UPDATE 4-India police quiz tycoon Anil Ambani in telecom probe
* Scandal probe reaches top levels of India Inc
* India may have lost up to $39 billion in 2G revenue
* Prime minister says will not resign over scandals
* Anil Ambani group firms in sharp selloff last week
(Recasts, adds details)
NEW DELHI, Feb 16 (Reuters) - Billionaire Anil Ambani, who controls India's No. 2 mobile carrier Reliance Comm (RLCM.BO), was questioned on Wednesday by federal police in a widening corruption investigation that has battered the government.
The 51-year-old tycoon is the latest and highest-profile company executive to be quizzed by Central Bureau of Investigation (CBI) officials in the probe into whether lucrative mobile phone licences and radio spectrum were sold at below-market prices in return for kickbacks.
Allegations the government may have lost up to $39 billion in revenue as a consequence have caused months of parliamentary paralysis and reached the highest levels of political and corporate India, shaking investor confidence.
Prime Minister Manmohan Singh, whose ruling coalition has been rocked by the scandal, spent a large part of a rare news conference on Wednesday defending his embattled government over a series of corruption scandals. [ID:nSGE71F037]
The telecoms scandal has brought down a former telecoms minister, leading to his arrest by the CBI.
"During the course of his weekly visit to New Delhi, Anil Ambani met CBI officials today to clarify ongoing issues, relating to telecom matters for the years 2001 to 2010, and virtually every telecom operator in the country," Mumbai-based Reliance ADA Group said in a statement.
Broadcasters NDTV and CNN-IBN said Anil Ambani had been summoned by the federal police for questioning. Reliance ADA Group said he had not been "summoned" by the CBI.
The CBI has ordered companies who were involved in the telecoms licence process to answer a series of questions as it probes irregularities and possible corruption.
After about three hours at CBI headquarters, Anil Ambani left the building through a side gate, avoiding waiting reporters.
A series of scandals that has rocked India in recent months has exposed the cosiness between the political and corporate elite in a country with a huge gap between the rich and poor.
Anil Ambani was ranked by Forbes last year as the world's 36th richest man, although the value of his listed assets has taken a beating, with Reliance Comm and Reliance Infrastructure (RLIN.BO) the two worst performing stocks this year on the main Sensex .BSESN index.
Anil's older brother Mukesh, who controls Reliance Industries (RELI.BO). ranks 4th on the global rich list.
Last week, a sudden selloff in companies in Anil Ambani's Reliance ADA Group, including debt-laden Reliance Comm, Reliance Infrastructure and Reliance Power (RPOL.BO), wiped $2.5 billion from their value, which the company blamed on "baseless and motivated rumors" spread by rivals. [ID:nSGE71900B]
Late on Friday night, the group said some of its executives were examined in the alleged telecoms graft probe.
"This was expected. CBI is talking to many players, they are broadening the investigation after directions from the Supreme Court," said R.K. Gupta, managing director at Taurus Mutual Fund.
"I think one should not read too much into it, but you cannot rule out impact on ADA stocks tomorrow as this news came after market hours today," he said.
A government audit late last year said Swan Telecom, now known as Etisalat DB, won licences even though a unit of Reliance Comm held more than 10 percent of equity in the firm, a violation of rules. The audit also said Swan Telecom appeared to have been "acting as a front company" on behalf of the Reliance Comm unit.
Reliance Comm has denied any wrongdoing, and no charges have been filed against it or its executives. Reliance ADA Group on Wednesday said the group had not made any financial gain from Swan Telecom's 2G licence win.
The world's second-fastest growing major economy ranks 87th on graft watchdog Transparency International's list based on perceived corruption -- a worse rating than rival China -- and the government is under intense pressure to crack down.
Preparations for last year's Commonwealth Games were riddled with irregularities, while a bribes-for-loans investigation late last year saw eight senior financial executives arrested.
Indian federal investigators have arrested a former telecoms minister and a former top bureaucrat of the ministry.
Last week, they arrested Shahid Balwa, vice chairman of Etisalat's ETEL.AD Indian joint venture and accused his firm, formerly Swan Telecom, of being among two firms that were given undue preference in licence grants in 2008.
On Tuesday, Sanjay Chandra, managing director of India's No. 2 listed property firm Unitech (UNTE.BO), which has a mobile telecoms joint venture with Norway's Telenor (TEL.OL), was questioned by investigators.
All companies involved have denied any wrongdoing.
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