Former Union Minister Pramod Mahajan is in the dock as the Supreme Court issues notice on a petition seeking an investigation into an allegation of corruption against him.
V. VENKATESAN in New DelhiSENIOR Bharatiya Janata Party leader Pramod Mahajan was a Cabinet Minister in the Atal Bihari Vajpayee Ministry until January 2003 when he quit ostensibly to serve the party full time. During his tenure as Minister, Mahajan held several portfolios, including Parliamentary Affairs, Water Resources, Information Technology and Communications. His term in the Communications Ministry from September 2001 to January 2003 was especially hailed for his contribution to ushering in the mobile phone revolution in the country; this period saw a phenomenal rise in the number of mobile phone users.
Part of the explanation for Mahajan's contribution, it appears, can be found in the allegation that he connived at the violation of certain legitimate norms and conditions by a particular business group, even though it resulted in a huge loss to the exchequer.
Limited mobility or Wireless in Local Loop (WLL) refers to a mobile service that should work only in a defined area. This is in contrast to cellular mobility, which works all over the country. There was a long-standing policy that in the interest of revenue generation, the limited mobility and cellular mobility services should be kept separate and distinct. The Telecom Regulatory Authority of India (TRAI) had recommended the use of a V5.2 interface using Public Switched Telephone Network (PSTN) architecture for WLL services, and in a letter on September 28, 2001, urged the Department of Telecommunications (DoT) (under Mahajan's Ministry) to ensure that this interface was not tampered with so that mobility was limited to the short-distance communication area in which the subscriber was registered.
A public interest petition filed in the Supreme Court by the Citizens Forum Against Corruption has alleged that Mahajan managed to circumvent this policy of TRAI in favour of Reliance Infocomm (RIC), with the needle of suspicion pointing to a quid pro quo between Mahajan and the RIC. The Supreme Court Bench comprising Chief Justice Y.K. Sabharwal and Justices C.K. Thakker and R.V. Raveendran issued notices to the Union of India, the Central Bureau of Investigation (CBI) and the Central Vigilance Commission (CVC) to respond to the petition on January 2.
The DoT, in its reply to TRAI on October 17, 2001, refused to accept the recommendation of TRAI, breaking with due procedure laid down in the TRAI Act, 1997. The DoT maintained that existing licence provisions envisaged adequate safeguards, that the matter should be allowed to rest there, and that further correspondence might be avoided. Section 11(1) of the Act requires that in cases where the Central government comes to a prima facie conclusion that a specific TRAI recommendation cannot be accepted or needs modifications, such recommendation shall be referred back to TRAI for its reconsideration. Subsequent to such a reference, TRAI may within 15 days, consider the reference and return the recommendation after due deliberation. The petition notes that such a dismissal of TRAI recommendation by the DoT was a clear violation of the statutory provision and was conspicuous in its absence of reason.
The TRAI Chairman again wrote to the DoT on October 23, 2001, warning that anything that blurred the distinction between WLL and cellular services would cause huge problems and create uncertainties. On February 26, 2002, RIC rolled out its WLL (mobile) network with full-fledged mobile switching centres, totally ignoring the V5.2 restrictions. This in effect enabled RIC to offer full cellular mobility through multiple registrations/roaming, and violated the licence agreement. RIC rolled out its service in full public gaze, with a mega advertising campaign. Mahajan inaugurated the scheme.
The petition alleged that RIC advertised the service as a full mobility service, and could give a plethora of incentives to the subscribers because it did not pay the licence fees chargeable from a fully mobile service provider. The petition further alleged that it was only because of this that RIC could get five million subscribers, which was hundreds of times more than it could have got as limited mobile operators. "Reliance valuations thus shot up to thousands of crores, something its competitors could not dream of while offering limited mobility in the same circles," it said. The petition estimated that this caused a loss of Rs.1,100 crores to the exchequer, on the basis of the difference in the licence fee payable to the government by a fully mobile service provider and a WLL service provider. RIC became the fifth fully mobile service provider, having entered the scene through the WLL route, whereas the earlier four players had paid the licence fee applicable to a fully mobile service provider.
RIC merger of the WLL licence and full mobility was done during the tenure of Mahajan's successor in the Communications Ministry, Arun Shourie. The justification given for this before the Supreme Court was that lakhs of subscribers had already been enrolled by RIC on the promise of full mobility. Thus the illegality allowed during Mahajan's tenure was itself subsequently used as a justification for legalising it. This benefited RIC to the tune of hundreds of crores of rupees, the petition said.
The TRAI, therefore, opined that RIC was liable to pay penal interest with effect from the date of signing the licence agreement to the date of migrating to the unified access licence regime. This was in addition to the entry fee paid by the four cellular operators in respective circles.
In its press release dated February 15, 2005, RIC admitted that it had allotted one crore shares to Ashish Deora, through three front companies, at Re.1 each on September 16, 2002. It stated that the shares given to Deora were from "shares that were transferred to a trust, intended for the benefit of Reliance employees and business associates". Since the trust was authorised to sell their shares to business associates, RIC paid him remuneration for services rendered to the company through such a transfer. RIC claimed that the trust had retained the option to buy back the shares at par, and barred Deora to sell/pledge/deal with the shares. Since Deora was not able to fulfil his commitments, the shares were returned to the trust, RIC added.
The petition raises a number of doubts about this transaction. It points out that Reliance Industries paid Rs.55 a share to buy 32 crore shares in RIC for Rs.1,752 crores within six weeks of the transfer at Re.1 a share.
The allotment of cheap shares to private companies at Re.1 in contrast to the amount paid by the public listed company Reliance Industries was a matter of public concern, the petition said.
The petition cites a series of stories carried in Asian Age, exposing the transfer of one crore shares to three front companies at Re.1 each by RIC on September 16, 2002. It was subsequently reported in the newspaper, after an investigation, that these front companies did not exist at the addresses given in the records. These were financed by 10 equally obscure Delhi-based companies, of which details of only six were available to the press. All six had a common address, which was used by a chartered accountant close to Mahajan.
CITING newspaper reports, the petition suggested that there were several close connections (financial and otherwise) between the Mahajan family and Deora. The petition cites the fact that Indian Online Network Ltd (IOL) Broadband, a company in which Deora is the director, bailed out Integral Production Private Limited (IPPL), a company owned by the wife and son of Mahajan, by paying off Rs.5 crores due from IPPL to Prasar Bharati. The payment was necessitated by the institution of a public interest petition in January 2001, wherein it was alleged that Mahajan had doled out favours to IPPL through Prasar Bharati when he was the Minister for Information and Broadcasting. It was alleged that IPPL owed Rs.6.5 crores to Prasar Bharati as the firm failed to pay the minimum guarantee of Rs.3.5 lakhs an episode produced by the firm and telecast on Doordarshan. Deora was also a co-founder of IOL with Mahajan's son-in-law.
The petition concluded that these facts, if found to be true, were grounds for believing that the allotment of these shares by RIC to three front companies at a markedly low price either was for the benefit of Mahajan or was made at the instance of Mahajan.
Mahajan himself did not deny the specific facts in these allegations. Instead, he gave a bland denial - as he had given earlier - that he had not taken any decision that had favoured any particular company during his tenure as Minister.
The government, the petition said, had every opportunity to take note of the allegations and initiate a criminal investigation to get to the root of the matter.
The petition suggested that an investigation could be launched under the Prevention of Corruption Act. Under this, a public servant is said to have committed the offence of criminal misconduct if he "by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage".
Gravely concerned about the serious illegality and corruption involved in the case, as well as the lack of action by the authorities concerned, the Citizens Forum Against Corruption, through one of its eminent members, Prashant Bhushan, an advocate in the Supreme Court, requested the CVC, the CBI and the Prime Minister, through separate letters, to initiate criminal investigations against the persons concerned. The Forum approached the Supreme Court after its reminder-letters to these authorities failed to get any response.
Frontline has found that the Forum's complaints against Mahajan and RIC were duly received by these authorities. The CVC acknowledged the complaint and informed the Forum that it had forwarded the complaint to the CBI for necessary action. However, the CVC's web site revealed a different picture. To a query on the status of the complaint bearing the given complaint number, (430/05/2) the web site responded that the report on the complaint from the Chief Vigilance Officer concerned was pending. The CVC official, however, was unable to explain the apparent contradiction between the web site's answer and the CVC's written reply to the Forum. Obviously, the CVC should have been more proactive in this case, considering the grave nature of the allegations against Mahajan. Frontline's efforts to contact Chief Vigilance Commissioner P. Shankar for a response were not successful.
Frontline asked the CBI whether it had found any substance in the complaint sent by the Forum and whether it warranted an investigation. The CBI spokesperson answered that the agency had received the complaint and it was examining it.
The Prime Minister's Office (PMO) too acknowledged to Frontline the receipt of the complaint sent by the Forum on May 18, 2005. It was duly sent to the Anti-Corruption Unit of the Grievance Redressal Cell of the PMO, where it has been gathering dust.
Despite the seriousness of the allegations, the reticence of the Congress to take action on them is disturbing. In the recent past, the Congress has always tried to score political points over every corrupt deal involving leaders of the BJP.
COMMents
COMMents
SHARE