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SCAM

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CONTENTS

About 2G.

What is 2G spectrum scam?

Who are Involved?

Media Response. Market Response.

Steps Taken by Govt.

Political Response to Scam.

Conclution & Your Thoughts.

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HISTORY OF 2G

2G spectrum technology was first launchedin 1991 in Finland only in the GSM mobile

phones but this is not the latest technology

that we are using. As 2G was launched in

1991 so many other technologies overcome

it with 2.5G, 2.75G technologies but the latest

technology in present world is 3G.

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INDIAIN THE WORLD'S EYES

Wharton's Singh feels foreign investors may view corruption inIndia "as the cost of doing business." But the country would attractmore foreign investments and business interest if it had a strongerreputation for being non-corrupt, he says. Investors are attracted

to India because "there are not too many other options that areparticularly attractive ... but this can change rather quickly,

The 2G scandal is unlikely to hurt India's investment appeal

globally, according to Alok Shende, principal analyst and founderdirector of Ascentius Consulting. "Foreign investors may actuallyperceive the role of courts and rule of law, the role andindependence of the CAG and the will of the vernment to unearththis scam as a positive attempt to spring-clean all that waswrong,"

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The 2G spectrum scam involved officials and ministers in theGovernment of India illegally undercharging mobile telephonecompanies for frequency allocation licenses, which they woulduse to create 2G subscriptions for cell phones. According to a

report submitted by the Comptroller and Auditor General based onmoney collected from 3G licenses, the loss to the exchequer was

176,379 crore (US$38.27 billion). The issuing of the 2G licensesoccurred in 2008, but the scam came to public notice when the

Indian Income Tax Department investigated political lobbyist NiiraRadia and the Supreme Court of India took SubramaniamSwamy's complaints on record [With Case type:Writ Petition(Civil),Case No:10, Year:2011]. The case details of the main PILfiled with the supreme court is Type:Writ Petition (Civil),CaseNo:423, Year:2010.

WHAT DO YOU MEAN BY 2G SCAM?

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A. Raja (Born May 10, 1963, Perambalur, Tamil Nadu, India) is an

Indian politician from the Dravida Munnetra Kazhagam(DMK) political

party. He is a member of the 15th Lok Sabha representing the Nilgiris

constituency ofTamil Nadu. Raja was first elected to the Lok Sabha in

1996 and first served as minister of state from 1999 to 2003. On being

re-elected to the Lok Sabha in 2004, he became a cabinet ministerinthe UPA government. In 2007, he became cabinet minister for

communication and information technology. On being re-elected in

2009 he was again appointed cabinet minister for communication and

information technology until being tainted in the 2G spectrum scam

and resigning in 2010.

Who is this Person?

One of the main person behind the

Indias Largest Corporate Fraud.

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WHATARE THE CHARGES ON FORMER

TELECOM MINISTER

ARAJA

?CHEAP TELECOM LICENSES

Entry fee for spectrum licenses in 2008 pegged at 2001 prices

Mobile subscriber base had shot up to 350 million in 2008 from4million in 2001.

NO PROCEDURES FOLLOWED

Rules changed after the game had begun. Cut-off date for applications advanced by a week. Licenses issued on a first-come-first-served basis. No proper auction process followed, no bids invited. Raja ignored advice of TRAI, Law Ministry, Finance Ministry.

TRAI had recommended auctioning of spectrum at market rates.

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Unitech, Swan Telecom got licenses without any prior telecomexperience .

Swan Telecom given license even though it did not meet

eligibility criteria.

Swan got license for Rs.1537 crore, sold 45% stake to Etisalatfor Rs.4200 crore.

Unitech Wireless got license for Rs. 1661 crore, sold 60% stakefor Rs. 6200 crore.

All nine companies paid DOT only Rs.10,772 crore for 2Glicences.

FAVOURITISM, CORPORATES ENCASH PREMIUM

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CORPORATE PERSONALITIES INVOLVED

Anil Ambani - Reliance Group (ADAG)Shahid Balwa - DB Realty and DB Etisalat (Swan Telecom)Vinod Goenka - Dynamix GroupVenugopal Dhoot - Videocon GroupPrashant Ruia - Essar Group

All of them have either been question by the CBI or are

prospective suspects in the scam.

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Nira Radia, a former airline entrepreneur turnedcorporate lobbyist whose conversations withpoliticians and corporate entities were recorded bythe government authorities and leaked creating

theNira Radia tapes controversy.

MEDIA PERSONS AND LOBBYISTS INVOLVED

Barkha Dutt, an NDTVjournalist alleged to havelobbied for A.Raja's appointment as minister.

Vir Sanghvi, a Hindustan Times editor allegedto have edited articles to reduce blame in the NiraRadia tapes.

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IMPACT ON STOCK MARKETS

The first casualty in Stock Markets once Raja wasarrested was DB Realty.

DB Realty had given 200+ crores to Kalaignar TV(owned by Karunanidhi's Wife) .

The news led to 20% fall in the stock prices of DB

Realty.

Sun TV had its shares fall by 10% on the next dayfollowing rumours ofKalanidhi Maran having stake inKalaignar TV.

Sun TV COO refused the allegations. Swan TelecomChief Balwa was arrested on Feb 8 and this led torumours of links with Anil Ambani's Reliance ADAG andit led to 20% fall of his stocks. Its reported that nearly2 Billion USD was eroded from his stocks .Spicejetstocks went down after reports of investigation on

Maran's recent takeover of Spicejet.

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A. Raja arranged the sale of the 2G spectrum licenses below theirmarket value. Swan Telecom, a new company with few assets,bought a license for 1,537 crore (US$333.53 million). [15] Shortly

thereafter, the board sold 45% of the company to Etisalat for4,200 crore (US$911.4 million).

Similarly, a company formerly invested in real estate and not

telecom, the Unitech Group, purchased a license for 1,661 crore(US$360.44 million) and the company board soon after sold a60% stake in their wireless division for 6,200 crore (US$1.35billion) to Telenor

SHORTFALL OF MONEY

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RELATIONSHIP BETWEEN MEDIA&

GOVERNMENT

Media sources such as OPEN and Outlook reported thatBarkha Dutt and Vir Sanghvi knew that corporate lobbyist

Nira Radia was influencing the decisions of A. Raja. The

critics alleged that Dutt and Sanghvi knew about corruption

between the government and the media industry, supported

this corrupt activity, and suppressed news reporting the

discovery of the corruption.

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The tapes leaked to the public include conversations betweenNira Radia and Ratan Tata. Tata petitioned the government toacknowledge his right to privacy and demanded accountabilityfor the leak, with the Minister for Home Affairs, CBI, IndianIncome Tax Department, the Department of

Telecommunication, and the Department of InformationTechnology as respondents in the petition.

RATAN TATA PETITIONS

OVER TAPE LEAK

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Unitech Group:A real estate company entering the telecom industry with its 2G bid; sold

60% of its company stake at huge profit to Telenor after buying licensing

(Including land values properties for towers).

Swan Telecom:

It sold 45% of its company stake at huge profit to EmiratesTelecommunications Corporation (Etisalat) after buying licensing.

Videocon Telecommunications Limited

Reliance Communications

Sistema Shyam Mobile (MTS) Sistema Mobile Russia

Tata Communications

Vodafone Essar

Loop Mobile

S Tel

Dishnet Wireless

Allianz Infra

CORPORATIONS INVOLVED

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STEPS TAKEN BY

GOVERNMENTAFTER SCAM

Set up a special branch of CBI to look into the matter.

Telecom Minister resigns his post after Scan.

A Raja also arrested by the Police.

CBI is also interacting with the brothers of A Raja andalso some business men.

Government of India take some important steps looking

forward in this Scan:

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In response to the various allegations , the Govt ofIndia has replaced the then incumbent Telecom

minister ,A Raja with Kapil Sibal who has taken upthis charge in addition to being the Union minister

for Human Resources Development.Mr Sibal

contends that the "notional" losses quoted are a

result of erroneous calculations and insists that the

actual losses are nil.

RESPONSE TO SCAM

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The CBI conducted raids on Raja and four othertelecom officials - former telecom secretarySiddharth Behura, Raja's personal secretary R KChandolia, member telecom K Sridhar and DoT

deputy director general A K Srivastava on 8December 2010.

Raja, Behura and Chandolia were arrested on Feb2nd 2011.

RESPONSE TO SCAM

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THANK YOUTHANK YOU