Harish Gupta: Shiela Dixit

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Friday, February 23, 2018

Fly on the wall : The 10-day silence in Rs 11400 crores Scam ?

by Harish Gupta, National Editor, Lokmat Group

The 10-day silence in Rs 11400 crores LoU Scam ?

It is no secret that the diamond business of Mama-Bhanja (Nirav Modi and Mehul Choksi) came crashing on January 16 this year when an executive of Nirav Modi went to the Brandy branch of the PNB to clear the LoU. The cat was out of the bag as the handling deputy manager alerted his seniors of something fishy. All hell broke within hours and the top management got in touch with Nirav Modi who was holidaying in New York. His top executives in India including CFO Ambani kept telling the PNB that monies are being arranged. The shaken PNB management kept negotiated fo full ten days and tried hard to persuade Choksi and Modi to to arrange for collateral and matching securities. Finally, the Managing Director Sunil Mehta told the Banking Secretary in the Finance Ministry who conveyed to Finance secretary Hasmukh Adhia who in turn conveyed the biggest scam under the NDA to the Finance Minister. It transpires that Adhia informed the PMO and Jaitley too briefed the PM on the issue separately. Finally, the PNB decided to lodge a formal CBI complaint on January 28 of cheating relating to Rs 280 crores. The CBI started looking into the matter and three days later, it registered the case on January 31. The second complaint amounting to Rs 11400 crores was reported on February 13.

Value of Nirav Modi properties is Just Rs 800 Cr

The Enforcement Directorate bragged within two days of raids on Nirav Modi's establishments across the country that value of seized assets including flats and properties is Rs 5700 crores. However, the valuers and assessors of properties, jewellery and diamonds are still struggling to assess the actual value of seized assets. An informed source in the ED said the total value of immovable assets of Nirav Modi is around RS 800 crores only. The ED is yet to get hold of the actual ownership documents of all the properties if they had not already mortgaged to banks or otherwise. The ED's legal department is still struggling to discover if the properties are free from any collateral for picking up loans. What surprised industry veterans is that speed with which ED assessed the value of diamonds which is an extremely tedious process. In fact, the whole scam of Nirav Modi was to import rough diamonds and export them or sell them in Indian market at a very high price after cutting and polishing them due to his designing skills and high brand value. So far, the ED had conducted searches at over 200 premises of Modi as well as Gitanjali Gems and seized diamonds, gold and precious stones worth Rs 5700 crores based on the “tag value” or the “book Value” of the diamonds and jewelery. The book value cannot be true estimate of the goods recovered. The tag value is highly inflated. In fact, when the banks sanction loans against imported stock of rough diamonds to jewelers, there is no way to assess the true value because most valuers have no knowledge themselves or they look the other way. This is used for over-invoicing and under invoicing. The Income Tax department had also attached and froze 103 bank accounts and 40 properties of the Modi group of firms, but the value of this attachment has not been given by the IT so far.

Having declared the true value of stocks and properties as Rs 5700 crores, the ED is now in a tight spot. It transpires that the value of diamonds, gold & jewelery is in the range of Rs 1400-1500 crores. One of the reasons for this is that Nirav Modi used to import cheap quality rough diamonds and divert them after value additional in the domestic market at a very high price rather than exporting them.

Nirav Modi’s Hyderabad SEZ scam

The ED detected that Nirav Modi's Hyderabad-based SEZ was overvalued in the books of Punjab National Bank (PNB) huge variation in actual inventory and their book value. The difference was as huge as Rs 3,500 crore. The SEZ on an area of 250 acres was sanctioned by the UPA government and inaugurated by then Chief Minister Y.S. Rajasekhara Reddy in 2005 and then it was named as Rajiv Gems Park. In 2014, the name was changed to Gitanjali Gems Park which houses all the five firms owned by Nirav Modi and his associates. The raids at five gems and jewellery units located at a hardware park at Raviryala village in Maheswaram mandal of Ranga Reddy district, about 30 km from the city. The actual value of 100 odd boxes and containers at the Gitanjali Gems Park, was Rs 300 crore, but the book value in the group’s computers is mentioned around Rs 3,800 crore. This SEZ is the biggest processing unit of the Nirav group’s gems and jewellery. The group used to import raw and uncut stones from Hong Kong and other places and processed them at Surat, Pune and other places in Gujarat and exported them to UAE, EU and other destinations. Shockingly, the there were only 400 employees at the SEZ as against the 1,850 shown in the records. The EPF was deposited in the names of 1850 employees. Perhaps to jack up job data and siphon money as well.

A Cultural Shift at AICC under Rahul Gandhi

We had already reported in these columns that Congress President Rahul Gandhi will not have a Political Secretary like his mother had for 20 long years. It had also been reported that he will hold Public Darbars at the AICC to meet with the common man and interact with Congress workers. It now transpires that Rahul Gandhi is undertaking a big shift in party's policy. His latest Mantra is to buy peace in his own party first and tell party leaders in states to close ranks. Before stepping up his campaign to talk to like-minded parties, he wants that Congress should regain its lost glory. Gone are the days when he was not available and had virtually become incommunicado. He never responded to SMSes, didn't care for the waiting guests and canceled appointments at will. Now he is playing on the front foot and inviting all those who left the party. He has been telling all PCC chiefs that its their responsibility to keep flocks together and spending hours and hours with leaders of each state. The way Shiela Dixit and Ajay Maken buried the hatchet and Arvind Singh Lovely returned to the party fold in Delhi is an indication of this cultural shift. He is also giving free hand to the Chief Ministers with a clear message that they will have to keep the flocks together. The target is May 2019. He told Karnataka CM Sidhharamaiah to do whatever he likes. But he shouldn't ignore other leaders. His focus is Maharashtra, Rajasthan, Madhya Pradesh, Chhattisgarh, Haryana, Himachal, Punjab and even Bihar where the Congress can stage a big come back in 2019 to take on Modi.

Thursday, February 22, 2018

Fly on the wall : The 10-day silence in Rs 11400 crores LoU Scam ?

by Harish Gupta, National Editor, Lokmat Group

The 10-day silence in Rs 11400 crores LoU Scam ?

Value of Nirav Modi properties is Just Rs 800 Cr

Nirav Modi’s Hyderabad SEZ scam

A Cultural Shift at AICC under Rahul Gandhi

Tuesday, May 16, 2017

Never say die !

by Harish Gupta, National Editor, Lokmat Group

With the collapse of Aam Aadmi Party (AAP), first in Punjab & Goa, and now in the recently held Municipal polls in Delhi, the last “hope” of the Opposition politics is heading towards self destruction. No doubt, the opponents too are working over-time to inflict a body blow to the four-year born baby. But most of the AAP’s wounds are self-inflicted. If the party is heading towards the funeral pyre, its no one’s fault. Its none else than Arvind Kejriwal himself.

Gone are the days when he was the darling of the media, the down-trodden and the middle-class. It was Kejriwal who had stunned the nation by trouncing the BJP in its citadel by winning 67 out of the 70 Assembly seats. The rout of the Congress which ruled the Union Territory for 15 years under Shiela Dikshit, was of no consequence. It was expected due to variety of reasons. But it was he who single-handedly halted the victory march of Prime Minister Narendra Modi. It was a severe blow to the BJP and sent its leaders into a shell. The “alternative politics” became the narrative. It was not as if the country was not aware of Kejriwal’s national ambitions. After all, he had contested 500-odd Lok Sabha seats in May 2014 and came a cropper. Yet AAP winning four Lok Sabha seats in Punjab raised eye-brows. But it was his win in Delhi that aroused a new kind of “Hope”.The “secular forces” needed a horse to ride and Kejri was right there. He was the man of the moment.

The timing of his rise in 2013 was most opportune and he never looked back until the big shock in Punjab & Goa and then in Delhi which was his citadel. The Congress had lost the plot in May 2014 and could never recover from the shock tally of 44 Lok Sabha MPs. And this was not all. The party started losing one state after the other and with the BJP scouting for “talent” in every state, the Congress suffered one set back after the other. So much so that veterans like S M Krishna opted to “dump the sinking ship.” A prominent Madhya Pradesh Congress leader had almost clinched his re-entry into the BJP. It was nixed at the last minute by one of the Trioka members (Modi-Shah-Jaitley).

The Congress’ two sitting Chief Ministers will face their litmus test this year end in Himachal Pradesh & Karnataka. It is also an irony in the era of Congress bashing that its victory in Punjab is not attributed to the Gandhis. The credit for Capt. Amrinder Singh’s win is attributed to his leadership and to the BJP which did everything possible to ensure AAP’s rout. Secondly, AAP’s one blunder after the other in Punjab helped the Congress to dislodge the Akalis after ten years. Why the Congress leadership can’t be credited with Punjab win ? Look at the MCD poll results in Delhi ! Rahul Gandhi’s hand-picked Ajay Maken ensured that the party secures the third position. Therefore, the most worrying aspect is that the Congress leadership failed to create “hope” amongst its rank and file and Rahul Gandhi’s inability to enthuse the voter is widely accepted. The Left parties who commandeered Central governments from outside, have now been reduced to single digit in Parliament. It is now confined to Tripura and even here, BJP chief Amit Shah is determined to snatch the Left’s last Bastion. The Indian Left is facing a leadership crisis and it is desperately searching for a Kanhaiya to save it from virtual extinction.

The less said the better of another prominent national political party, the BSP which has nearly 20% votes fixed votes in over 100 Lok Sabha constituencies. But she is fast losing the plot and surfacing of her recent audio-tapes could be a turning point in Dalit politics. Her image is already sullied and the BSP is virtually on the verge of extinction in both houses of Parliament. The Lalus, Mulayams, Mamatas have destroyed their own image as one scam after the other hits them and their parties. This has brought Bihar Chief Minister Nitish Kumar who is considered a clean politician at a crossroad. If he dumps Lalu, his government goes. Alternatively, he can re-join the NDA. The BJP also badly needs Nitish Kumar as it wants Bihar’s 40 Lok Sabha seats in its kitty. The BJP is aware that it will be difficult to sweep Lok Sabha polls in Bihar if it contests alone and Nitish-Lalu-Congress stay together. In either case, his dream of emerging as a consensus candidate for the Prime Ministerial post from the Opposition benches is in jeopardy.

Therefore, its a pitiable situation for the Opposition, at least for the moment. For the very survival of democracy a strong Opposition is needed. But one cannot expect the Modi-Shah to create the Opposition. The leaders on the Opposition benches will have to re-invent themselves. The Opposition will have to find a leader who is capable enough to take other parties along. Arvind Kejriwal had showed the charisma and there was a moment when the Left parties were willing to do business with him. But he lost the plot due to his self-destructive over-ambitious politics. Rahul Gandhi had ample opportunities to lead the party from the front and provide the leadership. But he too missed the bus. May be he will have to re-orient and re-invent.

If BJP can re-invent after 14 years of struggle after being routed in 1984, why shall the Opposition be in a hurry. Modi’s honey-moon is not over yet and the Opposition parties do not have 24X7 politicians like Modi and Amit Shah. But political parties don’t die, only their corrupt and incompetent leaders fade away with time. The parties bounce back.

Wednesday, January 18, 2017

THE BUSINESS OF POLITICS

by Harish Gupta, National Editor, Lokmat Group

While the Supreme Court has, in its indisputable wisdom, held it unnecessary to probe the mysterious scribbling on confiscated files of Sahara and Aditya Birla Group officials regarding payments made to politicians, the cloud of suspicion will not lift anytime soon. It is largely because that politics in India is fuelled almost entirely by illicit financing from corporate. In the 2013 CBI raid on Hindalco, the ABG company, a set of documents was recovered from the computer of the CEO which read: “Gujarat CM—Rs. 25 crore. 12 paid. 13?” Yet another Income-Tax Department raid in November 2014 on the Noida office of the Sahara Group led to seizure of computer data pointing to distribution of Rs 115 crore to political leaders specifically identified. Rs 40 crores given at Ahmedabad to “Modiji”. Rs 10 crores given to “CM Madhya Pradesh”. Rs 4 crore to “CM of Chattisgarh”. Rs 1 crore to “CM of Delhi” (Shiela Dixit at that time). The attempts by the companies to make these appear to be innocuous business transactions were ludicrous. The Hindalco CEO told investigators all he meant by “Gujarat CM” was “Gujarat Alkalis and Chemicals.” Then what did “C” and “M” stand for? The official had no answer.

Published in LokmatTimes on 17th Jan

The honourable Supreme Court, however, has found these papers to be of “little evidentiary value” as there was no “corroborating evidence”. In the context of Indian politicians, I don’t see how rational it is to expect that politicians would accept illegal payments and issue signed receipts. Nor will the alleged payment show up on the list of assets of the payee. Even if it did, it would not be an easy job for the investigator to access the VIP account book. On the other hand, the practice followed from Jain Hawala case in the 90’s is to let investigators carry on with their job regardless of proof of receipt. In the Jain Hawala case, the court issued “continuousmandamus” to CBI to find evidence for prosecution. It is another thing that the exercise was a blot on the judiciary as everything was done at the instance of the SC and it was thrown into the dustbin by the SC later.

More significantly, to close investigation into such doubtful payments on the ground of their inadmissibility as evidence may weaken the government’s case against, say, the Trinamool Congress (TMC) in West Bengal. The party’s MPs Sudip Bandyopadhyay and Tapas Pal were in CBI custody and now in judicial lock up. Their detention is largely due to jottings in a diary reportedly belonging to Gautam Kundu, owner of Rose Valley Corporation, a Ponzi-scheme firm (much like Sahara) which is alleged to have had collected nearly Rs 20,000 crore by duping the public with promises of unrealistic returns. Until sufficient evidence is obtained to prosecute the MPs, it will not only weaken CBI’s case but add credence to TMC chief and West Bengal chief minister Mamata Banerjee’s charge. It was Ms Banerjee who charged that her party is a victim of witch hunt as she was the first to oppose Prime Minister Narendra Modi’s November 8 decision to scrap 500- and 1000-rupee notes.

Published in LOKMAT on 17th Jan

It is obvious that the ‘great Indian swindle’ of winning elections and extending political influence with corporate slush funds and, increasingly, with money collected from ordinary people by modern avatars of fraudster Charles Ponzi a century ago, is not easy to go. It is linked with a section (29C) in the Representation of the People Act that allows donors under Rs 20,000 to go anonymous. It is not difficult to see that the invisible donors, who contribute nearly 70-80 per cent of the funds of political parties, are channelling either tax-evaded cash of business houses, or it is, as is increasingly evident, a large share of ordinary people’s savings.

Can this evil be fought off by streamlining the election law? The Prime Minister has lent (verbal) support to a move to bring down the limit of ‘anonymous donation’ to political parties from Rs 20,000 to its one-tenth, Rs 2,000. Alternatively, there are suggestions to change the law by making all political donations open to public viewing, as is the practice in most western democracies. It may be a good beginning for cleansing the political system. But is it enough?

Published in Lokmat Samachar on 17th Jan

I doubt it. Electoral politics in India was always expensive due to the country’s size, not to speak of its topographic and cultural diversity. Over the decades, it has been witnessed that mere cost of election campaign is a fraction. On the other hand, it involves coaxing and cajoling pressure groups to stay on board, which is costly. Caste leaders or clan heads need to be kept happy. The hands of support are extended to the highest bidder. Election also involves winning over a sizeable chunk of the bureaucracy. On the election day, a ‘friendly’ police chief or an ‘amiable’ magistrate is worth a thousand ordinary party workers.

It is obvious that the funds required for such a gigantic operation cannot be sourced from nameless ‘well-wishers’. Nor can corporate houses alone bear the cost, as the chief source of their expendable black wealth, is shrinking following trade contraction worldwide. The tax evasion through over-invoicing or under-invoicing is becoming extremely difficult world-wide. The future of political funding will, therefore, rest on Ponzi operations like those of Sahara, Rose Valley or the infamous Saradha Finance, also involving the TMC party. Investigation of Saradha and Rose Valley have shown that their tentacles have spread far and wide—to Haryana, Odisha, Andhra Pradesh, Telangana, Assam and Jharkhand, not to speak of West Bengal. The ordinary Indian has strong saving instincts but few instruments to save. Banks are rare, a stark fact that came to light in the wake of the recent demonetisation. Poor man is dependable on these swindlers in every nook and corner of the country as banks were never for the poor. That makes the common man a prey of fund swindlers, so long as they are ready to share the booty with politicians powerful enough to protect them.

Thursday, September 15, 2016

'Jayam Dehi'

by Harish Gupta, National Editor, Lokmat Group

It is certainly not the way that an eminent party, having gone to seed lately, should give itself a makeover. Last week, when Congress vice president Rahul Gandhi gave kick start to his four-week-long, 2,500-kilometre flamboyant travel in Uttar Pradesh, a clever strategy went for a toss in the most unexpected manner. It was the idea of strategic planner Prashant Kishore, engaged by the Congress, to focus the campaign on farmers" distress, particularly their rising indebtedness, and get Rahul to hold close meetings with villagers seated on "charpai", or wooden cots, instead of addressing the usual rallies. That was supposed to make the Gandhi scion re-emphasise his earlier charge that Prime Minster Narendra Modi"s administration is "suit boot ki sarkar". Charpais, it was thought, would set the intimate tone for Rahul"s "kisan yatra" covering 223 assembly segment across the state"s 39 districts.