DMK leader A Raja became Union Minister for Environment and Forests in May 2004 and was shifted to Ministry of Communications and IT on May 16, 2007. Soon after taking over, Raja asked then Telecom Secretary DS Mathur to grant new licenses and spectrum. Mathur pressed for transparent auction and competitive pricing (as recommended by TRAI from 2003 onwards and Cabinet decision of Oct 2003). Raja wanted to grant licenses as per First-Come-First-Serve method (in a peculiar way - who first pays license fee and not who first applied) and at the price fixed in 2001 when there were only four million mobile subscribers. The number crossed 350 million in mid 2007. Manju Madhvan, Member (Finance) of DoT and Finance Secretary D Subbarao also suggested to go for competitive prices and argued for auction. But Raja ignored them all and sent the file to law Ministry for opinion. He started the procedures for grant of licences in September 2007
On September 24, 2007, DoT issued a press release late in the evening which appeared in next day newspapers), fixing the cut-off date of October 1, 2007 for filing aapplication for licences
On Nov 1, 2007, the law Minister HR Bhardwaj directed to constitute an Empowered Group of Ministers (eGoM) to form transparent procedures for grant of 2G Spectrum allocation and new licenses
On the very next day, Raja wrote a letter to Prime Minister Manmohan Singh, opposing Bhardwaj’s direction. Within an hour (9pm) on the same day (Nov 2, 2007) the PM wrote to Raja to stop all procedures and directed him to get his concurrence in future actions on 2G spectrum allotment. The PM directed Raja to adopt transparent method by going for auction and fixing new pricing
In the mid night, Raja wrote back to the PM. This letter dated Nov 2, 2007 was also delivered to PM’s residence in midnight itself
Finance Secretary D Subbarao wrote to Telecom Secretary Mr. DS Mathur on November 22, 2007 - objecting the pricing policy of 2G Spectrum and argued for auction. In the letter, the Finance Secretary objected the dual policy (cross technology) implemented (Oct 2007) to help CDMA operators like Reliance and TATA. nStrong resistance by Telecom Secretary DS Mathur and Manju Madhavan prevented Raja from moving ahead. In an internal note dated Dec 4, 2007 who took VRS soon, Raja snubbed Manju Madhvan for suggesting a series of steps for auction
After 50 days, on Dec 26, 2007, Raja wrote a letter to PM, saying that he was “further enlightened” by Pranab Mukherjee (then External Affairs Minister) and G Vahanvati (then Solicitor General) to go ahead with “pre-emptive and pro-active” decision to allot 2G Spectrum and new licenses. Raja also argued for reversing the cut-off date to limit the number of players. The PM did not reply, but simply gave a routine acknowledgement on Jan 3, 2008
On Dec 31, 2007, when DS Mathur retired, Raja brought in his trusted man Siddarth Behura as new Telecom Secretary. Behura worked as an Addl. Secretary with him in the Ministry of Environment and Forests. On Jan 10, 2008 at 2:45pm the DoT uploaded a press release saying that cut-off date had been reversed from October 1, 2007 to September 25, 2007. The press release asked the new players to remit fee (huge money ranging from Rs 1000 cr- Rs 1651 cr) between 3:30pm and 4:30pm on the same day. It is a mystery how nine new companies remitted huge fee by demand draft within 45 minutes. The CAG Report exposed that all these companies were already with Demand Drafts
On Jan 10, 2008, the CEOs of Swan and Unitech were present in Raja’s Private Secretary RK Chandolia’s cabin in Sanchar Bhavan. Chandolia asked his department official to collect applications and demand draft from CEOs. Only one counter was opened at the eighth floor of Sanchar Bhavan to receive application fee from other seven companies. There was a mad rush to become first in the queue and physical fight took place between rivals, who had also brought in bouncers. The police did arrived, but no case was registered due to instruction of Chandolia
Objecting to the dubious allocation of 2G licenses, then TRAI Chairman Nripendra Misra wrote to Telecom Secretary Siddharth Behura on January 14, 2008. Among other things, her also opposed reversal of cut-off date. later in the media Misra said the DoT had “cherry picked” his recommendation
As per the Sec 11(1)(a)(ii) and Sec 11(1)(d) of the TRAI Act, the DoT is mandated to get the approval of the TRAI before issuing license to new operators. Raja never sought the TRAI recommendation and allotted allotted license to new operators like Swan Telecom, Unitech group companies ( name changed to Uninor), loop Telecom (license was granted in the name of Shipping Stop Dotcom India Pvt ltd!!!!!), Datacom floated by Mahendra Nahata - changed name to Videocon, STel owned by DMK-linked businessman Sivasankaran and Allianz Infra (merged/amalgamated with Etisalat later with their license in 2 circles). little knowown Allianz Infra was owned by Ajay Singh, OSD of former Telecom Minister Pramod Mahajan and current owner of Spice Jet
DoT allots spectrum/licenses including additional spectrum to existing players to on March/April 2008 douse their protests. All files were signed by Raja. Unitech applied licenses in different names - Unitech Infrastructure, Unitech Builders and Estates, Aska Projects, Nahan Properties, Hudson Properties, Volga Properties, Adonis Projects and Azare Properties. later Unitech Group forms eight companies - Unitech Wireless (Tamil Nadu), Unitech Wireless (North), Unitech Wireless (South), Unitech Wireless (Kolkata), Unitech Wireless (Delhi), Unitech Wireless (East), Unitech Wireless (Mumbai), Unitech Wireless (West)
On Sept 13, 2008, BSNl entered into an unprecedented MoU with Swan. This was known as Intra-Circle Roaming Agreement. This MoU would help Swan to use all infrastructure (Towers, optical network etc) of the BSNl. This MoU was executed just a week before, Swan's Rs.4500 Cr deal (sale of 45 per cent shares) with Etisalat
In Sept/October 2008 - Swan offloaded 45 per cent shares to UAE based Etisalat for Rs 4500 Cr. (Swan got license for Rs 1530 Cr). Swan was actually owned by Anil Ambani’s Reliance Group, which could not apply for telecom licenses because only one company from a group was allowed to apply in telecom sector to prevent monopoly. Anil Ambani passed on Swan to Shahid Balwa and Vinod Goenka, but kept stakes in Swan also. This was exposed by the CAG and CBI. Swan’s shareholding pattern was y mysterious. It was owned by many shell companies under zoological names like Tiger Trustees, Cheetah Financial, Penguin Holdings, Zebra Consulting etc
Unitech offloaded 60 per cent of shares to Norway based Telenor for Rs 6200Cr. (Unitech got license for Rs 1651 cr). Telenor is a major operator in Pakistan and Bangladesh and Indian security agencies were opposed to the deal. But later when Chidambaram became Home Minister this deal was approved
On November 4 2008, Swan informed DoT that it allotted Rs 380Cr worth shares (9.9%) to a Chennai-based newly floated company Genex Exim. This was alleged to be a kickback from Swan to Raja. Genex was incorporated on September 17, 2008. This shell company was owned by Syed Mohammed Salahuddin, an NRI business tycoon heading the Dubai-based real estate conglomerate, ETA Ascon Star Group, which was reportedly very close to DMK leadership
The CAG found that all of 122 licenses including those allotted to Swan (13), Unitech(22), loop(21), Datacom(21) STel(6) and Allianz Infra (2) were totally illegal according to DoT guidelines itself, apart from violations of Companies Act. The CAG tabled the report in Parliament on November 16, 2010, suggesting a presumptive loss up to Rs 1.76 lakh crore due to the illegal allotment of 2G spectrum including Dual Policy
The CBI claimed that that Swan Telecom linked firms paid Rs 214 crore to the DMK-controlled Kalaignar TV as kickback and also named Karunanidhi’s daughter Kanimozhi in the deal. According to the CBI, controversial lobbyist Nira Radia was also allegedly behind the allotment of 2G licenses to many companies
