Tamil leader held in £24bn fraud probe

Andimuthu Raja belongs to a party allied to Prime Minister Manmohan Singh's ruling Congress Party.

His arrest may spark tension between coalition partners and galvanise an opposition that has blocked parliament since November in protest over the alleged scandal.

The sale of below-market price licences, which a government audit says may have cost India up to $39 billion in lost revenues, is the biggest alleged corruption case to have hit the country in decades.

A spokesman for the Central Bureau of Investigation, India's federal force, said that Mr Raja was arrested "due to irregularities in the allocation" of mobile licences and bandwidths.

Those arrested are expected to appear in court today.

Mr Singh, the 78-year-old prime minister who won re-election in 2009, is accused by the opposition of failing to act against Mr Raja when complaints were raised. The scandal could overshadow his Congress Party's campaign to win key state elections this year.

"I only wish that the prime minister instead of living in denial had acted three years ago so this huge, monumental loss to the public exchequer had not taken place," Arun Jaitley, leader of main opposition Bharatiya Janata Party (BJP), told reporters.

But the Congress Party defended Mr Singh, saying he had acted in accordance with the law. "Nobody will accept that the credibility of the prime minister or the government has been affected," Congress spokesman Abhishek Manu Singhvi told reporters. "That's absolutely wrong. The integrity of the government is enhanced by allowing law to take its own course independently and objectively."

Mr Raja, who was sacked in November, is accused of misuse of his ministerial office to benefit others, criminal misconduct and having unaccounted assets. Mr Raja, who belongs to the regional Dravida Munnettra Kazhagam (DMK) party from the southern state of Tamil Nadu, has denied any wrongdoing.

Investigators also arrested RK Chandolia, Mr Raja's personal aide, and Siddharth Behura, the former telecoms secretary during the time of the bandwidth sale, it was reported.

The opposition has shut down parliament since early November, demanding a joint inquiry into the scandal, and further disruption could hit the next session of parliament in late February when the budget is due to be debated.The government has refused to hold a joint inquiry, fearing it could lead to senior figures such as the prime minister testifying while also overshadowing both the state elections and the 2014 general election.

The main opposition BJP yesterday repeated its demand for a full inquiry.

With no major parties capable of winning a majority on their own in parliament, Indian governments effectively come down to coalition-brokering. The DMK, with 18 seats, is the second biggest ally of Congress in the government.

The DMK has weakened in recent years, relying on support of other parties including Congress to hold power in Tamil Nadu. As a result, it is unlikely the DMK would pull out of the coalition, because it needs Congress as much as Congress needs it.

The world's second-fastest growing economy ranks 87th on graft watchdog Transparency International's list based on perceived corruption - a worse rating than rival China.