Govt vows telecom action; loan probe may widen - source

REUTERS and Yahoo
 Nov 29 10:30 PM

The government vowed action against companies that allegedly secured valuable telecom licenses at rock-bottom prices, while investigators from the Central Bureau of Investigation (CBI) built their case in a bribes-for-loans probe that a source said would be widened.

India may have been deprived of up to $39 billion by selling cellular licences too cheaply, a recent government audit found, which has resulted in a stalled parliament as the opposition demands an investigation.
Late on Monday, the new telecoms minister said he would send notices to companies who received 85 mobile telephone licenses in 2007 and 2008, asking why they should not be revoked for not meeting eligibility criteria -- a move that may help break the logjam in parliament.
The companies to be sent notices are those named in the recent government audit report, Telecoms Minister Kapil Sibal said. The audit named Abu Dhabi's Etisalat as well as Indian property firm Unitech, which later launched mobile operations in a venture with Norway's Telenor.
Meanwhile, a CBI source with direct knowledge of the matter said its probe in the bribes-for-loans case, which saw eight financial industry executives arrested last week, would be widened further to look into other public sector banks.
A CBI spokesman in New Delhi said the investigation remained focused for now only on the financial firms already named.
The telecoms and lending scandals are the latest to batter India's image among investors, dog the government of Prime Minister Manmohan Singh and test India's ability to crack down on corruption.
CORPORATE GOVERNANCE
"When we are working with western companies, one of their biggest concerns is not geopolitical threat or terrorism, it comes down to corporate governance," said Bundeep Singh Rangar, chairman of London-based advisory firm IndusView Advisors.
A lawyer for the CBI said during a special court hearing in Mumbai on Monday that the former LIC Housing Finance <LICH> chief executive, one of eight executives arrested last week, took bribes to clear loans for three property firms.
The court ordered the eight to stay in custody until Friday.
"This is a small tip of the iceberg," CBI lawyer Eijaz Khan said at the hearing, where the eight executives were present.
LIC Housing said the CBI probe involves loans it made of about $85 million. The company, controlled by Life Insurance Corp of India, said the loans were performing and were secured by collateral of more than three times their value.
The CBI last week said Money Matters Financial Services Ltd, an Indian brokerage, acted as a "mediator and facilitator" of corporate loans and other facilities by bribing bank officials. Three of its executives, including its CEO, were among those arrested.
Money Matters said in a statement on Monday that funds raised from institutional investors in a $97 million share sale last month were placed in a bank deposit and would not be withdrawn or managed without board approval.
Shares in Money Matters, whose officials could not be reached for further comment, were down by their daily limit of 10 percent on Monday and have lost nearly 50 percent since their close on Tuesday.
Asia's third-largest economy, growing at 8.5 percent, has been beset by a wave of scandals. Corruption in India gained global attention in early 2009 when the founder of Satyam Computer Services, one of India's top software firms, resigned after admitting profits were falsely inflated for years.
Those arrested last week include senior officials at state-run Central Bank of India, Punjab National Bank and Bank of India for allegedly accepting bribes for sanctioning loans. Last week the CBI widened its probe to 21 firms for links to the bribes-for-loans scandal.
Several leading Indian firms were named in court documents filed by the CBI last week, including wind turbine maker Suzlon Energy, infrastructure company HCC's Lavasa unit and real estate firm DB Realty. All three have denied any wrongdoing.
(Writing by Tony Munroe; Editing by Jui Chakravorty and David Holmes)


-- Shared by Jeevan Kumar