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Swan Telecom made money by offloading shares: HC

delhi Updated: May 23, 2011 21:54 IST
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Swan Telecom, which came into being as a shell company of Reliance ADAG, made a kill after its promoters Shahid Usman Balwa and Vinod Goenka offloaded its shares to two MNC firms Emirates Telecommunications Corporation (ETISALAT) and Genex Exim Ventures Private Ltd, the Delhi high court on Monday said.

Justice Ajit Bharihoke, while dismissing the bail plea of Goenka and four other co-accused corporate leaders in the 2G case, said the accused had fabricated the records after the Reliance withdrew from the firm.

Initially, Reliance ADAG officials had created Swan Telecom to circumvent the then DoT rules debarring existing telecom players to bid for the UAS licenses.

Later, Reliance ADAG, after being allowed to have dual technology, suddenly withdrew and allowed Balwa and Goenka to "forge" documents to get the "undue" benefits, the judge said.

He also said Goenka, along with Balwa of Swan Telecom which got the UAS licence and scarce spectrum in 13 telecom circles including Delhi, sold shares to UAE-based ETISALAT and Genex Exim Ventures Private Ltd and earned huge profits.

"ETISALAT subscribed to 11,29,94,228 shares of Swan Telecom of face value Rs 10 per share at a huge premium of Rs 275.71 per share for a total consideration of Rs 3228 crores, it said, adding shares were sold on the same lines to Genex Exim Ventures also.

"This gives a glimpse of the quantum of monetary gain reaped by the accused Shahid Balwa and Vinod Goenka," the court said.

Goenka of Swan Telecom, in conspiracy with Balwa, concealed the shareholding pattern of the firm to cheat the DoT to bag UAS licence fraudulently, Justice Bharihoke said.

They furnished false information to DoT and misrepresented that the firm was an eligible company to get the licence.

Goenka, along with Balwa, took a majority stake in Swan Telecom to take advantage of the application made by it on March 2, 2007, for UAS licence. The Reliance had no use of the company after the change in the policy which allowed existing players to apply for the UAS licenses.

Goenka also manipulated the minutes of the board meeting to show transfer of shares of Giraffe Consultancy to his firm, the court said.