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    From Tehelka Magazine, Vol 9, Issue 06, Dated 11 Feb 2012
    CURRENT AFFAIRS  
    COVER STORY

    2G SPECTRUM SCAM

    The case against the AG

    The case against A Raja might collapse if the questions about Goolam Vahanvati’s role in the 2G scam remain unanswered. Ashish Khetan explains why

    CBI Director AP Singh (left) and Attorney General Goolam Vahanvati

    Brothers in arms? CBI Director AP Singh (left) and Attorney General Goolam Vahanvati

    Photo:PTI


    THE 2G scam investigation was not just about punishing the guilty but also a test of some of the core principles on which our constitutional democracy is founded. The rule of law being one of them. In the past one year, we have seen three chargesheets, the imprisonment of former telecom minister A Raja, DMK supremo M Karunanidhi’s daughter Kanimozhi and millionaires such as Shahid Balwa and Sanjay Chandra.

    But besides the high-profile indictments, we also saw some questionable clean chits, the most hotly debated among them being that of Union Home Minister P Chidambaram and industrialist Anil Ambani. Many people argued that the law has been applied selectively and the powerful have been let off on the basis of deceptive and untenable theories. They feel that the CBI, in its bid to protect a few influential people, has built up a deeply flawed case that is bound to collapse under intense legal scrutiny.

    The entire case against Raja and 16 other accused (which include former Department of Telecom officials, promoters and executives of telecom companies) rests on the following three charges:
    1. That Raja arbitrarily advanced the cut-off date from 1 October 2007 to 25 September 2007 and thus reduced the number of eligible applicants and rigged the priority list in favour of Swan and Unitech.
    2. That he subverted the first-come first-served (FCFS) policy and waywardly redefined it to ensure that Swan and Unitech got 2G licences.
    3. That he didn’t auction the 2G spectrum or adopt some other market-determined methodology to determine its real valuation and instead benchmarked it to a rate discovered in 2001, when the telecom sector was at a nascent stage.

    To prove the case of corruption against Raja, the CBI will have to establish the above three charges and the proposition that these decisions were taken without any legal or administrative backing. The million-dollar question is: Will these charges stick?

    Till date, the CBI has not been able to unearth a single rupee of bribe money that was paid directly to Raja or any other DOT official (The Rs 200 crore loan extended by Swan promoter Balwa to DMK-owned company Kalaignar TV is the only money trail between the alleged illegal beneficiaries, but that too would be hard to prove as graft in court, argue legal experts).

    While Chidambaram’s role has been dissected and questioned from every possible angle, Vahanvati’s role has not been put to a rigorous scrutiny so far

    Raja’s defence on the last of the above three charges, which is that he caused a loss to the exchequer by allocating licences at the 2001 rate, is that the then Finance Minister P Chidambaram had also concurred on the decision. And on the first two counts, that is the advancement of the cut-off date and redefinition of the FCFS policy, his defence is that he had the favourable legal opinion of the then Solicitor General (SG) Goolam E Vahanvati, who is now holding the constitutional position of the Attorney General of India — the highest law officer of the government.

    While over the past few months, Chidambaram’s role has been subjected to microscopic scrutiny, dissected and questioned from every possible angle, Vahanvati’s role has not been put to a rigorous scrutiny (Even as we were going to press the news came in that on 2 February, the Supreme Court (SC)would pronounce its order on Janata Party chief Subramanian Swamy’s plea that Chidambaram’s role should be thoroughly investigated).

    The Public Accounts Committee (PAC) headed by Murli Manohar Joshi was the first one to question the role of Vahanvati. Joshi had contended that Vahanvati as SG had bypassed the then Law Minister HR Bhardwaj and directly given Raja’s telecom department the legal advice to go ahead with the allocation of new licences. “The committee, therefore, recommends that a serious view must be taken in the matter,” read Joshi’s draft report. But the nine Congress and DMK members of the 21-member PAC ensured that the report was rejected.

    Following the report’s observations, Prashant Bhushan’s NGO Centre for Public Interest Litigation filed an intervention application on 8 July 2011 seeking a thorough probe into Vahanvati’s alleged role in the scam.

    While appearing before the special CBI court 20 days later, Raja made the sensational claim that all decisions related to new 2G licences were approved by Vahanvati. “He (Vahanvati) has become the AG from SG … and I am in jail for following his advice. Is this justice?” Raja had shouted in court. But the CBI argued that Raja was an accused and thus his arguments had no legitimacy.

    LEGAL EAGLE
    Defying All Odds

    BORN IN 1942 in what is now Bangladesh, Goolam Vahanvati studied for his bachelor’s in law in Mumbai

    WITHIN A YEAR of his enrolling at the Bar, his father died. The same day, his uncle died of grief, forcing him to take up family responsibilities

    FROM THE AGE OF FIVE, he started going to the races at the Mahalaxmi course, developing an interest in horse-breeding that became an abiding passion

    FROM 1976 TO 1980, the young Goolam worked almost 18 hours a day operating from the Bombay High Court library as he didn’t have a chamber

    'IN 1981, he became the first Indian lawyer to be enrolled by special dispensation to appear for a case in England

    HIS SON from his first marriage, Essaji Vahanvati, works as a corporate lawyer in Mumbai

    FOR SOME YEARS, he wrote a legal column for The Asian Age and features on food for the Taj magazine

    BY 1990, he was a senior advocate and took up several aviation cases, including the Bangalore Air-India crash on 14 February that year

    IN 1999, he became the Advocate General of Maharashtra, which catapulted him to high-profile cases, including the one against Enron that resulted in the closure of the Dabhol power plant

    IN 2000, he appeared in defaulter cases on behalf of the Securities and Exchange Board of India

    IN 2004, Goolam moved to Delhi when he was appointed Solicitor General. In his top job, he appeared in virtually every big case

    IN JUNE 2009, he became the first Muslim to hold the post of Attorney General of India

    On 24 September 2011, the CBI filed a detailed affidavit before the SC countering Bhushan’s allegations and defending Vahanvati. In the same affidavit, the CBI also defended its decision of not chargesheeting the promoters of Tata and Reliance Telecom. However, CBI counsel KK Venugopal only read out the part of the affidavit that dealt with Tata and Reliance and omitted reading the portion dealing with Vahanvati in court. Bhushan too contested the CBI submissions only on the issue of corporate groups being given a clean chit. The issue of Vahanvati thus got a quiet burial.

    THE BIG question is what the CBI’s defence of Vahanvati was and whether it was factually and legally sound. Whether by accident or design, nobody has taken a closer look at the CBI’s dogged defence of the AG till date. TEHELKA decided to investigate the CBI’s claims not only because it is important to fix the accountability of those holding positions of power, it’s imperative to understand if there is any merit in Raja’s arguments vis-a-vis Vahanvati. Because, if Raja succeeds in arguing that his illegal decisions had the then SG’s approval and that while he has been arraigned, the SG has not only been let off but has been promoted to the rank of AG, then the entire 2G case would collapse.

    What was Raja referring to when he said that while issuing new licences he was following Vahanvati’s advice? He was talking about the press release of 10 January 2008, which is one of the most decisive instruments of the scam. The CBI case rests heavily on this press release. The agency has argued that it is through this press release that Raja had changed the cut-off date and distorted the FCFS policy to favour select companies. The draft of the release contained four paragraphs.

    Paragraph 1 read as follows: “The TRAI on 28.08.2007 recommended that no cap be placed on the number of access providers in any service area. The government accepted this recommendation of TRAI. Hon’ble PM also emphasised on increased competition while inaugurating India Telecom 2007. Accordingly, DOT has decided to issue a Letter of Intent (LOI) to all the eligible applicants on the date of application who applied up to 25.9.2007.”

    Through this paragraph, Raja illegally and arbitrarily changed the cut-off date. In an earlier press release issued on 25 September 2007, Raja had announced the cut-off date as 1 October 2007. But by advancing it to 25 September, he eliminated 343 applicants (that is 60 percent of the total 575 applicants) from the fray and placed those firms who had applied till 25 September in an advantageous position. A bizarre rationale given by Raja was that the date on which the cut-off date was announced would be the new cut-off date. (The CBI later discovered that Unitech had applied on 24 September and that was one of the main ulterior motives for making 25 September the last date of eligibility).

    Besides skewing the playing field in favour of a few select companies, this paragraph was also in violation of the TRAI Act. Because, on the one hand, Raja claimed that he had accepted the TRAI recommendation of placing no cap on the number of telecom players, and on the other, he eliminated a majority of applicants by imposing a cut-off date. This was a clear violation of section 11(1) (a), fifth proviso of TRAI Act, which makes it mandatory for the government to refer back the matter to the statutory authority in case it wished to modify or deviate from its original recommendations. But Raja brazenly violated this statutory provision.

    Paragraph 2 dealt with different technologies and had no bearing on the allocation of new licences.

    By paragraph 3, Raja turned the existing FCFS policy upside down. It read as follows: “DOT has been implementing a policy of first-come first-served for grant of UAS licences under which initially an application that is received first will be processed first and thereafter if found eligible will be granted LoI and then who so ever complies with the conditions of LOI first will be granted UAS licence.”

    This was a patent lie. The existing FCFS policy was exactly the opposite of what Raja claimed. The one man commission of Justice Shivraj Patil (set up by the government to inquire into the irregularities of spectrum allocation procedure since 2001) has nailed the manipulation of Raja by pointing out that the existing procedure was diametrically opposite to Raja’s claims. According to the CBI, under the existing FCFS procedure, the LOI was issued first to an applicant who had applied first. Then sufficient time was given for compliance with LOI conditions. The LOI prescribed a week’s time for acceptance and 15 days to deposit entry fee and performance bank guarantee or financial bank guarantee. Licences were then also issued on the same priority as per dates of application.

    7 Questions

    The CBI should have asked the AG in the first place

    1. Mr Vahanvati, you were the Solicitor General at the time, the second highest law officer of the country. Your job was to correctly interpret the law for the government. You wrote that you have “seen the notes”. Clearly, you must have also seen on page 1 and 6 of the file brought before you that your own minister had turned down A Raja’s request for seeking your opinion and sent the file back saying the matter should be referred to the Empowered Group of Ministers. Why did you bypass your minister?

    2. The file has dissenting notes of senior DoT bureaucrats objecting at the manner Raja was formulating the policy, particularly the objections raised about the pricing of spectrum and the departure from the existing FCFS policy that was in place since 2003. When you wrote that you have “seen the notes”, you surely must have seen these disagreements recorded by officials?

    3. On pages 26-27 of the same file, Raja had noted that the FCFS change had already been conveyed to the PM. It also said that you had already concurred to it and the fact of your concurrence was also communicated to the PM. If you had not given such concurrence, then why didn’t you inform the PM about it? After all, a scam was underway and it was being done citing your concurrence. But instead of thwarting Raja’s moves, you paved his way by noting that what is proposed is fair and reasonable.

    4. The first paragraph of the press release had multiple violations of the TRAI Act. The third paragraph violated the existing policy arising out of the Cabinet decision of October 2003. You have been appearing before different courts representing the government in telecom-related matters. Certainly you knew the TRAI Act better than many others. Still you have remarked that the press release, which was patently illegal, makes for transparency.

    5. If you had raised an objection to the illegal moves, which was your duty as the SG, the scam could have been prevented and Raja could not have gone ahead after your adverse opinion. Alternatively you could have taken the same stand as your minister and refused to grant the opinion. Sir, from the evidence on record, it appears that there was not only a dereliction of duty on your part, but also some kind of collusion. Do you have any evidence to rebut this conclusion?

    6. In its affidavit to the Supreme Court, TRAI stated that Raja had violated the TRAI Act by introducing new service providers through the press release of 10 January without seeking its mandatory recommendation under Section 11 (1) (a) 2nd proviso. Why did you as SG not check the press release to see that it was in compliance with the most fundamental and critical provision of the TRAI Act, which is the bedrock of processes involving new licences?

    7. Why did you choose to give a direct opinion (bypassing existing norms) on a matter which involved revenue of thousands of crores of rupees?

    But by distorting the FCFS policy, Raja ensured that the date of compliance of LOI conditions, which is submission of bank guarantee, etc and not the date of application, became the criterion for licence allocation. According to the CBI, the FCFS was custom designed to favour Swan and Unitech and push them ahead in the queue for spectrum allocation.

    The fourth and final paragraph read as: “However, if more than one applicant complies with the LOI conditions on the same date, the inter-se seniority would be decided by the date of application.”

    It was this draft press release consisting of the above-mentioned four paragraphs that was sent to Vahanvati for his legal opinion on 7 January 2008.

    The draft was sent to Vahanvati along with 29-page long notings (marked as ‘N’) along with all crucial annexures (marked as ‘c’), all bound in a confidential file titled UAS Licencing Policy (File No 20-100/2007- AS-1 and marked secret). This file contains the most crucial pieces of evidence of the 2G scam. The file contained departmental file notings, remarks of the minister and other senior bureaucrats and correspondence with other departments, including the law and finance ministry and the PMO.

    Internal Affairs
    Correspondence shows how Vahanvati approved Raja’s press release


    Click To Zoom
    BHARDWAJ’S OPINION
    The opinion of Hon’ble Minister of Law and Justice at page 9/c was discussed with Hon’ble MoC&IT. Ministry of Law and Justice has given their views that in view of the importance of the case and various options indicated in the statement of the case the issues be considered by Group of Ministers

    Click To Zoom
    INTERNAL NOTE ON FCFS
    In any case for spectrum allocation also, the date of priority should also be the same as the date of the application provided he is found eligible on the date of application and he deposits the Entry Fee and complies to the LoI within the stipulated time

    Click To Zoom
    MANJU’S NOTE
    The Department of Economic Affairs wherein they have expressed concern that we are offering the rates obtained in 2001 as entry fee even in 2007, without any indexation/current valuation. They want to be consulted in the matter




    Click To Zoom
    RAJA’S APPROVAL NOTE
    Approval: pl obtain Solicitor General’s opinion since he is appearing before the TDSAT and High Court Delhi. Press release appd as amended

    Click To Zoom
    RAJA’S VESTED INTEREST NOTE
    These type of continuous confusions observed on the file, whoever be the officer concerned, does not show any legitimacy and integrity but only their vested interests

    Click To Zoom
    VAHANVATI’S OPINION
    I have seen the notes. The issue regarding new LoIs are not before any court. What is proposed is fair and reasonable. The press release makes for transperancy. This seems to be in order

    The file reveals how the conspiracy took shape from one stage to another. In fact, the file starts with a departmental note about the letter dated 24 October 2007 that was sent by Raja’s ministry to Law Minister Bhardwaj with a request to seek the SG/AG’s legal opinion on grant of new UAS licences. A few pages later, the file records that Bhardwaj had refused to forward the request to the SG/AG for his opinion and instead recommended the matter of new licences to be referred to an empowered group of ministers.

    Another few pages later, the file contains a note from Manju Madhavan, Member, Finance (a senior DOT official) which states: “We are in receipt of a communication dated 22.11.2007 from the Department of Economic Affairs wherein they have expressed concern that we are offering the rates obtained in 2001 as entry fee even in 2007, without any indexation/current valuation… Since the rates have not been revised and the Finance Secretary has raised the issue, I’m of the view that this issue should be examined in depth before any further steps are taken.”

    But two pages later, Raja, to one’s utter shock, had rubbished Madhavan’s note by noting that “these types of continuous confusions observed on the file, whoever be the officer concerned, does not show any legitimacy and integrity but only their vested interests”. Thus Raja silenced the bureaucrat who was advocating revision of entry fee by accusing her of protecting vested interests.

    It was this file containing the above-mentioned communications that was sent to Vahanvati for his legal opinion.

    SINCE BHARDWAJ had already turned down Raja’s request of forwarding his proposed policy of issuing new licences to Vahanvati for his opinion, Raja devised a new method of sending the file across to Vahanvati, bypassing the law minister. He noted that: “Please obtain SG’s opinion since he is appearing before the (telecom tribunal) TDSAT and the Delhi High Court.”

    Vahanvati was appearing on behalf of DOT before the Delhi HC and TDSAT against the Cellular Operators Association of India, which was contesting the government’s various decisions. Raja used this as an excuse to route the 2G file to Vahanvati.

    On 7 January 2008, which is three days before the infamous 2G scam occurred when Raja issued LOIs, Vahanvati recorded the following opinion on the file: “I have seen the notes. The issue regarding new LOIs are not before any court. What is proposed is fair and reasonable. The press release makes for transparency. This seems to be in order.”

    Thus Vahanvati as SG concurred with the illegal decisions proposed by Raja of arbitrarily and illegally advancing the cut-off date and distorting the established FCFS policy in favour of select telecom players. The only change that Raja made in the draft press release approved by Vahanvati was that he removed paragraph 4 which at best had limited significance in the overall conspiracy. The corrupt and unlawful decisions were incorporated in the first and third paragraphs. The CBI itself in its chargesheet has explained the significance of the first and third paragraph.

    Raja

    In the dock Raja says Vahanvati never raised any objection against his press release on 2G

    Photo: AFP

    But after nailing Raja on the basis of these two paragraphs, the CBI then moves on to the fact that Raja had deleted paragraph 4. The agency has labelled the deletion of this paragraph as forgery committed by Raja. “When accused A Raja struck out the last para of the draft press release, at the same time he also inserted the words — press release appd (approved) as amended. This insertion in his note was wilfully done by accused A Raja after the then Solicitor General had already recorded his note dated 7.1.2008 after his (Raja’s note) on the running note sheet. By this dishonest act, accused A Raja in conspiracy with accused Siddhartha Behura fraudulently portrayed to the DOT that the amended draft had the consent of the then SG,” reads the chargesheet.

    A few sentences later, the CBI says that this amendment in the press release led to redefining of the FCFS policy. But a plain reading of the press release shows that the FCFS was redefined in paragraph 3 and not paragraph 4.

    It’s paragraph 3 that states that seniority would be fixed on the basis of compliance of LOI conditions. Paragraph 4 only states that if two applicants fulfilled the LOI conditions on the same date, then the date of application would be the deciding factor. So paragraph 4 is only auxiliary to paragraph 3 and not a negation of it. The specious arguments put forth by the CBI betray the deceptive nature of its probe.

    And the worst of CBI’s desperate attempts to give Vahanvati a clean chit appears on page 34 of its chargesheet. After placing on record the letter that Raja wrote to the PM claiming Vahanvati’s concurrence for distorting the FCFS, the CBI goes on to claim that “the investigation has not revealed any discussions with the then Ld SG.” Now consider this. In a reply dated 1 April, 2011, (one day before the CBI filed its chargesheet) Vahanvati had admitted that: “Yes. In the first week of December 2007, there was a discussion held with the then Union Minister for External Affairs... in relation to allocation of spectrum. The Minister for Communications & IT was present... The meeting lasted about 15 minutes. No minutes were prepared.”

    To complete the charade, the CBI also recorded a two-page statement of Vahanvati. On the first page, Vahanvati only stated the different cases in which he had appeared as SG for the DOT. It’s to be noted that law officers routinely appear for different government departments. While the opinion that Vahanvati gave was on the fairness of the press release and the justness and transparency of the policy it proposed, when the time came to explain his scandalous opinion before the CBI, he tried to connect with the ongoing litigations in which the DOT was a party at the time when licenses were issued.

    He told the CBI, “To the best of my recollection, it was in these circumstances that on 7 January 2008, an officer or officers of the DOT came to my residence and asked me whether there was any stay of any court with regard to the issue of LOIs.”

    So if Vahanvati is to be believed, no formal reference was made. He gave a three-line written advice/opinion after making the claim of having read the notes. This act of Vahanvati to entertain DOT officials with a file explicitly violates the Rule 8 of the Law Officers Conditions of Service Rules 1972, which prevents law officers from giving advice to any ministry or government department/PSU unless the reference is received through the law ministry. Surely the SG, on whose opinion hinge crucial decisions of the government and the Cabinet, would have known the rules that govern his service conditions.

    THERE WERE some basic questions that should have been addressed to Vahanvati (see box). But none of these questions were asked. Is this the way to investigate the most important case of corruption and crony capitalism of our times?

    In the affidavit filed before the Supreme Court as well, the CBI is silent on all these points. Instead, much emphasis has been laid on the deleted paragraph without explaining how it exonerates Vahanvati who was party to approving the first three paragraphs. In his statement recorded by the CBI on 10 March 2011 as well, Vahanvati has been allowed to get away by saying that the press release was amended and thus he was not in the wrong. One could argue that it’s a case of a collusive investigation where the suspect and the investigator have together devised a stratagem to deal with a sticky situation. Instead of rigorously examining the AG, he was given an escape route.

    ‘Vahanvati has become the AG from SG … and I am in jail for following his advice. Is this justice?’ Raja had shouted while appearing before the CBI special court

    Imagine this that the master orchestrator of the 2G scam, A Raja in turn has accused Vahanvati. He told the special CBI court judge OP Saini at the time of framing of charges last July that, “After 2008, he (Vahanvati) must have seen it (press release) a hundred times. Could he not say then or raise an objection? All this while he has been maintaining that it is a genuine press release and has been defending it in various forums. Will the top law officer of the country let it go if a minister makes changes in his advice? He became Attorney General from the Solicitor General. He became wise only after three years.”

    Raja may well be discredited but this particular argument is rooted in facts. Vahanvati as AG had defended this press release in a case before the Delhi HC and SC between 2009 and 2010 and had failed. The question that arises is that if Vahanvati and the CBI now think that the press release was tampered with, then why at the time of contesting the case before the Delhi HC didn’t the AG register his protest with the DOT or with the law ministry that the draft press release that he had vetted and cleared was amended without his approval. On the contrary, he defended the same press release and lost the case.

    The defence put by the CBI on this issue is that “Vahanvati only defended the cut-off date as a matter of law” (excerpt from CBI’s affidavit before the apex court) is duplicitous, to say the least.

    The facts indicate that the CBI has created a legal smokescreen by presenting a distorted and incomplete picture of Vahanvati’s role before the Supreme Court.

    TEHELKA reached out to Vahanvati for his response. But the AG refused to speak saying the matter was sub judice.

    The moot point is that in the face of such glaring lacunae in the CBI’s probe, would the case against Raja pass muster? The basic questions around Vahanvati’s role have to be answered. Or else the 2G case would also end up in a debacle like other high-profile CBI cases of the past.

    Ashish Khetan is Editor, Investigations with Tehelka.
    [email protected]


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    From Tehelka Magazine, Vol 9, Issue 06, Dated 11 Feb 2012
 

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