Indian Supreme Court Cancels Controversial Telecom Licenses

Posted February 2nd, 2012 at 8:05 am (UTC-5)
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India’s Supreme Court has ordered the government to cancel 122 telecommunications licenses awarded in 2008 that are at the center of one of the country’s largest corruption scandals.

Thursday’s court ruling is expected to somewhat disrupt the nation’s cell phone market as customers of the affected companies are forced to switch to licensed services. Experts say the ruling will affect about five percent of India’s cell phone users.

India’s former telecommunications minister, A. Raja, is in jail and accused along with more than a dozen other defendants of conspiring to sell the licenses at cut-rate prices in exchange for bribes.

The scandal is believed to have cost the Indian government up to $40 billion in lost revenue.

The Supreme Court said Thursday the licenses were granted in an “arbitrary and unconstitutional manner.”

The scandal has become representative of accusations that Prime Minister Manmohan Singh has been unable, or unwilling, to contain corruption.

Critics, including India’s main opposition Bharatiya Janata Party, have been calling for an investigation of Home Minister Palaniappan Chidambaram, who was finance minister at the time of the 2008 transaction. But Thursday’s Supreme Court decision left it up to a trial court to decide whether he should be investigated.