Homes of India’s former minister raided

Indian investigators have raided the homes of Andimuthu Raja, the former telecommunications minister as scrutiny of the Congress party-led government’s handling of the fast-growing telecoms sector intensifies.

The Central Bureau of Investigation on Wednesday launched raids on the residences of Mr Raja in New Delhi, India’s capital, and Chennai, the capital of his home state of Tamil Nadu. The homes of his senior aides were also searched.

Mr Raja, a senior member of a Tamil Nadu-based party allied to the ruling Congress party, resigned as the telecoms minister last month. Shortly before his departure, a government audit concluded that the exchequer lost $39bn in potential revenues from the sale of telecoms licences in a non-competitive bidding process.

He denies any wrongdoing, and has complained that he has been put on trial by the Indian media before any judicial process has got under way.

The furore over the allegations of irregularities surrounding the award of 2G telecoms licences two years ago has crippled parliament in the world’s largest democracy, preventing any legislative activity in the winter session.

The scandal has its roots in the severe telecommunications spectrum crunch in India, where much is allocated to the defence establishment, space research, satellites, and other government entities, leaving little available for commercial phone operators.

India’s mobile phone companies are already facing a severe shortage of 2G spectrum, which has resulted in deteriorating call quality, numerous dropped calls, and failures to connect.

In India, “spectrum policy planning is an accident,” Jaikishan Rajaraman, a senior director at the GSM Association, which represents the industry, told the FT on Wednesday. “It’s ad hoc; it doesn’t exist.”

Leading opposition parties have strongly criticised the Central Vigilance Commission and the CBI as being “compromised” and not up to the task of pursuing what they claim is some of the worst corruption in India’s post-independence history. The CBI has been investigating the case for more than a year, and is expected to submit its findings by the end of March. It had previously searched the offices of the Department of Telecommunications.

Kapil Sibal, the new telecoms minister, said that the CBI was acting under the instructions of the Supreme Court, which has raised questions about the conduct of the telecoms ministry.

“It’s in the interests of the people of this country to know [what’s going on] in an open and transparent manner,” he said.

The Supreme Court on Wednesday indicated that it might widen the brief of its investigation into the telecoms scandal to the period when the National Democratic Alliance was in power. In 2001, an auction of spectrum followed similar rules to the 2008 sale.

"What happened in 2001 needs to be looked into. It is for the CBI to investigate and find out,” justices G.S. Singhvi and A.K. Ganguly said in a statement.

The court has also ordered federal investigators to probe bank loans to the companies which were granted 2G licenses in 2008..

The spectrum shortage has led to fierce behind-the-scenes battles among corporate rivals to try to secure spectrum for themselves, over their rivals, which is one of the areas that lobbyist Niira Radia, who worked for Ratan Tata, was involved in.

Meanwhile, the GSMA is calling for to New Delhi to release another 5 megahertz of 3G spectrum for the mobile broadband industry, which it said would increase wireless internet penetration by 1 per cent, potentially adding an additional Rs162bn ($3.6bn) to India’s GDP by 2015.

The court also recommended that a special court, with telecoms expertise, should be formed to handle any corruption or conspiracy charges that might emerge over the telecoms investigation.

“Unless the government is prepared to create a special court, purpose will not be served. It is the need of the hour, we must have exclusive courts to deal with these offences," the bench said.

Suhel Seth, a corporate lobbyist and managing partner of Counselage, said the investigation had ‘teeth’ and threatened to lead to prosecutions. “It’s likely to be the business people [who go to jail]; but the politicians will get away,” he said.