OREANDA-NEWS. December 22, 2011. Essar Energy plc [LSE:ESSR], the India-focused integrated energy company, announced that Mr Ravi Ruia has voluntarily decided to temporarily step aside as Chairman, however he will continue as a director  of Essar Energy. This decision follows allegations by India’s Central Bureau of Investigation (CBI) that Mr Ruia, 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 equity holding of Essar Group in Loop Telecom Limited (Loop).

There are no charges of bribery or corruption or collusion with public servants (as compared to the other prosecutions being pursued in the 2G spectrum scam).

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

Essar Group is surprised and disappointed by the stand taken by the CBI especially because the Indian Ministries of Law & Justice and Corporate Affairs have already reviewed the facts and confirmed that the direct and indirect shareholding of the Essar Group in Loop was below 10% and therefore there was no such violation and that no prima facie case of any offence can be made out.

Mr Ruia and Essar Group deny all charges and intend to take legal recourse to defend their position.

These charges do not relate to Essar Energy plc, 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, Mr Ravi Ruia said: “I believe that as a good corporate governance measure and to ensure that the board and management of Essar Energy continue to be fully focused on successfully delivering against their strategy, I should step aside at this time. Essar Group has always been open, transparent and law abiding, and 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.” 

As a result of Mr Ruia’s decision, the Board of Essar Energy has appointed Mr Prashant Ruia as interim Chairman of Essar Energy. Mr Prashant Ruia is currently Vice Chairman of Essar Energy and is fully conversant with the strategy, business and operations of Essar Energy.