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2G scam: PM smelled something fishy but stayed away, says Arun Shourie
Sruthijith KK, ET Bureau
Former telecom minister A Raja's statements in court has opened a new political battlefront, with BJP demanding the resignation of the Prime Minister and P Chidambaram, who was finance minister when the 2G spectrum allocation was made. The telecom minister during the NDA regime, Arun Shourie , has been tracking developments on the 2G trial. In an interview to ET , Shourie discusses what he believes the PM knew, going by the file notings, Raja's defence that he inherited the policy, and other related issues. Excerpts:
Are you inclined to believe Raja's statements that he did everything with FM's and PM's knowledge?
Raja was very clever. He wrote about 18 letters to the PM during the 2G episode. And in each letter, he implicated somebody. For instance in his letter on 7 November, 2008, he says, "kindly recall my meeting with you on 4/11/2008 along with the honourable Finance Minister in connection with 3G spectrum auction and one time spectrum charges for 2G. During the discussion, you advised me to meet the press, to explain the policy and rules.
Accordingly, I addressed the issues in the press conference today and explained the related issues including the dilution of shares as explained by the Finance Minister, of Swan and Unitech." The same day he issues a press release, in which he repeats that this issue has been explained by the Finance Minister. "This matter has been discussed and clarified with the Finance Minister," the press release says, in which this portion is in bold!
Then the FM himself has said, yes, the PM asked me to examine this particular matter. He says I examined it, I said it is dilution of equity and it was consistent with policy and procedure. If that is the case, how is it that now, the Enforcement Directorate, which is under the same ministry, has slapped a 7100 crore penalty on Etisalat? For violation of FEMA!
If everything was done as per policy and procedure, then how? It now transpires, according to ED, that Etisalat was given permission to bring in money from UAE. But it, instead, brought in money from an unknown unit in Mauritius. Secondly, on the same day, Syed Salauddin, a close associate of Mr Karunanidhi, brought in 380 crore. He was allowed to bring it in as a domestic investor and he brought the money from UAE. He has also been slapped with a Fema notice. Both things happened in Swan on the same day.
So, is Raja on firm ground?
All these statements these lawyers like Kapil Sibal are making now, saying everything was in order and there was zero gain to the companies, are statements that will be used by these companies to defend themselves in notices. Kapil Sibal is not the lawyer for the PM, he is the lawyer for Raja and the companies.
It is not Raja who is dragging in the PM now. You go back to Sibal's first press conference on this matter. There he said Raja kept the FM and the PM informed at every turn. I had said at that time that this is the sentence that Raja will use. That is exactly what has happened. Now you wait and see. When the Telecom Minister says the companies made no gain, that will be their defence.
The PM had said in Parliament in February that the then FM and Raja had agreed on a formula and this was communicated to him. Raja says the equity dilution in Swan Telecom and Unitech was discussed and cleared with the FM before the PM. FM says the PM wanted to know if it was a case of dilution of equity or divestment. This shows that the matter that has caused the most outrage, that these two companies benefitted from enormous valuation for a license they paid the government very little for, was known to the PM and he did nothing about the policy that allowed these companies to do this.
All this is in the public domain. Priority lists have been changed, the basis of first-come-first-served had been changed, cut off date had been advanced and 500 applicants were reduced for favoured companies. It now turns out from the CBI chargesheet that the license applications of three companies were approved even before the policy was announced.
You mean to say rivals would not have brought it to the attention of TKA Nair (Principal Secretary to the PM) and others in the PMO? Do you mean to say the Intelligence Bureau and CBI and others would not have brought this to their attention? I cannot believe that. Because our system is so structured that the PM and his office gets to know about every sparrow that moves in the government. That I can testify from personal knowledge.
This was all in public domain...
The notings on the file indicate that the PM was quite alarmed at what was happening. These licenses were given on 10 January, 2008. On 11 January, the Principal Secretary notes that the PM desires to take into account the developments concerning the issue of licenses. This means perhaps that he wanted to have a meeting about it. The file is submitted back to the PMO on 15 January. Now see what the Principal Secretary notes.
"Prime Minister wants this informally shared with the department. He does not want a formal communication and wants PMO to be at arms length". Why would he give this instruction to his officers unless he knew that there is murky stuff going on and it is better to stay away. I think he had full knowledge and I think he had deep apprehension that something terrible has happened and his only concern was let's stay away from the filth. That is not what a PM is supposed to do.
You mean, he knew but shied away from taking any action?
This particular sentence, at arms length, very well describes Dr Manmohan Singh's attitude in regard to CWG, defence acquisitions and every other major decision. Weapons purchases are not happening because Mr Antony (Defence Minister) also wants to stay at arms length on every decision. I think this will be an apt title for a book on Dr Singh's tenure as PM - At Arm's Length.
Raja has also said that if the policy was wrong, all former telecom ministers must be jailed.
Raja says that he was following earlier policies but he flouted them. Take first-come-first-served (FCFS): He says I will FCFS. Then he disregards pending applications. If you were following the policy, you should have dealt with them first. Then he says I will have this cut-off date of October 1. After the applications are received, he says no, I will advance deadline to 25 {+t}{+h} September.
Then he changes FCFS. First, it was time and date of application received. And suddenly it becomes time and date of fulfilling the conditions in the letter of intent. Where is LoI? People rushed for it. It says, within 40 minutes, bring a banker's draft of Rs1,650 crore. Companies he favoured already has those drafts from Mumbai and sitting in his office. How could they get it in 40 minutes?
When he could not find adequate spectrum for his favoured companies, he changes the priority list in the Punjab and Maharashtra circles. You show me one single, unique, solitary instance during my period or anybody else's period during NDA when any of this would have happened. So yes, people who do wrong should be in jail and continue to be in jail without bail.
