New Delhi: Anil Ambani, the billionaire chairman of Reliance ADA group, appeared on Tuesday before a parliamentary panel investigating a multi-billion dollar telecoms graft scandal that has rocked the country’s political and business establishment.
Ambani’s testimony comes days after police indicted officials and a unit of his group for conspiracy, cheating and other offences during a flawed 2008 telecoms licence grant process that may have lost India up to $39 billion in revenue.
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The scandal is the largest of several corruption cases to have emerged in Prime Minister Manmohan Singh’s second term. It has badly damaged the government’s credibility and set off worries about regulatory risk in Asia’s third largest economy.
Police accuse Reliance Telecom, a unit of Reliance Communications , and three Reliance ADA officials, of conspiring to set up Swan Telecom as a front company to gain valuable radio spectrum. Indian rules bar an existing licence holder from owning more than 10 percent in another operator in the same market.
Ambani, one of India’s highest profile businessmen, arrived at the parliament building on Tuesday in a white Honda Accord car and entered through a side gate, a day after tycoon Ratan Tata appeared before the same Public Accounts Committee.
While the committee’s recommendations are not binding on the government, the spectacle of some of India’s biggest business names being questioned is almost unheard of in a country where leading tycoons have long been seen as untouchable.
“This investigation has caused corporate India to sit up and take notice of the fact that there are law enforcement agencies in the country who are minded to ask tough questions if things get out of hand,” said Saurabh Mukherjea, head of equities at Mumbai-based Ambit Capital.
“Even if the investigation comes to nothing from this point in, just the fact that we’ve seen our authorities being willing to ask India Inc tough questions will exert a degree of discipline on corporate behavior going forward.”
The parliamentary committee, which scrutinises government accounts, is headed by lawmaker Murli Manohar Joshi, a member of the main opposition Bharatiya Janata Party (BJP).
The panel was also due to hear testimony on Tuesday from Sigve Brekke, the head of Telenor in Asia who is also in charge of the Indian unit; Sanjay Chandra, managing director of Telenor’s partner Unitech ; and Atul Jhamb, the chief executive of Etisalat’s Indian joint venture.
Police on Saturday charged former telecoms minister Andimuthu Raja (A Raja), Chandra, three officials and a unit of Reliance ADA group, and the Indian joint venture partners of Norway’s Telenor and of UAE’s Etisalat in the case.
All the accused have denied any wrongdoing. Etisalat and Telenor have said the events described in the charges occurred before they made entered India.
The telecoms ministry is considering whether to cancel several licences issued during that period, potentially jeopardising billions of dollars in investment that operators have made in the world’s second-largest mobile market by users.
Such worries prompted the Norwegian prime minister write to Singh seeking “fair treatment” for Telenor.
The corruption charges have weighed on the stock market, with the benchmark Mumbai index ending the March quarter as the world’s worst performer.
The scandal saw the main opposition Bharatiya Janata Party (BJP) all but shut down an entire session of parliament demanding a special cross-party panel investigate the charges. The government agreed to the demand, and that panel is carrying out parallel hearings.
The Supreme Court, which is monitoring the police investigation, had reprimanded Singh for not acting quickly enough against the telecoms minister and had ordered police to go after the rich and powerful involved in the case.
“We have a large number of people who think themselves to be above the law. You must catch all of them. Merely because a person is in the Forbes list of millionaires and billionaires does not matter,” the court said in February.