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Indian Court Finds Singh Ally Guilty in 17-Year-Old Graft Case

Sept. 30 (Bloomberg) -- An Indian court found politician Lalu Prasad, an ally of Prime Minister Manmohan Singh, guilty of embezzlement in a 17-year-old graft case that may redraw alliances before national elections due by May.

The court in the eastern state of Jharkhand also found more than 40 others, including politicians and bureaucrats, guilty of fraudulently withdrawing about 377 million rupees ($6 million) through fake bills from the state treasury, Press Trust of India reported. The money was meant for purchasing cattle fodder.

Singh’s party is now moving to drop Prasad, whose party controls four seats in the 545-strong lower house, and woo his rival Nitish Kumar, Bihar’s chief minister who leads a party with 20 seats. Polls show neither Singh’s Congress or the main opposition Bharatiya Janata Party winning a majority, increasing the importance of smaller regional parties.

“Congress party won’t be interested to continue the alliance” with Prasad’s Rashtriya Janata Dal party, said Sanjay Kumar, a New Delhi-based analyst at the Centre for the Study of Developing Societies. “It’s a blow to Prasad and his party is finished for some years.”

Prasad may be first politician to lose his seat in parliament after the nation’s Supreme Court in a July ruling disqualified lawmakers convicted of crimes carrying jail terms of two years or more.

Gandhi Criticism

Singh’s cabinet issued an executive order on Sept. 24 to reverse the court’s ruling, a decision that was criticized last week by Rahul Gandhi, the scion of the Gandhi family and a deputy leader of the Congress party. The ordinance has yet to be ratified by President Pranab Mukherjee.

While Prasad’s party isn’t formally part of the ruling coalition, it has backed Singh on key legislation and decisions such as allowing Wal-Mart Stores Inc. and Tesco Plc to open supermarkets. Kumar’s Janata Dal (United) severed ties with the BJP in June.

The court in Jharkhand, which was a part of Bihar until November 2000 when the state was bifurcated, will pronounce the sentencing on Oct. 3, PTI reported. Prasad was taken to Birsa Munda Central Jail in Ranchi, the news agency said.

Prasad, 65, has denied all charges of corruption against him. The former railways minister between 2004 and 2009 in Singh’s cabinet is known for his folksy humor, quirky style and mass appeal.

Prasad’s RJD, which ruled Bihar for 15 years, campaigns for the empowerment of lower-caste Hindus and the minority Muslim community. Prasad resigned as the state’s chief minister in 1997 over the graft case and appointed his wife, Rabri Devi, in his place.

Appeal Planned

“Some forces are conspiring to implicate our leader,” Tejashwi Yadav, Prasad’s son, told reporters outside the court, adding he will appeal the verdict. “We will go to the people’s court. We will fight it out.”

About a quarter of federal and state legislators face charges that include murder, rape and kidnapping, according to the Association for Democratic Reforms, which has campaigned for better governance since 1999. The number of lawmakers charged with offenses has more than doubled in the last 15 years.

“It’s a judgment for Bihar,” said Rajiv Pratap Rudy, a BJP leader. “It’s a justice day for the country against corrupt politicians.”

Congress spokesman Ajay Maken said his party won’t comment on a judicial process.

To contact the reporter on this story: Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net

To contact the editor responsible for this story: Niveditha Ravi at nravi2@bloomberg.net

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