And it’s still got the country’s taxman on its tail
Vodafone’s Indian offshoot has been caught up in a corruption web amid claims that the country’s spectrum was awarded illegally under a former, Hindu-led government.
Also caught up in the police probe is India’s top mobile phone firm Bharti Airtel, headed by billionaire Sunil Bharti Mittal, in accusations that go back to 2002.
Police are already looking into separate rigging claims stemming from the 2008 sale of Indian bandwidth in a scandal that has rocked the current Congress government and led to corruption charges against a former telecoms minister and others.
Meanwhile Bharti and Vodafone India face charges of criminal conspiracy over the awarding a decade ago of 2G spectrum by the then nationalist Bharatiya Janata Party (BJP) government, according to court documents filed by federal police.
Neither Bharti or Vodafone have yet to comment on the accusations, though yesterday [21st December 2012] shares in both companies dipped slightly.
The alleged 2002 offences involve Vodafone’s India subsidiary when it was a joint venture between Hong Kong’s Hutchison Whampoa and India’s Essar Group.
The Central Bureau of Investigation claims the government suffered a loss of 8.46 billion rupees ($150 million) as a result and accuses former telecom secretary Shyamal Ghosh 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 BJP party, which was in office until 2004, has responded by accusing the Congress government of trying to blacken its name.
Even more damaging, it’s claimed the much-larger 2008 2G spectrum sale by the Congress government could have cost the treasury billions of dollars in lost revenue, the public auditor has alleged, as spectrum was sold off at far below market rates to favoured firms.
It’s not the first time Vodafone has been caught up in India’s complex web of politics. Earlier this month the country’s tax officials asked the Supreme Court to look again at the UK operator’s acquisition of Hutchinson’s stake in Essar via offshore subsidiaries which, it’s said, cost the Indian treasury some $2.2 billion in capital gains tax.
Tax officials want the matter heard afresh by a larger seven-judge bench. Late last year police also raided Vodafone’s Indian offices as part of its probe.
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