The chairman of Essar Energy is to step down temporarily, following a ruling in India that he is to face charges relating to a $39bn (£25bn) telecommunications scandal in the country.
Ravi Ruia, the billionaire founder of the energy company, will remain as a director of Essar Energy but he will have to face in a specially convened Indian court the charges brought against him by India's Central Bureau of Investigation (CBI) two weeks ago.
Nevertheless, he is the most senior figure to become embroiled in the inquiry into the award of second-generation mobile phone licences in 2008.
There are no charges of bribery or corruption but the CBI is looking at ownership in licensee companies and claims Mr Ruia suppressed facts relating to a holding by Essar Group in Loop Telecom. The company said the charges do not relate to Essar Energy, and it was surprised at the CBI's stand. Mr Ruia and Essar Group deny all the charges.
Even so Essar Energy, which floated in April 2010 at 420p a share, was the biggest faller on the FTSE 100 yesterday, down 6.1p to 171.9p.
Mr 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."
Essar Energy has appointed Prashant Ruia, who is its vice-chairman, as interim chairman.Reuse content