In a scathing criticism of former Telecom Minister A Raja for favouring industrial houses including Anil Ambani group, government auditor CAG on Tuesday said he alloted spectrum ignoring the Prime Minister’s advice and caused a loss of Rs 1.76 lakh crore.

Among the other industrial houses that benefited from Raja’s 2G spectrum policy were Unitech, Datacom (now Videocon), S-Tel, Swan and Loop Telecom, who were given licences in January 2008.

CAG said that the entire process of allocation of Unified Access Service licences “lacked transparency” and was undertaken in an “arbitrary, unfair and inequitable manner”, in the process “flouting every canon of financial propriety, rules and procedures.”

On the issue of spectrum allocation to existing operators beyond the contracted quantity of 6.2 Mhz, CAG has found Sunil Mittal-led Bharti to be the biggest beneficiary, among private players, with 32.4 Mhz in 13 circles, followed by Vodafone- Essar with 19.6 Mhz.

The auditor has pegged revenue loss on account of new licences at up to Rs 1.40 lakh crore and that on account of additional spectrum allotment to the existing operators at Rs 36,993 crore.

The 77-page report of CAG, tabled in Parliament, said that due diligence was not followed and even the recommendations of the telecom regulator TRAI were “not followed in spirit”.

The report said the “presumptive” loss caused to the exchequer through spectrum allocation to 122 licensees and 35 dual technology licences in 2007-08 was Rs 1,76,645 crore.

It arrived at the figure on the basis of 3G auction held earlier this year in which the government mopped up over Rs 67,000 crore.

It said there was an “imperative need to fix responsibility and enforce accountability for the lapses highlighted in the audit report.”

Elaborating on the lapses and irregularities, the government auditor said Prime Minister Manmohan Singh had “stressed on the need for a fair and transparent allocation of spectrum” while the Ministry of Finance had sought for the decision regarding spectrum pricing to be considered by an EGoM (Empowered Group of Ministers).

“Brushing aside their concerns and advices, the Department of Telecommunications, in 2008, proceeded to issue 122 new licences for 2G spectrum at 2001 prices, by flouting every canon of financial propriety, rules and procedures,” the CAG said.

The DoT also did not do the requisite due diligence in the examination of the applications submitted for the licences, leading to the grant of 85 out of 122 licences to the “ineligible applicants” as all these firms did not have stipulated paid-up capital at the time of application.

Further, 45 out of 85 licensees were issued to companies which failed to satisfy conditions of main object clause in the memorandum of Association (MoA), it said.

The CAG said the process of giving dual technology licence to leading telecom firm Reliance Communications “lacked transparency and fairness”, and equal opportunity was denied to other similarly placed operators, including Tata Teleservices, who could apply for use of dual technology only after formal announcement of the policy.