Ravi Ruia resigns as Essar Energy chairman

Ravi Ruia resigns as Essar Energy chairman
Comment E-mail Print Share
First Published: Thu, Dec 22 2011. 12 25 AM IST

Stepping down: Ravi Ruia (left) and Prashant Ruia. The latter has been appointed at the helm of the company by the board of directors. By Ramesh Pathania & Kedar Bhat/Mint
Stepping down: Ravi Ruia (left) and Prashant Ruia. The latter has been appointed at the helm of the company by the board of directors. By Ramesh Pathania & Kedar Bhat/Mint
Updated: Thu, Dec 22 2011. 12 25 AM IST
New Delhi: Ravi Ruia temporarily stepped down as chairman of Essar Energy Plc.on Wednesday as a special court allowed investigators to bring charges against him, four others, and three companies for telecom spectrum-related irregularities.
Stepping down: Ravi Ruia (left) and Prashant Ruia. The latter has been appointed at the helm of the company by the board of directors. By Ramesh Pathania & Kedar Bhat/Mint
Anshuman Ruia, Kiran Khaitan, her husband I.P. Khaitan, Vikas Saraf, Essar Teleholdings Ltd, Loop Telecom Pvt. Ltd and Loop Teleholdings are the rest of the people and companies against whom the Central Bureau of Investigation (CBI) was allowed to bring charges of cheating and conspiracy before the court conducting the trial of the second-generation (2G) telecom spectrum case.
The main charge relates to the rule that a telecom licence holder cannot hold more than 10% of a company that also owns a licence. CBI alleges that Essar, which owned 33% in a joint venture with Vodafone (Vodafone Essar Ltd), also owned more than 10% of Loop, and it did not disclose this to the telecom department when it applied for a licence in 2007.
The accused were issued summons by the court to be present before special judge O.P. Saini on 27 January.
Ravi Ruia voluntarily stepped down as chairman of the $2.32 billion Essar Energy, though he will continue as a director, according to a statement filed with the London Stock Exchange (LSE).
Essar expressed “surprise” at the court’s decision to allow prosecutors to bring the charges. It contended that since there were no allegations involving public officials or corruption, the special court had no jurisdiction over the case.
“Essar Group is surprised that the special court has taken cognizance of the matter even though there is no charge of corruption made by CBI,” the company said in the statement to LSE.
In its 12 December chargesheet, CBI accused the promoters of Essar and Loop of conspiring to cheat the department of telecommunication (DoT), but has not found evidence to prosecute them under the Prevention of Corruption Act.
It said “investigation has not revealed evidence to prove mala fide on the part of public servants in the matter”.
CBI has said the accused persons and companies created a “complex corporate veil” to cheat DoT by concealing that Essar, an existing telecom operator with substantial stake in Vodafone (then Hutch), owned more than 10% stake in Loop Telecom.
In its London Stock Exchange statement, Essar said it was “disappointed” by the stand taken by prosecutors, “especially because the indian ministries of law and justice and corporate affairs have already reviewed the facts and confirmed that the direct and indirect shareholding of the Essar Group in Loop was below 10% and therefore there was no such violation and that no prima facie case of any offence can be made out.”
Ravi Ruia said he was stepping aside “as a good corporate governance measure” and he expects to “resume the office of chairman at an appropriate time”. Prashant Ruia, who was vice-chariman of Essar Energy, was appointed at the helm by the company’s board of directors.
Essar Global, the main holding company of the Mumbai-based Essar Group, owns 76.72% in Essar Energy.
Bloomberg contributed to this story.
nikhil.k@livemint.com
Comment E-mail Print Share
First Published: Thu, Dec 22 2011. 12 25 AM IST