Tuesday, February 15, 2011

Former DoT and Trai bosses had a role in Tatas getting telecom licences without auction: Report

New Delhi: The Shivraj Patil committee report has brought into focus former telecom regulatory authority (Trai) chief Pradip Baijal and then department of telecom (DoT) secretary Vinod Vaish’s role in violating policy to award telecom licences to the Tatas in 2004 without auctions.
The report shows how Baijal and DoT violated Cabinet-approved Trai decisions and fresh Unified Access Service Licence (UASL) guidelines.
The one-man Patil panel was set up to examine the policy environment since 2001 in the context of the 2G scam in which former telecom minister A Raja awarded licences for telecom airwaves in 2008 at 2001 prices on a first-come-first-served basis.
The report indicts Raja for several wrongdoings and does not offer the 2004 precedence as an excuse for the 2008 spectrum scam. The 2004 incident, mentioned on pages 51 and 115, stands out as a deviation from Cabinet-approved policy.
Trai, under Baijal’s leadership, released its recommendations mentioning adoption of a “multi-stage bidding process” for grant of new UASL licences in section 7.39 of its report on October 27, 2003. The Cabinet approved this on October 31, which resulted in the first-ever UASL guidelines on November 11.
On November 14 that year, Baijal wrote to DoT secretary Vinod Vaish reversing his own recommendations to clarify “apropos telecon that the entry fee for new unified licence would be the entry fee for fourth cellular operator”. Subsequently, on October 17, Vaish approved the decision to accept applications made for grant of UASL licences.
The report highlights two wrongs. The first is Baijal writing a letter contradicting his own recommendations which had Cabinet approval. The CAG too has criticized Baijal for this in its report of November 2010. Section 3.16 of the CAG report says: “Discussing the issue on telephone and getting clarification even in a letter from the Chairman Trai on the same day in his individual capacity on such a critical issue shows the undue haste and avoidance for following normal official procedures by the DoT. Further, the chairman Trai did not have the authority to issue a clarification on an issue which had not been discussed and deliberated upon in the authority. The clarification was not in line with the Recommendations of Trai.”
Second, Patil criticizes Vaish for formulating a procedure based on this letter, including his omission in neither placing this procedure before the Telecom Commission nor in the public domain in a transparent manner.
Naming the beneficiaries of this chain of events, the report says: “Without there being any notified procedure to be followed for the grant of UASL and without application having been invited from all, the procedure thus formulated was applied to facilitate consideration of applications made by Tata Teleservices Ltd in the forms prescribed for grant of basic service licences.”
The report concludes that Baijal’s letter to Vaish was interpreted to infer conclusions on the entry fee payable for fresh UASL licences contrary to and inconsistent with Trai recommendations.
The Tatas during this period, received 12 new UASL licenses, seven for which they applied for on November 12, 2003 and one on November 14 – before Baijal’s letter – and four applications on November 29. They were the first to be granted new UASL licenses without auctions in 2004 (see chart).
While the main focus of the Supreme Court investigation continues to be Raja’s wrongdoings, SC has extended the CBI investigation to the 2001 period. It is in the context of the 2G scam investigation that Baijal has been interrogated by CBI.

The Violation Route

27 OCT 2003 | Trai releases recommendations for multi-stage bidding for award of new UASL 31 OCT | Cabinet approves Trai recommendations 11 NOV | UASL guidelines issued 12 NOV | Tatas apply for 6 UASL licences 14 NOV | Baijal writes to DoT secretary Vinod Vaish saying new UASL should be given at the same 2001 price 17 NOV | Vaish approves Tata’s application 24 NOV | Telecom minister approves Tata’s applications 30 JAN 2004 | Tatas awarded UASL

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