RCom alleges Rs 1-lakh cr fraud by 'old 2G operators'

Reliance Communications today accused “old 2G operators” of causing over Rs 1 lakh crore in losses to the exchequer through “fraudulent means”. Though it did not name any operator, the so-called old 2G operators are Bharti Airtel, Vodafone and Idea Cellular.

Syed Safawi, president (wireless business) of Reliance Communications, said in a statement that the old 2G operators, “By active and fraudulent misrepresentation and concealment of material facts from the government, have unscrupulously caused the national exchequer staggering losses of over Rs 1 lakh crore during 2001 to 2010.” Safawi demanded a Central Bureau of Investigation probe into these alleged irregularities.

He said spectrum was hoarded illegally in excess of 6.2 MHz in active connivance with certain DoT officials, and has been extensively documented and commented upon in successive reports, which form part of the ongoing investigations by the CBI, under Supreme Court monitoring. The loss of revenue to the government on account of holding excess spectrum beyond 6.2 MHz alone is around Rs 55,000 crore, Safawi claimed.

RCom also said that old 2G operators obtained an extension and doubled their licence period from the stipulated 10 years to an unprecedented 20 years with no payment of additional fees. “Based on fraudulently obtained benefits, these old 2G operators immediately sold stakes in their companies to foreigners, and encashed thousands of crores of rupees (in) illegal profits, in (an) identical manner, as has been adversely commented upon in the CAG (comptroller & auditor general) report of 2010, in relation to stake sales for 2G licences issued in 2008,” Safawi said in a media conference call.

The Telecom Regulatory Authority of India had also pointed out that some operators were holding 2G spectrum in the “superior” 900 MHz band. It has proposed that airwaves in this band be priced at 1.5 times the cost of spectrum in the 1,800 MHz band, for which the regulator recommended a six-fold jump in price last week.

On the report by CAG that Reliance Telecom held 10.17 per cent in Swan Telecom, breaching government rules, Safawi said the company had held only 9.9 per cent of the equity share capital of Swan at the time of filing the relevant licence application in March 2007. This shareholding was fully disclosed at inception, and this information has always been in the public domain, said Safawi.

Safawi said according to legal advice, the company had not disclosed the preference share capital held by Reliance Telecom in Swan, as it is not included for the purposes of determining shareholding levels, under the provisions of the Companies Act, 1956.

RCom also said neither the company nor Reliance ADA Group individuals held shares in Swan at the time a 2G licence was granted to it in January 2008, or at any time thereafter. It also said there had been no monetary gain directly or indirectly, nor was it a beneficiary of the grant of a licence to Swan.

CBI’s questioning of some executives is not specific to the company, and around 50 executives of several operators are under investigation, the company said.

“Hari Nair of our group was company secretary of Swan Telecom for a few months while Reliance Telecom held equity stake in the company, but that shareholding was sold, and he ceased to hold that post, well before a licence was granted ,” said Safawi.