2G scam: Much ado about 'associates'

In a breather for the Ruias of Essar and Anil Ambani, the court hearing the telecom spectrum allocation case on Monday directed the Central Bureau of Investigation (CBI) to place on record the recent opinion of the ministry of law and justice on ‘associate companies’. This decision may weaken the prosecution’s case.

Defence lawyers had moved court last week for the law ministry document (dated August 30 this year) to become part of the case files, while CBI prosecutor Uday U Lalit opposed the move. Lalit had argued the law ministry’s opinion was “unsolicited” and it would not be proper to allow this because CBI had already framed its chargesheet based on a different definition.

The law ministry’s opinion on the definition of an associate company is in favour of Swan Telecom (now Etisalat DB Teleservices India Pvt. Ltd), Reliance Telecom Ltd, Loop Telecom and the Essar Group.

“The report (of the law ministry) is largely legalistic in nature, clarifying a law point only. The prosecution is not likely to suffer any prejudice by its production. Accordingly, in the interest of fairness of trial and its transparency I deem it proper that a copy of the said report be placed on record by the CBI,” ruled judge O P Saini.

The defence counsels are hopeful that the law ministry's report will establish that Reliance Telecom and Swan Telecom are not associate companies, as alleged by CBI in its chargesheet. Former telecom minister A Raja, along with Shahid Balwa of Swan Telecom, Gautam Doshi of Reliance Telecom, and Sidharth Behura, former telecom secretary, all in judicial custody for their alleged role in the 2G scam, had filed a petition demanding that CBI file the law ministry's report before the court.

Saini, while pronouncing the order, slated September 21 as the date for presentation and arguments on the report. He, however, said it was apparent that the document was not created at the instance of CBI and it came into existence after the filing of the chargesheet.

While the law ministry's opinion does not mention the name of any company, it says that in the telecom sector, several companies may get into associations for activities like tower sharing, but it does not make any of the companies an associate. Whether a company is an associate will be decided only on the basis of shareholding, it said. “There must be either a holding and subsidiary relationship between the two companies, or there must be a more than 50 per cent shareholding in both companies by the common parent, holding shares in either of the two companies.”

CBI, in its chargesheet, called Swan Telecom an associate company of Reliance Telecommunications. The law ministry's definition could undermine CBI's stand on the associate company charge against the two companies. Also, investigations were on to assess whether Essar controlled Loop or whether they were associate companies.