Loop Telecom was front company for Essar: CBI

The Central Bureau of Investigation (CBI) on Monday told a special court that Loop Telecom Ltd (LTL) was a front company for Essar Tele Holding Ltd (ETHL) to bag 2G spectrum licences in violation of a provision under the Unified Access Services Licences (UASL) guidelines.

Advancing the ongoing final arguments in the case, special public prosecutor Anand Grover said that violation of clause 8 of UASL guidelines by the accused firms was a crucial factor. As per clause 8 of UASL  guidelines, no single company or legal person, either directly or through its associates, shall have 10 per cent or more equity holding in more than one licensee company in the same service area for same service.

Grover told Special CBI Judge O P Saini that purpose of clause 8 of UASL guidelines was to encourage competition in the telecom sector. Clause 8 of UASL guidelines was violated in this case. This (clause 8) was to avoid dominant position of a particular telecom company in a particular service area. The applicant company (LTL) was a front company for ETHL, he alleged.

During the brief arguments, Grover said, On all count, from whichever way this court will see, clause 8 of UASL guidelines was violated in this case. The ongoing arguments in the case remained inconclusive and would continue on August 5.

CBI had earlier told the court that accused firm LTL was used by Essar Group of companies to acquire 2G licences by circumventing the procedures.

Essar Group promoters Ravi Ruia and Anshuman Ruia, Loop Telecom promoters, Kiran Khaitan, her husband I P Khaitan and Essar Group Director (Strategy and Planning) Vikash Saraf are facing trial in the case, along with three telecom firms - LTL, Loop Mobile India Ltd and ETHL. The five individual accused, who are out on bail, have denied the charges levelled by CBI.

CBI had earlier argued in the court that Essar Group of companies had directly funded majority of the money involved in the transactions and as per documents on record, the money trail originated from various firms of Essar Group.

CBI had charge-sheeted these accused on December 12, 2011, alleging they had cheated the Department of Telecommunication by using Loop Telecom as a front to secure 2G licences in 2008.

On May 25, 2012, the court had framed charges against all the accused under section 120-B (criminal conspiracy) read with section 420 (cheating) of IPC, while the charge of cheating was made out only against Saraf.