April 21 (Bloomberg) -- Telenor ASA asked the head of its Indian mobile-phone venture with Unitech Ltd. to step down after a court ordered his arrest in a probe into a sale of mobile-phone licenses.
Telenor, the biggest Nordic phone company, asked Unitech to name a replacement for Unitech Wireless Chairman Sanjay Chandra for as long as the court case goes on, Glenn Mandelid, a spokesman at the Fornebu, Norway-based company said in an e-mailed statement.
Billionaire Chandra, who is also the managing director of Unitech, India’s second-largest real estate company, is among five officials from three companies who were arrested yesterday after being charged by federal investigators with offenses linked to a mobile-phone permit sale in 2008. The sale of licenses at “unbelievably low” prices may have denied the exchequer $31 billion, the nation’s chief auditor has said.
“Given their reputation globally, given that Telenor is actually a government company, they’re going to be extra sensitive, extra careful,” said Kunal Bajaj, head of telecommunications consulting company Analysys Mason India Pvt. in New Delhi.
Telenor is 54 percent owned by the Norwegian government, according to data compiled by Bloomberg.
‘Appropriate and Decent’
“Withdrawing from the chairman position is the most appropriate and decent thing for Sanjay Chandra to do given the current circumstances,” Mandelid said. “It is of vital importance that the running business of our Indian operation is not hampered.”
The probe into the sale of mobile-phone spectrum won’t have an “adverse” impact on Unitech’s real estate and telecommunications businesses, the Indian company said in an e-mailed statement.
Telenor entered India by buying a stake in Unitech Wireless, an arm of Unitech. The Norwegian company began accumulating its stake in the venture known as Uninor in 2009 and now owns 67.25 percent. The Unitech group holds the remaining stake.
Others arrested yesterday were Reliance ADA Group Managing Director Gautam Doshi and Senior Vice Presidents Hari Nair and Surendra Pipara and DB Realty Ltd. Managing Director Vinod Goenka. Trials will resume today.
India’s Central Bureau of Investigation charged the five company officials on April 2 along with former telecommunications minister Andimuthu Raja, his personal secretary R.K. Chandolia, former ministry secretary Siddhartha Behura, and three private companies, Reliance Telecom Ltd., Unitech Wireless and Swan Telecom Pvt.
Raja and the two other 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.
Unitech Wireless and Chandra have been charged “for actions when it was a fully owned Unitech company, prior to Telenor Group entering India,” Mandelid said.
Reliance Communications dropped 1.9 percent to 105.8 rupees at the close of trading in Mumbai yesterday. The shares have tumbled 27 percent this year. Unitech slid 5.6 percent to 40.45 rupees while DB Realty fell 4.3 percent to 102.3 rupees.
The Reliance ADA Group said April 2 that its three employees deny the charges and have a legal presumption of innocence pending the completion of a trial. Unitech said the same day it complied with applicable rules in obtaining its licenses and that none of its employees have done anything “inappropriate or illegal.”
Balwa hasn’t done anything “inappropriate or illegal,” DB Realty said in a statement in March. Raja has denied wrongdoing.
Raja, Behura, Chandolia and Balwa were arrested by the CBI for alleged irregularities in the allocation of phone licenses. The scandal has weakened the government of Prime Minister Manmohan Singh, forcing him to deny he had become a “lame-duck” leader. Singh agreed in February to a parliamentary probe of the license sales, after opposition protests paralyzed legislation.
CBI lawyer Uday Lalit has argued that the five company executives should not be granted bail because of concerns they may try to influence witnesses in the case. Mukul Rohatgi, a lawyer for the three Reliance ADA Group executives, has said his clients should be granted bail as they were cooperating with investigators.
The CBI said in its 80,000-page charge sheet that Raja conspired with government and private company officials 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 CBI said their actions caused a loss of 309.8 billion rupees ($7 billion) to the government.
DB Realty’s Chief Financial Officer Asif Yusuf Balwa and Chief Operating Officer Rajiv Agarwal are also in judicial custody after the CBI arrested them March 29. They have not been charged.
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