Ruias likely to be named in Loop Telecom charge-sheet

The Central Bureau of Investigation (CBI) has decided to ignore the law ministry’s opinion and go ahead with the Loop Telecom charge-sheet in the 2G spectrum scam. The main charge relates to whether the Ruias of Essar are proxy owners of Loop when the telecom policy forbids one operator from owning 10 percent or more in another operator in the same circle.

The premier investigating agency has already prepared the charge-sheet and sent it to Attorney General GE Vahanvati for his opinion on Wednesday. The AG is expected to return the charge-sheet with his comments by next week.

The CBI charge-sheet is likely to name industrialists Ravi Ruia, Anshuman Ruia, IP Khaitan and Kiran Khaitan, among others.

The charge-sheet will be filed despite an opinion given by the law ministry’s Director of Prosecution Abdul Aziz, who said that Loop cannot be legally called an “associate’’ of Essar. Abdul Aziz, who had retired on 31 July and is on extension for two years, was asked to define and interpret the term “associate’’ in the light of facts gathered by the CBI in this case.

Aziz said two companies can be considered associates if they have common directors and their funding sources are the same. On this basis, he declared Essar and Loop werenot associates.

CBI sources are not convinced. The agency’s Director AP Singh is understood to have given the go-ahead for filing the charge-sheet and does not want to get embroiled in hair-splitting arguments over whether Loop and Essar are associates. The CBI has already told the apex court that Loop is the “alter ego” of Essar. Loop is formally owned by Kiran and IP Khaitan, sister and brother-in-law of the Ruia brothers Shashi and Ravi.

Law Minister Salman Khurshid, in an interview to The Indian Express on Monday, had questioned the need to “victimise” the corporate world. The newspaper quoted him as saying: “If you lock up top businessmen, will investment come?''

The Essar-Loop case will be the first one in which big-ticket businessmen will be charge-sheeted in the 2G scam, though three executives of Reliance-ADAG and some from Swan and Unitech are already in jail for it.

The Loop story began in July 2005 when Santa Trading Pvt Ltd, owned by IP and Kiran Khaitan, bought BPL Communications and later renamed it Loop Telecom. Loop was issued 21 licences in January 2008 when Andimuthu Raja was communication minister. The charges against Loop Telecom are that Essar, which earlier had stakes in Vodafone, funded Santa Trading and had common managers with Loop Telecom as well.

According to the CBI, Essar financed Loop for the payment of licence fees. Essar provided bank guarantees for State Bank’s loan to Loop. Essar’s chief executive officer and chief financial officer actively participated in the process of Loop getting licences.

Ravi Ruia had allegedly helped the Khaitans buy BPL Communications and Anshuman Ruia was one of the directors in BPL Communications. Rajeev Chandrashekhar, former CEO and chairman of BPL Communications and now a Rajya Sabha member, has given a written statement to the CBI to the effect that BPL Communications negotiated with the representatives of Essar and not the Khaitans - the on-paper owners of Loop.

The CBI’s case will be that the Khaitans were a front for Essar. Others who may figure in the CBI charge-sheet are former Communications Minister A Raja, former Department of Telecom legal advisor Santokh Singh and DoT official Sidhartha Behura and Vikas Saraf of the Essar Group. Saraf was on the Loop Telecom board. CBI sources say Vikas Saraf was the ‘common’ link between the Ruias and Khaitans to carry out Loop Telecom operations.

It is claimed that several Essar directors, including Girish Sathe, V Ganesan and Rajiv Sawhney, were also working for Loop Telecom. Girish Sathe, Company Secretary of Essar Technologies Ltd, was the authroised signatory registered at the portal of the ministry of corportate affairs and his email ID on the portal is common for the Essar Group and Loop Telecom.

Loop spokespersons, however, have consistently been denying these allegations, arguing that it was a “family’ affair”. In their version, the Essar group was a net borrower from the Khaitans. “The Essar Group owed more than Rs 1,400 crore to the Khaitan Group,’’ a Loop spokesperson said. It was this owed money that was used to buy Loop licences. They also add that the actual stake of the Essar group was just 2.15 percent in Loop and this had been further reduced to 1.5 percent.

More damning may be the Indian High Commissioner to Mauritius, Madhusudan Ganapati’s statement. He said that Essar’s Prashant Ruia and Loop’s IP Khaitan had come to meet him in Mauritius to discuss the business environment. However, Ganapati said both of them showed more interest in the CBI’s letter rogatory sent for determining the share ownership details of Santa Trading.