Vinod Rai: The culprit of 2G fiasco

Although corruption existed in 2G spectrum allocation, it was not certainly to the mythical proportion  (Rs. 1,76,000 crores) as Mr. Vinod Rai said. If this was in US, Mr. Rai probably would have been cooling his heals in jail. Not surprisingly, in India he has been rewarded in India with post retirement assignments which only affirms that he is a BJP's stooge.

VINOD RAI, THE CULPRIT

• Vinod Rai was then serving his central posting under the Finance Ministry, and following his retirement from IAS in 2008, it was P Chidambaram, the then finance minister who appointed him as the CAG. 
• It was during his six-year tenure that the CAG blew the lid off what came to be known as the 2G scam, Coalgate scam, CWG scam, lapses in Air India Ltd ’s acquisition of aircraft, holes in defence spending, the sale of sugar mills in Uttar Pradesh, and anomalies in the award of contracts to exploit natural gas reserves. These audit reports had impacted functioning of the then Congress-led UPA government.
• Forbes described Rai as being among that "rare breed of civil servants who knows how to get work done in the government." The Business Standard reported that “this was the first time the apex auditor had shown the courage to take on the mighty”.
• Vinod Rai has been called many things in the wake of the 2G spectrum allocation audit – a rare civil servant, a courageous man, a BJP stooge, and a commander general when it comes to conducting audits.
• Under Rai, the CAG became more media-savvy, with him holding a press conference, every time he submits a report to the Parliament. He also oversaw the creation of small booklets on his various reports for the better understanding of "audit" for parliamentarians.
• He propounded astronomical figures that common Indians had never heard of – the Rs 1.76 lakh crore 2G scam, the Rs 10,67,300 crores coal scam, the Rs 141 crore Commonwealth Games scam. As his audits threw these numbers, life became difficult both directly and indirectly for the then Congress-led UPA government.
• However RP Singh, who headed the CAG team that audited the 2G spectrum allocation, “did not have a hand in compiling the final report.” He asserted that the report was “forced” on him and that he was not the one who put the “figure” of Rs 1.76 lakh crore in the report. This 2G scam was only in the head of Vinod Rai and the Rs 1.76 lakh crore number never held much conviction. Even in the CBI charge sheet, the number had come down to Rs 30,984 crore. Trying to arrive at any kind of number was always incorrect.
• The then Union Minister Kapil Sibal drew flak when he made a statement back in January 2011 that the 2G spectrum allocation had caused no losses to the government. After the CBI court verdict, Sibal lashed out at those who had criticised him for his ‘zero loss’ statement.
• By attacking government policy and not just its expenditures, Vinod Rai may not have been going beyond his constitutional mandate, but he was clearly prioritising the CAG’s SOPs.
• With Justice O P Saini, of the CBI special court, acquitting all 18 accused in the 2G spectrum allocation case not only have Vinod Rai’s numbers come to question, but also his role as the chief auditor. It was on the basis of his report (i) that the CBI launched its investigation and (ii)  India voted for in the 2014 General Election.
• Post his retirement in November 2013, Vinod Rai still dons many hats. He is the chairman of UN Panel of External Auditors, honorary advisor to Indian Railways, and was most recently appointed the president of COE of the BCCI by the Supreme Court. In February 2016, Rai was appointed the chairman of Banks Board Bureau (BBB), the body which advises the government on top-level appointments at public sector banks and ways to address the bad loans.

CBI COURT DISMISSES THE 2G CASE

• On Dec 23, 2017, Special CBI judge O P Saini, acquitted former telecom minister A Raja, DMK MP Kanimozhi and all others in the 2G Case, said the CBI cannot absolve itself of the burden to prove its case by “piggy riding on the so­ called high magnitude” of the case and the media hype. At the final stage, legally admissible evidence is required,” judge said.
• “In view of deficient, or I may say nil evidence on record, I find myself unimpressed and unmoved, whatever may be nature of the case,” the judge said.
• High profile nature of a case cannot be used as a ground for holding people guilty without legal evidence. Lack of commercial prudence in execution of documents cannot be used as a ruse to hold people guilty of corruption,” the court said.
• The CBI had alleged in its chargesheet that there was a loss of Rs. 30,984 crore to the exchequer in allocation of licences for the 2G spectrum which were scrapped by the top court on February 2, 2012.
• This verdict doesn't override the Supreme Court judgement that the procedure followed for allocating 2G spectrum licenses during UPA was illegal and cancelled all licenses.
• Special judge remarked that everybody was going by public perception created by rumour, gossip and speculation. However, public perception has no place in judicial proceedings. The judge laments the role of "prominent public-spirited persons" who went on and on about wrongdoing but had no evidence to submit. Apparently this means that nobody had any good or first-hand evidence in his possession". The judge also said that for “the last about seven years on all working days, summer vacation included, I religiously sat in the open Court from 10 am to 5 pm, awaiting someone with some legally admissible evidence in his possession, but all in vain. Not a single soul turned up.” Needless to say CBI was let down by its own witnesses.
• Videocon Telecommunications, which lost its nationwide telecom licence in February 2012 following a Supreme Court (SC) order, will claim Rs 10,000 crore as compensation from the government. Many others may also follow suit.
• Vinod Rai who has made far reaching comments on UPA and Manmohan Singh etc at the fall of hat on 2G scam during past several years, has so far not commented on the issue on any forum.

SPECTRUM AUCTIONS, THE TRUTHS

• The aim of public policy just to maximise gains for the exchequer from allocation of natural resources is fallacious and misleading. Priorities must be ensuring the wider net for access to mobile telephony, broadband and high-speed internet.
• The private concessionaire has to make profits and therefore if you charge more for natural resources, the costs will be passed on to the users. 
• The money that telecom companies pay to the state is almost entirely borrowed from banks. If the government earns revenue from auctions, it must dig into other pockets to capitalise banks straddled with debt as a consequence of those very auctions.
• A healthy telecom sector, characterised  by steadily increasing teledensity and connectivity, engenders productivity and employment, providing a boost to the economy. The “notional” gain of earning revenue through auctions, therefore, pales in comparison to the very real, massive costs borne by the economy. The state of the telecom sector in the country and the impact of its poor performance on the economy speak for themselves.  
• For foreign companies Telenor, Etisalat and Sistema, who invested a lot of money, time and resources in India, this single judgment of SC wiped out all their investments. They were like innocent bystanders and this has hurt the sentiment of foreign investment.
• The ramification of the 2G debacle is that the telecom sector is reeling with debt running up to Rs 4 lakh crore, owing partly to auctions and license cancellations. When telecom companies do well, 5-10% of their topline goes to the government as part of a revenue share model. When they perform poorly, not only do banks lose out, but the adverse financial consequences are passed on to consumers, and the government loses out on revenue share as well as direct and indirect taxes paid by telecom companies. Currently, India’s telecom sector is one of the worst performing ones in the world.
• Recently, worried about the banking sector’s huge exposure to the telecom industry, SBI Chairman has asked the DoT to work out a bailout package for the operators, including deferred payment for spectrum and rationalising spectrum fee. The telecom sector, which could come under stress due to declining revenues with their total EBITDA on annualised basis is ₹65,000 crore which is unsustainable for debt of more than ₹4 lakh crore.
• In the business of politics, “facts” are easy to conjure and manufacture, and public perceptions are hard to change. The untruths can cause immediate and irrevocable damage. The truth will ultimately prevail but in the meantime, its absence can be devastating for some.
• The '2G Scam' and its malicious campaign has facilitated that catapulted Modi as PM and Kejriwal as CM of Delhi. Others were richly rewarded notable among them are Vinod Rai, Kiran Bedi, Arnab Goswami runs his own TV channel funded by NDA MP.

Who sold us the 2G 'scam'?

The conviction rate for the CBI is less than 5%. The CBI and ED seem to be lacking necessary forensic skills as far as financial frauds are concerned. Unless these agencies are modernised, we will continue to see more such cases that are heavily hyped but can only end up as having to be dismissed. Supreme Court judgment 2012 cancelling all 2G licences is a matter of regret in which the SC at that time moved from a pre-conceived notion to a pre-determined conclusion. They decided before any hearing that A. Raja was guilty but then chose to punish the completely wrong parties. Auction is not necessarily the only way of allocating public resources. For sure, we could have implemented the process better and in a more transparent fashion, but throwing out the policy to punish the guys because of perceived and unproven personal benefits was like throwing out the baby with the bathwater. Auction of spectrum at high prices means that it is no longer viable or justifiable for a new player to challenge the incumbents. The higher spectrum costs will be passed on to the public at the end of the day. After his retirement as CAG in 2013, Vinod Rai regularly writes articles in magazines, was conspicuously silent on failed adventures of BJP/Modi's demonetization, GST and many more.