Arrest of EBay Unit’s CEO in India Sparks Outrage

Officials in India’s technology industry expressed anger over the jailing of the chief executive of EBay Inc.’s Indian subsidiary, and the U.S. State Department has made inquiries about the case.

“There is a high-level interest in Washington regarding the case,” an embassy statement issued over the weekend said of the arrest of Avnish Bajaj, the CEO of Baazee.com, which is owned by San Jose-based EBay.

Bajaj, an Indian-born U.S. citizen, was arrested Friday on charges related to the sale of pornographic images showing classmates at a New Delhi high school engaged in a sex act. Police said eight video compact discs were auctioned through Baazee.com in late November.

Bajaj was jailed without bail. A statement from EBay, which maintains the sale occurred without the knowledge of its executives, said the firm was outraged.

“The video clip itself was not shown on the site,” the statement said. “The listing violated Baazee.com’s policies and user agreement and was removed from the site once it was discovered.”

Bajaj was arrested after he voluntarily traveled to New Delhi to cooperate with the police investigating the case, EBay said.

Industry officials and legal experts in India demanded the government plug loopholes in the Information Technology Act. Police had said that Bajaj was arrested under the 2000 IT Act that declares “publishing, transmitting, or causing to publish any information in electronic form which is obscene” as a criminal offense.

Bajaj’s arrest has “many ramifications,” as Internet use in the country is rapidly growing and foreign investors are increasingly looking for opportunities, said Amit Mitra, CEO of the Federation of Indian Chambers of Commerce and Industry. “It’s a huge service industry of tomorrow. We need to be careful and cautious in what we do.”