Going Around In Circles

HOW long will the CBI take to unravel the dimensions of the gigantic telecom scam? Never known for its speed in investigations, the agency may take several years before it completes the probe or pins down the main players in the various shady telecom deals. And going by its past record, the course of investigations could depend on the will of the political establishment.

The value of licences for 10 basic circles in which letters of intent, draft interconnect and licence agreements have been issued is around Rs 1,880.38 crore in the first year of operations and Rs 65,775.3 crore for the 15-year licence period. But whether the tele-com firms (who may have already been forced to pay huge kickbacks) will sign the licence agreement by the September 12 deadline set by the Department of Telecommunications (DOT) is the big question.

The cumulative value of contracts and licences awarded during Sukh Ram's tenure as communications minister may easily exceed an estimated Rs 30,000 crore. Licences have already been awarded to private operators for cellular, paging, e-mail and VSAT services, all of which have now come under a cloud and resultant CBI scrutiny.

However, CBI sources say that right now, the only cases being investigated are Sukh Ram's assets, alleged to be disproportionate to his known sources of income and the excess payment of Rs 1.68 crore to Hydera-bad-based firm, Advanced Radio Masts (ARM), for the purchase of their multi-access rural radio system. But documents of all contracts above Rs 50 lakh awarded by DOT during Sukh Ram's tenure will be scrutinised. Say CBI sources: "The documents are huge and it is difficult to say when their scrutiny will be complete. Naturally, only in those deals in which a prima facie case is established will the CBI proceed further."

 But why wade through a mountain of all contracts above Rs 50 lakh, which is like searching for a pin in a haystack, when the correct line of investigation would be to first probe suspect deals, say telecom exp erts. The CBI should also probe how the telecom privatisation programme was used for personal gain:

Basic Services: The cap of three circles for both basic and cellular services benefited only one consortium—Himachal Futuristic Communications Ltd (HFCL) and its partners. Imposing a cap bailed the HFCL-Beseq-Shinawatra combine out of the nine basic telephone circles for which they made incredible bids totalling Rs 85,000 crore. It allowed the combine to keep the three best circles—Delhi, Haryana and UP West. 

Cellular Telephony: The cellular cap bene-fited HFCL, because it could claim the lucrative circle of Gujarat, one of the two cellular circles that the BPL-US West alliance had to vacate. HFCL got Gujarat as it was among the three highest bidders. The CBI should probe what motivated the decision to impose a cap and if any pay-offs were involved, says a former DOT official. It's quite a simple and clear case—no volumes of documents need to be pored over, he adds.

Artificially Low Bids: Virtually buffeted by power brokers in and outside Sanchar Bha-van when Sukh Ram was communications minister, executives of telecom companies are now questioning the credibility of every other equipment contract. They even go to the extent of saying that many so-called lowest bids for equipment may have, in fact, been made artificially low by excluding certain key items from the quotation. Another allegation doing the industry rounds is that tender specifica-tions in the case of equipment contracts were changed to favour companies like HFCL, all under the garb of indigenisation.

With DOT officials like Runu Ghosh handpicked by Sukh Ram and placed in strategic posts in the price negotiating and tender evaluation committees, anything could have passed muster, the executives allege. Says CPI(M) MP Nilotpal Basu: "It is possible that bids were kept artificially low. Moreover, what appears to be the lowest price for equipment may not be the best negotiated rate when seen in the context of global price movements of telephone equipment which are on the downswing." 

Transnational Bias: "Are you implying that world renowned TNCs which supply equipment to DOT also excluded key items from their bids?" asks an agitated DOT official. But Basu puts the issue in perspective. Says he:  "TNCs have quoted prices that were not only much below the domestic market but even less than the global market. This points to attempts to dump equipment in India to elbow out indigenous manufacturers."

A classic example is a contract for 40,000 line exchange switches in 1994 which attracted many TNC bidders. Basu says that Indian Telephone Industries, which also bid, was edged out of the race while C-DOT was not even given a chance with type approval (approval based on specifications necessary for bidding) refused to it by DOT.

Flouting Tender Norms: Telecom companies which were Sanchar Bhavan favourites were allowed to join the race without type approval or even bidding. In one shocking case, says Basu, ARM was awarded a contract in March 1996 for equipment used for testing of optical transmission lines though it did not participate in the tender. Ninety per cent of the requirements were ordered from ARM though its price was 50 per cent higher than other bidders, resulting in a projected loss of Rs 20 crore to the exchequer, alleges Basu. In this case, Sukh Ram overruled the recommendation of the tender evaluation committee to consider the lowest bidders and said that ARM should be given the order as it was more dependable, says Basu.

But is DOT,with a century of experience, so gullible that it is taken for a ride? Given the now infamous nexus between some DOT bility of Sanchar Bhavan babus conniving at lapses can hardly be ruled out, says a telecom consultant who requests anonymity.

Repeat Orders: A major area of wrongdoing was placing repeat orders with favour-ite firms. Though there is a Government norm that when a repeat order exceeds 25 per cent of the first contract, a fresh tender should be floated, this was often breached. The CBI has also asked DOT to provide documents of all repeat orders placed on companies during Sukh Ram's tenure. 

Though Basu says the CBI is trying to do a thorough job, telecom analysts and industry insiders are sceptical. By calling for so many files, investigators may be trying to show progress in the case. But once the political heat is off, the CBI may play it cool. The agency, they feel, has not yet come to grips with any of the real issues.

That could hardly be expected as investigations into the scam have just begun. But India's premier investigative agency can do better than just scratch the surface. Or else it may be a long, long time before the CBI even reaches the tip of the iceberg, leave alone getting to the heart of a telecom scam that threatens to make the securities scandal look like child's play.