Top Indian politician to be arrested over India telecom scam

An affair involving irregular allotment of 2G mobile licenses has already resulted in the arrest of ex-minister A. Raja

Kanimozhi Karunanidhi, a high-profile Indian politician and member of Parliament, is likely to be arrested later on Friday, after a special court in Delhi denied her bail in connection with investigations into the irregular allocations of 2G license and spectrum.

The investigation has already led to the resignation and arrest of former telecommunications minister A. Raja. He belongs to the same political party as Karunanidhi, which is a coalition partner of Prime Minister Manmohan Singh's Congress Party.

A number of civil servants and top businessmen in India are already in jail in connection with the scam. They businessmen are mainly from real-estate companies which diversified into mobile services, to later sell stakes in their mobile companies to multinational services companies like Telenor and Etisalat.

The case is being investigated by the Central Bureau of Investigation (CBI) under the direction of India's Supreme Court. The irregular allocations of 2G licenses and spectrum to some Indian operators in 2008 may have cost the country about US$39 billion, according to a report by the Comptroller and Auditor General of India (CAG) that was presented to Parliament in November. Raja resigned as telecommunications minister before the presentation of the report in Parliament, after its contents were leaked to local media.

He was arrested earlier this year.The 2G licenses were issued in 2008 at prices that prevailed in 2001, the CAG said. The Department of Telecommunications (DOT) went ahead and issued the licenses in 2008 without an auction, even though other government agencies such as the Ministry of Finance had asked it to review the decision, it added.

India's new telecommunications minister, Kapil Sibal, said the government was following the procedures laid down by the previous government, which kept license costs low to encourage the fledgling telecom sector.But some companies were favored while awarding the licenses, even though the DOT had earlier said it would follow a "first come, first served" policy in the allocation, the CAG said.

A TV channel owned by Karunanidhi's family is alleged to have received kickbacks by businesses that bagged the licenses. The head of the TV channel is also likely to be arrested, after his bail plea was also rejected.Karunanidhi has the option to approach the High Court for bail.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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