India charges mobile firms over 2002 spectrum award

Indian police Friday filed criminal charges against Bharti Airtel, India's top mobile phone firm, and Vodafone's Indian arm as part of a sprawling probe into alleged corruption in spectrum allocation.

The accusations against Bharti Airtel, headed by billionaire tycoon Sunil Bharti Mittal, and Vodafone stem from the granting of bandwidth under the previous Hindu nationalist Bharatiya Janata Party (BJP) government in 2002.

They follow separate allegations of the rigging of the 2008 sale of spectrum that have rocked the current Congress government and led to corruption charges against former telecom minister A. Raja and 16 other people as well as several big firms including Reliance Telecom.

Bharti and the Indian unit of British mobile giant Vodafone face charges of criminal conspiracy over the awarding a decade ago of second-generation (2G) spectrum, according to court documents filed by federal police.

Spokesmen for Bharti, India's leading mobile operator by subscribers, and Vodafone, the second largest, said they had no immediate comment on the case to be heard January 14. But in the past both companies have denied wrongdoing.

Bharti's shares fell over three more percent to 307.15 rupees following the charges, the latest negative news to hit India's struggling, fiercely competitive telecom sector.

The alleged 2002 offences involve Vodafone's India unit when it was still a joint venture between Hong Kong's Hutchison Whampoa and India's Essar Group.

The Central Bureau of Investigation (CBI) alleges that a former senior telecom bureaucrat conspired to cause the government a loss of 8.46 billion rupees ($150 million) and provide an "undue gain" to the telecom firms.

Former telecom secretary Shyamal Ghosh, now retired, is accused of colluding with then BJP telecom minister Pramod Mahajan, who was shot dead by his brother six years ago, to carry out the offences.

The charges are the outcome of a CBI probe into the awarding of airwaves between 2001 and 2007 after its investigations led to the scandal embroiling the Congress government over the 2008 spectrum grant.

The main opposition BJP, which was in office until 2004, has accused the Congress government of seeking to blacken its name.

The much-larger 2008 2G spectrum sale by the Congress government at far below market rates to selected firms could have cost the treasury billions of dollars in lost revenue, the public auditor has alleged.

Late last year, police raided offices of Bharti and the Indian unit of Vodafone as part of its probe.

Critics have called India's telecom ministry, which has been regularly shaken by allegations of irregularities over the years, an "ATM machine" for politicians and bureaucrats.