2G scam: Ministry, AG split over Essar-Loop

In a new twist to the ongoing 2G scam, the law ministry has questioned the opinion of attorney general GE Vahanvati where he allowed the CBI to proceed against the promoters and officials of the Essar Group and Loop Telecom for violation of rules.

In a new twist to the ongoing 2G spectrum scam, the law ministry has questioned the opinion of attorney general GE Vahanvati where he allowed the Central Bureau of Investigation (CBI) to proceed against the promoters and officials of the Essar Group and Loop Telecom for violation of rules.

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The law ministry has made it clear that Vahanvati, its top law officer, “had tendered his opinion without considering the ministry’s inputs.”

Going a step further, the legal arm of the government has said that no offence was made out against the two companies.

The ministry, in its latest opinion endorsed by law minister Salman Khurshid on December 1, following a petition by the Essar Group, has concluded: “A perusal of relevant papers reveals that Essar companies are holding only 2.15% shares of Loop, which was below the 10% threshold limit or more to attract relevant rules for violation of licence allotment guidelines.”

The law ministry has also slammed its top law officer for his refusal to take into account the definition of an “associate company” provided by the ministry of corporate affairs.

Loop Telecom was allotted 21 licences for the 2G spectrum during 2007-08.

The matter first reached the law ministry in October this year following differences between two CBI officials — its director and director prosecution on whether Loop was a subsidiary of Essar Group and did the two companies indulge in a conspiracy to suppress facts to obtain licences through fraud.

CBI director AP Singh wrote: “I agree that a case of criminal conspiracy and cheating is made out….however I do not agree on the role of public servants.”

Director prosecution Abdul Aziz, however, disagreed with Singh, saying the Essar Group “did not have any substantial equity in Loop and there is no misrepresentation or concealment of facts.”

Vahanvati, in his nine-page opinion to the CBI on November 22, agreed with the CBI director, concluding there was sufficient evidence to indicate “that Loop Telecom was an associate of Essar under a corporate veil.”

He also agreed that the “accused private persons had conspired and suppressed facts to fraudulently obtain 21 licences.” The ministry, however, has raised doubts on Vahanvati's findings, saying a case of cheating cannot be made by the CBI despite the attorney general’s opinion “due to lack of sufficient evidence.”