CBI seeks opinion on cross-holding of Essar shares in Loop

CBI seeks opinion on cross-holding of Essar shares in Loop
New Delhi, Aug 28 (PTI) CBI has submitted its findings
on cross-holding of shares of Essar in Loop telecom to its
legal wing for opinion following differences in probe between
it and Corporate Affairs Ministry which said the Ruias-led
group held only 2.15 per cent stake in Loop telecom and not
over 10 per cent as alleged when 2G licence was granted.
Sources privy to the investigations said the entire probe
had been submitted to the Directorate of Prosecution
comprising eminent lawyers to give its opinion as the CBI
investigation has claimed so far that the cross-holding of
shares of Essar in the Loop telecom was higher than the
prescribed 10 per cent, a charge denied by both the companies.
The sources said that if the legal department of the CBI
concurred with the findings of the investigators, the agency
would proceed for filing of charge sheet and if there was a
difference of opinion, the matter would be sent to the Law
Ministry for taking a final view.
The Registrar of Companies (Mumbai) has said, "The Essar
Group, directly or indirectly, held only 2.15 per cent of Loop
Telecom as on September 03,2007 i.e. the date on which the
application was made to DoT for UAS licence".
The RoC letter also said that the documents of the
company do not substantiate "Associate" relationship between
"Essar Group and Khaitan Group" as alleged.
The CBI has been contesting the claims of Essar and
Reliance saying that both the companies held more than 10 per
cent of shares in Loop and Swan when the spectrum was
allocated to them, a charge rebutted by both the companies.

In a 2009 report, the Corporate Affairs Ministry had said
Essar had 9.9 per cent stake while in its recent communication
it said Essar's stake was just 2.15 per cent.
According to licence norms, cross-holding of less than 10
per cent is permissible. The agency had also questioned the
two versions of the Ministry in its status report filed in the
Supreme Court. The CBI is investigating whether Essar used
Loop as a front company to corner spectrum in violation of the
guidelines.
As per 'substantial equity' clause of the licence, a
company can not hold more than 10% in two operating licencees
in same circle.
The documents submitted to the CBI include an RoC
observation that Essar group has been a net borrower from
Khaitan group between March 2006 and September 2007.
In a related development, the DoT asked the Ministry of
Law and Justice to kindly arrange or advice the meaning or
definition of the term "associate" to enable the department to
take further action in the matter.