India Searches Vodafone, Airtel Offices in Probe

By Abhishek Shanker - Nov 19, 2011 3:47 PM GMT+0530

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India’s federal investigators searched offices of telecommunications carriers Bharti Airtel Ltd. (BHARTI) and Vodafone India Ltd. in a probe into alleged irregularities in allocations of spectrum in 2001 and 2002.

Central Bureau of Investigation entered the providers’ premises in Mumbai, New Delhi and Gurgaon, near New Delhi, after registering a case against them, said Dharini Mishra, spokeswoman at the bureau. Spokesmen at Bharti Airtel, India’s biggest mobile-phone company, and Vodafone India, unit of Vodafone Group Plc (VOD), confirmed the searches.

The probe seeks information about possible malpractice in allocating spectrum during 2001-02 when Pramod Mahajan was the telecom minister under the National Democratic Alliance government led by Bhartiya Janta Party, the main opposition in the current government, Mishra said.

The bureau also searched residences of Shyamal Ghosh, the telecom secretary in the federal government during 2001-02, and J.R. Gupta, then director at state-owned telecom company Bharat Sanchar Nigam Ltd.

“All our documents are in complete compliance with the governing laws and regulations,” Suresh Rangarajan, spokesman at Vodafone, said in an e-mailed statement today. “Vodafone India is completely co-operating with the officials and will provide them all the required details as part of their checks.”

Bharti Airtel’s spokesman Prem Subedi said the company secured all spectrum blocks as per the government policy.
Revenue Losses

In a separate probe, India’s chief auditor said last year that former minister Andimuthu Raja in the Congress-led government and others conspired to grant licenses to unqualified companies for personal benefit, reducing state revenue by as much as $31 billion. The CBI put the loss at 220 billion rupees ($4.3 billion)

The scandal has weakened Manmohan Singh’s government, lowered investor confidence in the economy, paralyzed legislation in parliament and sparked nationwide street protests. The government is cracking down on corruption as it is under pressure from social activists and opposition parties to curb official graft and make a stronger anti-corruption law. The government may seek lawmakers’ approval for such a law in its winter session from Nov. 22 to Dec. 21.

“The government is only trying to use its powers to find answers for some tough questioning on corruption issues in the upcoming parliament session,” N. Bhaskara Rao, chairman of Centre for Media Studies, said by phone today. “It has no inkling in solving the issue and regaining investors confidence.”

To contact the reporter on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net

To contact the editor responsible for this story: Jim McDonald at jmcdonald8@bloomberg.net
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