November 19, 2010 / 10:10 AM / 9 years ago

UPDATE 1-India PM readies court defence as pressure mounts

* PM appoints top legal official to defend him * PM accused of “inaction” in corruption scandal * Opposition stalls parliament, reforms in limbo (Updates throughout, adds details, reaction)

By Paul de Bendern

NEW DELHI, Nov 19 (Reuters) - Prime Minister Manmohan Singh has turned to India’s top legal official to represent him at the Supreme Court over why he failed to probe what could potentially emerg e as one of the country’s biggest corruption scams.

The last-minute change to have the attorney general represent the prime minister suggests increased concern within the ruling Congress party over a widening scandal that has touched both political and corporate India. [ID:nSGE6AH0FR]

The Prime Minister’s Office confirmed the change, but declined to give further information. Government sources told Indian media Singh had done nothing wrong. The 2G spectrum allocation scandal is the biggest challenge to Singh since he became prime minister in 2004, and how the next few days unfold will be key to his political survival. Telecoms Minister Andimuthu Raja was sacked at the weekend after months of pressure from the opposition and Indian media .

Raja is accused of selling telecoms licences too cheaply, potentially losing the state up to $31 billion in revenues, according to a government audit. Raja has denied the accusations.

Raja is a member of the DMK, a regional party from Tamil Nadu that helps give the Congress party a majority in parliament. The opposition has stalled parliament as it claims Singh failed to act because he feared upsetting his coalition partner.

Telecom shares suffered significant losses on Thursday on investor uncertainty, and the case has already led to opposition parties halting parliament proceedings, thereby threatening to freeze passage of key legislation or approving additional spending plans by the government.

On Tuesday, the Supreme Court took the rare step of publicly criticising Singh for “alleged inaction” in taking 16 months to decide if Raja should be charged and investigated, a blow to the image of a prime minister seen as one of the country’s most honest politicians.

“Manmohan Singh has certainly squandered some moral capital over this spectrum scandal,” said an editorial in The Indian Express on Friday.

“The image of integrity is arguably the biggest strength he has, and by letting this scam fester for so long, the prime minister and the Congress party have put that at risk.”

Attorney General G.E. Vahanvati must file an affidavit on behalf of Singh by Saturday, according to a court request.

Vahanvati will then defend the prime minister in person at the Supreme Court on Tuesday, and he is expected to say Singh followed correct procedure. Singh, who has not commented on the court criticism, is not expected to attend. The court wants to know why Singh remained silent on a plea by an opposition member of parliament to prosecute Raja. The court cannot punish Singh if it is found he failed to take action, but any criticism would be a blow to his credibility. TARNISH IMAGE?

Rahul Gandhi, a senior Congress member and seen as the prime minister-in-waiting, defended Singh, saying there was no reason for him to be embarrassed, according to media reports. While Singh and his coalition government are likely to survive the scandal, the criticism has tarnished Singh’s image and is expected to further weaken the federal government’s ability to move key economic reforms through parliament.

A series of corruption scandals, infighting between coalition partners and a more assertive opposition have forced the government on the defensive in its second term of office. Raja is the third senior government official to lose his job in recent weeks over allegations of corruption.

The opposition wants a parliamentary probe after a report from the government auditor said the state may have lost up to $31 billion in revenues, roughly equivalent to the defence budget, in the granting of licences in 2007-2008. The process also violated several rules, the report said.

India was ranked 87th in Transparency International’s 2010 ranking of nations based on the perceived level of corruption. India lies behind rival China, which is in 78th place. (Additional reporting by Henry Foy; Editing by Bryson Hull and Sugita Katyal)

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