MCA updates through Business standard

MCAturnaboutcouldn’tsave Loop-Essar

BS REPORTERS
New Delhi, 12 December
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 IP 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.
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 alicence 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 ~384 crore. While Loop Telecom has been fined ~184 crore, that for Loop Mobile is ~200 crore (reduced from ~431 crore, initially).
Last year’s headline-making report of the Union comtroller and auditor-general had clearly said Loop was ineligible to receive alicence. 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.
Though ministry under Deora jettisoned earlier view on collusion, no other government agency bought it
NBILLIONAIRE RUIAS IN TROUBLE WITH CBI OVER 2G N