Essar Energy Chairman steps aside to clear his name

The investigation by the Indian authorities into alleged malpractice regarding the allocation of telecoms licences and mobile phone spectrum space in 2008 has prompted Ravi Ruia to temporarily give up the post of Chairman of Essar Energy.

The India-focused integrated energy company said Ruia would continue as a director of Essar while the investigation by India's Central Bureau of Investigation (CBI) proceeds. Prashant Ruia, currently Vice Chairman of Essar Energy, will take over as Chairman on an interim basis.

The CBI is investigating allegations that Ruia, along with certain other executives of the Essar Group, and Essar Teleholdings Limited - an Indian company belonging to the Essar Group - had suppressed facts relating to the extent of the equity holding of Essar Group in Loop Telecom Limited.

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The allegations relate principally to a certification given by Loop Telecom at the time of the granting of mobile telecom licences that Loop was in compliance with Clause 8 of the guidelines under which such licences were issued; Clause 8 prohibits any shareholder company (directly or through its associates) from holding 10% or more equity shareholding in more than one mobile licensee company.

The statement from Essar stressed that there are no charges of bribery or corruption or collusion with public servants, unlike in the other prosecutions being pursued in what Essar called "the 2G spectrum scam".

Ruia and Essar Group deny all charges and intend to take legal recourse to defend their position, the statement said.

The charges do not relate to Essar Energy, or any of its businesses and subsidiaries, and are not expected to have any impact on Essar Energy's business operations.

Commenting on his decision to step aside as Chairman, Ravi Ruia said: "I am confident that these charges will be dismissed by the courts in India. I expect that I would resume the office of Chairman at an appropriate time."

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