Undue haste in help to Airtel: CBI

telecom scam net moves backwards

The decision to allocate additional spectrum beyond 6.2 MHz to Bharti Airtel in 2002 was done in “undue haste” and keeping in mind the ongoing Initial Public Offering (IPO) of Bharti Tele-Ventures Ltd which had opened on January 28 and closed on February 2, 2002, the Central Bureau of Investigation (CBI) has communicated to the secretary of the department of personnel & training.

Also, that the late Pramod Mahajan, the then minister for communications, had taken the decision himself, in consultation with officials of the department of telecom (DoT), for allocating additional spectrum beyond 6.2 MHz up to 10 MHz by charging only one per cent of the adjusted gross revenue, breaching the rules.

The proposal was not discussed with either the Telecom Commission or the member (finance). According to CBI, the technical committee of DoT had recommended allotment of additional spectrum beyond 6.2 MHz only after the operator’s subscriber base reached 900,000; this was reduced to 400,000 for applying to get additional spectrum and 500,000 for actual allocation. The CBI communication has noted Bharti Cellular was the only company to have 400,000 subscribers as on December 2001 and 500,000 on January 31, 2002, when the decision was taken.

CHAIN OF EVENTS

November 19, 2011
CBI registered a formal police complaint against Bharti Cellular (now Bharti Airtel), Hutchison Max & Sterling Cellular (now Vodafone Essar)

October 2012
CBI writes to Attorney General (AG), seeking counsel on certain issues

October 23, 2012
CBI writes to secretary, DoPT on same issues

AG’s views sought on

• If companies or officials of the companies or both should be charged
• If the present entities should be liable for the criminal activities done by the erstwhile companies, as there have been mergers and acquisitions since the decision was taken in 2002

In response to a detailed questionnaire, a Bharti spokesperson declined to comment on the issue.

This communication was made just a few days after CBI had written to the Attorney General of India (AG), seeking legal opinion on certain issues relating to the investigation. In the letter, CBI has mentioned the views of the executive officers or law officers differed from those of the director of prosecution (DoP), who has said no case was made out against any of the accused telecom companies or any promoters of such companies.

CBI has asked the AG if the companies concerned or the officials of the companies or both should be charged. And, if the present entities could be liable for the misdoings of the erstwhile companies, as there have been mergers and acquisitions since the decision was taken.

The stream of communications was triggered after nearly a year’s probe by CBI, which last year had named Bharti Cellular (now Bharti Airtel), Hutchison Max & Sterling Cellular (now Vodafone Essar) in a First Information Report (FIR) over alleged irregularities in spectrum allocation. The FIR was also filed against former DoT secretary Shyamal Ghosh and a former DoT deputy director general, J R Gupta, alleging criminal conspiracy under the Prevention of Corruption Act, 1988.

CBI has alleged Ghosh and Gupta, with Mahajan’s permission, took a hurried decision on January 1, 2002, to allocate additional spectrum beyond 6.2 Mhz, going against the report of a technical committee in the ministry. The investigating agency had inspected the premises of Ghosh, Gupta, Bharti Airtel and Vodafone Essar across Delhi, Gurgaon and Mumbai. It registered a case of excess allocation of spectrum to the two telcos in 2001-02.

In its latest communication, CBI has also mentioned that Bharti officials’ association with Mahajan and DoT officials had influenced the decision. However, CBI had also said it could not find evidence indicating any overt act or criminal intent on the part of any person belonging to the accused companies, including Bharti Airtel, Hutschison Max Telecom and Sterling Cellular.

CBI says the entire exercise gave cumulative pecuniary advantage of Rs 846 crore to the beneficiary companies and the same loss to the government exchequer.