In 2011, Time magazine included India’s 2G spectrum allocation scam in its list of “Top 10 abuses of power”. Indeed, in a country where corruption allegations are a dime a dozen, the 2G scam, as it was popularly known, stood head and shoulders above the rest. For one, there was the sheer scale of the loss alleged. The Comptroller and Auditor general of India put out the upper limit of Rs 1.76 lakh crore. That’s 176 followed by 10 zeroes – Rs 17,60,00,00,00,000. A lot of money.
The case created a political and economic earthquake. In 2012, the Supreme Court cancelled 122 spectrum licenses issued to telecom operators, at one stroke redrawing India’s telecom industry. According to one estimate, the verdict had an impact on 5.3 crore phone connections. Politically, the scam became a totem for the Congress’ alleged corruption. The alleged scam was the fuel for the India Against Corruption movement led by Anna Hazare and was frequently invoked by the Bharatiya Janata Party in the lead up to the 2014 Lok Sabha election.
But there was one earthquake more to come. On Thursday, a special court presided over by Justice OP Saini, said that for all the brouhaha, there simply was no scam. Every one of the accused people in the case was acquitted. Everybody was going by “public perception created by rumour, gossip and speculation”, the court ruled. “Some people created a scam by artfully arranging a few selected facts and exaggerating things beyond recognition to astronomical levels.”
Yet, this still raises the question: if all there was to it was “rumour, gossip and speculation”, why did the Supreme Court in 2012 cancel 122 licences, drastically affecting the telecom industry?
In 2012, the Supreme Court was responding to a Public Interest Litigation filed by a host of activists in order to answer questions about whether the government had a right to distribute natural resources in a manner that was not “fair and transparent” in accordance with the “fundamentals of the equality clause enshrined in the Constitution”. It also looked closely at the method in which the 2G spectrum was allocated. A specific question the Supreme Court looked at was whether A Raja, then Union Minister of Communications and Information Technology, had acted in order to “favour some of the applicants”.
In its order, the court was scathing when commenting on Raja’s conduct. “The material produced before the Court shows that the Minister of C&IT wanted to favour some companies at the cost of the Public Exchequer,” the order read. It also said, Raja “virtually gifted away the important national asset at throw away prices”.
For the court, Raja’s corruption was proved by the actions of the companies who had been given licences.
“This becomes clear from the fact that soon after obtaining the licences, some of the beneficiaries off-loaded their stakes to others, in the name of transfer of equity or infusion of fresh capital by foreign companies, and thereby made huge profits.”
Auction not first-come-first-serve
The Supreme Court had held the first-come-first-serve policy suspect and declared that auctioning was the only logical way to have done this.
“We have no doubt that if the method of auction had been adopted for grant of licence which could be the only rational transparent method for distribution of national wealth, the nation would have been enriched by many thousand crores.”
The court also took the companies that it thought were involved to task, fining them heavily for having “benefited at the cost of Public Exchequer by a wholly arbitrary and unconstitutional action taken by the DoT for grant of UAS [Unified Acccess Services] Licences [to firms operating cell phone services] and allocation of spectrum in 2G band and who off- loaded their stakes for many thousand crores in the name of fresh infusion of equity or transfer of equity”.
The Supreme Court was especially scathing about the “first-come-first serve-policy” employed by the government and the fixing of cut-off dates. In one case, the court says:
This arbitrary action of the Minister of C&IT though appears to be innocuous, actually benefitted some of the real estate companies who did not have any experience in dealing with telecom services and who had made applications only on 24.9.2007, i.e., one day before the cut off date fixed by the Minister of C&IT on his own.
The special court order released on Thursday, though, takes a rather different line on this:
“There is no evidence on the record produced before the court indicating any criminality in the acts allegedly committed by the accused persons relating to fixation of cutoff date, manipulation of first-come-first-served policy, allocation of spectrum to dual technology applicants, ignoring ineligibility of STPL (Swan Telecom Pvt. Ltd.) and Unitech group companies, nonrevision of entry fee and transfer of Rs 200 crore to Kalaignar TV (P) Limited as illegal gratification.”
It then, of course, goes on to acquit each of the accused, stating that “some people created a scam by artfully arranging a few selected facts and exaggerating things beyond recognition to astronomical levels.”
2012 versus 2017
Paranjoy Guha Thakurta, journalist and a petitioner in the 2012 case, however, maintained that the spectrum allotment process was deeply problematic. “The 2G spectrum was allocated in a manner that was completely unconstitutional and arbitrary,” argued Guha Thakurta.
He added: “I am deeply disappointed with the Justice Saini judgement. The order has taken many things at face value. It stretches credulity. In my opinion, it is a flawed judgement that raises more questions than provides answers.”
However, Siddharth Luthra a senior advocate in the Supreme Court and former Additional Solicitor General of India, argued that both judgements held their ground. “There is absolutely no contradiction between the 2012 Supreme Court case and today’s judgement. The parameters in a civil and a criminal case are different. In 2012, the Supreme Court simply went on the material placed before it,” said Luthra. “Whereas the trial court was looking at a larger range of evidence and found dishonest elements missing.”