India's deposed telecom minister, A Raja, ignored top-level government advice and his department's own criteria while issuing 2G licenses in 2008, India's government auditor has found.
In a damning report, India's Comptroller and Auditor General (CAG) said that more than 70% of the winning applicants were not qualified to participate and 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.
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 (€28.8 billion)
The report found that Raja ignored the advice of regulator Trai, the High Powered Telecom Commission, the finance and law ministries and the prime minister while pushing ahead with the sale at prices determined by the 2001 2G auction.
It said the DoT arranged some of the specifics - such as the cut-off date - in an arbitrary manner, leading to an artificial cap on the number of applicants. The department also appears to have broken even its own first-come-first-served policy for the allocation.
In deciding to sell licenses at the 2001 rates, the DoT was implementing only the first stage of the licensing policy as approved by cabinet.
It had overlooked the second phase, intended to de-link the price of spectrum from the issue of licenses, but the DoT “completely side-tracked [these] pricing issues.” the report added.