2G scam: CBI probing Reliance Telecom role

While continuing face-to-face custodial questioning of former Telecom Minister A. Raja and DB Realty

Managing Director Shahid Balwa on Saturday as part of its ongoing probe into 2G spectrum scam, the Central Bureau of Investigation (CBI) has also started looking into business links between Mr. Balwa’s Swan Telecom Ltd and Anil Dhirubhai Ambani Group which had launched Reliance Telecom Ltd. (RTL).

In a new twist in the ongoing probe into allegations of corruption and wrongdoings in allocating 2G spectrum and issuing Unified Access Service (UAS) licenses, the CBI is also verifying contents of a letter written to it in December last year by Mr. Balwa in which he had reportedly admitted of getting investments from RTL.

In his letter, CBI sources said, Mr. Balwa had admitted that ADA group helped him set up business to apply for 2G spectrum licenses. DB Realty’s chief also said that ADAG had brought preferential shares in his company to give him initial capital.

In fact, the November 2010 report of the Comptroller and Auditor General of India (CAG) on the issue of licenses and allocation of 2G spectrum mentions that “Swan Telecom Private Limited while applying for the UAS licenses in 13 service areas was acting as a front company on behalf of RTL and their application was in effect against the intent and spirit of the UAS licensing guidelines.”

It said the total equity/stakes of RTL in the Swan Telecom was of Rs.1002.79 crore as against equity holding of Rs.98.22 crore by the majority share-holder Tiger Traders Private Limited.

The report pointed out that Swan Telecom happened to be a newly incorporated company with no fixed assets and it “raises doubts about the intention of the RTL and the control it would exercise in a new company incorporated barely few months ago.’’

ADAG also confirmed that some group officials have been examined by the CBI in connection with telecom-related matters that date from 2001 to 2009. In a statement issued on Saturday, it said that the officials have been cooperating with the CBI in the investigations.

“As part of its ongoing investigations pursuant to the Hon'ble Supreme Court's orders, the CBI is reportedly examining a large number of telecom companies and their officials over the past several weeks, in relation to various matters relating to the years 2001 to 2008. As part of this process, CBI has also examined a few officials of Reliance ADA Group, and we are fully co-operating with the authorities in this regard,” ADAG said in the statement.

The CAG report also concluded that 85 licenses that were issued to the companies which suppressed facts, disclosed incomplete information and submitted fictitious documents to the Department of Telecom (DoT) and thus used fraudulent means for getting UAS licenses and thereby access to spectrum. “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 premium earned by these new entrants to the telecom sector was nothing but the true value of the spectrum, which should have normally accrued to the public exchequer,’’ the CAG report said.

CBI is also ascertaining if DB Realty managing director invested in a number of front companies on behalf of Mr. Raja and if some foreign channels were used in transferring illegal funds. CBI sources said the agency is likely to further widen its net of investigations and a team was likely to reach Chennai soon for questioning of some more persons, suspected to be having links with the former Telecom Minister and could help in deciphering the money trail that allegedly flowed out of 2G spectrum scam.

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