Bloomberg News

Indian Court Rejects Probe Into Chidambaram’s Airwaves Role

February 05, 2012

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Feb. 4 (Bloomberg) -- An Indian court dismissed a petition asking that Home Minister Palaniappan Chidambaram be probed for corruption in a 2008 sale of phone licenses that were canceled by the nation’s judiciary this week.

The rejection comes as a relief to Prime Minister Manmohan Singh’s government, which has been assailed by allegations of graft and policy drift for more than a year after a former Cabinet minister and company executives were charged with conspiring to sell phone permits at below-market rates.

The court’s order followed a petition by regional politician Subramanian Swamy, who alleged that as finance minister the permits were awarded, Chidambaram was party to discussions on the pricing of airwaves. During arguments, Swamy has said the evidences he produced before the court is sufficient to establish Chidambaram is as culpable as Andimuthu Raja, a former telecommunications minister who is in jail while facing trial in the scam.

“This is a small relief for Chidambaram and the government,” N. Bhaskara Rao, New Delhi-based chairman of the Centre for Media Studies, said in a telephone interview. “Recent developments have negative implications not just for telecommunications but other sectors also. Foreign investors will be concerned and there will be a pause in investments.”

Swamy plans to challenge the dismissal of his petition in a higher court, he told reporters in New Delhi today.

Resignation Demanded

While hearing a separate plea from Swamy, the Supreme Court on Feb. 2 left it to the trial court to decide whether to probe the role of Chidambaram in the phone-permit case. In another order, Supreme Court Justices G.S. Singhvi and A.K. Ganguly canceled 122 permits to run cellular services that were awarded in 2008, saying the allocation was done in an arbitrary and unconstitutional manner.

The main opposition Bharatiya Janata Party has demanded the home minister’s resignation, while the ruling Congress party has rejected Swamy’s allegations.

Chidambaram, 66, a lawyer and Harvard Business School Graduate, is one of the most prominent members of the Congress- led government. He was finance minister from 2004 until 2008, and took over as home minister following the November 2008 Mumbai terrorist attacks. 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.

Revenue Loss

India’s chief auditor said the first-come, first-serve 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 awards at a lower $4.9 billion.

Raja and company executives face charges they conspired to grant permits to unqualified companies for personal benefit. All deny wrongdoing and are on trial.

Allegations of corruption weakened 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.

--Editors: Arijit Ghosh, Anil Varma

To contact the reporters on this story: Pratap Patnaik in New Delhi at ppatnaik2@bloomberg.net; Anurag Joshi in Mumbai at ajoshi53@bloomberg.net

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


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