Court demands Indian premier address telecoms scam

India's Supreme Court issued a sharp and rare rebuke of the prime minister on Thursday, demanding he explain why the government took a year to investigate a cell-phone licensing scandal that cost the country billions of dollars.

The court said the government's delayed response was an "extremely serious matter."

It was the first time in India's democratic history that the court had taken the prime minister's office to task, political analysts said.

The scandal centers around former Telecoms Minister Andimuthu Raja, who was forced to resign Sunday amid allegations his ministry sold second-generation, or 2G, cellular licenses at reduced rates to undeserving applicants.

On Tuesday, the state auditor issued a damning report saying the 2008 sales went against Prime Minister Manmohan Singh's wishes for a transparent bidding process and resulted in significant revenue losses. A government inquiry reportedly estimated the losses to the treasury were about 1.76 trillion rupees ($39 billion).

The auditor's report said the sale "lacked transparency and was undertaken in an arbitrary, unfair and inequitable manner." Many of the 122 licenses were given to "ineligible applicants" who "used fraudulent means" and then quickly sold their stakes at a high premium.

India's telecom regulator on Thursday recommended that 62 licenses given to five companies be canceled.

The Supreme Court asked Singh's office on Thursday explain why it took a year to address parliamentary demands that Raja be investigated. India's corruption watchdog, the Central Bureau of Investigation, has been probing the 2G pricing since October 2009.

Solicitor General Gopal Subramanium downplayed the court's criticisms and said he would offer answers on Friday on the government's behalf.

Corruption has long tainted Indian politics and drawn attention away from the country's economic gains. Despite India's posting 9 percent growth, Transparency International this year ranked the country 87 out of 178 on its Corruption Perceptions Index — a slide downward from its position a year earlier as the 84th most corrupt country out of 180.

Singh, however, has widely been considered one of India's cleanest politicians — an intellectual who brought a touch of gentility to his office since taking charge in 2004. This scandal will challenge that image, analysts said.

"The prime minister cannot disclaim this," said political analyst Mahesh Rangarajan, a professor at the University of Delhi. "It's not just corruption, it's the idea that the minister owns the government, that the king can do no wrong, and that doesn't go well in a democracy like India."

The ruling Congress Party has faced a barrage of complaints and opposition challenges since the scandal-plagued Commonwealth Games in New Delhi, which India had hoped would boost its world reputation but instead generated headlines of sleaze, missed deadlines and cost overruns.

Raja — who belongs to Congress' coalition partner Dravida Munnetra Kazhagam, ruling in southern Tamil Nadu state — is third senior official to step down in recent weeks in a slew of unrelated scandals. He has denied wrongdoing.

(This version corrects number of 2G licenses issued to 122 instead of 112)