UPDATE 1: Etisalat DB boss Shahid Balwa arrested on suspicion of corruption amid wider telecoms sting
UAE telecoms firm Etisalat reiterated on Wednesday that it had no involvement in a telecoms corruption scandal in India that saw an executive at its joint venture arrested on allegations of wrongdoing.
The vice-chairman of Etisalat DB, a joint venture between India's DB Group and Etisalat, was arrested over allegations that two Indian firms got favourable treatment when 2G spectrum licences were awarded in 2008.
Etisalat, which owns an approximately 45 percent stake in the venture, has maintained that it bought the stake in the firm, then called Swan, after the licence had been applied for and granted.
"Etisalat had no involvement whatsoever in the UAS licence application process," it said in an emailed statement.
"It is a subsequent external investor ... which purchased its stake in the company on the bona fide belief that the licences have been validly granted."
The Abu Dhabi-based firm said it was committed to India and would not withdraw from the country, the world's fastest growing mobile market.
Etisalat shares were up 0.5 percent at 0750 GMT on the Abu Dhabi bourse.
India's Central Bureau of Investigation said on Wednesday it had arrested Shahid Balwa, who is managing director of DB Realty and vice chairman of Etisalat DB, the Indian telecoms joint venture between Abu Dhabi's Etisalat and DB Group.
The arrest comes as the government appeared close to agreeing to a parliamentary investigation into India's biggest corruption scandal, in which the government is alleged to have lost as much as $39bn in the award of second-generation telecoms licenses in 2008.
The telecoms scandal, the largest in a string of corruption investigations in India, resulted in the resignation last year of the telecoms minister and led to parliamentary gridlock in the most recent legislative session as the opposition called for an investigation.
On Tuesday, the government held its third round of talks with opposition parties in a bid to break the deadlock. Several members of the ruling coalition who attended the meeting said the government would likely agree to a joint investigation with opposition members and broad powers.
CBI spokeswoman Vinita Thakur said the arrest of Balwa was in connection with the investigation into alleged corruption related to 2G spectrum allocation.
Shares in DB Realty were down about 20 percent in early trade after reports of the arrest.
A spokeswoman for Etisalat DB could not immediately be reached for comment, while DB Realty did not have immediate comment.
Last week, Indian police accused for the first time two Indian companies of buying mobile licences at unfairly cheap prices.
One of the companies was Swan, which has since been renamed Etisalat DB and is about 45 percent owned by Etisalat, with the remainder owned by DB Group, which controls DB Realty.
The other company named by police last week was property firm Unitech, whose Unitech Wireless joint venture is majority held by Norway's Telenor.
Unitech last week denied that it had received any favours and said it had complied with rules, while Telenor said it had no reason to believe the licenses were issued improperly.
Shares in Unitech, India's second-largest listed realty company, fell more than eight percent in early trade on Wednesday before paring losses.
Yes, they are not involved. But they should have done a due diligence process before buying their 45% share, about the type of company they are dealing with, their past experience in the field of telecom, etc.