Business Ethics&

Chandan GuptaKrishna Mohan

Dimpal KanaujiaBavita Yadav

About 2G scamBackground

Corporations involvedCorporates involved

Bureaucrats and politicians involvedRole of MediaCAG report

Zero loss theoryEthical Issues

Measures for Improvement

CONTENT

2G spectrum scam involved politicians, government officials and business tycoons.

It is all about illegal undercharging mobile telephone companies for frequency allocation licenses creating 2G spectrum subscriptions for mobiles

About 2G SCAM

22 telecom zones281 zonal licenses122 new second generation (2G) Unified Access Service (UAS)first-come-first-serve basis.

BACKGROUND

Companies Involved

• Unitech Wireless• Reliance Telecom• Swan Telecom• Loop Telecom Pvt. Ltd• Essar Tele Holding

Unitech, Swan Telecom got licence without any prior telecom experience.Swan telecom got license without fulfilling eligibility criteria.All nine companies paid DoT only rs 10772 crores for 2G license.Unitech wireless got license for 1661 crores, sold 60% stake for 6200 crores.Swan got license for Rs 1537 crores, sold 45% stake to estimate for Rs 4200 crores.

Milestones of Scam

Sanjay Chandra- Former MD Unitech Wireless.

Gautam Doshi, Hari Nair and Surendra Pipara- RelianceAnilDhirubhai Ambani Group.

Vinod Goenka and Shahid Balwa-DB Realty & Swan Telecom

Asif Balwa and Rajiv Agarwal- Kusegaon Fruits and Vegetables.

Corporates involved

Corporate lobbyist Nira Radia’s conversation with politicians and corporates we rerecorded by Indian Income tax departmentTape was leaked which gave rise to Nira Radia tape controversy.CBI has about 5851 recordings of conversation Radia used some media person to influences the decision of forming A raja as telecom minister.Media hyped this issue but hide the involvement of big corporates

Role of Media

Politicians and bureaucrats involved

A Raja.Former Union Cabinet Minister (Communication and Information Technology – 2007 & 2009).

Criminal breach of trust by a public servant under section 409, criminal conspiracy under section 120-B, cheating under section 420 & forgery under sections 468 and 471. Booked under the Prevention of Corruption Act for accepting illegal gratification.

Entry fee for spectrum licenses in 2008 pegged at 2001 prices.Cut-off date for applications advanced by a week.Licenses issued on a first-come-first-served basis.No proper auction process followed, no bids invited.Raja ignored advice of TRAI, Law Ministry, Finance Ministry.TRAI had recommended auctioning of spectrum at market rates.

What are the charges on former telecom minister a

raja?

Taken into custody (arrested) by CBI on 2 February 2011, On 9 May 2012 he applied for bail for the first time since his arrest and was granted bail on 15 May 2012.

Status

M. K. Kanimozhi

Daughter of five-time Chief Minister of Tamil Nadu, M. Karunanidhi.Political party DMK. She is a member of parliament, representing Tamil Nadu in the Rajya Sabha (the upper house of Indian Parliament).

Siddharth Behura Telecom Secretary when licenses were granted.

RK Chandolia Raja's private secretary when licenses were granted

CAG Report

ZERO LOSS THEORY

The Supreme Court verdict

Supreme Court cancelled all 122 licencesGovernment auctions cancelled licences in consultation with TRAI Supreme Court said “Auction is not the only method unless the resource gives huge profit to a company”

Ethical Issues

GovernanceSpirit of Collective responsibility not conserved

GovernanceToo much power in hands of very few.

GovernanceSeemed like a throwback to “License Raj” era

IndustrySpirit of fair competition not observed

IndustryMiddle men used for access to those in power

Industry• Pure pursuit of profit from companies –

Uninor & Swan• Profit was the main driving force – no

intention to serve consumers.

IndustryNeutrality of media questionable

RegulationToothless with only advisory powers

Regulation• Appointment process aids conflict of interest• Insufficient manpower worsens the situation

• Personal greed puts business ethics at stake.

• Transparency and objectivity of DOT was put to question because of some corrupt officials.

• Wrong use of power leads to a great turmoil

Dilemma Faced By A. Raja

Dilemma Faced By Government

Dilemma Faced By Media

Ethical Dilemma

• Democracy by governance than by coalition.

• More accountability of government departments to regulators.

• Regulatory bodies equipped with more resources.

• Separation of Duties and Conflict of Interest to be noted in public appointments.

• Internal control measures from the media industry to preserve credibility.

Measures for Improvement