The Central Bureau of Investigation has alleged that the corporate affairs ministry and telecom department failed to stop Loop Telecom from obtaining mobile permits that it was not entitled to.

The chargesheet, a document which outlines the police case in detail, filed by the CBI says that the telecom department had received several complaints that Loop Telecom was a front for the Essar Group, thus violating rules barring companies from holding more than 10% in two telecom service providers.

The DoT referred the matter to the MCA, whose detailed probe established the violations. But the MCA chose not to send a definite opinion and instead furnished a 'vague report' leading to DoT taking a 'broad view' of the matter even though many of its officials recommended that showcause notices be issued to Loop Telecom for termination.

The CBI has suggested these officials be penalised, according to people familiar with the contents of the chargesheet.

Earlier this week, the CBI charged industrialists Ravi Ruia and Anshuman Ruia, the promoters of Essar Group, its director for strategy and planning Vikas Saraf and Loop promoters I P Khaitan and Kiran Khaitan with fraud and conspiracy as part of a sprawling court-monitored investigation into telecom sector.

The CBI has alleged that the three companies were beneficiaries because Loop had paid only Rs1,455 crore for mobile permits in 21 regions while these licences were worth Rs 5,092 crore, a figure which it has arrived by multiplying Rs 1,455 crore by 3.5.

The multiple, 3.5, was arrived at on the logic that aggregate gross revenue per megahertz of frequency spectrum was 3.5 times more in January 2008, when Loop got its licences, compared with 2001 when the all-India licences were auctioned. The government has never used such a calculation, people familiar with the telecom sector say.

Chargesheet details, loop history

According to the people familiar with the chargesheet, the document delves deep into the history of Loop to support the CBI theory that it was part of the Essar Group.

According to the CBI, the company that came to be known as Loop started life as Shippingstop Dot Com, an Essar Group company when it applied for longdistance licences in 2005. Later, in 2007, when it applied for mobile permits, it was funded by BPL Mobile Communications and BPL Communications, which in turn were funded by an Essar Group company, the agency alleged.

At the time of application, all four directors on the board of Shippingstop Dot Com were employees of the Essar Group. The CBI said its investigations revealed that Shippingstop Dot Com was majority owned by BPL Mobile Communications - now called Loop Mobile - which in turn was controlled by BPL Communications, a partnership firm. (Economic Times)