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Slide 1:

SCAM By Sreedeep Sinha

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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?:

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:

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.

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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,"

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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 . What do you mean by 2G scaN?

Who is this Person?:

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. Who is this Person? One of the main person behind the India’s Largest Corporate Fraud.

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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.

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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. FAVOURITISM, CORPORATES ENCASH PREMIUM

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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” . Media persons and Lobbyists involved 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.

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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.

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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 Shortfall of money

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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.

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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. Ratan Tata petitions over Tape leak

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Nira Radia M.Karunanidhi A Raja (Telecom minister) Arun Jaitley Barkha dutt (Journalist) Arun Shourie Pramod Mahajan Persons involved in 2G Spectrum Scam

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 Corporations involved

Steps taken by Government after Scam:

Steps taken by Government after Scam 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. Government of India take some important steps looking forward in this Scan:

Response to scan:

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.

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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

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. Response to scan

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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.

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