August 29, 2009 1:24:54 am
The Department of Telecom is closing the controversy over Essar Groups cross-holding in Loop Telecom as none of the agencies concerned,including its legal consultant,have found sufficient ground to fight it out in the courts.
The Economic Intelligence Unit of the CBI has informed that it did not find any criminal angle and hence,does not intend to take it up for further investigation, said a ministry official. DoTs legal advisor has also advised that there is insufficient ground for a show cause notice. The CBI was investigating Essars acquisition of 9.99 per cent in Santa Trading Private Ltd while holding a 33 per cent stake in Vodafone-Essar. Under DoT rules,a single promoter cannot hold more than 10 per cent in two different telecom companies operating in the same circle.
Though Essars equity is less than that mandated in STPL,its Essar Teleholdings holds non-convertible debentures worth Rs 1,592 crore of Santa Trading which bought 86 per cent equity in BPL Communications that owns 48 per cent of Loop Telecom. Santa Trading is owned by Kiran Khaitan,a sister of the Ruia brothers who own the Essar group. Closing the case in April,the Ministry of Corporate Affairs said: While Essar is not the equity holder in STPL,it has invested a huge amount in NCD. It would appear that through funding to STPL,equity has been provided to BPL Communications which is 48 per cent owner of Loop Telecom,though this is not directly to Loop Telecom.
With equity being the legal parameter to determine violation of cross-holding,the DoT has no case against Essar and plans to close the reference next month,said the official.
Earlier this month,the Reserve Bank of India too gave a clean chit on the overseas transfer of Loop Telecom shares between two Mauritian companies saying that the sale neither violated the FDI policy nor the reporting norms as there was no flow of funds out of or into India.
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