India’s Central Bureau of Investigation (CBI) arrested eight senior officials from some of India’s top financial services companies Wednesday on charges they took bribes in exchange for large loans and confidential business information.
Those officials were being questioned and 21 more companies were being probed and had been issued notices to open their books to investigators, said a CBI spokesman, R.K. Gaur.
The eight officials were accused of taking huge bribes from executives of a Mumbai-based financial services firm, Money Matters Group, to facilitate large corporate loans.
The CBI has not revealed the size of the alleged bribes.
The bribes-for-loans scam could not have come at a worse time for Prime Minister Manmohan Singh’s embattled coalition government, which is reeling from a multibillion dollar telecoms scandal that has resulted in massive losses to the treasury.
Telecommunications Minister A. Raja was forced to resign over charges that his approval of the sale of the mobile phone spectrum may have cost the treasury nearly $40 billion.
Although Singh’s government is not under threat, the opposition parties have paralyzed Parliament for more than two weeks as they demand a joint parliamentary probe. The government has refused.
However, the latest scandal involving officials from state-run Life Insurance Corporation of India, and three-state-run banks — Bank of India, the Central Bank of India and Punjab National Bank — has shaken public confidence, and the government was scrambling Friday to reassure people.
Finance Minister Pranab Mukherjee said he had ordered banks to ensure greater transparency in their lending transactions and promised that public money was safe.
India’s central bank chief, Duvvuri Subbarao, told journalists that he had cautioned banks about the need for greater accountability while disbursing loans.
