 Hello and welcome to NewsClick. Today we have with us Poranjay Guhatakurtha, eminent journalist and also one of the petitioners in the 2G case in front of the Supreme Court. It has been argued for quite some time that the Finance Ministry was really not involved in fixing the issue of the license fee and it did not give its concurrence to Raja's position that they should be given on a first come first serve basis under 2001 prices. It's been argued that Mr. Chidambaram and Raja had met but no concurrence was really given and no minutes were kept out of this. Though Raja has argued in different places and made statements that Chidambaram was fully involved, he had concurred with the prices, he had concurred with the 2001 prices being accepted and there is really no final difference between Chidambaram and Raja on this. What does the current report indicate? I think we have to take a little more nuanced view of the issue because clearly what has now happened in the 2G scam case is that the spotlight is on Mr. Chidambaram. We have to first look at the circumstances that led to the award of licenses on the 10th of January 2008 and then look at what happened thereafter. Moreover, it's also very important to in this case at least distinguish between the ministry and the minister. In the weeks and the months before the award of the licenses or the letters of intent I should say on the 10th of January 2008, there is evidence that Mr. D. Subarao who was the then finance secretary who is currently the governor of the Reserve Bank of India, Dr. Subarao had written a series of letters to his counterpart in the Department of Telecommunication that is Siddharth Bhikkura before him Mr. Mathur. So, Mr. Subarao was writing to his counterpart in the devotee and what he had clearly indicated that the manner in which each license was sought to be valued because it's not just a piece of paper, it's not just a license because bundled with that license was spectrum electromagnetic spectrum which was very very precious which was very very scarce. To price it at 2001 rates when it was discovered by an auction was in the opinion of Mr. Subarao and the officials of the Ministry of Finance clearly not on. He says that either you have public auction or you have some sort of an indexation of market mechanism to derive its true market value. Now, what happened thereafter was the duty under Mr. Raja overruled every objection of the Ministry of Finance and went ahead and gave its awarded those letters of intent. Now, this is what happened. Now, what happened after that? It now subsequently transpires that there were meetings that took place between Mr. Raja and Mr. Chidambaram in the presence of Mr. Bhikkura who's in jail and Mr. Subarao their secretaries wherein it was mentioned in the minutes the same meeting which was supposed to be not minute but now those minutes indicate that the Finance Minister said in that note that he is not seeking to revisit the situation that prevailed. Even at that stage it was just letters of intent. The government could theoretically have stalled that process but it did not because the Finance Minister chose not to revisit the process. The issue that really comes out is the fact that not only Mr. Chidambaram overruled his secretary which is of course he is well within his powers to do but he also publicly at least his colleagues in parliament said that no notes were kept of the meeting and no formal ministeration did not transpire that is not the case. Now, it transpires that is not the case. There were indeed records of the meeting that took place. It's not that meetings on all meetings are necessarily minuted but in this case this meeting was minuted because we also have the Prime Minister's office involved in this and we have Mr. Pulok Chatterjee's meetings also. Yes, you know, what is coming out is something very, very curious. It also explains why the government went out of its way to ensure that the public accounts committee, the first draft report that was prepared by Dr. Munlu Manohar Joshi was not adopted by the committee and by a very thin margin. There were 21 members, 11 members opposed it, 10 members supported it and the same Mr. Munlu Manohar Joshi is now trying to have another report but in that report he was critical of Mr. Chidambaram's role saying that he tacitly approved, he may not have explicitly approved. Now, what happened thereafter? The Prime Minister himself has acknowledged in his media interviews that initially there was divergence of views between the Department of Telecommunications and North Block which is the headquarters of the Ministry of Finance. Thereafter he says there was a concurrence of views. Now, how exactly was there a concurrence of views when the secretaries of the two departments clearly differ and here you have the Minister eventually overruling his secretary. This is one of the interesting sort of sub-theme of this whole thing. In an interview Mr. Chidambaram had said that they were waiting for a meeting of the telecom commission to take place and in that telecom commission meeting his secretary, Mr. Subar Rao would have participated but before that telecom commission meeting took place, the letters of intent were issued on the 10th of January 2008, almost preempting that process. So, once again we are finding a big question mark. Mr. Chidambaram said he didn't know that this would happen. Then after and this is very interesting, the Prime Minister's office says that an arms-length distance should be maintained and we have an interview given by Dr. Montek Singh Aluwali, the Deputy Chairman of the Planning Commission to Mr. Karanth Harper saying that you know when there are two ministries of disagreements, eventually the view of the ministry which has mooted the proposal prevails. Now this is strange logic. All along we have been told that actually the Ministry of Finance is the big boss, the Minister of Finance is the big boss and he can actually overrule and there are hundreds of instances where the Ministry of Finance has overruled proposals of other ministries. Even aside the correct rules of procedure is if the ministers have a disagreement they have to either go to the full cabinet or to an empowered group of ministers. Absolutely correct. And in this case the law ministry headed by Mr. Hans Raj Bharadwaj at that point of time had suggested that since there was a difference of view between the Ministry of Finance and the Department of Telecommunications there should be an empowered group of ministers. The point is it was not only not referred to an EGOM, it was not even taken up by the Cabinet Committee on Economic Affairs and thereafter Dr. Aluvalia in his interview to Karanth Harper said that this must not be construed as the Prime Minister Dr. Manmohan Singh turning a blind eye to what was happening. But if this is not Nelson's eye what is it? But leaving that aside for the time being let's calm down. I mean somebody is being economical with the truth. Absolutely. I mean let's be very clear about that. Let's be very clear that the economist in this case Dr. Bontek Singh and Aluvalia is being economical with the truth. But coming back to the issue which you have raised earlier the issue of mergers and acquisition. This is an issue on which actually finance ministry has even better locus than on the issue of license fee. And obviously again these terms were also modified and agreed to it appears in the same cabinet in the same meeting between Chidambaram and Raja. Basically what Mr. Raja did was that after the letters of intent were issued on the 10th of January 2008 roughly three months later in April that year Mr. Raja issued an order sumoto without taking anybody's consent changing the rules relating to mergers and acquisitions. And one crucial element of the rule was there should be a lock in period of three years before the license fee holder could sell its license. Now once again here again is a very very clever interpretation of the law. One thing is to sell a license and the other is to dilute the equity of the company which has bought the license. In this case what we found is that the unit a company in the unit a group and another company in which was earlier called SWAN and then became DB etysalat these companies what they did was that they roped in foreign partners. In the case of Unitec it was Tele-Nor of Norway in the case of the Balva DB reality group it was etysalat of the United Arab Emirates. What is interesting? I mean subsequently of course there was another similar deal involving the Tata Tele services at Dokomo of Japan but just sticking for that matter to SWAN stroke DB etysalat and also the unit a group what clearly the change in the merger and acquisition rules enables them to do was to rope in the foreign partners and what was very interesting the price at which the foreign partners purchased equity clearly indicated that the value of the spectrum behind that license was 7 to 10 times higher than what had been paid and what is worse is that you're indulging in semantic jugglery by trying to justify what happened by saying this is not sale of a license but dilution of equity you know it's a bit like the way in which even the first come first serve system was manipulated you know whether it should be the date of applying for a letter of intent or whether it should be the date on which you pay the amount of the letter of intent or the license fee it's almost like you shouldn't be selling a resource that belongs to the people of this country a scarce resource a national resource a natural resource in the way in which cinema tickets are sold that's the first point but even if you assume that they are selling it and you are standing in the queue and you're about to reach that box office and you said oh it's now my turn to get the ticket suddenly a bunch of goons from the back pull you back from that queue and said no the guy behind you will get the ticket but that's how the system was grossly abused and there is again proof to some proof to show that people are sitting in Mr. Rajah's anti-chamber and became number one on the in the queue but really now what we are seeing are really what shall I say the more sophisticated nuances being expressed and what is selling what is dilution of equity and also the issue what is an associate what is not an associate company that swan was really a part of ADAG group just as also loop telecom was a part of SR the Rui see once again we are seeing a desperate government trying to use the letter of the law to justify what happened I think what is also a rattle the government is the defense that that Mr. Raja has taken and and Kanimo he has taken I mean their lawyers have clearly said firstly they're saying please bring the Prime Minister summon the Prime Minister that's certainly not a particularly edifying situation to be in what is more their lawyers arguing in court that if what Mr. Kapil Sible the telecom minister is arguing that there was zero loss then why the hell are we in jail if there was no loss to the exchequer why was there any reason to put them behind bars and and the way in which this is all playing out and I think the court will take a very very proactive role one is the CBI in who who is it going to now investigate is it really going to close its investigation that this juncture you know and this whole issue of the associate companies the definition of who is really an associate company I'll give you a classic example on how this whole tiger cheetah leopard zebra was done you know suppose you have three companies a b and c a was 50% of b b owns 50% of c c owns 50% of a so a b and c claim they are independent corporate entities not associates why because neither owns more than 51% of the other and therefore has a controlling interest but you know if you if you see the larger picture mr. Chidambam lawyer we have mr. Kapil Sible lawyer both arguing in different mr. Salman Khurshid lawyer mr. Virappa Moilli law minister okay so you know you have this entire argument that the government is giving which is to defend what has happened that license have been given at very low costs really a true of a prices by companies have made a killing by reselling the license dilution yeah they would call it reselling dilution equity as a colleague and then what is it that they are willing to accept has been the problem for which mr. Raja is in jail that actually procedural lapses took place the poor man is in jail only for having done procedural lapses well all the money that has been made apparently been done all in good faith because there has been zero loss to the next checker this is really the government's argument and the government's argument as you rightly pointed out is sounding so weak so specious so hollow that I do not think that we've heard the last about this 2g spectrum scam and in a way in a strange way it's coming back again and again and again to haunt those who are holding very very important positions the the most important positions in the current government we have a brazen scam followed by brazen defense thank you for enjoying the coming down here