A Central Bureau of Investigation (CBI) witness on Monday told a Delhi court trying a case arising out of the probe into the 2G scam that Essar Group promoter Ravi Ruia had approached him, seeking a stake in BPL Communications Ltd on behalf of other investors, including Loop Telecom promoter I P Khaitan.
Deposing as a CBI witness, Rajeev Chandrasekhar, who is a former Chairman and chief executive of BPL, said Ruia had told him he was negotiating with him to acquire the stake on behalf of other investors.
In its charge sheet, CBI had alleged that promoters of Essar Group, “in league” with Khaitans had “designed a scheme” to acquire BPL through Santa Trading Pvt Ltd and other Mauritius-based foreign companies, to circumvent the restrictive clause 1.3 of the cellular mobile telephone service (CMTS) licences. In line with the clause, Essar Group, directly or through associates, could not acquire more than 10 per cent equity in operating companies. "In this background during a business conference, Ravi Ruia approached me and suggested that he could acquire my stake in BPL," Chandrasekhar told Special CBI Judge O P Saini.
"Since Ravi Ruia confirmed that he was acting on behalf of some other investors and that he would assume responsibility of settling the litigation and other government and regulatory approvals, I introduced my financial and legal advisors and internal team to his team to commence the negotiations," he said. In 2004, he had decided to sell his stake in BPL as the company was engaged in a series of litigation, Chandrasekhar said.
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He told the court they had received proposal from various companies but it could not fructify due to the ongoing litigation after which Ruia had approached him for acquiring the stake.
Essar Group promoters Ravi Ruia and Anshuman Ruia, Loop Telecom promoters I P Khaitan and Kiran Khaitan and Essar Group Director (Strategy and Planning) Vikash Saraf are facing trial in the case. Besides the five accused persons, CBI had also filed charge sheet against the three companies — Loop Telecom, Loop Mobile India and Essar Tele Holding.
CBI, in its charge sheet, had alleged that Essar, which already had a stake as an existing telecom operator, created a “front company” Loop Telecom to secure additional spectrum which was in contravention of then telecom policy.
Chandrasekhar, whose recording of statement concluded on Monday, told the court that BPL was an existing company and was owned by his father-in-law T P G Nambiar. He said that in 2004, he decided to sell his stake in BPL due to a series of litigations among the shareholders and this was affecting its ability to raise capital and make necessary investments to grow.
He said that after having initial talk with Ravi Ruia, the entire negotiations were conducted by JM Morgan Stanley, the financial advisors for BPL, and legal advisors with Saraf and their lawyers.
He said that total consideration amount for sale of his stake in BPL Communications Limited was Rs 304 crore.
During his cross examination by senior advocate S V Raju, who appeared for Ruias and Essar Teleholdings Limited, Chandrasekhar said "It is correct that when Ravi Ruia met on the first occasion in a business conference, he told me that he had no liquidity with him and he was negotiating on behalf of other investors including I P Khaitan."