The Essar Group provided corporate guarantee to Huawei International Pte Ltd that supplied telecom equipment, and to SREI Infrastructure Finance Ltd that loaned Rs 200 crore to Loop Telecom Limited, records of offshore legal firm Appleby show.
In an ongoing case related to the 2G scam, the CBI chargesheet claimed that Loop Telecom Ltd was a front company of the Essar Group and secured several bank loans on the basis of corporate guarantees by Essar.
Appleby received two letters from SREI Infrastructure Finance Ltd at the Cayman Islands address of Essar Global Ltd on October 30 and November 21, 2013. According to the letters, the Kolkata-based company provided Loop Telecom Ltd a loan of Rs 200 crore, which was backed by certain security interests and a guarantee by Essar Global Ltd, the holding company of Essar Group.
The first letter was a reminder that the loan — Rs 260.80 crore, along with interest — was due for repayment on November 1, 2013. Three weeks after the deadline, the second letter warned that default would invite legal action.
Appleby records also show that Essar Global Limited gave corporate guarantee to Singapore-based Huawei International PTE Ltd in September 2009, backing payment obligations of Loop Telecom Ltd for the supplies made under a contract between Huawei and Loop. After Loop delayed making some payments to Huawei due to a “tough phase” in business, the three companies, Appleby records show, held a series of discussions to reach an amicable settlement by executing an MoU in October 2013.
Essar accepted the terms “as a reaffirmation of its obligation under the guarantee dated 17 September 2009 on behalf of LTL and in favour of Huawei”.
Under the MoU, Huawei would not take any legal action if Loop paid its entire dues — $8,28,456 — to Huawei by December 15, 2013, failing which Essar Global Fund Ltd would be liable to make the payment “promptly upon demand”.
Set up in Cayman Islands in September 2005, Essar Global Ltd was renamed Essar Global Fund Ltd (EGFL) in March 2013.
In case of default or dispute, the MoU said, the issue would be referred to and resolved by arbitration in Singapore.
In an email, an Essar spokesperson said: “Details relating to guarantees provided by Essar Global Fund Ltd to SREI and Huawei and the guarantee charges paid by the Khaitan Group to EGFL in this regard were provided to the investigating authorities at the time of investigation itself.
Also Read | 714 Indians in PAradise Papers
“The promoters of Essar and Khaitan Groups have a family relationship. Transactions between companies owned by Khaitans and Essar Global Fund Ltd are normal business/commercial transactions which are fully disclosed in public documents in India and abroad and are fully permitted under the laws of the land.”
In an email, Nalin Khaitan, Vice Chairman, Khaitan Holdings, said: “The transactions between Khaitan and Essar with respect to guarantees mentioned by you were at arm’s length, fully compliant with the law and have been fully disclosed to the honorable special court. The matter is presently sub-judice and therefore it would not be appropriate for us to comment further.”
SEE PHOTOS | Paradise Papers: Here are the Indians on the list
A spokesperson for SREI said: “As a standard practice, we do not discuss client specific details in public. However, we can confirm that we had extended the loan and recovered our money. It would not be fair for us to comment further on this topic.”
Huawei International Pte Ltd did not respond to queries for comments.
Essar names Greenpeace and Unicef, they deny links
Ruia family trusts Triton and Virgo had a set of five companies each as beneficiaries — four owned by a family member from each branch of the Ruia family. The fifth beneficiary of the Virgo Trust, claim Appleby records, was UNICEF, and of the Triton Trust, Greenpeace International. Trust documents, however, show two companies — Wilderness Lodge Ltd and Horseshoe Ridge Ltd — as the respective fifth beneficiary.
“At this time, we are not aware of any relationship or affiliation between UNICEF and the Virgo Trust or the Wilderness Lodge Limited,” said Najwa Mekki, chief, Media Section, UNICEF.
Greenpeace in an email said: “Neither Greenpeace International nor Greenpeace India has any knowledge of ever having been named as a beneficiary of the Triton Trust, whether directly or through Horseshoe Ridge Limited. If they had done so, that would have been beyond our control and we would not accept any funds from such a source. The possibility that tax avoiders may be using the names of campaign groups is distasteful — our financial independence is critical to holding those in power to account.”
“Greenpeace International’s financial records go back to 2006. A thorough check showed that Greenpeace International has not received any money from Triton Trust or Horseshoe Ridge Limited. GP India has likewise done a detailed check of its financial records going back to 2006 and it does not find any contribution from the said entities — Triton Trust and Horseshoe Ridge Limited,” Greenpeace said.
Essar did not provide a specific reply to a question on Greenpeace and UNICEF.