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India's business reputation took another body-blow after the scandal-tainted government charged top public-sector bankers with having accepted bribes worth hundreds of millions of dollars. The federal Central Bureau of Investigation (CBI) arrested five officials from state-run listed companies Wednesday, including the chief executive of LIC Housing Finance, for taking bribes to facilitate large corporate loans. Three senior executives from a listed private company were also arrested on charges of handing out the bribes. The banking scandal has been one of the biggest India has faced, tarnishing the image of Asia's third-largest economy, particularly on the heels of Prime Minister Manmohan Singh having to defend his government in another graft scandal involving telecom licenses sold at rock-bottom prices. "The message is not good, both for the market and for the economy," said D.H. Pai Panandiker, head of private think tank RPG Foundation. "All these things create a very bad image about the country and create a loss of faith in the system." India's morale may have been buoyed by analysts who say the scandals are unlikely to deter investors from India, one of the four key BRIC emerging markets in the world. Investors are keen to tap into the country's population of 1.2 billion, with economic growth forecast at 8.5 percent in 2010- 11, rising to between 9 and 10 percent every year thereafter. Shares in the companies affected have fallen sharply since the scandal broke. "The gratifications (from the bribes) are huge, totaling more than thousands of crores (hundreds of millions of dollars)," CBI Joint Director P. Kandaswamy said Wednesday. The Delhi government, however, sought to play down the scandal, saying it was an isolated incident. "It is an insignificant amount. ... It is down to individual personal greed; it is not systematic failure," R. Gopalan, secretary for financial services, told the NDTV broadcaster. Reuters |
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