2G Telecoms: India’s Biggest Corruption Scandal

Andimuthu Raja , former telecommunications minister is facing trial in India’s biggest corruption scandal. But he wasn’t going down alone. Raja deflected blame onto the prime minister in court on Monday, saying he had knowledge of a key decision to manipulate the sale of 2G telecoms spectrum licences in 2007-8 when he was telecommunications minister.  Manmohan Singh appeared in court in the Indian capital denying the allegations.

Raja, a member of a party in the coalition government, has been charged with flouting telecoms rules and accepting bribes to favour some firms when they sought lucrative mobile phone licences at rock bottom prices, possibly causing the state losses of $39 billion in revenue.

Was Andimuthu Raja right to name the prime minister – and will the PM counter attack?

Shortly after the licences were sold on a first-come-first-serve basis a number of foreign companies, including Norway’s Telenor and Etisalat , bought stakes in the Indian companies at much higher prices, hence prosecutors believe a crime was committed.

The pre-trial comments put the government on the defensive after efforts by Singh to move past a series of damaging corruption scandals that have paralysed government policy-making and hurt foreign investment in Asia’s third largest economy. 

[quote]”Where is the crime? Where is the conspiracy? Telenor buying a stake in Unitech Wireless and Etisalat buying a stake in (DB Group’s telecoms venture) was totally legal as per the corporate law,” Raja said, according to NDTV news channel.

“The finance minister approved the sale in the presence of the PM. Let the prime minister deny it,” Raja said.

“What the telecom companies do after I gave them spectrum is not my domain,” he said.[/quote]

Executives from Reliance Anil Dhirubhai Ambani (ADA) Group and the Indian joint venture partners of Norway’s Telenor and the UAE’s Etisalat are among those charged by police in the case.

All of the accused deny the charges.

Ministers from the ruling Congress party were immediately deployed to say no such divestment had taken place and accused the opposition of seeking to derail the parliamentary session.

The main opposition Bharatiya Janata Party (BJP) seized on Raja’s comments demanding Singh’s resignation. That demand could be an ominous portent for the government gearing up to introduce major reform bills such as on land acquisition in the next session of parliament, which starts on 1 August.

The Congress party, the largest in the coalition government, has sought several times to distance itself from the telecoms fiasco, a case that has damaged relations with a key southern ally and pricked investor confidence.

Report from Reuters