Raipur, Sep 28 (IANS): An Essar Group general manager was arrested Tuesday for his role in paying "protection money" to the Maoists to help the company reopen a 267-km iron ore slurry supply pipeline in Chhattisgarh's Dantewada district, police said. The company has denied paying money to the rebels.

D.V.C.S. Verma was arrested after the interrogation of two people arrested Sep 9 at a weekly market in insurgency-hit Dantewada.

Verma, who is based in Kirandul town in Dantewada, "has been arrested after police got evidence of the Essar Group's role in huge cash transfers to the Maoists," Superintendent of Police Ankit Garg told IANS.

He said that more Essar officials in Chhattisgarh and outside may be questioned and arrested.

He informed that a police team was rushed to Orissa's Malkangiri district to arrest the company's deputy manager C. Srinivas.

Verma, arrested under penal provisions for waging war against the state and sedition, was sent to two days' police custody by a local court.

His arrest followed questioning of Essar contractor B.K. Lala, who was caught while handing over Rs.15 lakh to suspected rebel sympathiser Lingaram Kodopi.

Police said they were hunting for two more people - Pawan Dubey and Narendra Dubey - who run NGO Jai Johar, headquartered in the Bastar region. They were served notices recently.

According to police, Jai Johar received funds from Essar Group under its corporate social responsibility programme in Dantewada but the funds were actually given to the Maoists as "protection money" to persuade the rebels to allow the company operate its supply pipeline.

Chhattisgarh's main opposition Congress said that the company should be booked under a stringent law.

"I strongly demand that cases be registered against Essar Group owners for handing over massive amounts as 'protection money' to various factions of the Maoists," state Congress president Nandkumar Patel told IANS.

He said that provisions of the Chhattisgarh Special Public Security Act (CSPSA) should be invoked.

However, the company has denied any wrongdoing.

"The Essar Group vehemently rejects all allegations made regarding payments to the Maoists. Essar would like to state that such baseless allegations are being made to hurt the image and reputation of the group, which is a law-abiding corporate," it said in a statement.

The company said that Essar Steel was the largest private sector investor in Chhattisgarh's Bastar region, that included Dantewada. It added that its facilities relating to a plant and slurry pipeline have been damaged by the Maoists at least 15 times since it was commissioned in October 2005.