2GscamRadia Tapes

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2GscamRadia Tapes, Comptroller and Auditor General of India, Department ofTelecommunications, DMK, First-come first-served,Idea Cellular,Pramod Mahajan, Raja,Reliance Communications, Sukh Ram,Uninor

2G Spectrum Scam-Full Story,origin,growth(?) and

modus operandi.In Corruption, India,Politicians,Radia Tapeson December 25, 2010 at 9:27 am

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Mahajan assisted Reliance Infocomm to become a nationwide operator without payingfull licence fee

om scams are not new. In August 1996, the CBI registered an FIR against telecom ministerSukh Ram after recovering 3.62 crore from his residences in Delhi and Himachal Pradesh hemade it to the Guinness Book of World Recordsfor the wrong reasons! Thirteen years later, in
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2009, he was sentenced to three years of rigorous imprisonment for criminal conspiracy andspent time behind bars for a month before being released on bail.

During the NDA government, there was a major controversy when telecom companies wereallowed to move from a licensing regime to a revenue-sharing one. The sudden removal ofJagmohan from the post of communications minister in 1998 was reportedly a consequence ofhis refusal to toe the line of a section within his government. In July 1999, following therecommendation of a Group of Ministers headed by Jaswant Singh, the fixed licence fee regimewas changed to a revenue share one. This was adversely commented on by the CAG. Accordingto Ratan Tata, if a hypothetical amount was to be calculated at that point of time, the loss to theexchequer would be about Rs. 50,000 crore.

Other ministers for communications during the NDA regime, including the late PramodMahajan, were accused of assisting Reliance Infocomm to become a nationwide operator

offering full mobility in its cellular phone operations without paying the full licence fee. Thisdecision of the DoTwas against TRAI recommendations and the resultant loss to the exchequerwas said to be in the region of 1,100 crore. However, the sheer size of the subsequentundervaluation and misallocation of spectrum makes the earlier scandals pale into relativeinsignificance.

ON 10 JANUARY 2008, at 2.45 pm, an announcement was posted on the DoT website statingthat letters of intent (LOIS) for issuance of licences bundled with spectrum would be given toapplicants between 3.30 pm and 4.30 pm. The announcement added that application fees runninginto thousands of crores of rupees would have to be paid immediately by demand draft, alongwith supporting documentation.

It was made clear that LOIS would be issued to those who deposit their fees first, beating others

by even a fraction of a second this was the infamous first come first served (FCFS) system (orthe way movie tickets are sold) that privileged not financial wherewithal, technical competenceor experience but speed, clout and foreknowledge. Even the FCFS system was not properly

adhered to and the CAG categorically stated that those who obtained licences had priorinformation about how to apply for these LOIS.

A few months earlier, the cut-off date for receipt of applications for licences was suddenly

brought forward to enable particular companies to jump the queue. Here are a few examples:Swan Telecom, which had submitted its application on 2 March 2007, was given a licence withspectrum for Delhi on 28 August 2008, while Spice Communications, which had submitted itsapplication in August 2006, was not given spectrum for the same service area.

For Maharashtra, Spice, which submitted its application on 31 August 2006, got a licence in May2009, whereas Unitech and Videocon got their licences with spectrum much earlier in September2008 though the two companies had submitted their applications for licences more than a yearlater in September 2007. Idea Cellular(date of application: 26 June 2006) also got a licence in

Raja

claimed2Gand3Gspectrumswerenotcomparable,justasbas

matiricewasnotthesameasPDSrice

TheCAGfoundthat

13firmsthatgot85outofthe

122newlicencesin2008did

notsatisfyDoTeligibility

criteria
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May 2009 while Unitech (date of application: 24 September 2007) got its licence in September2008.

THE STORY did not end here. Some of these companies expanded their equity bases byinducting foreign partners who paid large sums of money for the shares. Three examples: inSeptember 2008, Swan Telecom sold 45 percent of its shares to Etisalat (of the United Arab

Emirates) for $900 million or around Rs. 4,200 crore the company had obtained its licence foronly Rs. 1,537 crore and did not possess major assets other than a piece of paper, the licence. Amonth later, Unitech Wireless offloaded 60 percent of its stake to Telenor (of Norway) for Rs.6,200 crore this company too counted among its assets only a licence for which it paid Rs.1,651 crore in January 2008. Thereafter, Tata Teleservices sold 26 percent of its shares to NTTDOCOMO of Japan for Rs. 13,230 crore. Thus, the DoT had undervalued spectrum by betweenseven and 10 times its true market worth.

This became even more evident in 2010 when the government was able to raise more than Rs.1,11,500 crore through public auction of third generation (3G) spectrum. Raja claimed 2Gspectrum and 3G spectrum were not comparable just as basmati rice was not comparable to ricefrom the PDS (public distribution system). This argument is fallacious in the context of valuation

of spectrum for a simple reason: the spectrum used is the same; only the nature of servicesprovided is different by deploying superior technology in other words, the same spectrum canbe, and is, used to provide faster data transfer and other mobile telecom services.

The CAG found that 13 companies that had received 85 out of the 122 new licences issued in2008 did not satisfy the DoT eligibility conditions. The companies did not have the stipulatedpaid-up capital at the time of application and 45 out of these 85 licences were issued tocompanies which failed to satisfy the condition that providing telecom services should be themain object clause in their memoranda and articles of association.

Crossed lines (from left): Since 1999, Ram Vilas Paswan, Pramod Mahajan, Arun Shourie,Dayanidhi Maran, A Raja and Kapil Sibal have helmed the telecom ministry

The CAG also pointed out that spectrum was provided beyond the contracted 6.2 megahertz(MHZ) to nine existing operators in 2007 despite a number of applications pending for new

licences. These were Aircel, Bharti, BPL (Mumbai), the public sector undertakingsBharatSanchar NigamLtd (BSNL) and Mahanagar Telephone NigamLtd (MTNL), Idea, Reliance,Spice (Punjab) and Vodafone.

The biggest beneficiary of additional spectrum was BSNL (61.6 MHZ in 19 telecom circles)followed by Bharti (32.4 MHZ in 13 circles), Vodafone (19.6 MHZ in seven circles), Idea (12.6MHZ in six circles), MTNL (124 MHZ in Delhi and Mumbai circles) and others. The total lossto the exchequer on account of allocation of additional spectrum at low prices: Rs. 36,993 crore.
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In January 2008, when the DoT issued all-India licences at Rs. 1,658 crore, the price was thesame as that which had existed in 2001. The CAG used two parameters for assessing the possiblepresumptive or notional loss which the exchequer has suffered. In November 2007, S Telhad written first to the PM and later to Raja offering to pay Rs. 13,752 crore over 10 years forallotment of 6.2 MHZ of GSM spectrum.

The CAG took this figure as a benchmark and calculated that the government would havegenerated revenue of 67,364 crore by selling 122 licences, 35 licences under the dual-technologyregime and excess spectrum beyond the contracted amount of 6.2 MHZ.

Further, after taking into account the revenue that was generated after the 3G auction, the priceof spectrum for the 122 licences issued can be established at Rs. 1,11,512 crore against the Rs.9,014 crore that the government actually earned. In addition, Rs. 40,526 crore would have beengenerated by selling 35 licences under the dual-use category and Rs. 13,841 crore for excessspectrum. Hence, the CAG report estimated the total loss to the exchequer, based on the 3Gauctions, at Rs. 1,76,645 crore.

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ReplyTweets that mention 2G Spectrum Scam-Full Story,origin,growth(?) and modusoperandi. Ramanan50's Blog -- Topsy.com25 December 2010 at 9am

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ReplyState-run Mahanagar Telephone Nigam Ltd is expect to finalise agreements for sharingits third generation (3G) mobile network eComTechnology27 December 2010 at 9am

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Shekhar Gupta: The government has the power to tap somebody's phone, andthat power has to be exercised with a great deal of caution - the Supreme Court has

set down the law very strictly. Shouldn't there also be responsibility to protect

somebody's privacy, even if they are involved in criminality? They can only use that

information specifically in case of prosecution.

Ratan Tata: I totally agree, government also has a responsibility; the agencies also

have a responsibility. They have been given a special right to be able to invade

people's privacy for national security or for enforcement of law, whatever it may be.

So they can do so. That additional power is a very special power which has to be

exercised with a sense of responsibility. The content needs to be held forprosecution purposes and not to be misused, and certainly not to go out to have a

field day with. There doesn't seem to be prosecution on one end and there doesn't

seem to be confidentiality on the other. Perhaps as things will emerge, not even

knowledge of how it was disseminated, nor admission of even having conducted

such telephone tapping. So we are going to be in a dead man's zone on this, which I

think is unfortunate. Here I just want to put what you have said quite rightly in

juxtaposition to feeling I have as an Indian, perhaps a law abiding Indian, I wouldn't

even try to work my way out of a speeding ticket. We have all to be proud of what

we have done in India, we have got to be proud of our Prime Minister, we have got

to be proud of the success we have. It's terrible if we as a nation destroy ourselves

and whoever is doing this kind of thing needs to consider themselves not as hero of

the nation but in fact as one of the villains who would bring down this nation after

the good that is being done.

Shekhar Gupta: Do you see the danger in that? Do you see where the murkiness

can lead to...
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Ratan Tata: I think if it's not controlled, I think yes. I used the word Banana

Republic, I did not use it lightly.

Shekhar Gupta: I was coming to that, because that is a very serious expression.

Ratan Tata: Banana republics are run on cronyism. People of great power wieldgreat power, but people of lesser power or people who have fallen out of power go

to jail without adequate evidence or their bodies are found in the trunks of cars. The

danger is that you could degenerate into that kind of atmosphere unless the

necessary parts of government play their role in upholding the law and fine, let no

one be above the law. I would happily have that happen, various other people would

not like to see that happen but I would feel very happy to see that, I would feel very

proud. So I think it can happen, I mean a Banana Republic kind of an environment

could emerge, if we don't put an end to this kind of thing and under the guise of

freedom of speech or the guise of many other numbers of so-called rights of

democracy abused, the luxury of a democracy.

Shekhar Gupta: While the government does not do its job?

Ratan Tata: The government should do its job, the government's job is in fact to

run the country, to manage the country, to govern the country. And governance is

an important thing not application where it suits one so to micro control where it

suits them on the other hand.

Shekhar Gupta: So you see a lot of crony capitalism, since you used the

expression.

Ratan Tata: Yes I see the evidence of it. I am not in a position to say a lot of it but

it's certainly evident.

Shekhar Gupta: Will you say some of it?

Ratan Tata: Yes.

Shekhar Gupta: Will you describe some of the evidence that you've seen?

Ratan Tata: You see, large contracts being awarded, we see conditions ofcontracts becoming a little vague, implemented funnily, eligibility of capability

being abused. You know, very often I wondered there are some countries for

example where favouritism doesn't apply but you actually pay into the government

if you get a contract. But the nice thing about those countries is that you get the

best contractor, it becomes like a tax. It's an open tax, you pay not to individuals

but an agency. I'm not condoning that but am saying that's one form.


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Shekhar Gupta: That's corruption by tariff card... transparent.

Ratan Tata: Yes, here, who pays the cost of giving something to a person with less

capability - the customer. We get something that takes five more years to finish

than it should. It costs five times more to complete than it should. So this is not the

time we should do this, this is the time we should build our nation. And we shouldbuild it as many other emerging nations have built theirs, on the basis of

meritocracy.

Shekhar Gupta: How do you manage? How does the group of Tatas manage in this

environment?

Ratan Tata: Well, we have endeavoured to uphold a value system that has been a

part of our tradition. And we've been disadvantaged repeatedly. In that we have lost

projects, projects have been delayed, we have ingratiated ourselves in some cases

with some politicians but we will stay that course. Sorry, annoyed them. And in that

sense we would like to keep the group ferociously protecting this one asset that we

have.

Shekhar Gupta: Do you sometimes pay if you have to pay?

Ratan Tata: We've never done so. Never.

Shekhar Gupta: Be it on the tariff cards... as you say in countries where they

charge it almost like a surcharge.

Ratan Tata: No, we have not actually operated in those countries... I have myselfintrospected what happens here which is a little fussy. I can't say that it's

something else. What happens here, it makes you believe that there is an

undercurrent that is subjective against what you see in some countries, which is out

in the open, and as I said earlier that I don't condone that. At least I see that the

country gets the best that is for that particular project.

Shekhar Gupta: I understand some of our Chief Ministers have started doing that

now, they have open biddings, but whoever wins the bids knows that a certain part

of it has to be contributed back somewhere.

Ratan Tata: Well again, that's off the table. Whereas what I was talking of... it's

there... it's in the invoice. It's out in the open.

Shekhar Gupta: But if we come back to the banana republic, would you say that to

the Prime Minister, whom you said that you respect?

Ratan Tata: I think what has happened in the last few weeks is an indication of


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what can happen anytime... then we are really going down the route into a banana

republic. I would have no hesitation of telling the PM this because I don't believe the

PM is contributing to this. I think he should be concerned about the nation going in

that direction. And he's a tremendously good man. We are lucky to have him as a

PM. I want to say that it has hurt me to see what he has gone through in the past

weeks... in Parliament... the pressure... the innuendoes and the pressures he's beengoing through to resign and so on. He is one person who is truly above any of the

allegations thrown at him... the person whom we are lucky to have to because it's

his face that has been the face of transforming India. And it is this person who has

commanded the respect of the leaders in major countries. He doesn't deserve to

face this kind of humiliation.

Shekhar Gupta: And the Gandhi family has spent a lot of capital in building his

image and sustaining it.

Ratan Tata: And I was very pleased to see Mrs. Sonia Gandhi supporting him

publically because he doesn't deserve this kind of thing... this kind of pressure in

Parliament. And here again I think this is the responsibility of the Parliamentarians

to transact, to govern the country and not to adjourn the Parliament everyday to

meet some.

Shekhar Gupta: Everybody knows you in the world of business... in the world of

finance. Do you find some of the investors of foreign lands getting worried or wary

of India now?

Ratan Tata: I think it has just happened... so truthfully, I have no knowledge. But I

have a feeling that everybody would be having it on their lips and would be hearingit when I go abroad, that would be in a couple of days. People would be asking

about all what is going on... this scam and that scam. People are now well informed

about India through the Internet. They will think of India as a scandal-riddled

country, which it is not. And you can easily make it that way... make everybody's

mindset operate from one scandal to the other. You can make that unfortunately

the fodder... that the media needs to sell publications or to attract viewing on

televisions. And my experience has been that more noise comes from those who

have the most to hide. So we should not fall into the trap of becoming a nation that

is destroying itself by making everything into a scam.

Shekhar Gupta: Have you seen any increasing unpredictability in the government

policy or governance in India, again from the point of view of an investor?

Ratan Tata: Yes I think so, I've always felt and said this openly that behind it is not

government policy, what's behind it is the vested interests. I think the FDI limits in a

whole series of areas - some of them promised by the government - have not been

done, insurance for example. Retail has been promised, and that is another area.


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The banks are the third. These are things that the free world has come to accept as

areas of participation. India is a nation that everyone is looking at today. People

want to invest and it's not unusual now for a foreign investor to ask when do you

think the FDI limits on this will change? And you can't give them an answer because

there's nothing today standing in the way of the government doing that. So there

are those areas that...

Shekhar Gupta: ...that you find are inconsistent...

Ratan Tata: Telecom is another example. Through the years... through ten years...

if one really went and looked whether the stated government policy has been

implemented in the manner and spirit it was intended, the answer is no. It's been

modified several times to suit individuals. Initially it may have been public sector

incumbencies, then it was one segment or another.

Shekhar Gupta: So you say it has been changed at whim?

Ratan Tata: Usually behind any change, behind any deviation, is a vested interest.

Shekhar Gupta: I remember two things you said at our last conversation referring

to corridors. I'm taking the second one first - you said that we have come a long

way but things still happen in dark corridors in Delhi and you said that we don't

know that much about them. The other thing you said that corridors of power don't

matter as much as they do... as they used to... but they still matter too much. How

have the things changed in six years, have they gotten better or worse?

Ratan Tata: In some ways it has got better, but I think in many ways it is worse.

Shekhar Gupta: Tell us those, some of those.

Ratan Tata: Well you know there used to be grater adherence to policy. Today the

interpretation of policy has become very vague, so eventually you find that you are

arguing on something that the other side interprets in manner that is so bully and

vague that you come away of that meeting thinking that I'm never going to be able

to do this.

Shekhar Gupta: Any specific example?

Ratan Tata: No, but let me give you an example that has been bandied and used

in the press because they all give me a chance to clarify. It may be known to many,

or some, that when Narsimha Rao was the Prime Minister, an accord was signed in

Singapore to form a joint venture airline. JRD Tata was called by Mr. A N Verma

(who was the Principal Secretary to the PM) to put up a proposal for such an airline.

And we went to Singapore Airlines... we made a great progress... we put a proposal


12/24

before the government. There was no policy for FDI at that time and a fifty-fifty joint

venture was, I wouldn't say approved, but informally accepted. Then vested interest

brought about a change and fifty-fifty became sixty-forty as a new policy. No

reason, no grounds given. Singapore Airlines accepted that to become a minority

player. So sixty-forty - a new proposal was made. In this period of time, many

governments also changed. I can't specifically say which happened when but itstarted in Narsimha Rao's time, then Mr. Gowda then Mr. Gujral.

Shekhar Gupta: In between that 13 days of Mr. Vajpayee.

Ratan Tata: Yes. Then finally we met every requirement that the government

had... and then the last change was no, no foreign airline can participate. If you are

a diaper manufacturer or P-cap manufacturer, you could invest... but as an airline,

you couldn't. And this is the kind of change and you see that is an example. You

see cases where you just don't get any attraction, nothing happens... the minister

may tell you that I will do this, we will deal with this but it doesn't take place.

Shekhar Gupta: I know you have struggled with defense for some time.

Ratan Tata: Yes, then again it's an issue of not knowing where you stand, though I

think in defense things are truly opening up now in more transparent manner.

Shekhar Gupta: And your group has expanded that a great deal...

Ratan Tata: Yes and I hope that we get away from this concept - which I think I

even said in defense meetings - where I or you are not considered less nationalist

than the public sector and that only they conserve the nation all over the world andfree world. The private sector does the most sensitive defense work and it isn't only

the public sector.

Shekhar Gupta: All over the world... in free world... except France.

Ratan Tata: But in France, even in France, most of that... except most of the labs

etc in the public sector... but there are private sectors that do sensitive work.

Shekhar Gupta: But you see changes there in the defense.

Ratan Tata: Yes, I have seen huge changes.

Shekhar Gupta: Do you regret for being in telecom? Do you sometimes say that

I'm doing 20 things by Telecom?

Ratan Tata: Yes, because of the inconsistency of policy... because of the bias that

exists... yes sometimes I do. But it's a great area. It's a wonderful thing that the


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government opened it up to everyone and it's travesty that policy got subverted in

a manner that it helps you, disadvantages others.

Shekhar Gupta: And when you can subvert policy and now sought of extra policing

and editorialising, when you have the freedom to subvert the policy then that opens

the market for rent seeking?

Ratan Tata: May be yes, theoretically yes.

Shekhar Gupta: Has anybody asked for money in telecom?

Ratan Tata: In telecom... no.

Shekhar Gupta: In aviation, you made a remark that somebody sitting next to you

said something...

Ratan Tata: Yes, I said that somebody sitting next to me... what I said was not

what the media reported. What I said was a fellow industrialist, in a flight sitting on

the seat next to me, said that why don't you pay money to the minister? You know

that he wants - Rs. 15 crore. No one had ever asked us for any amount of money.

Shekhar Gupta: Those were very good times. Rs. 15 crore would be small change

now.

Ratan Tata: Yes, I realise that. And the person said you people want the airline,

don't you? You want the airline, so pay Rs. 15 crore. How does that matter to you?

And I said - what I was trying to say in answer to the question that - how do youavoid corruption. I said that ought to be self-regulating. I told this person that you

will never understand we just don't do that. He said you are stupid. I said no, I want

to go to bed at night feeling that I have not succumbed.

Shekhar Gupta: And you have never done it even for a mining lease anywhere?

Because now it is considered to be the normal thing for mining leases.

Ratan Tata: No, it is not... on our part, no.

Shekhar Gupta: Tatas have never done that, and have you suffered because ofthat?

Ratan Tata: Yes. We have several mining leases that are still not extended - old

mining leases that have not been extended. Questions have been asked. We are an

expanding steel company. We need iron ore in terms of assured supply. If we are

allowed to expand in iron and steel, one may think, if one looks back the 100-odd

years that Tata Steel has been in existence, have we once exploited or usurped in


14/24

any way the mining interest that we have? Have we profited? Have we destroyed

the environment? Have we done any of those things? We have not. But we are the

ones that are picked out and it's unfortunate. I think our effort has been to be good

corporate citizens.

Shekhar Gupta: There is another story floating is that a group of Tatas paid asizeable amount of money to Madhu Koda...

Ratan Tata: It's absolutely untrue. As the Chairman of Tata steel, I can say, we

have not done any such thing - directly or indirectly.

Shekhar Gupta: Did you get many leases in his time?

Ratan Tata: Actually we have got no leases in his time which should in itself be an

indication of the veracity, or the lack of veracity, of the stories being circulated.

Shekhar Gupta: But you have heard this charge?

Ratan Tata: Yes, we heard about the charge. I believe Tata Steel has even been

called and asked those questions by the enforcement agencies and we have given

them a response, which is the same as I have told you.

Shekhar Gupta: This is the first public response. You know, I'm pushing the

envelope and I'm also digressing a little bit. India is a funny country. While we have

so many raw materials, yet countries like China, and Korea for that matter which

has no recourse, processes a lot more of it. So are we in effect transferring our jobs,

our taxes, our revenues to smarter countries?

Ratan Tata: In terms of meeting the needs of our own goals?

Shekhar Gupta: Yes, and also in terms of creating a value-added wealth here.

Instead of exporting a lot of this ore, if we had allowed our own capacity to expand

in India, it would be a lot better for us?

Ratan Tata: Absolutely, it would. In fact we are going counter to many years (of)

Mr Nehru's and Mrs Gandhi's national criterion of being self-sufficient, where we

have the capability to be self-sufficient, where today we can equal the bestmanufacturing facility anywhere in the world. Now as an open country we can

acquire technology (and) that's the time when we have our wealth - kept either on

the ground or under-ground - and ore going to people who are exporting that

natural resource. Natural resource today should be one of our key issues. It should

have value added and, as you say, what we should gain is to finish product as an

input.


15/24

Shekhar Gupta: Have you raised it with policy makers?

Ratan Tata: At various times, yes. (Do you find direction?) Find understanding, but

one of the ills we have is the issues - that are state issues and there are central

issues, and between the two sometimes nothing happens.

Shekhar Gupta: But mining leases is also the biggest ATMs in our politics for last

few years. Besides land, mining leases have become most productive ATM that

never runs out of cash.

Ratan Tata: Yes, because natural resources globally have gone through the roof.

For years and years, nobody bothered about iron ore. Suddenly iron ore and coal...

Coal India has been sitting on the sea of coal all these years (but suddenly it has

become the issue) value of which on the global basis is considered to be enormous.

Shekhar Gupta: Back to Delhi. At which point you realised that you needed

someone in Delhi to work for you and then you hired Niira Radia. How did that

happen?

Ratan Tata: I forget how many years ago. Ten-fifteen years ago, we found

ourselves, like just now, under attack - all kinds of statements being made. In fact

I'd go back home wondering where did these stories come from. We haven't done

this, we haven't done that - it would go on and on. One example is, I think you are

aware of, the story about me having hob-knobbed with the extremists in Assam...

Shekhar Gupta: That story, if I may say so, was broken by Express in 1996, I

think...

Ratan Tata: No no, the story was not broken. It was a prosecution by the

Assamese government at that time. We thought where it is coming from. So those

kinds of issues led us to say that we need to protect ourselves and get our point of

view across to the media. Every time we had tried to do something, it was a

defensive move - rebutting or denying - or usually we got relegated to back page in

newspapers. So we decided we go out and seek a firm to represent us and that is

how we in fact came together with Niira Radia who formed this company. Never

once in our association with her, have we ever tried to subvert policies, move policy

in our favour. Yes we have advocated level playing fields, we advocated changes inpolicy through her or directly, but never once have we done something to exploit a

policy issue. Never once have we used her to make payments or to seek favours,

and we have had a good professional relationship with her. I think she is being

attacked just now in a manner... As I said, every citizen deserves the right to be

innocent until proven guilty, not to be considered guilty by the media.

Shekhar Gupta: And you think that it is unfair... the situation you find right now...


16/24

Ratan Tata: It would appear so. I can't really say, but I think all the sense one gets

(that) there is someone and something behind it. It's not just natural thing.

Shekhar Gupta: And what (who) could it be? Rivals?

Ratan Tata: I do not know. It could be - could be rivals, enemies in the

government, the corporate rivals. I could not say but it's not a natural thing.

Shekhar Gupta: In your interactions with her, did you ever worry that since she

was working for the corporate world , you might get conflicted at some point?

Ratan Tata: Yes, and in fact, from time to time, I have voiced my concerns to Niira.

In my statements, I confined it to our relationship. Because she represents more

companies, statements are restricted to our professional relationship with her which

has been very good.

Shekhar Gupta: Because much later than she started working for you, she started

to work for the Mukesh Ambani group, which was again involved in a fairly messy

situation. Did you see either a conflict or division of time and mind space that may

have affected your interest?

Ratan Tata: Certainly division of time. Yes, undoubtedly because she did it through

a different company. I'm sure it took some of our time. In terms of conflict, Reliance

industries at that time had no conflict. They were in oil and gas and not in power,

not in telecom and not in financial services.

Shekhar Gupta: But you were in conflict with the other Reliance in a way, in the

marketplace...

Ratan Tata: Yes, we were in competition but she didn't represent them (Anil

Ambani group).

Shekhar Gupta: But you see she was representing you and the other body on the

other side. The two brothers were engaged in a combat of a kind. It is complicated?

Ratan Tata: It could be complicated. I can't say. I'm aware of what pressures orfocus Niira was facing on the other side. Today the two sides coming together, I

think there is more of a chance of conflict. Today Niira would eventually have to

make up her mind what she wants to do...

Shekhar Gupta: Two sides coming together means that Anil and Mukesh have had

a settlement. Is that what you are saying?


17/24

Ratan Tata: Yes. So now that Mukesh is in a position to enter the field of telecom

or power we have a potential conflict.

Shekhar Gupta: If you look at these tapes, such as they are, I think what caught

public imagination is the idea of somebody - you can call her lobbyist or PR person

or a representative - is talking to people to influence a Cabinet appointment.

Ratan Tata: I have listened to some of the tapes... I'm not a Delhi resident...

(Shekhar Gupta: Good for you) I wonder if other people's phones were tapped,

whether we got similar kinds of conversation. I don't know that she has the power to

influence cabinet appointments or anything of this nature.

Shekhar Gupta: But certainly if anybody thought this could be done to a

journalist, I find it very touching...(laughs). Think about that - a journalist can call

somebody and say make so-and-so a minister and don't make so-and-so a minister.

I've been in the business much longer than those people now, and I don't think I

could do that. As you said, I would have had hard time getting somebody a ticket.

Ratan Tata: I really believe that Delhi is full of people whose life revolves around

politics and what has happened today and what is going to happen and who does

what in political circles... so I really don't know. (Shekhar Gupta: Dark corridors at

11 pm as they say) Correct. Now I think corridors are replaced by telephone lines.

Shekhar Gupta: (The) Late J N Dixit used to tell me (the National Security Advisor

who passed away) that Shekhar it takes you a lifetime to understand the ways of

this city, and by the time I understood it was too late for me to help you. It takes

another life time. Did it (the tapes) come as a shock to you?

Ratan Tata: Some of them have come as a shock to me but the tapes have been

around for a long long time in one form or another. The parts of it (Shekhar Gupta:

You knew that tapes were there?) I knew that there were some tapes - the fact that

some included conversation with me. I realised that her phone had been tapped. We

have had many conversations as with many other people, and what bothers me is

that we are living in a state in this country where that kind of thing happens on an

official basis

Shekhar Gupta: And then it gets leaked...

Ratan Tata: Yes, that's a new phenomenon.

Shekhar Gupta: India is a funny country. We don't declassify something that

happened 60 years back. Nehru's letters to Kennedy (for example) we have to get

them from Kennedy's family's archive, we just got it two weeks back because

Kennedy's family's archive had it. We still have that classified in India. Here we leak


18/24

some information that were recorded few months back.

Ratan Tata: I think the porosity in Delhi also is something of great concern.

Telephone tapes are leaked, official documents get leaked, files disappear. I think

there is a great deal that the government has to look internally into.

Shekhar Gupta: All that happens in a corporate situations. Can you imagine what

happens to the Pakistani, the Chinese, the CIA, if they get involved. Have you raised

it with Prime Minister or Finance Minister yet?

Ratan Tata: Not to this extent. (Shekhar Gupta: Do you intend to?) Yes.

(Shekhar Gupta: How would you do it?) I think at present moment, I would like to

register my concern as an Indian that this is happening. I don't have enough

knowledge to profess to the Government what they should do, but I think as an

Indian and as a caring Indian who is proud of my country, I feel I should register.

(Shekhar Gupta: Formally would you write to them?) I have been toying with

whether to write or try to speak. Probably the better thing to do is to put on paper

my concern and register my concern with them. I'm not seeking anything for myself

from this. I'm not asking anything to be done for me. I'm asking the Government to

consider that there is an Indian who has concerns for his country that feels that this

kind of thing should not happen; and our country is such that we should honor the

responsibility the agencies have and take the necessary prosecuting actions that

need to be taken. But this free for all and sort of media blitz with seemingly evident

agenda and what looks more and more like a smokescreen, one should put an end

to that, and get down to taking the culprits to justice and getting over with this.

Shekhar Gupta: It is flooding the environment with things that are very seditious.It may be interesting to others but of no real consequence. In the little conversation

between you and Niira - you are showing wearing a black tie/dress and she is

wearing a black gown - it's funny but it's funny like a sequence in a movie.

Ratan Tata: But was that subverting policy? Was that in fact influencing the

induction or removal of a minister? Was that toppling Government? how is that of

any relevance and how do you correlate that with putting my picture on the cover

saying 2G scam.

Shekhar Gupta: Did it matter to you who became telecom minister?

Ratan Tata: From the standpoint of wanting to see, you know, a policy and a level

playing field - yes, it would matter. If you say did I want to see Mr Raja in or Mr

X...no, whoever we thought was going to be ...(Shekhar Gupta: But you have

history with Maran...) Yes, unfortunately because I think he is a very intelligent

person and we just had, if I might be honest with you, what seems to be a

chemistry problem more than anything else. He is extremely intelligent, extremely


19/24

sophisticated (Shekhar Gupta: And very smart and articulate ...) Yes.

Shekhar Gupta: Will you take us to what happened, because that is again

something we have heard? What happened between you and Maran?

Ratan Tata: I would not want to go into that because I think that has been abusedat various times. It was not my intention to abuse. So I think that should just be left

alone but we had differences. I don't know why. If Raja was going to create a more

level playing field - in a way he may have done many things wrong, but he did some

things right. He opened up the industry, took away a very powerful thing (if I might

say this) and made it a part of a bigger industry. He or whoever it may be need to

deal with people who have excess spectrum. They should they pay for it or return it.

They have deprived others of that spectrum. As of now, we still do not have any

spectrum in Delhi and 39 other areas for no reason. Other people have got it - other

people are holding spectrum for free. So there are inequalities and inequities in

telecom area which still need to be solved.

Shekhar Gupta: Will you give me your description of what you think the scam is?

Ratan Tata: I really don't know. When it started, I thought it was Mr Raja's alleged

deeds, then it seemed the scam related to Niira Radia's conversations with various

people, which were more innuendos than anything else, and Mr Raja's scam was the

loss to the exchequer. I don't want to comment on the rights or wrongs, but loss to

the exchequer was computed on the basis of 3G auction. 2G spectrum was

allocated before the auctions, so it looks somewhat like a hindsight issue but the

media has said that he robbed the nation of X... (Shekhar Gupta: $40 billion) OK,

so if that is so, somebody will need to show that there has been a sort of visionaryview before the event took place that cost him to cause that much loss to the

exchequer. These are things I think the media has blown up. What is unclear to me

is what really is the scam? Was it the manner in which he implemented the policy?

Shekhar Gupta: The one is spectrum and the other is licenses issued in arbitrary

manner...

Ratan Tata: Right, others feel that... So that should raise a question that all the

accusations to Niira, they culminated in her client going to court. So it's not clear

what the scam is.

Shekhar Gupta: Going to court as a victim?

Ratan Tata: Yes, as a victim and not as a beneficiary.

Shekhar Gupta: Give your solution to the Government. 3 things the Government

should do now to calm down situation and also to take it to right conclusion.


20/24

Ratan Tata: I think the government has a new minister in place, who I admire for

his ability to think through the situation. There should be first the calming down.

The Government should take over the control over the tapes and there should be

strictures on the media to not use the tapes the way they have been using them. I

think the Government should institute a public inquiry on whatever they wish to dorelating to the licenses, the manner in which they were implemented, the allotment

of spectrum and far beyond the eligibility of certain players - that should not be

ignored. In (retrospect), in 2005, I was the person who advocated that spectrum

should not be free. It upset Mr Maran and some of the operators made statements

that if I have so much of money, I should donate to the PM relief fund (Shekhar

Gupta: Sunil Mittal?) Yes. I said at that time that spectrum is a scarce resource and

should be paid for, and I'm the only one who did not get any spectrum (laughter).

So the point is I think there be an inquiry to go into what has really happened and it

should go back to 1999 or 2003 when policy were embedded in certain areas, and

whoever the minister or the Government was at that time. It should be a holistic

view because the industry deserves a consistent policy, not a chop-chop policy - not

a kind of review of what Raja did and what Maran did.

Shekhar Gupta: If investigation happens, you will fully cooperate with them...

Ratan Tata: Of course, if asked to.

Shekhar Gupta: We spend lot of time on what's wrong. Talk about your group.

From 1991 to now your turnover has grown 40 times but nearly 60% of it now is

overseas, is that the different?

Ratan Tata: To some extent it is, and in some extent it happens because the

reason that the so much of our turn over is overseas is because we made two large

acquisition overseas.

Shekhar Gupta: Prime Minister Cameron told us that you are the largest employer

in private sectors.

Ratan Tata: That's turned out, yes, we are between Corus and JLR. JLR was the

acquisition based strategically on products that we make - not the Jaguar part , but

the Land Rover part. As both came together, we were obliged to take both; and I'mvery pleased to Jaguar because I think it's the company with tremendous

technology embedded in it. And it's been a very exciting period of time after we got

over the down turn, which I think was weight around our neck which would in fact

sink us

Shekhar Gupta: Was there moment when you thought that you had bit off too

much.


21/24

Ratan Tata: Actually, I never thought that we are bit off too much. I just didn't

know that we could go through the deep water of the down turn. My main concern

was that all the initiatives that were in the pipeline should not stop, otherwise it

would come out of the down turn the same ways we went in. The product

development plans, the research-and-development program should continue

Shekhar Gupta: 26/11 came on top of that?

Ratan Tata: 26/11 came on top of that and that affected the hospitality end of our

business. The steel market collapsed worldwide coming out of this and the banking

system vapourised so you got hit the worse way from all sides

Shekhar Gupta: What was the toughest night that you face?

Ratan Tata: There were no toughest nights but there were several instances where

we had to turn to Tata Sons to back us up or to back stop situation or give a

guarantee. And Tata Sons is also not an infinitely deep pocket and so I had in fact

double responsibilities - one is to see these companies through and second, to

make sure that I didn't in any way endanger the security of Tata Sons. I think that

was my toughest period.

Shekhar Gupta: And then the attack came on top of that.

Ratan Tata: And then the attack came on top of it. Very emotional and in fact

something, even now, I feel difficult to control in thinking back to the misery that

was caused. It is such a needless loss of life...

Shekhar Gupta: Do you see a real danger of Indian entrepreneurs now actually

preferring to go overseas then invest in India.

Ratan Tata: It's possible because today we have the ability to go overseas

opportunity for investments are there and countries are very investment friendly

trying to bring in investment. In India states it wishes to be investment friendly but

when you look at fine prints you get stuck

Shekhar Gupta: What was your experience in investment commission, if I say thatit may not have achieved that much.

Ratan Tata: Well it didn't achieve that much because...

Shekhar Gupta: That you, Ashok Ganguly, Deepak Parekh were formidable

people...


22/24

Ratan Tata: I think we produced two documents that were worthy of view that I

don't think they ever had, we had about 140 specific recommendations to improve

the investment climate. We have never heard one way or another that A has been

approved or B has been disapproved, etc. It's just a black box in which it is gone

and I just think that it was one of these commissions that have been established we

help some companies, what was our local standard and what was our span ofauthority, zero. That apart, I think it was a terrific exercise to look at the

opportunities that there were in India and pin-pointing the areas, the road blocks

that we could take away that would make that happen; and I think there is a

frustration that it didn't do what it could do.

Shekhar Gupta: Did you share it with the Prime Minister?

Ratan Tata: Yes, the Prime Minister is very supportive, although it didn't go into

details, he has been very supportive and I think really wanted to see this happen,

the goal he has set of having $10 billion investments actually took place, but I in

humility must say not because of the investment commission, India itself just

became more attractive.

Shekhar Gupta: Actually 10 billion became a much smaller figure and the world

changed so rapidly.

Ratan Tata: That's right yes..

Shekhar Gupta: So Ratan hopefully the murkiness would go, life would be back to

normal. When that happens what's next on agenda?

Ratan Tata: I don't know Shekhar, I think one way is, not to make too many plans

because the world gives you an opportunity to be quite flexible. And I think as one

grows older, one wants to have the luxury of being more flexible and more tentative

about what they want to do. So, as we go forward, what is next is an issue of what

the country, or...

Shekhar Gupta: I think defense and aerospace is on your mind right now...

Ratan Tata: Yes, that's of considerable interest. Also what occupies my mind just

now is new ways to propel a motor car, you know, be electric, be it hybrid - thosenew technologies are of great interest to me.

Shekhar Gupta: So are we waiting to see a Tata hybrid?

Ratan Tata: Yes, actually, there will be a Tata electric car on sale in the UK next

year, that is, in the next few months - an Indica, but an electric Indica. And yes, you

will see hybrids in our stable in the next couple of years. JLR will have a hybrid and


23/24

so will Landrover. These are interesting and intriguing technologies.

Shekhar Gupta: And the inevitable question, December 2012?

Ratan Tata: It will fall in November 2012. The search is on. I'm not on the

committee. I consciously decided to stay away from it. And this is something that isgoing to emerge through a list of people, whom they would look at. And I keep

saying, let them come forward with something, lets not prejudge.

Shekhar Gupta: But in 2012, as you hang up your boots in active management, do

you see Tata as a global company, an Indian company, or a foreign company?

Ratan Tata: It's not a foreign company; it will always be an Indian company, with

an important international footprint. I will like to see it be considered as an

international company of Indian origin.

Shekhar Gupta: So an Indian MNC?

Ratan Tata: Yes.

Shekhar Gupta: And how do you spend your time, I know you are interested in

flying and swimming, and certainly dogs that's the interest we share but you have

plans.?

Ratan Tata: No I don't have any plans, you know sometimes in case like that you

don't want to make plans, I said publicly that I would like to continue my interest in

design and thats something I'll think through

Shekhar Gupta: And what's the point of retiring if you have to plan?

Ratan Tata: (Laughs) Good Point... but you know Sunday is a kind of day that you

don't want to make any plans and I hope that applies after December.

Shekhar Gupta: A week of seven Sundays...

Ratan Tata: That's right. At least for a period of time that will be a luxury and then

it might drag, in which time I'll find something to do

Shekhar Gupta: Ratan, you deserve it and I hope you get your seven Sundays and

I know they will be seven working Sundays.

Ratan Tata: I hope not.

Shekhar Gupta: Working on something that there are many opportunities to do...


24/24

Ratan Tata: Sure it's something.

Shekhar Gupta: Having this conversation with you is always such a privilege

because besides everything else one learn so much

Ratan Tata: Thank You.

Shekhar Gupta: (It's) Always inspirational talking to you.

Ratan Tata: Let me just tell you that you come to be somebody that I really

respect because of the fact you stand for, what you believe in and I have enjoyed

every moment that we have been able to share together, I hope that friendship will

grow as we go forward

Shekhar Gupta:Inshallah.

Ratan Tata: It's something I'll cherish. Thank You.

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Story first published:

November 27, 2010 19:52 IST

Tags: 2G scam, A Raja, Ratan Tata

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on-2g-scam-69007?cp
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