INDIA’S Supreme Court today scrapped 122 telecom licences awarded in a 2008 sale at the centre of a corruption scandal, further embarrassing the government and causing upheaval for the flagship sector.
Mis-selling of the second-generation (2G) mobile licences was estimated by the country’s public auditor to have cost the treasury up to $40bn (£25.27bn) in lost revenue.
The minister in charge of the sale, A Raja, is currently on trial accused of fraud and cheating, one of several corruption cases to have buffeted the government of Prime Minister Dr Manmohan Singh.
While the cancellation order re-opens a damaging episode for the government, there was a reprieve for home minister P Chidambaram who activists had wanted investigated by a special court trying suspects in the case.
The Supreme Court declined to rule on the issue, saying it was up to a special court to decide if there was evidence against Chidambaram, who was finance minister at the time of the 2008 sales.
Raja, a member of the DMK, a regional party in the Congress party-led national coalition, is suspected of rigging rules over the sale of the licences to favour some firms in return for kickbacks.
Lawyer Prashant Bhushan, who brought the case to the Supreme Court, welcomed the cancellations and fines for the telecom firms involved.
“This is a historic judgement for the reason that now these companies which were the beneficiaries of these illegal licences… will have to effectively refund the benefit,” he told reporters.
The public exchequer will be able to recover some of the losses, he added, saying it would send a “strong signal” to dissuade corrupt corporations and public officials from conspiring together.
Justice GS Singhvi told the court in New Delhi the Telecom Regulatory Authority of India would hold a fresh auction.
Among the companies affected are Swan Telecom, Tata Teleservices and Uninor, a joint venture between Norway’s Telenor and India’s Unitech.
Uninor said in a statement it was “shocked” at the penalty, adding “we have been unfairly treated as we simply followed the government process we were asked to.”
Graft has become a hot political issue in India due to high-level scandals such as the so-called “2G scam” and contracts awarded for the 2010 Commonwealth Games in Delhi, as well as a street-level campaign by activist Anna Hazare.
The latest set-back for the government comes amid a flurry of local elections, including one starting next week in political heavyweight Uttar Pradesh, India’s biggest state where Dr Singh’s party was hoping to make gains.
