The Shivraj Patil Committee report has said that Siddhartha Behura, former secretary, Department of Telecommunications (DoT) and A. Raja, former Minister of Telecommunications and IT had cleared 13 letters of intent (LoIs) for 2G licences to Swan Telecom on January 9, 2008, hours before these were awarded on January 10, 2008, according to news reports. The report added that this was done without verification and despite objections put forward by DoT?s internal finance committee.
Prior to this, The Comptroller and Auditor General of India (CAG), in its report dated November 2010, had identified Swan Telecom as a key beneficiary of A. Raja?s first-come-first-served policy. The Patil committee documents DoT?s special dispensation in awarding two licences to Allianz Infratech.
Later, Etisalat acquired 45 per cent stake in Swan and the new entity, Etisalat DB, went on to acquire Allianz Infratech, which in turn brought in another two telecom circles into its fold. Swan submitted a Company Secretary?s certificate to establish its prescribed net worth and paid up capital requirements as eligibility for the grant of Unified Access Service Licences for 13 service areas. The details of one of its promoters, Tiger Traders Private Limited was not available on the date of application for ascertaining eligibility.
There was doubt over compliance of the substantial equity clause as it was not clear if the preferential shares had to be included for the purpose of reckoning substantial equity. Despite these omissions, the decision to award Swan its LoIs was taken in a rush without ascertaining eligibility, and could lead to an ineligible applicant being granted licence.
Patil concludes, based on the file notings of January 9, 2008 that this act of granting licences could lead to arbitrary exercise of power resulting in favouritism. In case of Allianz Infratech, applications were put in for the grant of 22 licences on September 3, 2007. The company initially indicated that its net worth across four promoters was Rs 6 billion, but later sent a fax dated October 1, 2007 claiming a net worth in excess of Rs 29.50 billion.
The Patil report said: ?Subsequently, in place of two individual promoters a company stepped in. In terms of a note dated January 9, 2008 put by DDG-LF (licence fee) it was noticed that the claim for net worth for either of the amounts was not supported by details. Further at the time of application the memorandum of association did not include telecom services in its object clause.?
On December 12, 2007, Allianz Infratech informed DoT that the memorandum of association (MOA) was amended to include telecom-related activities on September 1, 2007. Yet, DoT records show the registrar of companies had taken on record this amendment on October 26, 2007.
