HC told Hutch sold 'benami' shares despite Centre's objection

NEW DELHI: Telecom Watchdog, an NGO seeking action against Hong Kong's Hutchison Telecom for allegedly violating FDI cap, has submitted before the Delhi High Court that the company sold 'benami' shares to Vodafone despite Centre's direction not to deal w ith such shares without its consent.
The NGO, in its affidavit filed in the court, alleged that foreign holding in erstwhile mobile venture Hutch-Essar was 89.03 per cent, far more than the 74 per cent Foreign Direct Investment cap for the sector.
"Not caring for the restrictions imposed by the government... Hutchison and Vodafone proceeded with the transaction. The transaction even included the transfer of economic interests of benami shares which the government specifically prohibited," the affi davit said.
It further said that the government, on May 7, 2007, had granted conditional approval to Vodafone to purchase only 52 per cent shares while the alleged 'benami' 15.3 per cent shares were ordered not to be part of the sale. The NGO also placed the copies of agreements between Vodafone and different parties that allegedly reveals that Hutchison agreed to pay $415 million (Rs 1,660 crore) to Essar in return for defending it and its nominees from proceeding related to violation of sectoral cap.
"The payment of first stage was linked to obtaining FIPB clearance. The payment for second stage was to be released only after Essar ensured that court proceedings related to violation of sectoral cap is withdrawn or dismissed," the affidavit said. - PTI
THE HINDU Business LineTuesday, April 15, 2008