UPDATE 1-Indian tycoon Tata faces lawmakers probing telecom scandal

* Tata to answer questions on radio spectrum grants

* Panel questioning Tata lobbyist Niira Radia

* Tata and his firms not charged in telecoms case

* Scandal potentially India’s largest graft case

(Adds details, lobbyist questioning)

By C.J. Kuncheria

NEW DELHI, April 4 (Reuters) – Iconic Indian tycoon Ratan
Tata will appear on Monday before a parliamentary panel probing
a multi-billion dollar telecoms graft scandal that has badly
dented the government’s credibility and alarmed investors in
Asia’s third largest economy.

The questioning of one of the foremost titans of Indian
industry comes two days after police made the first indictments
in the case, naming a former minister, a unit of Reliance ADA
group and the Indian partners of Etisalat and of
Telenor among the accused. [ID:nL4E7F201J]

Neither Tata, ranked No. 61 in the Forbes list of the
world’s most powerful people as head of autos-to-software
conglomerate Tata Group, nor his telecoms firm Tata
Teleservices, have been charged in the case.

But an independent lawmaker has said the firm gained from a
2007 policy change in the manner radio spectrum was granted.
Tata will answer questions including those related to the
allocation of spectrum, his spokesman has said. [ID:nL3E7ES2T3]

Tata has denied his company received any undue benefits.

The graft scandal, potentially India’s largest, has
tarnished the stature of Prime Minister Manmhohan Singh and
fuelled doubts that he will not serve a full term.

It is one of the several corruption scandals that have
emerged during Singh’s second term, hobbling policymaking and
diverting the government’s attention from pushing forward
crucial economic reforms. [ID:nL3E7F11Z5]

A dispute between the government and opposition over whether
a parliamentary panel should investigate the scandal paralysed
parliamentary proceedings for weeks late last year, until Singh
caved in to the demands of his political opponents.

The scandal has also led to several official decisions being
scrutinised or reversed, raising regulatory risk.

Shares in Reliance Communications , DB Realty
and Unitech , whose units were charged on
Saturday, all fell on Monday morning, lagging a broader market
that was in positive territory.

Andimuthu Raja, the telecoms minister during the licence
allocations, was forced to resign and has been arrested. He was
charged on Saturday with abuse of official position, cheating
and criminal conspiracy.

Tata had earlier backed Raja and the policy changes he made,
saying they “broke the powerful cartel which had been holding
back competition”. [ID:nSGE6B900V]

Ahead of Tata’s appearance before the panel on Monday
afternoon, lawmakers will question powerful lobbyist Niira
Radia, who has represented Tata Group companies as well as Tata
himself.

BILLIONS OF DOLLARS LOST

India may have lost as much as $39 billion in revenue due to
violation of rules when lucrative 2G mobile phone licences were
granted in 2008, the state auditor has estimated, a sum
equivalent to the country’s defence budget.

The Public Accounts Committee (PAC), the panel which will
question Tata, scrutinises the accounts of the government and is
chaired by Murli Manohar Joshi, an independent-minded lawmaker
from the main opposition Bharatiya Janata Party.

Anil Ambani, the billionaire chairman of Reliance ADA group,
is due to appear before the panel on Tuesday.

Apart from the PAC, the scandal is also being investigated
by a special cross-party parliamentary committee.

The police investigation is being monitored by the Supreme
Court, which earlier reprimanded Singh for not moving quickly
enough to act against his minister.

Several corruption scandals, which include charges of graft
in the run-up to the 2010 Commonwealth Games and allegations
officials at state-run banks took bribes for corporate loans,
have undermined Singh’s image as a clean and effective leader.

They could also affect the performance of his ruling
Congress party in five state elections across April and May, in
which the party must perform well or risk the coalition
unravelling.

The first round of elections began on Monday with the
northeastern state of Assam going to polls.

(Additional reporting by Nigam Prusty; Editing by Andrew
Marshall)

UPDATE 1-Indian tycoon Tata faces lawmakers probing telecom scandal