Surrendering Airwaves And Liberty To Nepotism
June 12, 2012
By JC Weliamuna -
A Governance Analysis Of Frequency Allocation & TV Rights In Present Sri Lanka
JC Weliamuna
Frequency Allocation- A Grand Corruption?
Understanding the State capture by Kleptocrats does not require a dedicated study; it is easily recognizable. For the benefit of keen students of governance, let me begin this article with the definition of Kleptocracy: “A form of political and government corruption where the government exists to increase the personal wealth and political power of its ruling class at the expense of the wider population”. Kleptocracies are mostly associated with authoritarian or nepotistic regimes. In this article, I endeavor to examine some governance aspects of Sri Lankan style of frequency allocation with specific reference to TV rights.
Television licenses and the right to own television rights for sports are turning to be one of the most abused resources. Why? Firstly, an average person does not understand the mechanics or value of transactions and therefore it is often abused by those who control them. Secondly, secrecy of broadcasting is generally maintained at the highest level of the political elite. Thirdly, in a State where regulatory framework is subject to interference, no challenge is possible against abuses. Finally, unlike other properties, radio frequency is not tangible and any contracts arising out of them cannot be measured by an average person.
Corruption in frequency allocation is rampant in several parts of the world. Let me take one example to demonstrate the financial losses that can cause to a State in such cases. One of the all-time biggest acts of corruption relating to the allocation of frequencies was reported from India. Known as the 2G Scam it was about the allocation of frequencies to mobile service providers for second generation mobile phones where 122 licenses were granted to 8 companies. The estimated loss to the State was US$ 34.5 Billion! The Minister in charge of Telecommunication (A. Raja – DMK Tamil Nadu) was in the centre of the controversy. He and his secretary along with a group of executives of companies resorted to corrupt methods to secure frequency allocation licenses for the identified 8 companies. Among the methods used was to advance the cutoff date of applications for licenses from 1st October to 25th September 2007. There was no rule in India to publicly auction frequencies but the price at which the allocations were done was, however, set for the rates as at 2001, which was the initial (formative) age of telecommunication industry in India. To quote an example, it was revealed that Swan Telecom which secured some contracts for frequencies for US$ 306 Million sold 40% of its stake to Etisalat for US$839 Million within a few months. Exposure of these deals led to investigations by the Auditor General and many other probes. The Centre of Public Interest Litigation and Subramaniam Swamy moved Supreme Court of India, resulting in cancelling all the 122 illegally entered contracts. The Central Bureau of Investigation (CBI) has taken over the investigations and the Minister, his secretary and many other VVIPs including the daughter of Karunanidhi were arrested and are now facing prosecution. Not to mention, the CEOs of several companies are also being prosecuted for their corrupt conduct. Though corruption took place, they were virtually caught and are being prosecuted. Can it ever happen here? Read More
