An Indian court jailed the daughter of a key government ally on Friday after charging her with handling a $47 million bribe in the country's biggest corruption case and raising uncertainty about her party's future in the ruling coalition.
Kanimozhi is a lawmaker and daughter of the head of the regional Dravida Munnetra Kazhagam (DMK) party, which gives the Congress party-led alliance a wafer-thin parliamentary majority, but has seen its reputation shredded by corruption charges.
Hers is the second jailing of a senior party leader on charges of rigging the allocation of telecom licences in 2007/08 which auditors say cost the exchequer up to $39 billion, and is seen calling into question the DMK's support for the government.
"This is a direct challenge to the DMK from the court, and indirectly from the government, which raises the question of the (DMK) party reassessing its position and pulling out of the coalition," said Mahesh Rangarajan, Delhi University professor.
"There is enormous pressure on the DMK to do something now, especially as there is a family member in jail. This is the lowest point in history for the party. They are caught between the devil and the deep blue sea."
A withdrawal of the DMK's 18 lawmakers from the coalition would not bring down the government, but would force Prime Minister Manmohan Singh to find new partners, further delaying legislative progress on important economic reforms.
Kanimozhi, daughter of DMK chief M. Karunanidhi, is charged with conspiracy and with handling a 2.14 billion rupee ($47.6 million) bribe through a television channel in which she owns a 20 percent stake to ensure the allocation of licences.
Judge O.P. Saini rejected her bail application and order her into jail on Friday, her lawyer Ram Jethmalani told Times Now television, adding she would likely appeal to a higher court.
The DMK's recent defeat in elections in its bastion state of Tamil Nadu marked a voter backlash against corruption, and Congress has vowed to stamp out graft in Asia's third-largest economy, with federal polls looming in 2014.
The telecoms scandal, which may have cost the equivalent of the defence budget, has battered the coalition government, stymied its agenda for economic reform, and hurt foreign direct investment into one of the world's fastest-growing economies.
Kanimozhi's party colleague, the former telecoms minister Andimuthu Raja, has been arrested in the case. Others arrested include executives of Reliance ADA group and Sanjay Chandra, the managing director of Telenor's India partner Unitech . All accused deny the charges.
The Indian joint venture partners of Norway's Telenor and of UAE's Etisalat also are charged in the case. Both of the foreign firms say the events described in the charges predate their entry into India.
Norway's prime minister has written to Singh seeking "fair treatment" for Telenor, saying the firm should not be penalised for "errors others have committed in India." ($1 = 44.975 Indian Rupees) (Reporting by
C.J. Kuncheria and
Henry Foy; Editing by Alistair Scrutton and
Daniel Magnowski)
