Chidambaram and the 2G Can of Worms

(Published in The New Indian Express, School Edition, on 14 October 2011, retrieved from http://expressbuzz.com/school/chidambaram-and-the-2g-can-of-worms/323116.html)

NOTE: This is not opinion. It's a factual summary of the 2G court hearings, with special reference to Chidambaram.

It’s been almost a year since newspaper headlines screamed ‘1760000000000’, but the 2G scam is back in the news, with rumours of disagreements within the Congress party, and speculations that two of its most senior ministers – Home Minister P Chidambaram and Finance Minister Pranab Mukherjee – are at war.

For a few months, A Raja has been saying he is only as culpable as Prime Minister Manmohan Singh and then Finance Minister – Chidambaram – and that they were involved in the licensing process. But when a note from Pranab Mukherjee’s department to the Prime Minister’s Office (PMO), dated 25 March 2011 and marked ‘Secret’, found its way to Janata Party president Subramanian Swamy through an RTI application, it set off breaking news – that Mukherjee had hinted that Chidambaram played a role in the 2G spectrum scam.

The Background of the Case

The licensing of 2G spectrum to mobile telephony companies happened in January 2008. However, rather than auction the spectrum or increase prices, the government sold it at prices fixed in 2001, and on a first-come, first-served basis. This is believed to have caused a loss of Rs. 1.76 lakh crore to the treasury, as estimated by the Comptroller and Auditor General (CAG).

Later, it was found two of the companies that bought licences – Unitech Group and Swan Telecom – sold stakes in their companies at huge profits to other corporate firms. This means the licences, which were supposed to be sold at market value, had actually been sold for much less.

The CAG report also found that up to 85 of the 122 new licences had been sold to firms that had no prior telecom experience, that had suppressed relevant facts or were otherwise ineligible. Raja has been charged with accepting bribes to allot licences.

The scam broke in 2010, when the Income Tax Department was investigating corporate lobbyist Niira Radia, and media houses got hold of taped conversations between her and ministers including A Raja and Kanimozhi (both of whom are in Tihar Jail now), as well as between her and industry captains including Ratan Tata and representatives of Mukesh Ambani. Radia’s conversations with senior journalists Barkha Dutt and Vir Sanghvi set off a furore about the media’s role in the scam.

The Supreme Court has censured Prime Minister Manmohan Singh for not taking action against Raja or questioning his decisions earlier.

While many wondered whether the government would collapse and there would be federal elections, political analysts have dismissed the possibility, saying the government’s majority is likely to see it through in case of a motion, and the main opposition party Bharatiya Janata Party (BJP) is not ready for elections anyway.

The Controversial Note

A ‘secret’ note sent by the Finance Ministry headed by Pranab Mukherjee to the PMO on March 25 this year created a sensation when Subramanian Swamy submitted it to a Supreme Court bench hearing his plea for a Central Bureau of Investigation (CBI) probe into Chidambaram’s role in the scam.

The note, prepared by the Department of Economic Affairs (DEA) and marked “This has been seen by the Finance Minister” was a part-factual, part-analytical summary of events related to the 2G scam. The note implied that Chidambaram could have overruled Raja, cancelled the January 2008 spectrum allocation and insisted on an auction. It said he had instead “implicitly agreed to imposition of same entry fee as that prevailing in 2001 for licences allotted up to December 31, 2008.”

Media reports openly discussed the rift between Mukherjee and Chidambaram, and perceived the note as Mukherjee’s indictment of the former Finance Minister.

The meeting between Chidambaram and Raja dated 30 January, 2008, was also brought into focus. Until recently, the government had said the minutes of the meeting were not available. However, they surfaced in the media now, signed by then Finance Secretary D Subbarao (who is currently the governor of the RBI).

The minutes noted that the mismatch between demand and supply of spectrum across circles was discussed in the meeting, and that Chidambaram had said “for now we are not seeking to revisit the current regimes for entry fee or for revenue share”. Merger and acquisition rules were also discussed, as they may amount to spectrum trading if companies that bought licences as a speculative move sold stakes to others at increased costs. A few months later, Raja changed the merger and acquisition norms, allowing Swan and Unitech to sell equity at huge profits.

Subbarao’s deposition before the Parliament Accounts Committee (PAC) on the spectrum allotment had raised more questions against Chidambaram. Subbarao said he had advised Chidambaram against the selling of spectrum at prices fixed in 2001. He had also directed the Department of Telecom (DoT) to stay the spectrum allotment. However, this did not happen.

The PAC’s draft report, which itself was submitted after a great deal of controversy, made a reference to a letter written by Chidambaram to Manmohan Singh on January 15, 2008, saying the sale of licences conducted five days earlier should be treated as a “closed chapter”.

The note from Mukherjee’s ministry made a reference to Chidambaram’s letter to the PM too. It said he had argued for the auction of spectrum “but only with reference to spectrum beyond the ‘start up’ spectrum.” It implied this was irrelevant to the licences that had been sold by Raja, saying “The licences allotted in 2007 and 2008 only carried the ‘start up’ spectrum embedded with them. The note of the Finance Minister did not deal with the need, if any, to revise entry fee or the rate of revenue share.”

The Reaction to the Note

As the call for Chidambaram to resign got louder, the Congress was in a fix. Pranab Mukherjee and Manmohan Singh were both abroad, and party president Sonia Gandhi had just returned after being hospitalised for a mystery illness. Chidambaram told media he had spoken to Singh and promised him he wouldn’t discuss the note till Singh returned to India. Speaking from New York, Pranab Mukherjee acknowledged the existence of the note sent from his ministry, but refused to comment on its contents, saying the whole issue was sub-judice.

The two ministers met Sonia Gandhi separately at her 10, Janpath home, before finally standing before the TV cameras for a joint press conference on 29 September, along with Telecom Minister Kapil Sibal and Law Minister Salman Khurshid.

Mukherjee claimed the note sent from his ministry – which he referred to as “an inter-ministerial background paper” – contained inferences and interpretations that “did not reflect [his] views”. Chidambaram announced that he was happy with the statement and said “the matter is closed”.

The literal and figurative show of unity was mocked by the press, as it left most questions unanswered. Pranab Mukherjee’s frustration was clear when he snapped at the media on being asked whether he was planning to resign, “This is all bunkum! If you don't have any serious questions, I’m sorry!”

The Prime Minister had stood by Chidambaram all through, dismissing the importance of the note and claiming the opposition is trying to force early polls.

What’s Happening in the Supreme Court?

The CBI seemed to absolve Chidambaram in the apex court on September 29, as it claimed he was being targeted for political reasons.

Swamy has asked for the constitution of a Special Investigation Team (SIT) to probe Chidambaram's involvement in the 2G scam, saying the CBI would not be able to question the Home Minister, being a government agency whose officers' confidential reports were prepared by the Home Minister. This was vehemently opposed by the CBI, which claimed to be an independent, autonomous body that could not be influenced by anyone.

At the last hearing on October 10, the CBI sought to prove that Chidambaram could not have been involved in the spectrum allocation, as his note to the Prime Minister came five days later. However, Swamy presented documents to argue that Chidambaram was aware of Raja's plans as early as November 2007.

Finally, the Supreme Court reserved its order on Chidambaram's role in the 2G case. Meanwhile, the government has criticised the open court hearing as 'counter-productive', an objection that was swiftly swept aside by the Bench.

TIMELINE
5 May, 2011	BJP demands a CBI probe into Chidambaram’s alleged involvement in irregularities in allotting spectrum.
23 August, 2011	Kanimozhi tells the court Manmohan Singh and Chidambaram had decided along with Raja against auctioning of the 2G spectrum licences.
24 August, 2011	A Raja says Chidambaram, Manmohan Singh and Kapil Sibal should be summoned as witnesses to prove the government did not suffer any loss because of the 2G spectrum allotment.
15 September, 2011	Subramanian Swamy wants to bring new facts about Chidambaram and Raja’s role in deciding spectrum prices and entry fees on record.
20 September, 2011	CBI tells Supreme Court (SC) that it has concluded investigations into A Raja’s role in the 2G scam, and is reluctant to reopen the case to investigate Chidambaram.
21 September, 2011	News of the note sent from the Ministry of Finance to the Prime Minister’s Office, indicting Chidambaram, breaks, as Subramanian Swamy submits it to the SC.
22 September, 2011	Pranab Mukherjee refuses to comment on the note, saying it is sub-judice.
23 September, 2011	Pandemonium in Parliament as the opposition calls for Chidambaram’s resignation, and the ruling coalition defends him.
26 September, 2011	Raja wants Chidambaram called as a witness in the 2G case; Chidambaram meets Sonia Gandhi to express his displeasure with the note and the subsequent media speculation.
29 September, 2011	Pranab Mukherjee and Chidambaram make a show of unity and issue a joint statement to the press; CBI tells SC Chidambaram is being targeted for political reasons.
10 October, 2011	Supreme Court reserves order on Chdiambaram’s involvement in the 2G spectrum allocation.