Reality Check India

Attacks on CAG on 2G spectrum scam

Posted in Uncategorized by realitycheck on November 27, 2012

Tonight I watched a show on NDTV  featuring former auditor RP Singh.  In the wake of the failed 2G auction questions are being raised about the motives and competence of the CAG Vinod Rai. Various Congress politicians have even launched a broad-spectrum attack on the institution itself.  In parallel, some sections in the media are seeking to exhume the zero loss theory that was given a state burial.

2G scam simplified  – it is the low price or the arbitrary allocation ?

The basic issue is one of  allocation. Here is the question : If there are 500 applicants for 122 licenses, how would you go about selecting who should have it ? Economics demands that the applicants who are most efficient should win. You can find out who the most efficient ones are by

  1. an entrance exam or a powerpoint interview – aka beauty contest (such as  Coalgate)
  2. who applied first
  3. who pays the most upfront yet is confident enough of its business abilities to compete in a market which already has powerful incumbents.

The option with the least possibility of intrigue and highest possibility of social benefit is the auction.  Be that as it may,  selecting the alternatives such as  FCFS or a beauty contest is a policy decision.  But this decision has a cost,  these two methods increase the likelihood  you have left money on the table due to the act of not following a market methodology.

The question then is, “Well how much did you leave on the table ?” The Congress and the media channel in question promote that argument that “We didnt leave anything on the table, because there is no table”  We didnt want to maximize revenue at all. Enter the social argument.

Social welfare argument

The argument here is that FCFS winners will offer low prices and do rural telephony in line with the benign government vision. This conveniently omits the fact that all aspirants have to meet strict rollout obligations as per the UASL license conditions.  That being the case, it is counter intuitive to suggest that FCFS winners possess some kind of altruistic gene that will make them go over and above their license obligations. Such policy making is dangerous because you are indirectly mandating some kind of virtuous behaviour at the expense of legitimate profit seeking.

What about what Raja did ?

Lets be honest here, if there was any loss at all to the exchequer A Raja of the DMK didnt cause it. He just rearranged the beneficiaries in some non-random, capricious way. This is of course illegal – for which he will probably pay a price. But lets say, he stayed with the first come first served criteria as date of receipt, and it so happened that the same companies miraculously  won. Would we then say that there was no 2G scam and no loss ?  Absolutely not.

3G auction figures for 2G, etc, etc

On the NDTV show Mr RP Singh said that since the 3G auction concluded in May 2010, it fell in Fiscal 2011 which was outside the timeframe of the CAG. Such technical talk is important but betray the lack of confidence of  Mr RP Singh.  Is he saying that if the audit window were to be extended by 2 months to May 2010, then the 1.76 Lakh Crore figure would make perfect sense ? If yes, then he has destroyed his own argument on a technicality.  The other arguments about 3G (Basmati rice) numbers (2100Mhz) and 2G (Ration rice) numbers (1800Mhz) have been analyzed threadbare many times over we are not going into it.  Also at this point, it is well understood by the public that winners who won the 2008 licenses then conducted private auctions to select a foreign partner and discovered a price on their own.

What about the failed 2012 Auctions

The real disaster is the UPA’s handling of the biggest 2G fallout – the cancellation of all 122 licenses by the Supreme Court.  They always seemed to adopt a thinly disguised passive-aggressive resistance to the court ordered auction.  Were the auction to succeed, maybe not to the 1.76L Crore extent, but to a lower number, t hat would totally vindicate the CAG. Show the Congress and DMK ministers in very poor light.

The  2008 allocation was not without its positives. A key one was that incumbents could not participate –  this was designed to shake off any cartel. Unfortunately this condition was removed in 2012.  This leads us to the two basic goals of an auction.

  1. Prevent collusion
  2. Increase participation

Both these goals  were adversely impacted by various policy decisions  a) a one time charge at winning price applied to all holding over  6.4Mhz  b) refarming (vacating the 900Mhz band) at the winning price c) pegging the starting bid for CDMA (800Mhz) at 1.3x the winning price d) no clarity on when the 700Mhz band will be available – this is where 4G LTE is most efficient e) no clarity on whether enough spectrum will be available in 800Mhz for data services like Photon+, Reliance, MTS  (say 5Mhz or 10Mhz). Into this quagmire , you add a curious tendency to honour any and all “level playing field” arguments brought forth by various players. You never know what you are getting into. In short the policy climate is messy.

Do you want to sell ?

A common tip to  newcomers on  eBay is  “Do you really want to sell your stuff?”

Say you had a guitar which you dont mind keeping, but for Rs10,000+ you will sell it. So you go on eBay and set the starting bid at Rs10,000.  If the participants find your starting bid too high they will simply assume you are too greedy and walk away. There are millions of such items on eBay with no bids at all. You dont care because you are in no hurry to get rid of the guitar and are not in immediate need of money.  This is the exact effect a stupendously high starting bid of Rs 14,000 Cr for a pan India license has had.  Telecom Minister Mr Kapil Sibal boasts that he got down TRAI’s recommendation of an even more ridiculous Rs 18,000 Cr figure.

So in effect, a high starting price combined with all the other factors decreased competition. Did it increase collusion ? We dont know, but obviously if one of the Big 3 (Idea, Vodafone, Airtel) bid and won high, it would rebound and impact all of them via the one-time levy. It would also impact the CDMA holders by setting their staring bids at 1.3x and so forth.  There is no way this auction could have succeeded.

Increasing competition by injecting disruptive players is key, not just for the auction, but for growth of the sector.  China has AT&T why cant India ? What are the policies that hinder their participation ? You need players from the west  like AT&T, Verizon, T-Mobile, Telefonica to participate. That would certainly make collusion that much harder among the incumbents because it is hard to buyout the big dogs at advanced rounds in an auction. If the meaningless 74% FDI cap on Telecom has to go, so be it.

As the auctions fail to generate any enthusiasm; nationwide  a total of 500+ Mhz lies unused. This is causing real loss in spectrum usage charges. Perhaps Mr Vinod Rai can take a look at this next.

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Where’s our story ? Media on 2G Spectrum Scam – Shyness or something more ?

Posted in Uncategorized by realitycheck on December 3, 2010

Nira Radia is not just another news source.

The 2G scam is not just another scam.

I was nodding in agreement with Manu Joseph of the Open Magazine when he stuck to his question to Barkha Dutt.  His question is, “Where is the story ?” If you string along such a high profile lobbyist with such high stakes head-fakes like “I will talk to xyz” – then the expectation is something big would break.  No story.  A corporate lobbyist desperate to place a person already under severe corruption charges in the exact same ministry is not a story, she tells us. She plainly said, “I dont think this was a big deal”.  Because, if she really felt the 2G scam had robbed an asset belonging to  street children  – the coverage of the scam would have been completely different. We do have to be careful to not make it just about Barkha Dutt – the entire media played a very suspicious role in the first 18 months since the scam broke. And it continues to do so today (next post)

 

I know so much about media silence on this scam because I despaired for a long time about the woeful lack of coverage of a scam that outraged me.  Who am I ? Why should I care so much ? Am I allied to the rival political party ?  How dare a tiny nameless ant take on the mighty ?  These questions are irrelevant. Lets just say I will do whatever it takes to punch way above my weight category against the corrupt and purveyors of fake social justice.  Just an ordinary outraged Indian citizen.

I have researched, scoured the internet, and recorded whatever I could about the 2G scam over a period of two years. My dominant feeling during this entire period was a sense of exasperation about the near total silence in the media.  Most of my inputs in the early days of the scam were from some cowboy outfits (Pioneer being the most notable).

Here is a list of blog posts on the subject with specific excerpts of my frustration with media silence.

Dec 12 2008 : Spectrum Scam and bullet proof vests

Thats right ! The size of the scam is greater than the amount we are going to spend on all defence purchases this year.  We can probably give each commando a bullet proof humvee and still have some money left over. How do you think this will make those who wear substandard bulletproof vests feel ?

Yet this story will hardly make a ripple in the media. Why ? Mr Raja has already passed the buck to Mr Singh and Mr Chidambaram, both media darlings. The matter has reached a dead end.

Dec 14 2008 : Scam robs poor street children

Maybe, the problem is that this scam has not been explained in the media in simple language.  Lets try it.

Dec 15 2008 : CPM for JPC to probe 2G scam

BJP does not seem to be doing its job as the main opposition party. Unfortunately, neither the media, nor the ‘middle-class’ bloggers will take it up because this been linked to the Prime Minister and P.Chidambaram, both who are above criticism.

To hell with 55,000 Crores cash money !! (I am not kidding, this is CASH the government could have got today, but has gone to Aravind-Adiga-White-Tiger-style-entrepreneurs)

Dec 16 2008 : About Yechury’s letter to PM on 2G scam

Yesterday, the media ran non stop headlines on the cash-for-votes scam.  Some bloggers including Offstumped covered it too. The only interesting thing about this toothpick of a scam is how the BJP hobnobbed with the CNN-IBN, literally begging them to do a sting.

The three stunning characteristics of the spectrum scam are :

….

The medias next assignment is this : Somehow run stories to divert attention from this scam. The minister A. Raja has clearly mentioned that he has full backing of the PM and former Finance Minister P. Chidambaram.

The CPM is the only party making a noise about this.  For that Kudos !

Dec 17 2008 : Satyam Daddy buys sons companies for $1.6B (2G ref)

First, an update on the grand daddy of all scams. The Congress Party led UPA government’s underselling of a national property by Rs 55,000 Cr is starting to attract eyeballs.  Some “entrepreneurs” have become dollar billionaires in just a 6-9 months.

….

Nothing is going to expose Indias underbelly like this scam.

The media must strain every muscle to shield some people in the Congress. The Telecom minister has clearly said that both Prime  Minister Dr Manmohan Singh and former Finance Minister and current Home Minister Mr P. Chidambaram were in the loop on all details.  We have not heard a single word from these two gentlemen. As things stand – they are in on this !

Dec 18 2008 : Biggest scam in history of independent India

Request to bloggers (Mutiny, National Interest, etc)

Please write at least one post about this  ! It is in the “National Interest” to protect the scarcest of national resources. Is it not ?

Dec 19 2008 : RS Debate on scam

I remember around this time there was a near complete blackout in the media. I had to find information from Rajya Sabha transcripts ! None of the channels even reported this truthfully later !

Dec 19 2008 : No simple scams please

We will continue to follow this story. Of course stupid, we are aware it will die soon. The PM and former FM continue to maintain a silence waiting for this outcome. Which they will be rewarded with in due time.

Around this time a couple of stray sources like Statesman / Telecom Tiger had some content.

Dec 19 2008 : Scam – CPM pushes for investigation

Watch UTVI

I switched TV channels today see if any one was running a story on this giant among scams. CNN-IBN, NDTV, TIMESNOW, none of them even mentioned it. My guess is because the PM and former FMs have been in the loop according to the minister.

UTVI was the only channel which carried a story including an interview with Sitaram Yechury.

This is a great chance for UTVI + Business Standard to shake up the other media houses.

Dec 20 2008 : Incredible India – Rs 1,00,000 Cr turns private

At this point everyone agrees the government and the poor people of India lost BIG. There are only alibis being offered. It is time the PM responded to this issue.

————————————

It is not too late now. The Telenor, the DOCOMO, and the Etisalat deals have to be scrapped. The cash returned to their respective owners. These companies should either roll out on their own or surrender their licenses so they can be sold for their actual value. If they are too small to offer services on their own, they should not even be allowed to play this game.

I called for license cancellation in 2008. By this time, quite a few blogs (Ecophilo) etc had picked up on the story. Still nothing on TV.

Dec 23 2008 : Antulay matter laid to rest (2G scam ref)

The Indian state lost big, dollar billionaires were created out of thin air. No one seems to dispute that. Yet, there is no word from the PM or FM.  This is what the 100K Cr spectrum scam is was all about. Sukh Ram was hounded for causing a loss of Rs 2 Crore to the exchequer. Thats right ! We have come a long way, haven’t we ?

The corrupt state of India is like a giant flying octopus.. If you want to change its nature you have to grab on to something real, like a dangling tentacle. If you can hold on to the tentacle and patiently climb up, you can  kill the monster. Antulay’s outburst does not mean much. It is not anything concrete, it is just words that can at best lead to ‘Gee it came out all wrong, sorry’.  It is like a jet of ink that confuses and prevents us from holding on to a tentacle.

This is my last post about the scam. This was the best tentacle we had in a while.  Sad to see it go.

Of course, this was not my last post about the scam. I was still outraged / dejected at how something so obvious did not get air time and Antulay’s nonsense antics (which I bet none of you remember now) topped air time.

Dec 27 2008 : We want clinching evidence (Prabhu  Chawla)

Dollar billionaires created holding just a piece of paper. No one, including you Mr Prabhu can dispute it. National assets sold for their real value to foreign players via real estate companies acting as intermediaries. No one, including you disputes it. We do not know if there is a fire, but we sure can see the thick smoke billowing.

Yet, you want evidence to even ask these questions. You have not written enough.

Can you blame our enemies (the cross border variety) from adopting the same ‘give me evidence’ tactics ?

Of all, Mr Prabhu Chawla’s cavalier and dismissive response stands out. Of course , now we have a pen with which we can connect the dots.

Jan 1 2009 : Satyam past must be investigated (2G scam ref)

This past year alone various institutions (Supreme Court, TRAI, COAI, CVC, etc) have been asked to prove their mettle. All have fallen woefully short. The CVC is being exposed in the way it deals with the magnificent spectrum scam.

The complex interconnection of politics + landlords + entrepreneurs dominate the political landscape in India today. (Political clout might save the day ) Cash changes hands freely while the media is paid off in cash or in secular money.

—-

I say we hold off on asking our soldiers to make the supreme sacrifice until we fix the house. Do you agree ? Dont we owe them that much ?

Jan 14 2009 : 2000 Cr Satyam bailout (2G scam ref)

Manmohan Singh and P. Chidambaram who are completely silent on the Rs 60,000 Crore spectrum scam can hardly be expected to represent the hapless tax payer.

May 5 2009 : No issues of any kind this election

It does not define itself. If the BJP is for Hindu rights, where was it in Malaysia or Sri Lanka ? It did not make a big deal about the Spectrum scam (which I think is a hidden factor in this election). Either it did some adjustments on the scam or was unable to make an issue out of it.  Both scenarios are disturbing.   Still its work on the Ram Sethu is appreciated.

Was really upset the BJP did not make the spectrum scam an election issue.

VVVVVVVVVVVVVVVVVVVVVVVVVVVVVV

INTERMISSION !

22 May 2009

Barkha Dutt  / Vir Sanghvi talk to Radia here on 22 May 2009

This is the untold story of Mediagate. You can see by now HOW MUCH water has flowed under the bridge as far as the 2G corruption story goes.  It is in this context that Mr Manu Joseph of The Open Magazine nailed Barkha Dutt on her show.

Where is the story ? This would have been the story of the century for me and almost all Indians. That a corporate lobbyist it pushing an already tainted person into the same ministry.  Not to mention the splits in the DMK. Nothing. Nada. Was reported.

Not only is this a story but is evidence of a crime committed against the hungry.

VVVVVVVVVVVVVVVVVVVVVVVVVVVVVVV

 

Jun 3 2009 : The vote magnet

“you accuse them of hopeless bias, exagerration, dramatization, and working up a frenzy, the perplexing defence the media will offer you is : “Hey let us go, only 1% of 3% watch English electronic media”. The fact is, the media still sets the table at dinner. What they dont like isnt even on the menu. Competition is laughable as they are mostly from the same gene pool.  For example : they could have easily pursued the spectrum scam as vigorously as Varun. This would have dramatically changed the colour and the mood of the free agent voters.”

Oct 24 2009 : CBI raids DoT offices over spectrum scam

It would be helpful to recall the media’s complete unwillingness to follow the story when it broke. I know what you are thinking, “Gotcha RC, How can you link to stories in the media and then claim the medias deliberate silence ?” The answer is that there is a big difference between reporting a story and following a story.  The media coverage, with the notable exception of the Daily Pioneer,  was nothing more than repeating the newswire. We never had any interviews with the guys behind Dynamix Balwas, Tiger Trustees, Zebra and Parrot Holdings, Genex Exim (allocated 300Cr of Swan with only 1 lakh share capital) – who exactly are these guys who became billionaires overnight. Not one question was put in front of the then Finance Minister Mr P Chidambaram and the Prime Minister Dr Manmohan Singh.

Oct 26 2009 : Sunil Jain on spectrum scam and the corrupt state

There is a lot of blogtalk about Kashmiris and Naxals. For arguments sake consider the following. What really happens if scams of this size time and again go unsatisfactorily handled. At least in the past they took place in the darkness of government media.

Oct 27 2009 : Decoding the governments defence of the UASL Licensee windfall

The more I follow this story, the more I feel that Mr Raja of the DMK must not be the only ones investigated. Mr Raja clearly mentions that Mr Chidambaram and the PM were appraised at every step. Mr Raja appears to have appraised the former FM at various stages. There have been no rebuttal from the either the former FM or the PM, so we have to assume what he is saying is true.

Oct 31 2009 : Raja turns tables

This CBI case is dead on arrival. The people of India have lost 60K Cr because their property (airwaves) has been stolen. The only way for this story to make more headway is for the media to latch on to this. In the 90′s the media would stay put on corruption stories and that was in no small way for the downfall of the Congress. What happened “post liberalization” ?

Nov 19 2009 : Serendipity and the new age entrepreneurs

Normally, monsoon time means rains and fog, but it seems like this season it is smoke and mirrors.

Jan 22 2010 : Chennai based company sells stake to Etisalat for 380 Cr

How many have heard of this company ?  How many companies without even a website sell their stake for Rs 380 Cr.  This single deal is worth more than half of funds raised by all Private Equity (PE) firms combined* in 2009. Surely a monumental achievement. Yet no one talks about it.

Aside : Outstanding and courageous journalism by Mr Gopikrishnan and the Pioneer.  All other media houses are avoiding this story at the same time as if on cue.

Back in the early 90′s, the media would jump on every story of corruption. That in  no small measure was responsible for toppling the Congress party’s monopoly. You would think that will all the liberalization, the media would go hammer and tongs on this one. Well its not happening and that tells you a lot about how liberalized the media really is.

Another scandal the media isn’t touching

The case, popularly known as Motorola…

Sep 24 2010, Corruption across the spectrum

I have blogged extensively in the past about the so called 2G spectrum scam. What really sets this scam apart in a nation wallowing in corruption is the scale, the brazenness, and the role of the media (we want clinching evidence Prabhu Chawla).

Role of the media: Take spotlight off the beneficiary

Recently, a leading media channel organized another Business Awards night. The usual suspects were awarded. …

You would expect that a couple of young entrepreneurs who crashed into the Forbes India Billionaires list at position #49 and #50 would find at least a mention. Not to be.  Is this how we treat our young entrepreneurs and start ups ?

In the answer to this lies a great secret.

Our media these days is very careful to screen beneficiaries of corruption. They would rather prefer a top-down approach to coverage of corruption stories because inevitably this gets lost in bureaucratic  ‘octopus-ink’.  In contrast, a bottom up pursuit will act as very potent entry points into the scam and have a high human interest angle. All Indians, including Maoists, really hate others getting rich on their money.

Lets put the scam in terms of the actors (underlined) :

Foreign firms paid market value to Indian middlemen for a natural resource who in turn paid peanuts to the government.

So does the media give equal airtime to the three actors. Lets see.

We have a spectacle of an  interview with Telenor CEO, who plainly said his firm is used to doing business in “countries like India”.  We also have the cursory interview with the government officials and ministers. But, you never hear from the “middlemen” who now command companies with market valuations in the billions of US dollars.  I have another example of a inspirational entrepreneur. They are a venture capital firm which sold their stake for 350 Crores – more than a 1/2 of all private equity investments in India in 2009 – yet we did not have one interview with their management and not one award. Contrast to the constant air time and awards given to sundry silicon valley venture capital firms who talk big over puny investments of 1-3 crore.  How are our young supposed to get inspired ?

Forbes India quite obviously has a lot to learn about India.

Nov 20 2010 : Spectrum scam – Daddy’s got a sweet tooth

But, if you push this line of offense you are falling into their trap. They will trap you in technicalities and word play. This is what Sibal is doing.  The intent will be relegated to the corner and something absurd like a technicality or misinterpretation or word play will take centre stage.

 

Thanks for getting this far.

This is not the end. The media even today is having unfocused coverage of this particular scam. The disallow any talk about this scam in isolation instead always wanting to pull in a secondary irrelevant scam as a smokescreen.

 

2G spectrum scam : Daddy’s got a sweet tooth

Posted in Uncategorized by realitycheck on November 20, 2010

The governments strategy has been pretty consistent all along.

“Nobody stopped us from perpetrating what you people are now calling as the ‘scam of the century’.”

 

Shorn of technicalities the scam can be summarized as below :

Before Picture :

1. Country (including minorities, dalits, tribals) had 4.4 Mhz of spectrum

After Picture :

1. Country has 0  Mhz of spectrum

2. Country got 10,000 Cr extra cash in pocket

3. Telenor, Docomo, Etisalat, Bahrain Telecom – the companies offering services – have 40,000 Cr less

4. Dozens of Indians gatecrash Forbes India Rich list ( a few even make it to the Billionaires list)

We can debate all we want about investment vs buyout, presumptive vs substantive loss, paper money vs cash money.  Even ignoring the 3G spectrum price discovery, simply based on what foreign companies have paid to Indian real estate middlemen – the value of the loss is 60,000 Cr.

All the arguments about low cost spectrum enabling low cost services and rural coverage is bogus. From the service providers point of view, they paid 6000 – 10,000 Cr. Period. They could care less about what their Indian partners paid.  Thats right, Etisalat who is giving you services does not care if Swan got the waves for free. For them, they paid 6-7,000 Cr and that investment would determine the pricing of their service.

Absence of bonafides is the new normal

Which brings us to this : Nobody stopped us from doing what we did

Mr Kapil Sibal who is the new Telecom Minister has decided to pursue the “Somebody stop me” line of defence. This is not only deplorable but insulting to the intelligence of those who have been following this scam.  Separatists will use these as yet another reason not to put up with the shenanigans of the state.

The premise :

1. We (the UPA & ally DMK) will operate in a malafide manner unless someone stops us.

2. If we get caught – we are guiltless because no body stopped us. You should be asking why the systems that ought to have stopped us failed. We just did what we do best.

All the back and forth by the government pinning saying, “But TRAI didnt say anything” / “PMO didnt say anything” squares off perfectly with the “somebody stop me” strategy.

The absurdity of this line is :

1. TRAI is not a superior power to the government. If the government wanted to it can ask TRAI to explain. Change its malicious positions. As it is doing now.

2. Besides, the TRAI has repeatedly refuted standing behind the 2001 price level.

From the CAG :

The TRAI, in its report, observed that the entry fee, as it existed in 2001, was not a realistic price for obtaining a licence in the changed situation considering the dynamism and growth of telecom sector… It also observed that the value of spectrum was not correctly reflected in the extant pricing model, and recommended again for de-linking of spectrum from licence.”

But, if you push this line of offense you are falling into their trap. They will trap you in technicalities and word play. This is what Sibal is doing.  The intent will be relegated to the corner and something absurd like a technicality or misinterpretation or word play will take centre stage.

Dont believe me.

Try arguing with the following statement.

“But that report was never discussed by us because GoM and Finance Ministry were not saying they ought to be discussed in reply to our Nov 31 letter to them”.

 

 

Somebody stop me video from The Mask

Sunil Jain on the spectrum scam and the corrupt state

Posted in Uncategorized by realitycheck on October 26, 2009

Its great to see Sunil Jain with more :

But there’s a far more serious problem the CBI has to deal with. Let’s assume the CBI gets all the proof it needs — where does it go after this to check how solid its legal case is? To Attorney General (AG) GE Vahanvati, India’s highest law officer. Well, when he was Solicitor General (SG), Vahanvati had opined in favour of much of what Raja’s done — how is the AG going to say that what he said as SG was incorrect?

Source : Can Manmohan ditch Raja

Why is the government of India risking becoming a laughing stock with the following defence of the billion dollar companies created ?

* As for the windfall profits made by companies like Swan, “this is a completely mistaken analysis”.

What they really mean is that the money paid by Telenor and Etisalat are only ‘capital infusion’ and not going directly to the bank accounts of the zoo creatures (zebra, swan, tiger, parrot, etc).

What is the difference, Sir ? The newly minted billionaires have many ways to achieve liquidity. Here is a quick list in the hope that the government will atleast drop this weak line of defence.

  • In the long term : Selling their newly inflated holdings
  • In the short term : Loans against their inflated holdings
  • Any auditor will tell you dozens of more ways.

The question is not only whether someone became rich. The bigger question is : Did the actions of the government result in the Indian people losing about $10Bn ? I do not see anyone disputing this. So, address this first.

In other news :

CBI in Chennai (Karunanidhi fumes at probe)

Prime Minister says nothing wrong when India’s poor lose $10 bn

Prime Minister Manmohan Singh said on Sunday that allegations about a scam in the spectrum allocation were incorrect but refused to answer a question about the Opposition’s demand that Telecom Minister A. Raja resign following last week’s CBI raids on the offices of the Department of Telecom.

“It is normal in a democracy to have differences of opinion and arguments,” he said, using the Hindi word ‘naunk-jhaunk,’ when asked about the Opposition’s allegations against Mr. Raja. “But that doesn’t mean that what the Opposition says is always correct.”

Source : The Hindu

I have no idea what “Naunk – Jaunk” means, but no one is claiming the opposition is always correct. We only want to know if the opposition is correct in this specific instance.

Bonus :

There is a lot of blogtalk about Kashmiris and Naxals. For arguments sake consider the following. What really happens if scams of this size time and again go unsatisfactorily handled. At least in the past they took place in the darkness of government media.

What effect would it have on the legitimacy of their claims and their challenge to states claim over monopoly over violence. What if they say that ” We dont want our stuff to be looted, maybe the north Indian plains guys dont care, maybe the south Indians dont care, but we dont want to be looted.” Any group whether Naxals or Jihadis with military resources can point to such corruption and advance their own agenda as morally better.  The only response of the Indian state would have to be to increase the military force by y% to compensate for the decrease in its own moral legitimacy by the corresponding y%.

Such negative energy never leaves the system.

CBI raids DoT offices over spectrum scam

Posted in Uncategorized by realitycheck on October 24, 2009

The CBI raided some offices of the DoT seeking evidence about the 2G spectrum allocation irregularities.

The Central Bureau of Investigation on Thursday raided top Department of Telecommunications (DoT) officials on allegations that they had colluded with private companies in issuing licences and allotting spectrum to new players on a first come, first served basis last year.

CBI officials searched the offices of, among others, deputy director general (access services-I) A.K. Srivastava and wireless adviser Ashok Chandra.

“The searches were done to collect incriminating documents linked to the irregular award of the licences,” said a CBI official who did not want to be named.

Source : HT

It would be helpful to recall the media’s complete unwillingness to follow the story when it broke. I know what you are thinking, “Gotcha RC, How can you link to stories in the media and then claim the medias deliberate silence ?” The answer is that there is a big difference between reporting a story and following a story.  The media coverage, with the notable exception of the Daily Pioneer,  was nothing more than repeating the newswire. We never had any interviews with the guys behind Dynamix Balwas, Tiger Trustees, Zebra and Parrot Holdings, Genex Exim (allocated 300Cr of Swan with only 1 lakh share capital) – who exactly are these guys who became billionaires overnight. Not one question was put in front of the then Finance Minister Mr P Chidambaram and the Prime Minister Dr Manmohan Singh. Mr Raja claims that the entire process was approved by them.  Reality Check had covered the attitude of Mr Prabhu Chawla who wanted ‘clinching evidence‘ before following the story. Did you have clinching evidence before you followed Bofors in the 90’s ? Does the media have clinching evidence against Modi ? There is immense public interest in getting to the bottom of it as evidenced by the reactions blogs and other alternate media are getting for these corruption allegations.

Back to the CBI, are they serious about investigating the scam or are they forced to conduct raids as a formality following the complaints received by the CVC (Vigilance Commission) ?

To really answer this, we need to take a step back and lay out the facts as we know it.

1.  Swan, Unitech, Shyam became overnight billionaires. Holding nothing more than just a piece of paper, they were able to parlay their Rs 1650 Cr into 6 or 8 times their value in a matter of weeks. Telenor and Etisalat paid what most consider to be fair price for the spectrum (owned by the poor people of India, but social justice champions of dissent will not tell you that). Till date no one disputes that these companies made it big and that a national resource was compromised to make it happen. However, this does not alone mean there was a scam. It could have just been incompetence.

2. The allocation of licenses was messy, the dates were moved around, and at the time of actual allocation there was a melee at the Sanchar Bhawan. No one disputes the process was messy, maybe this is how first-come-first-served licenses are issued in India. However, this does not alone mean there was a scam. It could have just been incompetence.

3. So, there are only two possibilities. Either there was a massive scam or massive incompetence. The net result is a national resource was used to make some private parties very rich (billion dollar rich).

4. The media did not follow this smoking gun because the scam occurred so close to the elections. The BJPs tepid response to this is even scarier. As Mr Swapan Dasgupta says, were they managed ?  In the early 1990’s, the BJP could have rode this all the way to political victory. Of course, the media back then would pounce on every corruption story.

By raiding the DoT and prodding Mr Raja, the Congress party is up to its old tricks. The policy is “Tease but dont tickle”. Recall 1993 when the Congress party (Mr PV Narasimha Rao led) went to great lengths to defend a judge accused of corruption and defeated his impeachment motion.  Mr Kapil Sibal was instrumental in that historic episode too.

The Congress wants this to be seen as a DMK issue and not a UPA issue. They are also making the vaccine scam a Ramadoss issue (Azad Vs Ramadoss : PSU closure to be probed).  Both A Raja and Dr A Ramadoss have clearly stated that the Prime Minister and the cabinet was fully appraised of the activities and modalities.

What surprises me is the BJP’s statement.

BJP spokesman Ravi Shankar Prasad said, “For a fair investigation into the matter, it is important that the Union Minister should immediately be removed from office.” Responding to a query that Raja had said that the allocation was made with approval of Prime Minister Manmohan Singh, Prasad said that in that case the Prime Minister should clarify his position in the matter.

Source : Express Buzz

Mr Prasad makes the same mistake our confused educated elite make.

Exhibit 1 : After the terror attacks. At that time,  the cacophony included “Shivraj Patil has to go”, “PM should sack Shivraj”, “Sonia should ask Shivraj to resign”.

Exhibit 2 : After the farm crisis and farmers suicides. The cacophony turns into “Sharad Pawar must go”, “Pawar spending more time in BCCI than at Agriculture”

Exhibit 3 : After the quota -without -data episode. Arjun must go. Light up Arjuns effigy.

Exhibit Now : Raja must go. The PM should take action. PM should rein in xyz.

These people have no idea how little they are asking for.  “We like you but just make this tweak please” will get you nothing in a democracy (voting based selection).  The only way to ask for tweaking your favorite party in a democracy is by voting them out, even if another evil gets in, so the next time around they will come back tweaked. Mr Ravi Shankar Prasad is asking for a tweak instead of going for the kill.

Say, the PM persuades Raja to go. Does that solve anything ? What happens  to the beneficiaries ? Do they get to keep their Bentleys ?  Recall the cabinet just approved Telenors hike in its share of Unitech Wireless.   The Wall Street Journal reported the purchase value to be 37 billion rupees (about USD 800m).  Raiding these companies is not enough.  Under the Congress’s eyes, there  is another one in the making- the WiMax controversy.

Do you expect much from these raids, Mr Raja has already claimed that the cabinet and the Prime Minister (of the Congress party) were being fully updated about the going-ons. Mr Karunanidhi has already hinted at Congress’ involvement.

DMK sources in Chennai said Karunanidhi impressed upon the PM that he felt Raja was being unnecessarily humiliated, as he had consulted the PM on the spectrum allocation issue all along. The DMK stalwart also argued that the PM’s decision to retain Raja in the communications ministry was clear evidence of his innocence. He also pointed out that Congress had defended the communications minister all along both in Parliament and in public, and even campaigned for him in the Lok Sabha elections.

Source : TOI

That is his ticket to immunity.

The poor Indian people continue to watch billionaires emerge from their money. Of course, negative energy of this magnitude will never leave the system.

Earlier coverage on Reality Check

I wished other topical Indian blogs covered it in addition to their coverage of big ticket items like how to deal with China, Pakistan, and United States. We need to deal with the basics in the same way we cant really run a 100m sprint without taking that much required dump first.  Territory is just another national resource.

Spectrum scam – Yechury’s letter to PM

Posted in Uncategorized by realitycheck on December 16, 2008

Yesterday, the media ran non stop headlines on the cash-for-votes scam.  Some bloggers including Offstumped covered it too. The only interesting thing about this toothpick of a scam is how the BJP hobnobbed with the CNN-IBN, literally begging them to do a sting.

The three stunning characteristics of the spectrum scam are :

1. Simplicity  – underprice a government asset and sell to private profiteers, who will then resell for the actual price. If Indian ‘middle class‘ cannot understand this, then they surely cant understand scams involving complex financial instruments.

2. Cash – other scams are hard to size because they might involve financial instruments. In this one, it is crystal clear what the market price of the national resource was ( Rs 65k Cr) and what was sold to private players like Swan, Unitech ( Rs 9k Cr). The entire loss is plain cash.

3. Size – this scam is so big that it can pay the entire amount involved in the alleged Bofors scam as interest every week.  That the BJP can keep mum on this while blaring away at Bofors is unbelievable.

—-

The medias next assignment is this : Somehow run stories to divert attention from this scam. The minister A. Raja has clearly mentioned that he has full backing of the PM and former Finance Minister P. Chidambaram.

The CPM is the only party making a noise about this.  For that Kudos !

From the CPI-M website.

In a letter to the prime minister on November 18, 2008, Yechury called for a probe by an appropriate independent agency to fix responsibility for “one of the biggest financial scams of all times in the country” — the total loss to the exchequer of giving away 2G spectrum in this way is over Rs 60,000 crore 

Source : CPI-M (emphasis mine and I agree)

Some excerpts from his letter

There are also reports in the press of Turkcell, a leading Turkish telecom company and Europe’s third largest operator being in talks to buy 51 per cent stake in Datacom solutions.

For a number of these corporations, who were awarded the so-called ‘first come first served’ licenses, the promoters are either unknown or shadow companies. This further reinforces the doubts regarding the bona fides of these companies as also the intent of the policy.

Source : CPI-M

Great, now we have Turkcell > Datacom, Telenor > Unitech,  Etisalat > Swan.

——

No issue is big enough to shake the Indian voter any more.

Spectrum scam and bullet proof vests

Posted in Uncategorized by realitycheck on December 12, 2008

Remember the mumbai police and the commandos.  Remember that many of them died because of our lack of investment in state of the art combat gear and training. You may also have heard about the little spectrum scam.  Read on as I attempt to make a tortuous connection between the two.

There is a little flurry of activity in the court about this little spectrum scam.

Today, the government filed its response to the Delhi High Courts notice.  The response itself is a bunch of meaningless words conveying nothing.  Read it here. Stripped of layers of fat, the essence of the argument is this :

Had spectrum been auctioned, it would not have been possible to collect the higher usage charges of the order of 2-6 per cent and a maintenance and administration cost which, typically of the order of 0.5 to one per cent, could now be recovered in a judicial manner.

Source : The Hindu

In other words, the government is not denying the loss of Rs 55,000 crores. It is merely saying that it can make money annually in little chunks.  This is the classic red herring. Service/Usage charges are an entirely different topic, you can charge market price for spectrum AND derive usage charges.  The question in front of us is ” Did you lose Rs 55,000 Cr today ?”

Let switch to the Progoti Blog for a really good response.

Their deconstruction of all the arguments put forth by the government is simply outstanding.  It has been a while since I read something quite like it. Keep it up guys.

For Raja’s logic to hold, (a) it must be the case that these ‘spectrum usage charges’ and ‘administration and usage’ charges can’t be levied on spectrum on which the correct price has been paid; and (b) the revenue that is gained each year in perpetuity from the spectrum that was given away almost free must be more than the Rs 55,000 crore that has been foregone.

And a snippet that drives home the size of this scam.

As is well-known, Raja gave away 2G spectrum for a song earlier this year and, after token resistance, Singh okayed this since no price was too high for his government’s survival, more so since the price was being paid by the exchequer. This price, we now know was around Rs 55,000 crore, or an amount that’s more than that earmarked for buying defence equipment this year.

Source : http://www.pragoti.org/node/2401  (Emphasis mine)

 

Thats right ! The size of the scam is greater than the amount we are going to spend on all defence purchases this year.  We can probably give each commando a bullet proof humvee and still have some money left over. How do you think this will make those who wear substandard bulletproof vests feel ?

Yet this story will hardly make a ripple in the media. Why ? Mr Raja has already passed the buck to Mr Singh and Mr Chidambaram, both media darlings. The matter has reached a dead end.

We have absolutely no disagreement with the Finance Ministry over the spectrum and licence fee. We are working in consultation with each other and all decisions have been taken with prior permission of Prime Minister Manmohan Singh”.

Source :  ITExaminer

The Congress is trying to steer clear of the scam. They must not be allowed to, but they will.  Mr Raja must not become the scapegoat, but he will.  He has kept the PM and FM in the loop in every step of the 2G spectrum allocation. If any wrongdoing is found, the PM and FM must also be forced to answer to the public.

More in a later post. Meanwhile check out Barbarindians’ take on it.

—-

PS:

I have googled high and low for the website of Swan Telecom. I cant find it.

How many $2 billion companies in the world do not have a website ?

Can you guys locate their site ?  Leave a link in the comments section.

2G scam – TRAI says cant price spectrum

Posted in Uncategorized by realitycheck on September 1, 2011

See important updates at end of this post.

Two news items that might give you an idea of where CBI is going with this

Maran gets clean chit (well almost) without even questioning him. Aides say Maran delayed files.

In what comes as some relief for former telecom minister Dayanidhi Maran, the CBI on Thursday told the Supreme Court that no element of coercion was found in sale of Aircel. The CBI, told this to the Supreme Court, in the status report filed today in the 2G spectrum allocation scam.The CBI said that it has so far found no evidence that Dayanidhi Maran misused his office to ensure that Aircel was sold by its owner to an entrepreneur who was close to Mr Maran and his brother, Kalanidhi.

Earlier, Maran had to resign as Union textiles minister in July after C Sivasankaran, who owned Aircel in 2006, complained against him and the CBI began investigating tha matter.

Source : HT

I am going to ignore the Maran story for now.  There seems to be great hurry for the CBI to wrap up a weak case because the accused have threatened to call in the PM and FM as witnesses.  One wonders if the case will even go to trial at this stage.

Lets focus on the other story. About the TRAI.

TRAI toes Raja’s line

Exonerating the former minister and Dravida Munnetra Kazhagam (DMK) leader, TRAI has told the CBI that his methods of selling and not auctioning spectrum were indeed according to rules and also it was not possible to estimate the revenue an auction would have fetched, reports said.

TRAI’s stand could weaken the CBI’s attack on Raja, when a special court, hearing the 2G case, will decide on Sept. 15, whether charges against the former minister and 16 others are valid enough to mandate a trial.

Source: IB

But the people of India are smarter. Way smarter than that.

Consider the issue on the table.

The Indian people have taken a 1.76Lakh Crore hit.

We are told that revenue generation is not good for us even though the money could have directly gone into constructing schools, hospitals, and infrastructure. 

A levy on AGR  instead of making money on sale is the better way it seems. We are also told that increasing tele-density and allowing rural poor to own a phone demands this hit .

This is where the genesis of the scam lies. The DMK ministers were adamant from day one on control of the pricing and allocation methodology. The CON leaders pushed for a while, probably alarmed at the scale of the wrongdoing, but suddenly fell in line.

Lets assume for a moment that the twin goals of a) inclusive telephony and b) a level playing field were worthy indeed in a country where teeming millions live in squalor. So worthy, that the government felt that leaving $40B on the table was a bargain.

That leads us to this question  :

Where is the study that balanced the two goals ? If there was no study at all – then it just means this whole line of teledensity, rural poor, inclusive telecom is a bogus argument.  We also know there was no study done – because inclusive telecom wasnt even a goal. Just a post facto alibi after being caught.  There was no homework done because the teacher gave no homework.

Dr Subba Rao puts it across the best in his testimony to the PAC.

Dr. Subbarao summed up:

“There is an argument to be made that if your forego revenue, you can gain on the welfare side like creating  teledensity and providing telecom access to lower income people.  Providing them opportunities would not only enhance growth but also made them more inclusive.  But I think that has to be an explicitly  objective and indepth study of costs and benefits of foregoing a certain amount of revenue against what would be the returns by way of increasing teledensity.  We had not done that at any point of time.  We were always arguing on the basis of level playing field rather then on the basis of any growth dimensions this might have subsidise that and if they have chosen to do that, then, as a civil servant, it would have been beyond my remit to contest that”.

In other words, the government did no due diligence at all before selling a most precious national asset.

What is a fit punishment for this gross negligence ?

Wont cancellation of the fruits of this malfeasance be the  most just ?

We will get to that in the next post.

Back to the TRAIs statement in the Supreme Court

Seven months after the Central Bureau of Investigation asked telecom regulator TRAI to quantify the loss to the exchequer in the 2G spectrum case, the latter has said that it is not possible to predict with certainty the precise values of spectrum that would have emerged in an auction.

Source : IT

In other words, TRAI is claiming to be incompetent. This is standard issue for those who are caught with their pants down.  This a complete U-Turn by a new chairman secretary Mr Arnold and contradicts TRAI’s own affidavit to the Supreme Court in March. Well guess what, this line is bogus too because it is trivial to deduce a fair value of the spectrum based on a number of parameters.

Some of these points were also made in the PAC hearings.

1. The USA made $32 Billion from selling spectrum just a few months before our own 2G. So there you go – an exact value. Update: See footnote.

2. Even  naive student of economics will apply indexation (based on inflation or PLR) to reprice the 2001 figure.  This, by itself would have priced the 2008 spectrum anywhere between 3,600 Cr to 4,400 Cr.

3. Total Indian market capitalization of all telecom companies in 2007-08 was $200 to $250 B.  Several orders of magnitude more than in 2001. That factor can be used to reprice the spectrum.

4. By 2008, all aspects of running the business were ironed out.  Technology winners had emerged. New vendors slashed prices of base stations and central equipment since 2001. Incumbents were bursting at the seams due to lack of spectrum. Airtel was begging for more spectrum even before 2008.

5. Vodafone paid $10B for a ~55% stake in Hutch in order to enter India. This values Hutch at $20B, it would have been straightforward to value their assets and isolate a figure for the spectrum. In hindsight, they could have entered India for $1.5B like Telenor and Etisalat did.

The CBI chasing down the NDA government is most unfortunate, not because they are doing such a bizarre thing. But because the Indian people are now awake to this sham. The anger will get reflected in unknown ways.

The government of the day being duly elected has every power to reframe and tweak any policies of any previous government.

Please rest assured we will do whatever it takes to spread awareness about the true nature of this monumental scam. Cancellation of all licenses is the only way the country can get justice and recover its lost assets.

Two Updates :

1.  Thanks to twitter.com/ChandrusWeb for pointing out this error. Mr R.K. Arnold is the Secretary of TRAI and not the Chairman. Mr J.S.Sarma is the Chairman.

2. The USA figure of $32 billion was cited by Chairman of VSNL during PAC hearings. I think he combined the numbers from two FCC auctions : Auction 73 and the AWS auction.  Auction 73 raised $19.3 B for the US government (Rs 90,000 Cr), this was won by AT&T  and Verizon. The AWS auction was won by T-Mobile ($4.2 B) and Verizon Wireless ($2.8B) and others – netted $13.2 B (Rs 52,000 Cr) for the US Treasury. It must be kept in mind that the USA is a smaller market than India even though ARPUs are higher due to value adds.

Nevertheless, the point is –  TRAI is misleading the country that it is impossible to reasonably value the spectrum by using a false dichotomy. The TRAI feels (now) that either they  should be able to predict with 100% certainty the precise value or they should be allowed to do nothing.  We are told, they did nothing because “it is impossible to  predict with certainty the precise values of spectrum that would have emerged in an auction”  Obviously such an dichotomy doesnt exist at all, because if it did then there is no need for auctions.  We can just invite TRAI to use its supernatural powers of precise prediction.  The awakened Indian people understand that just because you cant predict with 100% certainty does not mean you cant put a reasonable value on it.

I have never met a person who refused to leave the house because he didnt have an Audi A-8 to go out in.

The media ignores everything and instead of taking TRAI to the cleaners, claims the 2G case is dead.

2G Scam – The arbitrary and capricious policy test

Posted in Uncategorized by realitycheck on September 28, 2011

It looks like the government is going to brazen it out and here is the grand strategy.

There is no scam because what was executed was exactly the policy of the UPA government.

What about the gigantic loss pointed out by the CAG, you might ask ?

There was no loss because the policy was never to make money. Put another way, the so called “loss” you talk about is factored into the policy agreed by the then duly elected Congress Finance Minister , Prime Minister and A. Raja and D. Maran of the DMK.

If you are like me, you would come away with Maybe the policy itself is the scam ?”   Can you call a policy decision a scam – isnt it sacrosanct  ? That is the topic of this blog.

I know the United States is not India, but here is how they deal with challenges on policy decisions. If an agency (such as DoT/TRAI) makes a decision with as far reaching revenue implication as the 2G auction it must be prepared to pass scrutiny. You cant forward a post facto ‘electromagnetic social justice’ argument unless that argument can be shown to have been the driving force and all other views were adequately factored in.

Here is a overview of how USA/Canada/ deal with this issue :

A reviewing court may set aside an administrative decision if it is unreasonable (under Canadian law, following the rejection of the “Patently Unreasonable” standard by the Supreme Court in Dunsmuir v. New Brunswick), Wednesbury unreasonable (under British law), or arbitrary and capricious (under U.S. Administrative Procedure Act and New York State law). Administrative law, as laid down by the Supreme Court of India, has also recognized two more grounds of judicial review which were recognized but not applied by English Courts viz. legitimate expectation and proportionality.

Mark this : The Supreme Court of India has two extra grounds – legitimate expectation and proprotionality.

Source : Internet

Lets look a bit more at the American Law here, as I think this is most apt for the 2G case. The US standard of scrutiny is called the “Arbitrary and Capricious Test”.  Check out the book Administrative Law by Jack Beerman for more on this. Again I beg you to stay with me – I know India is not the USA.

“Courts will set aside agency decisions found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). As the Supreme Court has explained: “The scope of review under the ‘arbitrary and capricious’ standard is narrow and a court is not to substitute its judgment for that of the agency. Nevertheless, the agency must examine the relevant data and articulate a satisfactory explanation for its action including a ‘rational connection between the facts found and the choice made.’” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). Agency action is arbitrary and capricious “if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.” Id. Reviewing courts “may not supply a reasoned basis for the agency’s action that the agency itself has not given.” Id. (quoting SEC v. Chenery Corp., 332 U.S. 194, 196 (1947)).” — Fox v FCC, Docket No 06-1760-ag, slip 18-19 (2nd Cir. June 4, 2007)

 

I imagine the entire Congress Party is getting ready to forward that they knowingly dropped revenue consideration in favour of increased spectrum user fees. Note that I am purposely sidelining the “level playing field” . This is a bogus argument which will be dropped somewhere along the way. As soon as they realize this will lead them into the legal trap of unjust enrichment of private individuals.  Besides it is highly debatable if it is indeed a level playing field if new entrants can gatecrash into a market that was proven by others without partaking in any of the risks.

So the entire defence is going to eventually rest on this :

You cant fault us for policy – there is no loss because the goal was teledensity and not revenue on licence.

Once they do this : The case is cleanly split into two – 1) the policy decision and  2) Raja’s manipulation. On the second case, the damage is limited because cancellation of all licenses can not be on the cards. On the first case, the government will  enter into a familiar standoff with the judiciary questioning its authority to entertain challenge to policy decision.

The hope is the court doesnt miss the irony here : On one hand, the UPA government is saying Rs 32 per day is the standard of wretchedness and on the other it says forgoing 50,000 Cr on capital account can be justified for teledensity and level playing field.

 

Arbitrary and Capricious policy Vs Wrong Policy

I noticed this article by Pratap Bhanu Mehta in todays paper. The way the questions are framed should bother us all. Consider this :

It puts Chidambaram on the spot only when you assume three things: that the policy was wrong, that being associated with the policy does put a question mark on your integrity, and that the decision was not the responsibility of the prime minister or cabinet as a whole.

Source : IE (emp mine)

There is no wrong policy. Because Wrong isnt a working word. The question should be – “Was it an arbitrary and capricious policy?”  This nuance is important.  What is right for PC/Raja/Unitech  may be wrong for Indians.  On the other hand,  a  policy can be fairly tested as Arbitrary and Capricious .  If you accept this nomenclature – the next question will be. Is there enough evidence to prove that the policy, of forgoing tens of thousands of crores in exchange for teledensity, can pass a ‘reasonable basis’ test ?

The stakes are this :

If the policy is found to be arbitrary and capricious – then the policy can be cancelled. The fruits of the policy will be voided and they can be redone to benefit the Rs 32/day wretched people who have the most to lose.

Can the government’s teledensity argument stand up to the test ?

What happens if an equivalent to the American standard of “Arbitrary and Capricious” is applied by the court. As mentioned in my previous blog post – we have the former Finance Secretary Dr Subbarao on record stating that teledensity was neither an objective not a factor at any point of time.

But I think that has to be an explicitly  objective and indepth study of costs and benefits of foregoing a certain amount of revenue against what would be the returns by way of increasing teledensity.  We had not done that at any point of time.  We were always arguing on the basis of level playing field rather then on the basis of any growth dimensions this might have subsidise that a..

Source : RC – TRAI says cant price spectrum

 

I leave you with a short comparison of 2001 vs 2008 – the governments defence should start from these points.

 

2001

Subscribers : 40 Lakhs

Those who want spectrum : 12

Available  : 210 licenses based on free spectrum

Demand from operators : Zero

2008

Subscribers : 24.9 Crores

Those who want spectrum : 575

Available : 157  (122 new + 35 crossover)

Demand from existing : Severe – 150 existing operators in queue

(Source : Rajeev Chandrashekar’s presentation)

 

 

Next ?

A point by point rebuttal of all arguments of the Delhi Super Lawyers club – all of whom stand to make windfall profits from any confusion they can introduce into the case. Amazing they get so much airtime to put forth their clients interests before a gullible country.

 

Corruption across the spectrum

Posted in Uncategorized by realitycheck on September 14, 2010

Terror : Saffron, Green, and Red

Corruption : Across the spectrum

India today under the dominant political party

I have blogged extensively in the past about the so called 2G spectrum scam. What really sets this scam apart in a nation wallowing in corruption is the scale, the brazenness, and the role of the media (we want clinching evidence Prabhu Chawla).

Today, the Supreme Court has issued a show cause notice to Union Minister A. Raja and other branches of government while hearing a PIL filed by various agencies like the Telecom Watchdog, the CPIL,  and veteran journalist Pranonjoy Roy Thakurta.

The CBI’s failure to file a chargesheet or arrest any person in the murky 2G spectrum scam came under scrutiny in the Supreme Court, which on Monday directed Union Telecom Minister A Raja, the Centre and the CBI to respond as to why not the probe be monitored by the apex court or a special investigation team be set up to go into the scam.

Source : Daily Pioneer

In legal terms, the notice itself is fairly routine. At the very least,  it flies down the news wires and brings the corruption scandal into the media again.

The appointment of new CVC : Heads I win, tails you lose

In this light, Pranonjoy Guha Thakurta as a must read piece in the Deccan Chronicle today on the recent appointment of the new Central Vigilance Commissioner Mr PJ Thomas. Please go and read it now. Here is an excerpt of how serious this government is about pursuing the alleged theft of billions of dollars of the scarcest natural resource.

How Manmohan Singh and P. Chidambaram of the Congress completely overruled the fair objections of Sushma Swaraj of the BJP, even when a unanimous alternative choice was within reach.

It is hardly surprising that the appointment of Mr Thomas as CVC by Prime Minister Manmohan Singh and Union home minister P. Chidambaram by over-ruling the objections raised by Sushma Swaraj (who, incidentally, also holds a Cabinet rank as Leader of the Opposition) raised a big hue and cry, since he had just demitted office as secretary, DoT.

About how the new CVC appointee secured a note pre-emptively clipping his wings in what would be his new job.

The Bharatiya Janata Party has alleged that Mr Thomas was chosen because he would not rigorously pursue investigations into the 2G spectrum scandal since he “secured” a note from the law ministry while he was DoT secretary which argues that the allocation of electro-magnetic airwaves, or spectrum, used for telecommunications was part of official “policy” that cannot be questioned either by the CVC or the Comptroller and Auditor General (CAG) of India.

Source  : Deccan Chronicle

Observe how fast the files flew through various offices – as if his appointment was a foregone conclusion. This would automatically mean Manmohan Singh and P. Chidambaram viewed Sushma Swaraj as a mere dummy – who believes friendliness can sway a regime such as the Congress.

The DoT note to the law ministry on the spectrum allocation issue apparently moved with remarkable alacrity between August 10, 2010, and August 12 from official to official before the signatures of minister Mr Raja and secretary Mr Thomas were appended. That’s not all. Within a day, on August 13, the law ministry responded to the DoT’s queries. Such expeditiousness is hardly the hallmark of Indian bureaucracy.

Source  : Deccan Chronicle

On behalf of the citizens of India who are open to an alternative conventional wisdom, Reality Check India would like to extend a Thank You to Mr Pranonjoy Roy Thakurta for this excellent piece.

Role of the media: Take spotlight off the beneficiary

Recently, a leading media channel organized another Business Awards night. The usual suspects were awarded. This year, some brown people holding mid level positions in Obamas cabinet too were honoured. They in turn duly regaled the crowd with their funny accents. The anchor beseeched Mr NR Narayana Murthy once again to step into public life, straight into the office of the President. Mukesh Ambani received the ‘last but not least award’, then cocktails flowed and the crowd dispersed into the Mumbai night. Nothing wrong with these awards.

You would expect that a couple of young entrepreneurs who crashed into the Forbes India Billionaires list at position #49 and #50 would find at least a mention. Not to be.  Is this how we treat our young entrepreneurs and start ups ?

In the answer to this lies a great secret.

Our media these days is very careful to screen beneficiaries of corruption. They would rather prefer a top-down approach to coverage of corruption stories because inevitably this gets lost in bureaucratic  ‘octopus-ink’.  In contrast, a bottom up pursuit will act as very potent entry points into the scam and have a high human interest angle. All Indians, including Maoists, really hate others getting rich on their money.

Lets put the scam in terms of the actors (underlined) :

Foreign firms paid market value to Indian middlemen for a natural resource who in turn paid peanuts to the government.

So does the media give equal airtime to the three actors. Lets see.

We have a spectacle of an  interview with Telenor CEO, who plainly said his firm is used to doing business in “countries like India”.  We also have the cursory interview with the government officials and ministers. But, you never hear from the “middlemen” who now command companies with market valuations in the billions of US dollars.  I have another example of a inspirational entrepreneur. They are a venture capital firm which sold their stake for 350 Crores – more than a 1/2 of all private equity investments in India in 2009 – yet we did not have one interview with their management and not one award. Contrast to the constant air time and awards given to sundry silicon valley venture capital firms who talk big over puny investments of 1-3 crore.  How are our young supposed to get inspired ?

Forbes India quite obviously has a lot to learn about India.