RJI under fire; CAG says cancel 4G licenses

In what could be a major hurdle to the launch of 4G services, the Comptroller and Auditor General of India (CAG) has asked the Department of Telecom to cancel the nationwide broadband spectrum allocated to Infotel Broadband Services, or Reliance Jio.

In a draft report, CAG said: "the DoT failed to recognize the tell-tale sign of rigging of the auction right from beginning of the auction" where a small ISP Infotel Broadband Services Pvt (IBSPL) was able to buy spectrum by paying 5,000 times of its net worth.

RIL had acquired IBSPL after purchase of spectrum and later rechristened it as Reliance Jio.

"There is no final CAG report that we are aware of. That said we outrightly reject any suggestion whereby spectrum was acquired in any manner other than through a transparent bidding process duly supervised by the

Government of India," RIL said.

The report said that IBSPL had submitted "an earnest money deposit of Rs 252.50 crore "through the covert and overt assistance of third party/private bank", and bid for Rs 12,847.77 crore (5000 times of its net worth) for pan-India spectrum and then sold the company on the day of completion of the auction, which "indicated IBSPL's collusion and sharing of the confidential information with a third party in violation of auction conditions/rules."

A RIL spokesperson said: "There was no visible evidence of any eco-system for the BWA spectrum at the time of auction. Any allegations of so-called collusion, sharing the confidential information or rigging the auction are bizarre and completely rejected," the spokesperson said.

The person said: "Earnest Money Deposit (EMD) was based on specific deposit requirement for each telecom circle. Accordingly Infotel Broadband Services  (IBSPL) submitted a Bank Guarantee of Rs 253 crore in format as prescribed in NIA. Since no money was deposited as EMD, the question of source of deposit does not arise."