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Indian Court Asks Essar Officials to Appear in Telecom Probe

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Dec. 21 (Bloomberg) -- An Indian court asked three officials of the Essar Group to appear before it on Jan. 27 as it probes charges linked to a 2008 sale of licenses to run mobile-phone services.

Special Judge O.P. Saini today admitted charges filed by the Central Bureau of Investigation this month against Essar’s Vice Chairman Ravi Ruia and Directors Anshuman Ruia and Vikash Saraf for cheating and conspiring to provide incorrect information to the government while applying for permits.

The New Delhi court noted charges against the founders of Loop Telecom Ltd., Kiran Khaitan and her husband I.P. Khaitan, and summoned them for the same date. The CBI has said Essar used Loop as a front company to secure additional spectrum and licenses in contravention of telecommunications policy.

Former telecommunications minister Andimuthu Raja, a federal lawmaker, government officials and company executives are already on trial for conspiring to grant licenses to unqualified companies for personal benefit in 2008. The country’s auditor says the first-come, first-served award of permits may have lowered government revenue by up to $31 billion. All those on trial deny wrongdoing.

Essar Teleholdings Ltd., Loop Telecom Ltd. and its unit Loop Mobile India Ltd., named as accused parties in the case, were also summoned by the judge. Essar denies the allegations against the company and its officials, saying the charges relate to the interpretation of a contractual clause.

Essar in a statement on Dec. 12 said it held only 2.15 percent in Loop at the time it applied for a license and did not violate the law.

The scandal surrounding the wireless sale has weakened Prime Minister Manmohan Singh’s government, lowered investor confidence in the $1.7 trillion economy, stalled legislation and led to street protests.

With today’s court decisions, 19 people and six companies stand accused of involvement in the alleged scandal.

Twelve of the people have been freed on bail as their trials continue. Those released include three executives of billionaire Anil Ambani’s Reliance ADA Group and federal lawmaker Kanimozhi. Raja remains in custody in the capital’s Tihar prison.

-- Editors: Mark Williams, Sam Nagarajan

To contact the reporters on this story: P.S. Patnaik in New Delhi at ppatnaik2@bloomberg.net; Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net

To contact the editor responsible for this story: Sam Nagarajan at samnagarajan@bloomberg.net

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