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'Essar & Loop promoters deliberately violated UASL guidelines'

The case against them has arisen out of the probe in the 2G spectrum allocation scam.

New Delhi: CBI on Thursday told a Delhi court that promoters of Essar Group and Loop Telecom deliberately violated Unified Access Services Licences (UASL) guidelines by making "false and dishonest impression" before the DoT to get 2G spectrum.

"The basic case of the prosecution (CBI) is that they (accused) have violated clause 8 of the UASL guidelines and false and dishonest impression (made by them) is the crux of the matter," Special public prosecutor U U Lalit told designated CBI Judge O P Saini.

Lalit was making submissions on the framing of charges against Essar group promoters Ravi Ruia and Anshuman Ruia and Loop Telecom promoters I P Khaitan and Kiran Khaitan and Essar Group Director (Strategy and Planning) Vikash Saraf.

The case against them has arisen out of the probe in the 2G spectrum allocation scam.

He said that as per clause 8 of the UASL guidelines, "No single company or legal person, either directly or through its associates, shall have 10 percent or more equity holding in more than one licensee company in the same service area for the same service."

Lalit said the UASL guidelines were designed with a view to have fair competition in telecom sector but they violated its conditions with "fraudulent and false means".

"The case of the prosecution is that clause 8 of the UASL guidelines was designed for fair competition and to get rid of the cartelization. This clause has been violated deliberately by making false and dishonest impression," he said.

The CBI, in its charge sheet, had alleged that Essar, which already had a stake as an existing telecom operator, created a "front company" Loop Telecom to secure additional spectrum which was in contravention of then telecom policy.

Besides the five accused persons, the CBI had also filed charge sheet against the three companies -- Loop Telecom Pvt Ltd, Loop Mobile India Ltd and Essar Tele Holding. Lalit gave flow charts and summary of arguments to the court to buttress the charges levelled against the accused.

Detailing the facts of the case, Lalit said BPL Mobile Communication Ltd was having license in Mumbai circle and its subsidiary BPL Mobile Cellular Ltd was having licenses in the Tamil Nadu, Kerala and Maharashtra circle respectively.

He said that Rajya Sabha MP Rajeev Chandrasekhar was holding 63.07 percent equity and T P G Nambiar, founder Group Chairman of BPL and ICICI Trusteeship was having 7.2 percent and 9.30 percent equity respectively in BPL Communications Ltd.

In May 2004, Ravi Ruia made announcement that Essar Group would buy BPL companies and at that time, Essar had 33 percent stake in Hutchison Essar Ltd which was having licences in 19 circles, Lalit said.

He said from May 19, 2004 to July 16, 2005, 63.07 percent equity of Chandrasekhar in BPL Communication was purchased by Santa Trading Pvt Ltd (STPL) and for this Rs 304 crore was paid by Essar Tele Holding Ltd (ETHL) and for this, Saraf had signed an agreement on behalf of ETHL.

Out of Rs 304 crore, Chandrashekar invested Rs 254 crore in ETHL which was later returned by ETHL with Rs 11.115 crore interest, Lalit said.

He said that in a board meeting in October 2004 chaired by Saraf, ETHL decided to buy 9.99 percent equity of BPL Mobile for 26 million US Dollars from M/s Asia Pacific.

After this, in December 2004, one Dominance Holding sold 26 percent equity in BPL Mobile to Asia Pacific for 20 million US Dollar.

Lalit said that from September 2, 2004 to June 2, 2005, two employees of Essar Group were the directors of STPL.

He said in July 15, 2005, 7.2 percent equity of Nambiar in BPL Communications was purchased by STPL for which Rs 124.99 crore was paid by ETHL.

Lalit said that BPL Cellular and BPL Mobile sold their stake to Hutch and the entire amount of Rs 2,737 crore was paid to ETHL directly by Hutch.

He said on September 3, 2007, applications for UASL was filed for 21 circle by Shipping Stop Dot Com (India) Pvt Ltd.

After the filing of applications, Shipping Stop Dot Com became Loop Telecom Pvt Ltd on September 21, 2007.

Lalit said that after the issuance of letter of intents (LoIs) to Loop Telecom for 21 circles by the DoT on January 10, 2008, licence fees was paid by the firm which was allegedly sourced from Essar Group.

Detailing the source of funds, he said that Rs 700 crore had come from the Essar Group while State Bank of India (SBI) had given a loan of Rs 725 crore under the impression that Loop was a Essar Group company.

Besides these, Rs 175 crore had come from ETHL Global Capital Ltd and huge amount of loans were taken from banks in which the bank guarantee was given by Essar Global Ltd.

Lalit told the court that the entire funding for STPL had come from Essar Group companies and not "even a single penny" had come from STPL.

"Behind the scene, the real beneficial owner behind all this is ETHL," he said.

"Though money has come from Essar Group, the controlling block is shown to be STPL...It is nothing but ETHL or the companies under the same umbrella which is controlling STPL," Lalit said.

Detailing the roles of the accused, Lalit said, "Saraf, in conspiracy with Ravi Ruia and Anshuman Ruia and other persons, applied for licences and they fraudulently did it. They made false representation to conceal the actual hold of Essar on it (Shipping Stop Dot Com which later became Loop Telecom Pvt Ltd)".


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