Agencies/New Delhi
The head of one of India’s top real-estate companies resigned yesterday after being arrested as part of a probe into a telecom graft scandal that is sending tremors through the corporate world.
Shahid Balwa (PICTURED) is in jail after being arrested by the Central Bureau of Investigation (CBI) last month in an investigation into irregularities in how the government awarded second-generation (2G) mobile telecom licences.
Shares in DB Realty plunged as much as 15% to a record low of Rs100 at the Bombay Stock Exchange after news of Balwa’s resignation as managing director.
Balwa stood down “in view of his preoccupations relating to certain investigations,” DB Realty said in a statement.
“The management is preoccupied with getting Balwa released. Day-to-day decision-making seems to have gone for a toss,” said a sector analyst at a Mumbai brokerage, who declined to be named as he no longer had the company under active coverage.
“One can’t say at what level the stock will settle, because there’s no real buying interest,” he added.
DB Realty, which is focused on building high-end apartments in India’s financial capital, had said earlier Balwa has been “wrongly implicated” and will be strongly contesting the proceedings.
Balwa was also vice-chairman of Etisalat DB Telecom India, a joint venture between DB Realty’s parent company Dynamix Balwas (DB) Group and the Abu Dhabi-based telecoms giant Etisalat.
DB Realty was not immediately available to confirm whether Balwa had also stepped down from that role.
Former telecoms minister A Raja, who has also been arrested, is suspected of rigging the 2G licences rules to favour certain companies, allegedly including Etisalat DB when it was called Swan Telecom.
The CBI is looking into firms that may have benefited from suspected rigging of the 2G licence bidding rules when Raja was minister and whether kickbacks were paid.
The cut-price sale of the licences could have cost the treasury up to $40bn of lost revenue, according to official estimates, causing deep problems for Prime Minister Manmohan Singh and his coalition government.
Billionaire tycoon Anil Ambani and several other business heads have been quizzed by investigators during the inquiry.