Lies, Damn Lies and Kapil Sibal

There is nothing notional about the 2G losses and the minister cannot but know this

The Minister of Communications and Information Technology Kapil Sibal is also one of India’s leading lawyers, but the qualities that we need in a lawyer are not necessarily the ones we require of a minister. Take, for instance, his statement on why there was no loss in the sale of 2G spectrum licences.

The thrust of his argument is easy to state: “If at the time of issuing licences, the Government charges a very high entry fee, it would reduce the resources available to the operators to undertake the necessary creation of infrastructure. It would also eventually impact the prices charged by the operators and thereby limit the services to those who can afford higher services.’’ It is in this context that he justifies A Raja’s decision, saying the former Minister of Telecom had pointed out to the Prime Minister that ‘in the interest of ensuring a level playing field between existing operators, who had obtained licences and spectrum at very reasonable rates, and the new operators, and to ensure the new entrants could provide effective competition for the healthy growth of the sector, it would be appropriate to continue with the extant policy’.

As a lawyer, Sibal would have known the contradictions in these two positions; the interests of the purchaser of the licence are not always the same as the interests of the consumer, and the problem with what Raja did was that in many such cases he benefitted these purchasers without benefitting consumers.

This is best illustrated by the example of a company rather strangely named Swan. After being awarded the licence at Rs 1,537 in the 2008 2G spectrum allotment, this company sold its licence to Etisalat for Rs 4,200 crore without spending any money on executing the licence. Now consider for a moment that the Government had actually sold this licence to Etisalat for Rs 4,200 crore. Would the consumer have lost in any way? Clearly not. The loss of Rs 2,663 crore had nothing notional about it. Extrapolating from this loss, the CAG arrived at a total loss of Rs 57,666 crore. Another similar case relates to Unitech, a real estate company with no prior experience in the telecom sector, which bought the licence for Rs 1,661 crore and sold 60 per cent equity (actually 67.25 by the time the deal came through) for Rs 6,120 crore to Norway-based communication company Telenor. Again, by the time of the sale, Unitech had done nothing to execute to the licence. Based on this case, the CAG estimated the total loss to be Rs 69,626 crore. 

When asked about these two case by Karan Thapar, one of the few TV anchors to have done his homework, Sibal answered,  “Remember, when disinvestment took place in the NDA time, [Mumbai’s] Centaur Hotel was sold and within a month or so it was sold for Rs 30 crore more.’’ He went on to elaborate, “Therefore, these are economic perspectives that companies have when they enter into arrangements of buying equity in a company. These are long-term perspectives.” These equivocations beg the question of the large loss to the Government, which certainly was not used to benefit the consumer.

Clearly, Kapil Sibal was being economical with the truth and his statements only illustrate the problem with the Congress’ stand on the whole issue. Mistakes in the past by the NDA do not justify what was done now. If the matter is left to the Public Accounts Committee and the debate is restricted to the CAG report, this is what we will be left with—large-scale losses of revenue with no public benefit that will be explained away as a result of the ‘economic perspectives’ companies have. 

There is need to move beyond the immediacy of politics and see the issue for what it is. The need for the JPC is genuine and is again best illustrated by these two cases, which show that the very process of allotting licences cannot be separated from the issues thrown up of the 2G scam by the investigations and contents of the Radia Tapes.

The CAG itself has noted that, ‘Thus, it would appear that Swan Telecom Pvt Ltd, while applying for the UAS licences in 13 service areas, was acting as a front company on behalf of RTL (Anil Ambani’s Reliance Telecom Limited)  and their application was, in effect, against the intent and spirit of the UAS licensing guidelines’. And an Economic Times report has noted, ‘Investigating agencies probing the allotment of mobile permits by former telecom minister A Raja are examining a transaction between Tata Realty and Infrastructure Ltd (TRIL), a Tata Group company, and real estate firm Unitech in 2007.  People familiar with the investigation say a loan of around Rs 1,600 crore was advanced by TRIL to Unitech in a deal that investigators believe was facilitated by Niira Radia.’

Two of India’s biggest corporate houses, Niira Radia, direct losses of at least Rs 57,666 crore, the list can go on. But if these are not enough reasons to set up a JPC, what will ever be?

About The Author

Hartosh Singh Bal