December 20, 2004

Head of eBay India Arrested for Porn

NEW DELHI (AP) -- Executives at eBay Inc. (EBAY) and senior Indian technology officials are expressing alarm over the arrest and jailing of a CEO whose company listed a sex video in an online auction.

Avnish Bajaj, the CEO of Baazee.com was arrested Friday in connection with the sale of images showing teenage classmates at a New Delhi high school engaged in oral sex.

Bajaj, a Harvard-educated executive born in India, citizen, was arrested after he voluntarily traveled from Bombay to New Delhi to cooperate with police.

EBay purchased Baazee.com in June for $50 million, part of a broad expansion strategy throughout Asia and particularly the subcontinent.

Police say they arrested Bajaj because he violated the India's Information Technology Act of 2000, which makes a criminal offense out of "publishing, transmitting, or causing to publish any information in electronic form, which is obscene."

But executives at the world's largest online auction company said Bajaj was merely a scapegoat for Indian police, who have been under considerable pressure from social conservatives to identify and arrest anyone involved in the lewd video and its wide distribution.

The video is available online and from Indian street vendors.

The boy who filmed the act on his camera-fitted mobile phone and circulated it to his friends was arrested Sunday. The man who listed the video on Baazee.com was arrested last week.

EBay executives reached at company headquarters in California said they were "outraged" by the CEO's arrest, which they said may force them to reconsider future business dealings in India.

The company pulled down the listing - which never included the video clip itself - shortly after it debuted on the site.

"This incident has certainly given us pause and raises concerns about the safeguards that are in place for businesses operating in India - it raises serious questions," said Henry Gomez, an eBay vice president. "For now, the site is unaffected and we continue to operate there. But a lot depends on the outcome of this situation."

Gomez, who said Bajaj is a U.S. citizen, said he and other eBay executives were eager to work with Indian government officials and law enforcement agencies to clarify the country's e-commerce laws.

Silicon Valley has dramatically strengthened relationships with Indian businesses in the past half decade, and the subcontinent has become a popular source of low-cost technology workers and an emerging consumer market for e-commerce and electronics.

"The overtones here are immense," Gomez said. "Issues involving the Internet are only going to grow as Internet penetration grows in India. ... But right now, our principle goal is that we need our country manager to be released and to be returned to his family."

Bajaj was in court on Saturday, where the judge refused bail and sent him to jail for a week. Lawyers for Bajaj said they would appeal in Delhi High Court on Tuesday.

A U.S. consular official attended Saturday's court hearing, the U.S. Embassy statement said, but didn't elaborate.

"The U.S. Embassy is following this case very closely. There is high level interest in Washington regarding the case," said an embassy statement issued over the weekend.

In India's conservative society, where most people shy away from open displays of affection, the story has made headlines and sparked a debate about permissiveness, especially among urban high school students.

The case has also raised concerns about India's ambiguous Information Technology Act, which says that a service provider or a Web site manager can't be held responsible for an electronic offense if the company has acted diligently to prevent it after being informed about the offense.

Bajaj's arrest has "many ramifications," especially at a time when Internet usage in the country is rapidly growing and foreign investors are increasingly looking to India, said Amit Mitra, the chief executive at the Federation of Indian Chambers of Commerce and Industry.

"We need to be careful and cautious in what we do," Mitra said. "The IT Act has to be now rethought."


AP Technology Writer Rachel Konrad in San Jose, Calif., contributed to this report.