Telecom companies Uninor (earlier Unitech Wireless) and Etisalat DB (previously Swan Telecom) have been named for the first time by the Central Bureau of Investigation as being given preferential treatment in the award of new telecom licences during the tenure of former communications minister A Raja.
Both companies have considerable foreign investment. Norway's Telenor has 67.25 per cent in Uninor and has already invested Rs 6,135 crore (Rs 61.355 billion) in the company. Etisalat of the UAE has 45 per cent in Etisalat DB.
CBI also said the estimated loss to the government by granting licences to these two companies is Rs 7,105 crore (Rs 71.055 billion).
"Undue favours were granted in the allocation... The companies were favoured and spectrum and licences were awarded at a low rate," Special Public Prosecutor Akhilesh told a city court.
CBI also alleged that department of telecommunications officials had selectively leaked the date when letters of intent would be issued to some companies like Uninor and Etisalat DB, and that "an arbitrary condition" was incorporated that whosoever deposits the fees first would be granted a licence.
"These licences were issued at a very nominal rate based on prices fixed in the year 2001," Akhilesh told the court.
Unitech, in a statement, said facts were being misreported and that it had not sold any promoter shares to Telenor. "It is highly incorrect to allege that any favour was shown to Unitech during the licence process," said the company.
Etisalat DB said it was not party to the matter referred to before the court and therefore would not comment at this time.
CBI arrested Raja on Wednesday after allegations that he had favoured some companies by issuing them new licences in 2008 at very low prices and helping some of them to make a killing when they sold equity in these companies.
CBI on Friday accused him of causing a loss of Rs 22,000 crore (Rs 220 billion) to the exchequer and demanded his custody for five days, which the court granted.
Besides Raja, former telecom secretary Siddhartha Behura and Raja's former personal secretary, R K Chandolia, were produced before Special CBI Judge O P Saini. Raja's counsel, Ramesh Gupta, sought time for private consultations with his client, which the judge allowed for 10 minutes.
The telecom corruption scandal has erupted into a major political slugfest, with the BJP on Friday attacking Prime Minister Manmohan Singh for his inaction. The DMK stood by Raja, scotching speculation that he might be sacrificed to keep the Congress-DMK alliance intact in the upcoming state elections in Tamil Nadu.
Uninor and Etilsalat DB had earlier come under fire from opposition parties, who had alleged that Raja favoured these companies by granting them licences in 2008.
The two again came under attack in a Comptroller and Auditor General report, which said they and several other new companies did not meet the eligibility criteria on authorised share capital and had misrepresented various facts, despite which licences were issued to them.
CAG also observed that Swan Telecom had acted as a front for Reliance Telecom while applying for a new licence. Reliance Telecom held 10.71 per cent stake in Swan Telecom when it applied for a licence. According to rules, an existing telecom firm cannot hold more than 10 per cent in a competing firm in the same circle.
However, Reliance Communications, in a statement, said it had no shareholding in Swan Telecom at the time the licence was granted or thereafter.
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