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Etisalat denies role in India telecoms scam

Issac John / 10 February 2011

DUBAI UAE telecoms operator etisalat on Wednesday sought to distance itself from the devastating telecom scandal that entailed the arrest of a top executive of its Indian joint venture Etisalat DB on Tuesday.

Shaid Balwa, Vice-Chairman of Etisalat DB, was arrested in connection with the probe into irregularities in the awarding of 2G spectrum licences in 2008. The Central Bureau of Investigation filed an FIR on Wednesday charging Balwa with criminal misconduct and criminal conspiracy in the 2G-spectrum scam case.

Etisalat, which owns an approximately 45 per cent stake in the joint venture, denied any involvement in the licensing scandal, which reportedly caused an astronomical loss of Rs220 billion to government exchequer. However, India’s Comptroller and Auditor General in its report had pegged the collective revenue loss to the government at a $39 billion.

In a statement, the UAE telecoms giant maintained that it bought the stake in the firm, then called Swan, after the Unified Access Services, or UAS, licences had been applied for and granted.

“Etisalat had no involvement whatsoever in the UAS licence application process,” it said in an emailed statement to Khaleej Times.

“Etisalat acquired its stake in Etisalat DB (formerly Swan Telecom Pvt Ltd), in December 2008, which means the company’s investment in Etisalat DB took place entirely after the 15 UAS licences had been applied for and obtained by Swan,” the statement said.

“Etisalat had no involvement whatsoever in the UAS licence application process:  it is a subsequent external investor, who entered the Indian market bringing its international expertise and resources, which purchased its stake in the company on the bona fide belief that the licences have been validly granted,” the company said.

“Etisalat always operates within the laws of the countries in which it operates and will cooperate fully with the Indian authorities if approached. Etisalat has an impeccable record of performance and its antecedents and reputation have never been questioned,” said the statement. 

Etisalat is amongst the top 400 companies in the world in terms of market value and is a major international investor with operations in 18 markets across the Middle East, Africa and Asia and over 133 million subscribers.

The arrest of Balwa, who is also the managing director of DB Realty, Etisalat partner, comes a week after public prosecutor accused Swan Telecom of receiving favourable treatment in the award of the licences.

DB is one among a clutch of firms that allegedly acquired telecom licences on the cheap through unfair means in connivance with former telecom minister A. Raja and other accomplices. DB Realty got the 2G licence by allegedly presenting pre-dated drafts when Raja suddenly changed the criteria of granting licence. Licenses were issued to Swan for 13 circles at nominal rates for which the company paid Rs 15.37 billion. Swan sold 45 per cent stake before roll-out to Etisalat for Rs42 billion.

The investigation, which started in 2009, was bolstered after an official audit last November alleged irregularities were committed by the country’s telecoms ministry during the allocation of 2G licences. The other company currently under probe in the scam is Unitech Wireless — now known as Uninor — in which Norway’s Telenor has a majority stake.



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