Bloomberg News

Top Indian Judges Ask Trial Court to Decide on Chidambaram Probe

February 02, 2012

Feb. 2 (Bloomberg) -- India’s Supreme Court said a lower trial court should decide whether to investigate the role of Home Minister Palaniappan Chidambaram in a 2008 sale of phone licenses that has triggered corruption charges and damaged the government.

The top court had been petitioned by a regional politician, Subramanian Swamy, who alleged that as finance minister at the time of the permit award, Chidambaram was party to discussions on the pricing of second-generation airwaves. Chidambaram could have insisted on an auction that would have secured market rates and eliminated losses to the exchequer, Swamy argued.

“The court has said that at this stage, since the matter is in the trial court,” it is “perfectly competent to decide on the matter whether Mr. Chidambaram should be proceeded against or not,” Swamy said after the judgment today. The top court said the trial bench should reach a decision within two weeks.

In a separate order in New Delhi today, Supreme Court Justices G.S. Singhvi and A.K. Ganguly canceled 122 permits to run cellular services that were awarded in 2008.

India’s chief auditor said the cut-price, first-come, first-served sale four years ago may have lowered government revenue by $31 billion. The Central Bureau of Investigation put the loss to the government from the license award at a lower $4.9 billion. Former telecommunications minister Andimuthu Raja and company executives face charges they conspired to grant permits to unqualified companies for personal benefit. All deny wrongdoing and are on trial. While some of the company officials have been freed on bail, Raja remains in jail.

Resignation Call

Allegations of corruption weakened Prime Minister Manmohan Singh’s government, stalling its legislative agenda for much of the last 14 months.

Street protests and hunger strikes triggered appeals from business leaders to curb graft that has dented investor confidence in Asia’s third-largest economy.

To support his petition, Swamy submitted to the top court a March letter from Finance Minister Pranab Mukherjee’s office that cited Chidambaram for failing to act to prevent losses in the spectrum allocation. Amid media reports of a widening dispute between the two ministers, Mukherjee Sept. 29 said the letter didn’t reflect his views.

Chidambaram denies approving the pricing, saying last year he urged an auction of the permits instead of their issuance for fees fixed more than six years earlier.

The main opposition Bharatiya Janata Party has demanded Chidambaram’s resignation, while his federal ruling Congress party has rejected Swamy’s allegations.

The court in New Delhi where Raja and government and company officials are on trial is hearing a separate petition from Swamy directly seeking the prosecution of Chidambaram as a co-accused in the case.

--Editors: Mark Williams, David Merritt

To contact the reporters on this story: Pratap Patnaik in New Delhi at ppatnaik2@bloomberg.net; Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net

To contact the editor responsible for this story: Hari Govind at hgovind@bloomberg.net


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