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CAG finds slew of violations
April, 12th 2010

The Comptroller and Auditor General (CAG) has found a series of violations on the part of telecom minister A Raja in awarding unified access service licences (UASL) to eight companies in January 2008. It has observed that prima facie, the whole process of issue of licence lacked fairness and transparency.

The department of telecommunications is already under a CBI probe in the matter. CAG indictment of the minister for the way the licences were awarded comes on the top of similar strictures by the Delhi High Court and the Central Vigilance Commission.The charges, all of them serious, were first reported by FE in its edition of November 9, 2009 and through a series of related reports later.

The CAG, which is auditing the issue of licence and spectrum in 2008, while observing the series of violations, has sought DoTs response, after which it will be made part of the premier audit bodys annual report. The violations found by CAG are: Arbitrary advancing of the cut-off date for considering applications from October 1, 2007 to September 25, 2007; informing the same to the applicants and the public in the most non-transparent manner; violation of instructions by Trai and the Prime Minister; tweaking the first-come-first-served (FCFS) policy to award licence and spectrum to benefit certain parties and leaking confidential information to certain applicants in advance, enabling them to arrange large amounts of money at short notice.

As is known, the DoTs move to advance the cut-off date has already been struck down as illegal by the Delhi High Court.

The CAG observed that the decision to advance the cut-off date from October 1, 2007 to September 25, 2007 was taken by the DoT on November 2, 2007 but conveyed to the applicants only at the eleventh hour, i.e 1.47 PM on January 10, 2008, which was also the date of issuing the letters of intent (LoIs).

It has also observed that the decision to advance the cut-off date retrospectively was not only a violation of Trais recommendations duly accepted by the government and instructions of the Prime Minister to ensure fairness and transparency, but also unfair to the applicants who had applied between September 26, 2007 and October 1, 2007.

Rajas manner of disseminating the information regarding the change of cut-off date is even more damning. The CAG observed that the first press release was issued at 1.47 PM on January 10, 2008, but the second press release dated the same day and issued subsequently, was not even issued through the Press Information Bureau (PIB) as done on earlier occasions, but was only uploaded on the DoT website. It has now asked DoT to explain why the second press release was not issued through the PIB and why the communication was done at a very short notice. Pointing towards leaking confidential information to the interested parties, the CAG observed that though the information to process applications received up to September 25, 2007 was conveyed to applicants on January 10, 2008, they could all assemble at the DoT the same day at short notice and were all able to deposit bank drafts for licence fee, performance bank guarantee (PBG) and financial bank guarantee (FBG), which is more than Rs 1,651 crore!

The CAG observed that the urgency and justification for issuing the press release and awarding the LoIs on the same day at short intervals is not available in official records. It has now asked the DoT to furnish the same. The tweaking of the FCFS policy by Raja, which was also brought out by FE earlier, has also been highlighted by the CAG audit. As per guidelines, the date of filing the application is the date of granting LoIs. Subsequent to the award of LoIs, companies are granted 15 days time to complete the formalities furnish a bank draft of Rs 1,651 crore for a pan-India licence and a performance bank guarantee of Rs 800 crore. Raja shifted the FCFS from the date of application to the date of making the payment.

 
 
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