Essar official endorses CBI line, says Essar controlled Loop

New Delhi: Backing CBI’s line in the probe into Essar-Loop relationship, a top official of Essar Telecom has said the group was controlling Loop Telecom when it applied for telecom spectrum.

The statement of CFO of Essar Telecom Businss Group Somasundaram Subramaniam, who was the CEO of BPL Mobile (BMCL) which took over Loop Telecom Private Limited, was recorded before the magistrate on September 9. In his statement, Subramaniam has said Essar employees used to sign bank documents for Loop as well as extended corporate guarantees to secure funds during the 2G spectrum allocation.

“The financing for the licence fee requirements for LTPL were arranged along with bank guarantees by the corporate finance team of Essar led by V G Raghavan who was the Essar group CFO at that time. I was also aware that corporate guarantees were issued for this facility to the bank by Essar Steel Ltd and Essar Power Ltd,” Subramaniam said.

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[caption id=“attachment_87405” align=“alignleft” width=“380” caption=“Subramaniam resigned from the boards of BMCL and LTPL in June 2008 joining Essar Group as CFO of Essar Telecom Business Group while the then CEO of Essar Telecom Infrastructure took his place. Reuters”]  [/caption]

He said in the board meeting of Loop, held in July 20007, when it passed the resolution that company will apply for 21 Unified Access Licenses, directors V Ganeshan, Girish Sathe and Madan Mundra were present. Subramaniam said to the best of his knowledge these three directors were employees of Essar.

According to Subramaniam’s statement, Vikash Saraf, who was CEO of Essar Telecom Business Group, brought him on the board of Loop. “I used to report to Vikash Saraf. My annual appraisals were also done by him and my increment letters were signed by him as well. I took no decisions in BMCL without consulting Saraf. In both BMCL and LTPL, we used to have Essar employees as bank signatories. Vikash Saraf was at that time also CEO of Essar Telecom Business Group,” he said.

Subramaniam said Saraf reported to the promoters directors of Essar Shashi Ruia, Ravi Ruia, Prashant Ruia, Anshuman Ruia, Rewant Ruia and Smiti Ruia. “However, to the best of my knowledge, Rewant Ruia and Smiti Ruia were not actively engaged in the operations of the company at that time. From the above it seems to me prima facie that BMCL and LTPL (being subsidiary of BMCL) were controlled by Essar Group,” he said.

Subramaniam said he was aware that as per Telecom License Terms, Essar was not allowed to hold a stake exceeding 10 percent in another telecom company operating in same circles, while it held its stake in Hutchison Essar Ltd which was over 10 percent. “I was informed by Saraf that there was no contravention of this clause 8 provision at any point of time,” he said.

Subramaniam resigned from the boards of BMCL and LTPL in June 2008 joining Essar Group as CFO of Essar Telecom Business Group while the then CEO of Essar Telecom Infrastructure took his place.

PTI