CBI to make final report in telecoms graft case

Sun rises over the telecommunication towers in New Delhi December 22, 2007.

NEW DELHI (Reuters) – The Central Bureau of Investigation (CBI) will submit on Tuesday a final report to the Supreme Court over a multi-billion dollar telecoms corruption case before making the first charges in a scandal that has embroiled the government and business magnates.

The report, which will not be made public, comes before a Thursday deadline for the CBI to file charges. The scam has tainted Prime Minister Manmohan Singh, halted economic reforms and worried investors in Asia's third largest economy.

Police lawyers have earlier in court accused former telecoms minister Andimuthu Raja of having taken bribes from firms which are now the Indian arms of Telenor and Etisalat to grant them lucrative mobile phone licences.

All of the accused have denied any wrongdoing. Police will file formal charges by Thursday in a lower court.

The state auditor has estimated India lost up to $39 billion in revenue due to irregularities when licences were granted in 2007-08 at rock bottom prices in return for kickbacks. The report forced the resignation and arrest of Raja.

The opposition has called for Singh's resignation and halted parliament, effectively blocking economic reforms such as freeing up diesel prices and allowing foreign investors into the supermarket sector.

The scandal has touched the very top of Indian society, including some of the stars of India's economic boom once seen as untouchable. Police have questioned businessmen including Anil Ambani, the billionaire chairman of the Reliance ADA Group.

Notices have gone out to telecoms firms asking why their licences should not be cancelled, sparking questions about regulatory stability.

On Monday, a parliamentary panel probing the scandal called top Indian tycoons Ratan Tata and Anil Ambani to depose before it.

The scandal has weighed on the benchmark Mumbai stock market, which is down 7.6 percent since the beginning of the year, underperforming the MSCI's broader emerging markets equities index, which has gained 2.4 percent.

The corruption scandals, which include charges of graft at the 2010 Commonwealth Games and of officials at state-run banks taking bribes for corporate loans, have tarnished Singh's image as a clean and effective leader.

They could also affect the performance of the ruling Congress party in five state elections that begin in mid-April, in which the Congress must perform well or risk the coalition unravelling.

(Reporting by C.J. Kuncheria; Editing by Alistair Scrutton and Daniel Magnowski)