2G scam verdict: How CBI killed its own case

CBI's own witnesses disowned its investigation in court

The voluminous 2G verdict delivered by a special Central Bureau of Investigation (CBI) court acquitted all the accused in the case. Spread over six years, hundreds of prosecution and defence witnesses were examined and thousands of pages of documentary evidence produced – it seems nobody caused a Rs 31,000-crore loss to India by selling off valuable spectrum for pittance. The special court’s judgment shows that the CBI made charges that it could not defend, its own witnesses disowned its allegations in court and in many ways the CBI itself fumbled in the dark while probing how and who caused a Rs 31,000-crore loss to the exchequer.

 
Conspiracy through proximity: Missing records & delayed interrogation
 
The CBI failed to produce any records or registers at former United Progressive Alliance (UPA) minister Andimuthu Raja’s residence at Motilal Nehru Marg in Central Delhi or at his office to prove its charge that both Shahid Balwa, the promoter of DB Realty, and Vinod Goenka, the chairman of DB Realty, were close acquaintances of Raja since his days as the environment minister in 2004. The CBI instead produced Raja’s private secretary Aseervatham Achary as a witness in court. Achary testified before the court that he had seen Raja meeting Balwa and Goenka more than 20 times at Raja’ residence. However, Achary failed to substantiate his statements through documentary evidence for the same despite the fact that as Raja’s man-Friday he was responsible for maintaining the minister’s daily engagement charts. When daily charts maintained by Achary were produced in the court, nowhere were the names of Balwa or Goenka found. The CBI tried to counter the lack of evidence by stating that Balwa and Goenka’s names were deliberately not recorded in the register when they visited Raja. However, the court dismissed Achary’s testimony as unreliable, calling him a man with political inclinations. What further complicated the investigation was that even as he was one of the men closest to Raja and aware of his every single meeting, Achary’s statement was not recorded before a magistrate with a sense of urgency. Achary’s statement was taken by CBI’s investigating officer only in 2011, while the first case was registered by the agency in 2009.

 
The CBI further tried to establish proximity and conspiracy between Raja and Balwa by alleging that a company in which Raja’s close associates were directors received money from Balwa’s DB Realty. The company in question was Greenhouse Promoters, owned by Sadiq Batcha, an associate of Raja. Batcha allegedly committed suicide at his Chennai residence in 2011. While CBI alleged that Batcha’s company had received and returned more than Rs 1 crore to Balwa’s company, the court did not find this evidence as an indication of Raja’s close relationship with Balwa and Goenka, or this transaction as being conspiratorial in nature. The CBI, by the look of the court's observations, did not produce considerable documentary evidence to support its claim that Rs 200 crore had been paid to Kalaignar TV, affiliated to DMK patriarch Karunanidhi, by Balwa’s DB Realty. The CBI introduced a driver at Greenhouse Promoters, its managing director and a director as witnesses. But none of them could substantiate the CBI’s allegations of kickbacks to Kalaignar TV.
 
All of this raises questions on the kind of investigation that was carried out. Why did the agency wait for almost two years before taking Achary’s statement, despite knowing that he was Raja’s secretary and privy to all his meetings? Why did CBI keep on pressing the charge of multiple meetings among the three when it had only a delayed statement from Achary and no documentary evidence to back its claim? Why did the CBI not requisition bank account statements (or not produce them in court) to substantiate its allegations that kickbacks to the tune of Rs 200 crore were paid to Kalaignar TV? Why did the CBI rely on drivers and directors to substantiate this claim when it was well within its powers to requisition or seize bank account statements of all people and companies it suspected of having received kickbacks? If the CBI hadn’t recovered any incriminating documentary evidence in its multiple raids during the probe, why did it choose to mention the Rs 200-crore kickback in its chargesheet?

 
Cut-off dates: CBI’s reluctance to cross-examine Raja
 
The CBI alleged in its chargesheet that Raja had fixed the cut-off dates in a manner that favoured two companies – Unitech and Swan Telecom (allegedly owned by Reliance Communications Limited) but failed to convince the court about its conspiracy theory. The Telecom Regulatory Authority of India (Trai) sent its recommendation to Raja’s office on the grant of licences to telecom operators on August 29, 2007. A note was sent by A K Srivastava, then a joint-secretary-level officer in the ministry of telecommunications, to his superiors on September 24, 2007, with a proposal to set the cut-off date for receiving applications as October 10, 2007. According to the evidence produced in the court, on the same day Raja sent back the note saying that the cut-off date should be fixed as October 1, 2007. Srivastava had in his note explained that around 167 applications had been received following Trai’s recommendations and, given the massive rush for licences, a cut-off date should be set. The CBI’s case rested on Srivastava’s testimony that Raja’s private secretary R K Chandolia, also listed as an accused by the CBI, was constantly inquiring from him about Unitech’s bid.

But the court found Srivastava’s statement about a huge rush in applications following acceptance of Trai’s recommendation to be false. Documents produced in the court showed that only two companies had filed applications after the acceptance of Trai’s recommendation, and 124 applications were previously pending for approval. The CBI’s investigating officer deposed that there was a surge in applications but could not produce any documentary evidence to satisfy the judge. Unitech’s representative, meanwhile, deposed that he had submitted the company’s application on the morning of September 24, 2007. Srivastava deposed that he issued a press release on the same evening announcing the cut-off date as October 1, 2007. The CBI failed to adequately cross-question any of the witnesses, including Raja, on the coincidence of the above-mentioned events, despite claiming in its chargesheet that there was constant communication between Raja and Unitech group regarding the cut-off date. The CBI prosecution put two questions to Raja – none of them challenging Raja’s claim that there was no conspiracy. This led even Justice O P Saini, who delivered the judgment, to observe: “Prosecution put only two questions to Raja on cut-off dates. No question was put to Raja on whether the cut-off date was fixed by him in conspiracy with Swan Telecom and Unitech group of companies to help them in the matter of UAS licences and allocation of spectrum.” The CBI did not substantiate Srivastava’s claim that he was being constantly asked about Unitech’s bid by Chandolia for the reason that Srivastava could not tell the court the name of the junior officer from whom he had inquired about Unitech’s bid following calls from the most proximate bureaucrat in Raja’s ministry.

 
Letter of intent: CBI witnesses disown probe
 
In many ways, the CBI’s case to prove collusion between Raja and Unitech rested on the fact that Raja had decided to issue Letters of Intent (LOIs) only to those who had submitted applications by September 25, 2007. This effectively meant that Unitech, which had submitted its application on the morning of September 24, would have been one of the last ones to be issued letters of intent for an allocation of spectrum. The CBI’s allegation was that this led to a shuffling of the priority list and allowed Swan Telecom to bag prime spectrum in national capital Delhi. Additionally, the CBI contended that Raja’s decision to set cut-off date as September 25, 2007, ensured that even though adequate spectrum wasn’t available in various circles, Unitech and its subsidiaries were allocated spectrum.

However, the examination of CBI witnesses, comprising senior bureaucrats of the telecom ministry, failed to prove that the decision to change the rules was Raja’s alone. Letters written by these bureaucrats indicated that the sole criteria to be used for issuing LoIs should be to keep the availability of spectrum in mind. But the judge observed that the bureaucrats failed to inform and advise Raja, despite having an obligation to so. The CBI’s charges were quashed after it became evident that there were 575 applicants who had submitted applications in time and there was not enough spectrum to give all of them. The court observed that all senior bureaucrats were well aware of the fact that given the limited availability of spectrum, a cut-off date of September 25, 2007, for issuing LoIs was the only option. The court observed: “So the blame for shifting the cut-off date to September 25, 2007, cannot be put on Raja alone.”

 
Furthermore, even the CBI’s own witnesses produced in court – four senior bureaucrats of the telecom ministry, including Srivastava – failed to substantiate the CBI’s claim that the date was changed on Raja’s insistence. The court observed that although CBI was keen to prove that Raja had taken the decision to change the cut-off dates, the CBI’s own witnesses who were involved in the decision-making process in their respective capacities as senior bureaucrats were never questioned on the matter.
 
The CBI had further alleged in its chargesheet that Raja further tinkered with the rules of the first-come-first-served basis by deleting a paragraph in the draft LoI. This paragraph stated that a licence agreement for allocation of spectrum would be signed with those who had paid the entry fees first. This according to CBI’s chargesheet was a “malicious design” meant to benefit the accused companies. But Shah Nawaz Alam, the director of wireless finance in the ministry of telecommunications, who deposed as a prosecution witness before the court failed to back the CBI’s theory, told the court that he had suggested the deletion of the paragraph from the draft LoI but did not know who had actually deleted it. Other CBI witnesses also failed to back the agency’s claim, leading the court to observe that “witnesses have completely disowned the prosecution’s case”.

 
Raja misled PMO: ‘Not a scrap of evidence’
 
The CBI chargesheet as produced in the court accused Raja of misleading the then prime minister Manmohan Singh on the issue of changing of cut-off dates and changing contours of the first-come-first-served policy. The CBI produced a letter written by Raja to Manmohan Singh on November 2, 2011, in which Raja states that an unprecedented number of applications were being received after the acceptance of Trai’s recommendations on August 29, 2007. However, the judge had rejected this contention earlier while deciding records placed before it showed that only two companies had filed applications between August 29 and September 24, 2007.
 
It is this very contention, among others, on the basis of which the court had called A K Srivastava, one of the CBI witnesses, as unreliable. The CBI failed to flag this issue in the court. Although the CBI produced this letter in the court with the PM’s notings, the court itself noted that the file in which the letter was processed in the PMO wasn’t produced as evidence.
 
Furthermore, another letter written by Raja to Manmohan Singh in November 2007 was labelled by the CBI as an attempt to mislead the PMO. In the letter, Raja had assured the PMO that no rules were being violated in the allocation of spectrum, apart from clarifying his position on the revision of entry charges for newer players. The CBI again failed to “provide even a scrap of evidence” on whether this letter was even seen by Manmohan Singh. A section officer of the PMO who was cross-examined stated that he was unaware of how this letter was dealt with by the PMO. The court itself observed that despite making these allegations in its chargesheet, the CBI did not produce either evidence or any witness from the PMO in court to substantiate its charges.

 
Rs 31,000-crore loss: Whodunnit?
 
The CBI in its chargesheet contended that Raja had caused a loss of almost Rs 31,000 crore to the exchequer by not revising the entry fee last fixed in 2001. In doing so he ignored the recommendation of Trai, Ministry of Finance and even the PMO. According to the CBI, Raja was the person solely responsible for the loss to the exchequer. This is where things got tricky for the CBI while arguing in the court. Manju Madhavan as member (finance) in Raja’s ministry had written to the ministry of telecommunications in November 2007 that the issue of selling spectrum at 2001 prices should be examined in depth. Furthermore, D Subbarao, the finance secretary of the time, also made similar observations in communications that were produced as evidence in court. The court observed that since the matter of spectrum pricing pertained to the country’s finances, Manju Madhavan should have approached the finance minister. The court observed that there was no record or evidence to prove that she approached the finance minister.
 
But perhaps what is contradictory in the CBI court’s judgment is that it also notes that then finance minister P Chidamabaram was well aware of the matter. Chidambaram had asked the department of telecom to examine issuing telecom licences at 2001 prices in a communication dated November 30, 2007. After all, as finance minister Chidamabaram had the powers to flag the issue with the PMO. This is where the court observed that the “finance ministry was not very enthusiastic about its objections to the initial pricing of spectrum or the entry fee”. The CBI does not seem to have challenged these observations in court.

 
Records showing extensive interactions between Trai and Raja’s ministry were produced in court. Raja’s defence in court rejecting the CBI’s allegation that he failed to revise the 2001 prices was also heavily based on Trai’s report. The report had in August 2007 suggested not revising the entry price for new entrants in the 2G spectrum band (800 MHz/900 MHz/1800 MHz). However, CBI lawyers pointed out that the Trai report was contradictory. It recommended realising the true market value of a valuable resource like spectrum, and at the same time also advocated not raising the price for new entrants for the sake of maintaining a level playing field.
 
When Nripendra Mishra, the then chairman of Trai, was called as a witness, he testified that a revision of entry fees was indeed recommended. But the court found his explanation to be weak as the Trai report was open to interpretation and that “nobody understood the recommendations in this manner. There is absolutely no evidence, oral or documentary, that anyone understood that Trai had recommended a revision of entry fee.”

 
So, if Raja didn’t do it, who caused the loss of Rs 31,000 crore to the exchequer. The court raised questions over the very concept of a loss put forth by the CBI. The court observed that the revised guidelines for spectrum pricing were introduced only in 2003 and not in 2001. As a result, the perceived loss to the exchequer would have been less than what was being calculated. The court also seems to have justified the non-revision of price observing that any rise in the price of spectrum would have further discouraged newer telecom players.
 
The CBI’s argument that there had been a significant growth in the average revenue, profits and market capitalisation of telecom companies since 2001 failed to impress the judge. The court, while dismissing the CBI’s conspiracy theories, observed: “This does not amount to abuse of power by A Raja.” In effect, the court seems to have ruled that all words of advice sent to the telecom ministry by Manmohan Singh, P Chidamabaram, the then finance secretary, the law ministry, among others, to examine the pricing formula in depth were based on imaginary fears.