Indian investigators charged executives of three companies, including billionaire Anil Ambani’s Reliance Telecom Ltd., and a former telecommunications minister over a sale of second-generation mobile phone spectrum.
The charges will pave the way for trials in what may be India’s biggest case of political corruption. In February, Prime Minister Manmohan Singh agreed to a parliamentary probe into the sale of the licenses after opposition protests paralyzed legislation.
“It’s a step in the right direction,” said Kamlesh Bhatia, principal research analyst at Gartner Inc. in Mumbai. “Industry in India needs some level of regulation to be enforced.”
Former telecommunications minister Andimuthu Raja, his personal secretary R.K. Chandolia, former telecommunications department secretary Siddhartha Behura, former DB Realty Ltd. Managing Director Shahid Balwa, DB Realty Managing Director Vinod Goenka and Unitech Ltd. Managing Director Sanjay Chandra, were among those charged by the Central Bureau of Investigation today, as well as Reliance ADA Group Managing Director Gautam Doshi and Senior Vice Presidents Hari Nair and Surendra Pipara.
The companies charged were Reliance Telecom Ltd., Unitech Wireless and Swan Telecom Pvt., said A.K. Singh, a government lawyer, outside a court in New Delhi.
A Reliance ADA Group e-mailed statement said its three employees deny the charges and have a legal presumption of innocence pending the completion of a trial.
Unitech spokeswoman Tanuja Kehar and DB Realty’s Goenka said they couldn’t immediately comment on the charges.
Balwa hasn’t done anything “inappropriate or illegal,” DB Realty said in a statement to the Bombay Stock Exchange on March 29. Raja has previously denied any wrongdoing.
Raja resigned in November, two days before the nation’s chief auditor said in a report that the second-generation airwaves were sold in 2008 for an “unbelievably low” $2.7 billion, causing a loss of as much as 1.4 trillion rupees ($31.4 billion) to the nation. Raja, his personal secretary and an ex-bureaucrat were arrested in February.
Raja and the other the former government officials were charged under the Prevention of Corruption Act. The company officials and companies were charged with “lesser offenses” under statutes relating to conspiracy, cheating and forgery.
The Central Bureau of Investigation has argued in court that Raja conspired to benefit companies including the then Swan Telecom, now known as Etisalat DB Telecom India Pvt., and Unitech by violating guidelines in the license sale.
The Comptroller and Auditor General of India said in a report submitted to parliament on Nov. 16 that applications from companies including Swan and Unitech should have been rejected because they were ineligible.
Swan Telecom suppressed information and submitted false documents in its license application, the auditor said, while six companies belonging to the Unitech Group also fraudulently suppressed facts in their license applications, “misleading” the Department of Telecommunications in order to win licenses in 20 service areas, the report said.
Department of Telecommunications rules stipulate that an operator can’t own 10 percent or more in another operator that provides services in the same telecom zone.
Reliance Telecom “held only 9.9 percent of the equity share capital of Swan Telecom at the time of filing the relevant license application in March 2007,” the company said in an e-mailed statement Feb. 13.
The company said “as per the provisions of the Companies Act 1956, the preference share capital held by Reliance Telecom in Swan Telecom is not to be included for purposes of determining shareholding levels.”
The next hearing in the case will occur April 13.
Reliance Telecom is a wholly owned unit of Reliance Communications Ltd., the main company in Anil Ambani’s Reliance ADA Group.