Vice chairman of India's Etisalat DB arrested

Federal investigators in India have arrested Shahid Balwa, the Mumbai-based vice chairman of Etisalat DB Telecom, widening a probe into the sale of mobile-phone licenses which has already triggered the detention of a former minister.

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Indian federal investigators have arrested the Mumbai-based vice chairman of Etisalat DB - a telecommunications joint venture between Abu Dhabi's Etisalat and Dynamix Balwas - for his alleged part in the nation's telecoms industry scandal.

Shahid Balwa's arrest is the latest development in the ongoing 2G licence affair which is alleged to have cost the Indian government billions of dollars in lost license fees.

R.K. Gaur, a spokesman for the Central Bureau of Investigation, said today that the executive, Mr Balwa, was arrested in Mumbai a day ago and was being brought to New Delhi for questioning.

He was taken into CBI custody a week after the agency arrested India's former telecommunications minister Andimuthu Raja and two other officials. Raja, his secretary and former ministry official have been charged with abusing their official positions to benefit some telecom companies.

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The scandal stems from the sale in 2008 of cellular operating licenses under a "first-come, first-served" process that netted the government 124 billion rupees ($2.7 billion). It is alleged that some licenses were awarded to ineligible participants who in turn are said to have sold their stakes at higher prices than they bought them from the government. An auction might have netted the government as much as $39 billion, according to some estimates.

Mr Balwas, who is also managing director of Dynamix Balwas — a real estate, hospitality and telecoms company that Balwa's family partly owns, allegedly sold a 45 per cent share in a telecoms license to Etisalat at more than twice the price that the Indian government sold it for.

Raja, who has denied any wrongdoing, was forced to resign from the government in November as the scandal tainted the image of Prime Minister Manmohan Singh.

Today, Etisalat distanced itself from the situation, saying: "Etisalat has an impeccable record of performance and its antecedents and reputation have never been questioned.

"Etisalat 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." - with Associated Press.