2008. The Note reiterates in a number of places that though Finance Ministry officials disagreed with DoT officers on the spectrum allocation and pricing, there was “consensus at the levels of the Ministers concerned.”

On 16th February 2011, in a meeting with TV editors, the PM had stated that the Finance Ministry and the DoT had “concurred” on the issue of spectrum pricing, consistent with the requirement of the NDA’s Cabinet decision of 2003. Cabinet decision in October 31st, 2003, while clearing various licensing issues had recorded.

 

The Department of Telecom and Ministry of Finance would discuss and finalize spectrum pricing formula, which will include incentive for efficient use of spectrum as well as disincentive for sub-optimal usages. 

 

The Justice Shivaraj V Patil Report that went in telecom matters also states,

The spectrum pricing had to be finalized by DoT and MoF as required by the Cabinet decision dated 31.10.2003.

 

This was also the understanding of the CAG, as borne out by its Report.

Even without this explicit reference to the need of Finance Ministry for concurrence in the Cabinet decision of 2003, Rule-4 of the Government of India (Transaction of Business) Rules, Article-77(3) of the Constitution, clearly stipulates that any decision which may involve “any abandonment of revenue or otherwise have a financial bearing whether involving expenditure or not” cannot be done without the concurrence of the Finance Ministry. In case this is not forthcoming, the decisions has to go up to the Cabinet. 

 

The key question therefore has been that did the Finance Ministry agree with DoT that the license fees for 2G licenses to be at the 2001 level as the PM had said. Or was their a difference between the Finance Ministry and DoT? 

 

The question assumes importance as there is ample evidence on the files that senior officials of the Finance Ministry, including the D Subba Rao, the then Finance Secretary and now the Governor of the Reserve Bank had opposed the allotment of licenses on the 2001 prices. In a letter written on November 22, 2007, Subba Rao had written,

 

“The purpose of this letter is to confirm if proper procedure has been followed with regard to financial due diligence. In particular, it is not clear how the rate of Rs. 1600 crore, determined as far back as 2001, has been applied for a license given in 2007 without an indexation, let alone current valuation. Moreover, in view of the financial implications, the Ministry of Finance should have been consulted in the matter before you had finalized the decision.

Was he finally overruled by his Minister? Why did the Finance Ministry not pursue the issue further?

 

Did the Finance Ministry have the power to stop this decision that DoT and the Ministry of Communications & IT was taking clearly involving a loss of revenue?

Under Rule-7 Government of India (Transaction of Business) Rules, all the cases specified in the Second Schedule, which include cases involving financial implications on which the Minister of Finance desires a decision of the Cabinet and the cases in which a difference of opinion arises between two or more Ministers and a Cabinet decision is desired, shall be brought before the Cabinet.

So there are 3 clear grounds on which Chidambaram could have stopped the 2G scam. One was the the Cabinet decision, which clearly stated that on all future spectrum pricing Ministry of Finance and DoT will jointly decide on the pricing; the second the Rule-4 of the Business Rules, the third the Business Rule-7. Till date, the picture was given that all that Chidamabarm did was that in spite of his opposition, his only act was one of omission, he did not bring this to the cabinet and allowed Raja to proceed in violation of all the three procedures cited above. Now it transpires, it was something more – he had met with Raja and had agreed that this matter was now closed and Raja could proceed on this matter.

 

The Finance Ministry's Note is being used by the media to indicate that this is a difference between two senior ministers in the Union Cabinet. This is of peripheral importance to the country. What the Finance Ministry's Note of March 25, 2011 really does bring out is that it details out all the options that Finance Ministry had to stop Raja's 2G scam. It systematically details the Finance Ministry's position and how from a position of opposition to licenses being given at 2001 prices, Finance Ministry finally held consultations with DoT only on prices of spectrum beyond the start-up spectrum bundled with the license. On the rest, it had given its consent.

 

Chidambaram has been extremely coy about his role on the entire issue. For a long-time, the only meeting about which people knew was the one held between Raja and Chidambaram in May, 2007 in which no minutes were issued. Till the documents came out of the PMO on the Minutes of the Meeting of 30th January 2008, nobody knew about this meeting nor were aware of its content. Neither were people aware of the number of meetings held between the Finance Ministry and the DoT on the 2G issue. The Finance Ministry's Note to PMO of 25 March, 2011 makes clear that indeed a series of meetings did take place between Finance Ministry and DoT and Finance Ministry was only limiting itself to matters beyond the initial spectrum, the core of the scam.

 

The standard tactic of the UPA has been to bury the JPC and the PAC under a mountain of paper while withholding vital evidence. However, it is becoming increasingly difficult to claim as the Congress has been doing that Raja was a rogue Minister and the 2G scam was entirely his doing. Now there is ample evidence to show that Finance Ministry, the Law Ministry and also the PMO were fully aware of the issues and what Raja was doing. There was a statutory obligation of the Finance Ministry to agree to the license fees being maintained at 2001 prices, which the Finance Ministry was fully aware of and had indeed brought this to the notice of the DoT. The Finance Ministry had ample opportunities to stop the scam at various stages. It was the Finance Minister who finally gave his consent to the scam over-riding the officials in his Ministry.

The fact that Chidambaram as Finance Minister gave his consent to the 2G scam does corroborate what the PM had said in February 2011, but does not absolve him either. After all, India has a cabinet form of government, where the entire cabinet is responsible for its actions. On a matter involving 1.76 lakh crore, the argument cannot be that it was the act of only two ministers. The PM as well as his other colleagues knew about what was happening. The PM as the leader of his team and fully in the know and still let the scam continue. He may still talk about his honesty; his personal integrity is not the question. The question is if as Prime Minister, he allows a scam to take place with his full knowledge, the fact that he has not benefited in money terms from the scam is hardly the issue. Integrity is not only a question of personal honesty but also ensuring that the institution he heads – the Unio0n Cabinet – remains honest. Unfortunately, today the picture the nation has is that he is heading the most corrupt Government ever, where scams worth thousands of core appear to be mere chicken feed. That is the real tragedy of this country.

 

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