India's Powerful Can't Escape Jail

A scandal over a telecom spectrum sale snares members of the elite

Kalmadi, ex-chief of Delhi's Commonwealth Games, can't have his orthopedic mattress AP Photo

By Mehul Srivastava

Billionaire Shahid Balwa, the former managing director of Mumbai-based DB Realty, is accused of manipulating a government sale of mobile-phone spectrum. In custody since Feb. 9, Balwa has been held at Delhi's Tihar Jail, home to mass murderers and terrorists, even though he and his company maintain his innocence and he hasn't been formally charged. According to the prison spokesman, Balwa sleeps on the floor in a 10-by-15-foot cell and is roused every morning at 6:30 for roll call. The jail and the courts recently refused his request for an iPad.

The jail also holds ex-Telecom Minister Andimuthu Raja, accused by India's Comptroller and Auditor General of incurring a nearly $31 billion loss to the treasury by selling spectrum at a "ridiculously low price" to Balwa; Sanjay Chandra, the son of a billionaire and managing director of developer and mobile-phone operator Unitech; and three high-ranking executives at billionaire Anil D. Ambani's Reliance ADA Group. All are ensnared in the same telecom probe. Reliance says its executives are not guilty and deserve the presumption of innocence. Raja and Chandra deny any involvement in a fraud.

For Indians, the travails of Balwa and the others provide both comic and karmic relief. Newspapers including the Times of India carry regular updates on how the mighty have fallen, describing for example the 400 grams of wheat, 250 grams of vegetables, and 90 grams of cereal a day the jail allows each prisoner. "The general public is happy that these people for once are being treated like a normal slum dweller would," says Sunil Gupta, legal adviser and spokesperson for Tihar.

Other scandals are represented at Tihar. Suresh Kalmadi, the former chief of Delhi's Commonwealth Games, is charged with misappropriating funds. He says he is innocent. Kalmadi's unsuccessful request for an orthopedic mattress made headlines in India. To profit from the incarcerations, local website ibibo.com has developed a game where players can parade online avatars of Raja, Kalmadi, and others on donkeys, beat them with shoes, and place them behind bars.

The phone probe is largely driven by a class action filed by an anti-corruption activist. The Supreme Court got directly involved, directing the Central Bureau of Investigation to arrest the suspects even if they are "on the Forbes list of millionaires," according to court documents.

Prime Minister Manmohan Singh has been fighting off allegations that he has allowed corruption to fester. He resisted the creation of an independent anti-corruption body, agreeing to hold discussions on the proposal only after a social worker, Anna Hazare, went on a hunger strike, as did a popular yoga guru, Swami Ramdev, on June 5. Although the guru was moved by the authorities to a Himalayan village, the uproar has not died down.

The bottom line: High-profile arrests in several corruption cases have overjoyed Indians. The conviction rate in such cases remains low.

Srivastava reports for Bloomberg Businessweek from New Delhi.