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INTERNATIONAL BUSINESS NEWS
November 20, 2011 12:00:00 AM
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Indian police on Saturday raided offices of two of the nation's biggest telecom firms, Bharti Airtel and Vodafone Essar, in a widening probe into alleged wrongdoing in the awarding of mobile spectrum.

India's top federal police force, the Central Bureau of Investigation (CBI), searched offices of Bharti Airtel and the Indian unit of Vodafone, part of Britain's Vodafone Group, as well as senior former government telecom officials, a CBI spokeswoman told AFP.

The searches involved alleged irregularities in the distribution of second-generation (2G) mobile spectrum between 2001 and 2003 when the previous Hindu nationalist Bharatiya Janata Party was in power, the spokeswoman said.

"The searches were in connection with allegations that have been framed," she said.

The raids were part of an increasingly sprawling police investigation into awarding of spectrum that has engulfed the current Congress-led government and threatens to taint the previous BJP government which was in office until 2004.

The BJP accused the Congress government of seeking to blacken the opposition party's name and nicknamed the CBI "the Congress Bureau of Investigation."

"What is happening is part of a political conspiracy to divert attention away from the government," said BJP spokesman Prakash Javadekar.

The raids come as a former Congress telecoms minister is on trial with 13 other top government and other officials over an alleged multi-billion-dollar corruption scandal involving the allocation of mobile spectrum in 2008.

A. Raja, telecoms minister from 2007 to 2010, is the central figure in the case that has rocked Prime Minister Manmohan Singh's administration and helped make corruption one of India's hottest political issues.

Responding to the raids, a spokesman for Bharti Airtel, India's leading mobile provider by subscribers, said "all the spectrum allotted to us from time to time has been strictly as per the stated government policy."

Vodafone said the company had acted in "complete compliance" with rules. Britain's Vodafone bought a 67-percent stake in Hong Kong-based Hutchison Whampoa's Indian mobile unit in 2007, renaming it Vodafone Essar.

The CBI alleged in its preliminary enquiry report that the telecoms department increased the spectrum base under late telecoms minister Prahmod Mahajan beyond the prescribed limit for a token sum and favoured certain companies, causing a loss to the exchequer. No formal charges have been laid.

Mahajan, a prominent BJP politician murdered by his brother in 2006 in a family argument, served as BJP telecom minister from 2001 to 2003.

The sale of 2G spectrum by the Congress government in 2008 at far below market rates to selected companies could have cost the treasury up to $40 billion in lost revenue, the public auditor has alleged.

Raja has insisted he was only following the previous BJP government's policy in awarding mobile spectrum.

Meanwhile, separately, a court sentenced an 86-year-old former telecom minister Sukhram, who goes by one name, to five years "rigorous imprisonment" for taking bribes when serving under a Congress government in 1996.

Critics have called India's telecom ministry, which has been regularly shaken by allegations of irregularities over the years, an "ATM machine" for politicians.

AFP

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