Essar Power Ltd stood guarantor for Loop Telecom: Witness
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Essar Power Ltd stood guarantor for Loop Telecom: Witness

Last Updated: Friday, August 31, 2012, 20:14
 
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Essar Power Ltd stood guarantor for Loop Telecom: Witness
New Delhi: A CBI witness Friday told a Delhi court trying the case arising out of the probe in the 2G scam that Essar Power had stood as a guarantor to a loan advanced by State Bank of India to Loop Telecom Pvt Ltd, which did not mention to the bank that it was an Essar group firm.

C H Narasimha Rao, who retired as Chief General Manager of SBI, testified that in the loan application submitted by Loop Telecom, "it is mentioned...That Loop Telecom (P) Limited is a BPL Mobile group company. It is nowhere mentioned in the application that it is an Essar group company."

He said the bank is guided by the guidelines of Reserve Bank of India (RBI) on the issue of treating a "company as a group company".

Rao said that corporate guarantee of the loan sanctioned by the SBI to Loop Telecom Pvt Ltd, an accused company in the case, was given by Essar Power Ltd.

"I have been shown a term loan facility agreement dated January 10, 2008 executed between the State Bank of India and Loop Telecom...There was a guarantor to the loan sanctioned by the SBI to Loop Telecom (P) Limited. An agreement was entered with the guarantor also guarantying the loan.

"The corporate guarantee of the facility, both fund based and non-fund based, given to Loop Telecom (P) Limited was given by Essar Power Limited in favour of SBI," Rao testified before Special CBI Judge O P Saini.

Essar Group promoters Ravi Ruia and Anshuman Ruia, Loop Telecom promoters Kiran Khaitan and her husband I P Khaitan are facing trial in the case on the charges of conspiracy to cheat the government.

Essar Group Director (Strategy and Planning) Vikas Saraf is also facing trial in the case along with three companies -- Loop Telecom Pvt Ltd, Loop Mobile India Ltd and Essar Tele Holding Ltd (ETHL).

The CBI had earlier told the court that Loop Telecom Pvt Ltd was completely controlled by Essar Group which used it as a "front" to secure the 2G licences in 2008.

During the hearing, the court also recorded the statement of two other prosecution witnesses--Arvind Shukla, manager of The Federal Bank Limited and Pawan Kumar who is Assistant Vice President in Axis Bank and posted the matter for further hearing on October 1.

The CBI has alleged that the accused persons and companies created a "complex corporate veil" to cheat the Department of Telecom by concealing that Essar, an existing telecom operator having substantial shares in Vodafone (then Hutch), was having more than 10 percent stake in Loop Telecom Pvt Ltd.

Essar had denied any involvement in the 2G spectrum scam. It had said that they have not been holding nearly or over 10 percent stake in the Loop Telecom and its stake was only 2.15 percent and there was no violation of clause 8 of the Unified Access Services Licences (UASL) guidelines.

PTI



First Published: Friday, August 31, 2012, 20:14


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