Though ministry under Deora jettisoned earlier view on collusion, no other government agency bought it.
In the final analysis, the change of mind by the ministry of corporate affairs (MCA) since 2009 on the alleged culpabilility of Loop Telecom and its promoters in the 2G telecom spectrum allocation scam hasn’t stopped other government agencies from penal action in this regard.
The company got a pan-India licence in 2008 with nine others under the controversial regime of former communications minister A Raja. In 2009, the MCA under Salman Khurshid said the company was a front for the Essar Group, which included relatives of the Ruias, the promoters (sister Kiran Khaitan and brother-in-law I P Khaitan). The department found numerous linkages through various loans, non-convertible debentures and investments made by the Essar Group and the Khaitans together in Loop.(Click here for table)
Under the the Unified Access Service Licence (UASL) rules, a company could not have more than 10 per cent stake in another competing telco in the same telecom circle. Essar had 33 per cent stake at that time in Vodafone Essar (which they later sold) and much more than 10 per cent in Loop, MCA alleged .
However, in 2011, in a complete volte face, MCA (now under Murli Deora’s ministership) gave a clean chit to the Essar Group. It said the Ruias-promoted group had only a 2.15 per cent stake in Loop at the time of application for a licence in September 2007. In its letter to the department of telecommunications, the MCA said the documents examined did not substantiate the charge of an "associate" relationship between Essar and the Khaitan group.
However, the Central Bureau of Investigation (CBI) disagreed. On July 7 this year, it questioned in the Supreme Court the clean chit given to Loop by MCA. And, in August, the enforcement directorate issued showcause notices to both Loop Telecom and Loop Mobile, for alleged violation of foreign exchange laws for about Rs 384 crore. While Loop Telecom has been fined Rs 184 crore, that for Loop Mobile is Rs 200 crore (reduced from Rs 431 crore, initially).
Last year’s headline-making report of the Union comtroller and auditor-general had clearly said Loop was ineligible to receive a licence. And, the Telecom Regulatory Authority of India recommended cancellation of licenses of Loop Telecom, among others, on account of missing rollout obligations.
It was clear that there were differences of opinion within the CBI on what action to take. The matter was referred to the Union attorney general.
The AG, Goolam Vahanvati, noted CBI and its director (prosecution) agreed that there was no involvement of public officials in any conspiracy with Loop or Essar on spectrum allocation. Hence, he said, he was not required to rule on this issue.
He added that he had no objection to make to the CBI opinion that Loop, the applicant for spectrum, was a proxy for the Essar Group and so, a case of cheating and criminal conspiracy was warranted.
CBI had stated that Loop was an alter ego of the Essar Group. Which cleared the decks for the chargesheeting.
Ravi Ruia
Vice-Chairman, Essar Group
The “AR” of Essar Group, Ravikant Nandkishore Ruia, or simply Ravi Ruia is a feisty business leader, known for negotiating and execution skills. The billionaire brothers Shashi and Ravi, are no strangers to business ups and downs, having gone through turbulent times with their Indian oil refining and steel businesses just a decade ago, with a dubious distinction of becoming the first Indian corporate to default on a $250 million foreign currency loan in 1999.
But they have turned around since then to emerge as a serious competitor to many of their Indian peers and with $10.2 billion, the brothers, who are a united force, stand 4th in the Forbes rich list in India. Working in perfect tandem and a cogent team, both the brothers have overseen group activities of a sprawling conglomerate, but telecom has always been a special focus for younger brother Ravi, who managed the volatile relationships with JV partners Hutchison and then Vodafone before cashing out earlier in the year from the third largest telco with a multi-billion dollar cheque. He was the non-executive chairman of Hutchison Essar and non-executive director of Vodafone Essar. Many group watchers argue that telecom has been a key catalyst behind the scorching growth and turnaround the group. “ Shashi has been the big picture chairman and Ravi was left with all the crucial nitty gritties and execution details,” said the CEO of a business house on condition of anonymity. A mechanical engineer with a passion for cricket, Ravi has moved to London and used it as a base to aggressively pursue Essar's globalisation spree. Naturally, he - along with nephew and Group CEO Prashant, were instrumental in steering the successful $2 billion London listing of Essar Energy.
Anshuman Ruia
Director, Essar Group
The younger son of Shashi, Anshuman (40) is as fond of sports as his father. But he's not crazy about golf, but is a champion table tennis player. But Anshuman knows his business too, spearheading the shipping, BPO and ports and logistics business within the group as the younger Ruias have slowly taken over many operational functions. Like his brother Prashant, he was also a key stakeholder in the group's telecom play, but more recently, he got more focused on the $11 billion power sector initiative that the group has initiated to consolidate its 9500 MW planned portfolio. Obsessively media- shy and private but friendly if one gets to meet him, he however has not shied away from diversifying further into renewable energy, a space which till very recently lacked proper regulatory framework. In the same way, Anshuman has also spearheading Essar Power's entry into transmission and distribution to complete the entire value chain.
A member of the YPO (Young President' Organisation), Anshuman as a fellow industry associate puts it, "has always been excited at new business developments and growth opportunities."
Vikash Saraf
Director Strategy & M&A, Essar Investments
The master dealmaker was one of the hottest telecom bankers in Mumbai in the 90's, heading the practice for SSKI as CEO, SSKI Corporate Finance. An ex-IIM Kolkata graduate, Saraf was responsible for getting Rajeev Chandrasekhar funding from marquee global investors for BPL Mobile. Saraf also worked closely with the Essar Group while they were tie-ing up with Hutchison for the telecom JV.
Even though Saraf was one of the main catalyst behind the successful launch of Sharekhan, the retail broking arm of SSKI, he soon left the organisation as "differences had cropped up in the team."
Essar lapped him up and soon he was managing the Hutchison relationship as well as overseeing the conglomerate's telecom business. His close association with both Shashi and Ravi Ruia has earned him the sobriquet, "the "4th son of the Ruia family."
After Hutchison, came Vodafone and again Saraf's deal making capabilities came to the forefront to negotiate a deal and contract with Vodafone, one of the largest telcos in the world.
But over the last ten years that he has been with the group, Saraf's mandate has widened to include group strategy and M&As across sectors. From negotiating steel assets to BPOs, his investment banking skills have always come handy for the diversified conglomerate. "He has the eyes and ears of the family and rightfully so. He is part of the inner circle," said a fellow investment banking head who has worked with Saraf on a number of transactions.
