Saturday, November 07, 2009

Oblivious To Scandal

Vasu Reddy from Chicago
vasureddy@aol.com

You don’t need much to make a mess out of a good thing. As the old saying goes one bad apple spoils the whole bushel. The glory of surpassing the 500 million connections was superseded by the allegations of the largest telecom scam that ever suspected in the telecom world. While the delays in 3 G spectrum negotiations continue between the military and DOT, a new date has been announced along with a new fee structure.

The telecom minister seems unperturbed with alleged scam that totals a loss of 20,000 to 60,000 to Indian coffers. When the CBI raided the telecom ministry and DOT, followed by a number of locations across the country, there was no surprise element to the public. For several years there was suspicion of wrongdoing, specially supported by the new licensees generating exorbitant valuations, and actually getting paid for it from foreign telecom companies. These multiples (in billions of dollars) were generated without a network or subscribers. This doesn’t happen often with any industry especially with telecom. The opportunity for multiple transactions in billions of profits to the license holders was simply afforded because of the way the licenses were awarded, and at the cost at which they were purchased. If you value the license today, the losses (already extraordinary) will be humongous. Even the foreign telecoms that paid a huge premium (just for the license, without the network or customers) have already gained in value and should be quite happy with the price they paid for purchasing stakes into the licenses awarded at dirt cheap prices. They won’t be at risk of losing the licenses as they are not a party to the alleged scandal as they paid a premium on a cheap license. If properly valued much of these companies might never have been in a position to participate, and if they did they would have paid full price for what they purchased.

Arbitrary decision my the minister to change the dates for accepting the applications, processing them at will with no regard to the work that went into applying for the license, and then getting thrown out without cause was further fuel to suspicion of scandal. It is highly unlikely that any other country would have even envisioned such decision making.

Hording of spectrum by the early leaders might have prompted them to remain quiet when the spectrum was given away at prices that were set at least 6 years ago. You don’t hear any word of objection from the telecom operators now, or when the licenses were given away at cheap prices. The operators, manufacturers, support infrastructure, business and industry leaders and everyone else who was involved with the telecom industry did not protest this, except the few who were arbitrarily rejected with a cut off date that was changed to meet the convenience of the minister, or his department and no reasons for such decision.

The government continues to support the telecom minister and will continue to do so due to political issues that will crop up if they take a stance against him. The very fact that he is still in his job is extraordinary. In such sensitive position dealing with global telecom issues, and with CBI raiding his offices should have prompted him to get out. But it seems he and the sitting government is oblivious to scandal and don’t seem to care about at least showing serious intent to get to the bottom of this.

The irony is that the minister was reappointed after new elections, under a cloud of suspicion. The center could have acted wisely to appoint someone else when the cabinet was being reshuffled and reappointed. There could have been saving grace if there was a probe after the minister was no longer in charge of telecom, and the sleuths could have had an easier time with access to information on the scandal.

Such extra ordinary money can not just disappear and the very fact that CBI raided and garnered enough information to continue the investigation lends credence to the allegations. Telecom minister being a member of the sitting government and claiming to have followed the law and guidelines set for awarding the license and the senior leaders supporting his innocence to any irregularities that have scandalized his department while continuing CBI probe lends one to believe things are not kosher with what was suspicious activity to begin with.

There is a problem with what happened and perhaps the public will never realize the magnitude of the losses to the center. Each of the spectrum related sale opportunity is a blessing to any government, and India squandered one of the greatest assets it had with this particular opportunity. While the general public suffers and government borrows money to support programs, such a large amount money disappearing is truly scandalous. Even if no one benefitted personally, this is a case and point that should never happen, and allowing it to happen is a disgrace. And now that CBI is investigating a minister and his department while they are the ruling government, and the minister and the government claiming innocence is a further disgrace to commonsense. Be it with intent or without, such national loss should be accounted for with appropriate action and should be made sure that it never happens.

November 7th 2009
Vasu Reddy
President
Optus Technologies, Inc.