2G Scam

Ripping into JPC report

Print edition : December 13, 2013

P.C. Chacko, Chairman, Joint Parliamentary Committee on 2G Spectrum allocation. Photo: Shanker Chakravarty

Sitaram Yechury of the CPI(M). Photo: V. SUDERSHAN

Yashwant Sinha of the BJP. Photo: R.V. MOORTHY

The dissent notes on the Joint Parliamentary Committee’s final report on the 2G scam call it a bundle of contradictions, criticise it for its selective use of evidence, and question the committee’s credibility as a democratic forum to debate policy decisions.

EVEN as voices of dissent from across the political spectrum started to grow louder and louder, P.C. Chacko, Chairman of the 30-member Joint Parliamentary Committee (JPC) constituted to examine the allocation of 2G spectrum between 1998 and 2009 , submitted the committee’s final report to Lok Sabha Speaker Meira Kumar on October 29.

Members of the JPC belonging to the Bharatiya Janata Party (BJP), the Communist Party of India (Marxist), or the CPI(M), the Communist Party of India (CPI), the Dravida Munnetra Kazhagam (DMK), the All India Anna Dravida Munnetra Kazhagam (AIADMK), the Trinamool Congress and the Biju Janata Dal (BJD) have in their dissent notes, which have been made public, pointed out the serious contradictions and persistent flip-flops on policy positions in the draft report. The draft report, which was leaked to the media in May, was marked by inconsistencies and biases ( Frontline, May 31). The dissent notes, which record the members’ objections to the findings of the committee and are appended to the final report, have raised significant policy issues as well as procedural questions about the functioning of the JPC as a democratic forum for critiquing policy decisions. The final report, the notes opine, is replete with the same contradictions that marked the draft report. In fact, the JPC has subverted established parliamentary procedures by failing to address any of the vital policy questions raised by the dissenting members. This has serious implications for the accountability of the executive to Parliament in a representative democracy.

In a letter to Meira Kumar on November 9, six BJP members of the JPC demanded that she reject the final report. The signatories to the letter —Jaswant Singh, Gopinath Munde, Harin Pathak, Ravi Shankar Prasad, Dharmendra Prasad and Yashwant Sinha—alleged that the draft report was adopted at the JPC’s September 27 meeting without much discussion and consultation.

Senior CPI(M) leader Sitaram Yechury, in a dissent note submitted to Chacko on September 26, pointed out the selective use of evidence in arriving at the conclusions and the failure of the JPC to summon the Prime Minister and the Finance Minister to appear before it.

The neutrality of the JPC has come under the scanner on account of its failure to summon key witnesses for investigation. The final report absolves the Prime Minister of responsibility for the arbitrary allocation of spectrum despite ample evidence on record to suggest that the policy decisions were communicated to him by the then Minister of Communications and Information Technology, A. Raja. In his note, Yechury states: “The undersigned and other members of the JPC repeatedly requested that the JPC examine evidence from the Hon’ble Prime Minister and the Hon’ble Finance Minister despite the serious questions surrounding their involvement in the issues at hand.”

The CPI(M) leader has highlighted the failure of the JPC to honour the principles of collective responsibility of the Cabinet: “The report has failed to apply the principle of collective responsibility of the Cabinet in arriving at its conclusions and findings. Further, the report has failed to understand that an offence can equally be an offence of omission as opposed to an offence of commission.” Yechury pointed out that the Finance Minister’s letter to the Prime Minister, dated March 25, 2011, had stated that the option of cancelling letters of intent (LoIs) and allowing the insertion of proper licence terms and conditions was very much possible even after the LOIs had been issued. This indicates that the Prime Minister and the Finance Minister were aware of the constitutional actions of Raja and yet failed to take any preventive or curative action.

Annexures removed

Interestingly, some of the annexures supporting the dissent notes have not found a place in the final report. This has significant policy implications as the documents annexed to the dissent notes had provided substantive evidence on various aspects of the scam.

For instance, Yechury’s dissent note, which contains a list of annexures, points out that Pulok Chatterjee, the then Secretary to the Prime Minister’s Office, had submitted a note to the Prime Minister on spectrum-related issues on December 31, 2007, before Raja issued the LoIs in January 2008. Thereafter, Pulok Chatterjee submitted a comprehensive note on January 6, 2008, suggesting the norms and methodology to be adopted by the Department of Telecommunications (DoT) on spectrum-related issues. The Prime Minister appears to have suggested on January 11, 2008, that the note authored by Pulok Chatterjee be modified taking into account the issuance of LoIs on January 10, 2008. Pulok Chatterjee then prepared a fresh note on January 15, 2008, reiterating the points made in his earlier note. These documents suggest that there was criticism within the PMO about the methodology adopted by Raja for awarding spectrum. Such crucial documents, including the correspondence between the Prime Minister and the Communications Minister, are not annexed to the final report.

Similarly, the communications between the Ministry of Finance and the DoT regarding the pricing of spectrum have not been annexed. On June 6, 2007, the then Finance Secretary, D.S. Subbarao, wrote to D.S. Mathur, Secretary of the DoT, asking him to consider including the pricing of spectrum in the terms of reference of the Group of Ministers (GoM). The GoM was formed in December 2006 to look at vacation of spectrum for the defence forces. On June 15, Mathur, in his reply, stated: “This matter is discussed in a meeting with the MoCIT [Minister for Communications and Information Technology] at this time. And it was felt that the ToR [terms of reference] may now remain as they were issued in December last year.” This communication indicates how the issue of pricing of spectrum was kept out of the purview of the GoM although the Ministry of Finance tried to push it. These documents, which were attached to Yechury’s dissent note, have not been annexed to the final report.

By excluding these annexures, the final report leaves out significant evidence that could have helped fix the responsibility for the scam in the highest quarters of the government.

The dissent notes also point out the disproportionate number of pages and documentation devoted to finding flaws with the policy decisions taken by the previous National Democratic Alliance (NDA) government in comparison with the attention given to those taken by the United Progressive Alliance (UPA) regime. Yechury notes: “The fact that the report attempts to brush aside the scam committed when the UPA was in power is evident from the fact that only nine documents are annexed to the report that pertain to the entire 2007-2008 period, that too mostly innocuous documents.”

The BJP’s dissent note observes that 39 pages of Chapter 10 of the final report deal with the period between 1998 and 2004, when the NDA was in power, whereas only 23 pages have been devoted to the scam period, that is, 2008-09. Also, 14 pages have been devoted to maligning the Comptroller and Auditor General and its findings in the 2G scam.

Contending that the report has used information selectively, the BJP members point out that the JPC has ignored an affidavit submitted by the Telecom Regulatory Authority of India (TRAI) in 2011 as part of the hearings in Subramaniam Swamy vs Union of India which gave some credit to the policy decisions taken by the NDA government to expand the telecom subscriber base. The TRAI affidavit had stated: “The impact of the 2003 decision was that the subscriber base increased to 149.62 million subscribers by December 2006. The Government of India’s revenue from spectrum charges increased from Rs.10,280 crore in 2004-2005 to Rs.20,900 crore in 2006-07. This also led to more competition in every service area. So there was overall growth and public interest was benefited.”

The BJP notes that the PMO and the Cabinet Secretariat did not submit the note written by the then Cabinet Secretary, K.M. Chandrashekhar, to the Prime Minister on December 4, 2007. In his note, the Cabinet Secretary had reportedly pointed out the rationale for raising the entry fee and drawn attention to the fact that doing so would garner an additional revenue of over Rs.30,000 crore. The dissent note observes: “This note was kept from the JPC to shield the Prime Minister. That such a note had been written came out only during the responses of K.M. Chandrashekhar to questions asked by members of the JPC.”

In his dissent note, CPI leader Gurudas Dasgupta, referring to the Cabinet Secretary’s note, said: “The most emphatic avowal of the value of the spectrum emerged not from any constitutional or external agencies, but from the highest centre of the government itself. The note given by the Cabinet Secretary had never been made available in the public domain and came to public notice only when, in response to my questions during the course of his interaction with the JPC, Shri Chandrashekhar stated that he had sent a note to the Prime Minister on the issue and that he had calculated the value of the spectrum.”

The JPC report goes all out to highlight the policy mistakes made by the NDA government, whereas, in all fairness of things, it should have taken into account the documents on record that acknowledge the benefits that accrued from the NDA’s decisions.

Contradictory positions

The final report is a “bundle of contradictions” and uses the same logic to indict the NDA and defend the UPA. The BJP’s dissent note touches upon the glaring “flaws” and “half-truths” in the report’s approach to policy decisions. Speaking to Frontline, JPC member Yashwant Sinha commented specifically on the widely quoted loss amount of Rs.42,080.34 crore following the migration package (Section 10 of the report indicts the NDA government for allowing private telecom players to migrate from a fixed fee model to a revenue-sharing model). “There is an inherent contradiction in the manner in which the projected loss to the exchequer as a result of migration package has been calculated by the Department of Telecommunications. The figure has been calculated taking as a base the notion of fixed licence fees. However, the projection also factors in the expanded subscriber base as a result of liberalisation due to migration. The migration package led to the expansion of the sector by bringing in more players, increased the subscriber base and ultimately helped the government in garnering more revenue. The DoT revenue loss projection is self-contradictory and erroneous; on the one hand it critiques liberalisation by using the fixed licence fees for calculating loss: on the other hand it uses the expanded subscriber base for projections, which only happened as a result of liberalisation,” he said.

In fact, by coming to such a conclusion, the report ignores its own observations in an earlier section about the revenue earned by the government in the post-migration period. Section 3.44 of the report states: “The committee also called for details of revenue generated during the post-migration phase vis-a-vis the revenue that had accrued had the licencees continued in the remaining period of the old regime, i.e, the end of the 10-year-period.”

The figures provided by the DoT indicate that there was a revenue increase of Rs.4,144.32 crore post-migration. A table in Chapter 3 provides a year-wise comparison between post-migration revenue and presumptive revenue, pre-migration, between 1999 and 2005.

In respect of revenue generation also the report contradicts itself. The BJP’s dissent note observes, “The report has strained in Para 10.12 to assert that the migration package caused a loss of Rs.42,080.34 crore to the exchequer, and when confronted with the CAG’s estimates of the loss caused by the decisions of the UPA government, the report has maintained that revenue generation was not meant to be the principal or sole objective in the telecom sector.”

While the report apportions blame to the NDA government for revenue losses incurred post-migration, it does not adequately criticise the manner in which the first-come first-serve (FCFS) policy was distorted by Raja. The BJP’s note observes: “The problems that plagued the sector later, and which have occasioned prosecution now, did not arise because the FCFS method was followed, but because no method was followed at all.”

Yashwant Sinha told Frontline: “The FCFS policy was introduced at a stage in the telecom sector when applications for licences were few and far between and licences were granted contingent on fulfilment of terms and conditions in the LoI. The FCFS policy was distorted when a large number of applications were allowed to accumulate, the cut-off date for applications was changed arbitrarily, and the terms for eligibility were changed.”

The report does not adequately criticise these policy decisions.

The mandate of a JPC is to hold accountable organs of the executive for policy decisions that adversely impact the public interest. The JPC on 2G spectrum allocation has desisted from making major organs of the government accountable for their actions. The BJP’s note observes that the demand for a probe by the Central Bureau of Investigations (CBI) into the Aircel-Maxis deal was not honoured.

In 2006, the Foreign Investment Promotion Board, headed by the then Finance Minister P. Chidambaram, approved the takeover of Aircel by Maxis. The head of the Aircel group had then alleged that he was forced to sell his company. While the sectoral cap on foreign investment had shown that foreign investment in the telecom group was 74 per cent, documents filed by Maxis with the Malyasian stock exchange showed that Maxis had taken over 99.714 per cent of Aircel. The BJP’s dissent note states that the CBI limited its investigation to the alleged arm-twisting of the Aircel chairman. It observes: “In spite of the manifest facts that cried out for inquiry, and in spite of the repeated demands of members, the JPC was blocked from examining the transactions and decisions relating to the takeover of these Indian companies by a foreign company.”

The final report has significantly diminished the consultative role of the parliamentary committee and thereby reduced the credibility of the body as a forum for questioning policy decisions. A detailed examination of the key evidence and documentation on record illustrates the JPC’s lack of genuine interest in thoroughly investigating a matter of grave public importance.