Auditor slams Raja over 2G licensing

Dylan Bushell-Embling
17 Nov 2010

India's deposed telecom minister, A Raja, ignored top-level government advice and the department's own criteria while issuing 2G licenses in 2008 at 2001 prices, India's government auditor has found.

In a damning report into the allocation of spectrum in 2008, India's Comptroller and Auditor General (CAG) said that more than 70% of the winning applicants were unqualified to participate.

Raja resigned on Sunday over his role in the scandal, which by the CAG's reckoning could have cost the government up to $39 billion.

The auditor's report, tabled into parliament yesterday, found that the process followed during the auction “lacked transparency and objectivity and has eroded the credibility of the DoT.”

The flawed process meant that 85 of the 122 winning applicants did not satisfy the basic eligibility conditions for the auction. These companies allegedly suppressed facts - or even outright lied - in their applications.

“Owners of these licenses, obtained at unbelievably low price, have in turn sold significant stakes in their companies to the Indian/foreign companies at high premium within a short period of time,” the report said.

One successful applicant, Swan Telecom, appears to have been acting as a front for established operator Reliance, in breach of a rules that ban companies from owning a substantial stake in two operators in a single circle.

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