Most 2G licences given in 2008 were illegal: CAG

The Comptroller and Auditor General has said 72 of 122 new 2G licences issued in January 2008 by the department of telecommunications were awarded to companies that did not meet the eligibility criteria.

Datacom Solution, STel, the Unitech Group of companies, Loop Telecom and Allianz Infratech were issued licences in 2008, though they weren't eligible to apply, CAG said in a note.

Nine companies were given new licences in January 2008.

"DoT chose not to abide by its own guidelines and issued 122 licences without detailed verification," it added.

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"Termination of licence of five applicants by DoT would result in encashment of Rs 2,625 crore (Rs 26.25 billion) on account of financial bank guarantee of Rs 1,875 crore (Rs 18.75 billion); and performance bank guarantee of Rs 750 crore (Rs 7.5 billion)," the note said.

The audit body said the applications should have been rejected in the first place.

"Since there were 343 other applications waiting to be processed, eligible applications from the waiting list based on the first-come-first-serve principle should have been considered for issue of licence," it said.

The Supreme Court recently asked the government to respond to the CAG report that points towards large-scale irregularities and favouritism allegedly by Telecom Minister A Raja in the Rs 70,000-crore (Rs 700 billion) 2G spectrum allocation scam in 2008.

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A Bench comprising Justices G S Singhvi and A K Ganguly asked Solicitor General Gopal Subramanium to go through the draft report alleging that the ministry of telecom ignored the advice of the law ministry and the prime minister and allotted the license by favouring 'ineligible' companies at the lower rate on first-cum-first basis by arbitrarily deciding the cut off date.

The Bench posted the matter for October 22 without perusing the status reports filed by the Central Bureau of Investigation and the Enforcement Directorate into the investigations in the case.

It returned the reports filed in sealed covers to both the agencies stating that it will consider them during the next date of hearing.

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Raja was represented by senior advocate T R Andhyarujina who was asked to be supplied with the copy of the CAG report.

Earlier, Subramanium said he would like to allay any apprehension that investigations would not be fair.

The Solicitor General said an FIR relating to the scam was registered against unnamed persons a year ago and the matter has undergone judicial scrutiny in the Delhi high court and the Apex Court.

"Today we have a situation where co-ordination is required between the CBI and the other government agencies like ED, Income Tax department, etc," he submitted and pleaded that six months time be granted for a comprehensive probe.

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He said the transcript of the tape involving telephonic conversation between several persons, including corporate lobbyist Nira Radia and some journalists, have to be examined as it has a bearing on the allocation of 2G spectrum.

However, advocate Prashant Bhushan, appearing for the NGO which has alleged financial irregularities by Raja in connivance with certain middlemen, including Nira Radia, alleged that the probe by the CBI was not fair as even after the registration of FIR a year ago, none of the persons has been interrogated or arrested.

He said neither Raja nor Radia has been interrogated or arrested till now despite the tapped conversation clearly throwing sufficient light on their alleged involvement in the scam.