Etisalat faces fine of $1.6 billion in India
Etisalat DB, the UAE-based telco’s Indian operations, could be faced with a fine of up to $1.6 billion after being accused of violating foreign investment laws.
The Indian regulatory authority on money laundering, the Enforcement Directorate, has accused five directors of Etisalat DB of breaching foreign direct investment and foreign exchange rules, reported the Financial Times today. The controversy centres on Etisalat DB’s acquisition of stakes in Swan Telecom. In 2008 Etisalat DB initially acquired a 45% in Swan Telecom and then went on to buy a further 5% stake, which took the telco over the foreign allowance limit of 49%. In an interview with the FT Balesh Kumar, the special director from the Enforcement Directorate who issued the notices, said that Etisalat DB didn’t receive authorisation for the second acquisition and that is why the company is being prosecuted.
The company now has 30 days to explain its actions or it will have to pay the fine.
This latest scandal follows on from the arrest of vice-chairman of Etisalat DB, Shahid Balwa, over allegations that two Indian telcos received favourable treatment when awarded 2G licences in 2008.
There have been a series of scandals and arrests in Indian telecoms recently over the 2G auction, which have severely damaged the sector’s reputation - including the arrest of the country’s communications minister.