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India's parliament to investigate 2G scandal

John Ribeiro | Feb. 28, 2011
India is appointing a Joint Parliamentary Committee (JPC), consisting of representatives of the government and the opposition, to probe into an alleged scam in the allocation of 2G (second generation) mobile licenses and spectrum in India in 2008.

Bangalore, 22 FEBRUARY 2011 - India is appointing a Joint Parliamentary Committee (JPC), consisting of representatives of the government and the opposition, to probe into an alleged scam in the allocation of 2G (second generation) mobile licenses and spectrum in India in 2008.

The irregular allocation of 2G licenses and spectrum at low prices in 2008 to some Indian operators may have cost the country about US$39 billion, the Comptroller and Auditor General of India (CAG) said in a report that was presented in India's Parliament in November.

The demand for a JPC was made by members of the opposition who stayed away from Parliament in protest during a session late last year.

India's Prime Minister, Manmohan Singh said in Parliament on Tuesday that he was asking the speaker of the house to constitute the JPC to avoid a repeat of the boycott by the opposition. The current session of Parliament which started Monday has the country's budget as a key item on the agenda.

The terms of reference and powers of the JPC have not been announced, though the JPC is likely to have some authority over ongoing investigations by the Central Bureau of Investigation (CBI), which is already under the supervision of the country's Supreme Court.

The Department of Telecommunications could have raised more funds if it had opted for an auction, CAG said in its report in November. The department instead decided it would issue licenses on a first come-first serve basis, and sell the licenses and spectrum at 2001 prices, CAG said. The rules of the first come, first serve policy were also changed to favor some companies, it added.

The country's former telecommunications minister A. Raja and key aides in the civil service have been arrested by the CBI, as has Shahid Balwa, vice chairman of Etisalat's Indian joint venture, Etisalat DB Telecom.

Balwa is a promoter of Swan Telecom, which is alleged to have been one of the companies favored in the irregular allotment of licenses. Etisalat acquired a 45 percent stake in Swan which was subsequently renamed Etisalat DB Telecom.

Etisalat said that it was not involved in the controversial license application process, and purchased its stake in the company in the bona fide belief that the licenses had been validly granted. The U.A.E. operator acquired a stake in the joint venture in December 2008 at $900 million which was more than what was paid by the Indian promoters to the government for the licenses less than a year earlier.

 

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