Ministry of Information and Broadcasting, Finance Ministry, ED and CBI must act.
After registration of a First Information Report (FIR) by the Central Bureau of Investigation (CBI) in the AirAsia matter, PGurus carried out research on similar such clearances/ deals during the UPA regime that may prima facie look suspect or a similar modus operandi may have been used.
Hola! (pardon our Spanish) What do we find?
The usual suspects again – NDTV & Promoters!
NDTV received Foreign Investment Promotion Board (FIPB) clearance to bring FDI into its Indian companies (subsidiaries) on March 5, 2007. The subsidiaries being – NDTV Imagine, NDTV Convergence, NDTV Labs & NDTV Lifestyle (i.e. non-news businesses / channels) that are in businesses not strictly regulated (Foreign Direct Investment (FDI) cap etc) i.e. non-news. What of course is known to all and is a matter of intrigue that this clearance was given to NDTV Networks Plc, London (which by itself was then a 100% owned “khokha”/ shell company of NDTV, the Indian listed company). Strange? Get FIPB clearance for one overseas shell company to invest in other Indian shell companies!
A copy of the FIPB clearance is reproduced at the end of this post.
Now let us examine some of the conditions imposed in the FIPB clearances (extracted below):
Points 4 and 5 above are very clear; they were required to do an Initial Public Offering (IPO) / Public Offering in NDTV Networks Plc, London and the valuation of FDI / Shares that was to be done for bringing in money to subsidiaries – NDTV Imagine, NDTV Lifestyle, NDTV Convergence etc was to be done as per RBI and SEBI approved guidelines.
However, both these conditions were never adhered to and were blatantly breached. The paragraph from the ITAT (Income Tax Appellate Tribunal) Order makes this very clear (see below):
It is easily seen from the Order above (subsequently, it also stood scrutiny of the Delhi High Court (HC) in a Writ/ Appeal) that neither NDTV UK Plc did an IPO, not did it get any fair valuation done, and of course never followed SEBI / RBI norms that were mandated by FIPB. Well, what happened to checks/ monitoring by Ministry of Information and Broadcasting and of course the Finance Ministry (then under Mr. Chidambaram).
In fact, the biggest offense committed by NDTV Promoters and Management has been the fact that they brought in the money for use by the news business through dubious means and never paid a penny as taxes! What is more incriminating is the fact that NDTV (Executive Director) has admitted to this crime. Do read the extract below from the filings done by Income Tax Department in the Delhi High Court in Writ Petition No. 984 of 2015 (filed on August 1, 2016).
We all know that now in May 2018, the Income Tax Department has also initiated criminal prosecution on this matter.
We wonder why the Central Bureau of Investigation (CBI), Ministry of Information and Broadcasting (MIB) and Ministry of Finance are not acting. An FIR is already registered by CBI and in fact, they should immediately summon MIB officials and check as to why they have not acted till now as MIB Regulations have been flouted blatantly and they were aware of it since 2011-2013. Not only that, they were supposed to ensure compliance with the FIPB Approval (refer Point 6 in the FIPB Approval). Further, CBI needs to examine quid pro quo in grant of such a “shady” approval i.e 100% subsidiary (overseas and not having anything I.e. a shell company) being allowed to invest in other controlled subsidiaries based in India? How come approvals were granted through a third party (a law firm)? Surely, NDTV itself had enough credibility to apply and receive approvals, why would they need any middleman to do this? Besides, most importantly the money not being used for the purpose and actually routed back to India and deployed in the news business when such investment from overseas was barred (self-admission by an Executive Director, reproduced above).
In addition, many other FIPB conditions were blatantly flouted and no one in the Finance Ministry or Ministry of Information and Broadcasting has bothered to act against NDTV management. Read some below (extracted from the approval letter):
It is imperative for CBI to get all email trails and more importantly bank account statements and examine them for fund movements and other activities (during the relevant time period). It’s quite possible that money moved from NDTV to a “middleman” and then further on for these clearances etc. This angle needs to be examined as the whole clearance itself seems dubious and the subsequent self-admission by a Director before the Income Tax Authorities makes is further suspect. Why is it that Ministry of Information and broadcasting is sitting on all evidence and complaints on this matter since October – November 2013 when the matter was referred to it by the Enforcement Directorate? Surely, there is some invisible hand at work that is stopping them from acting. Is that hand now still meddling or a tad “shaky” (unwell)? The Prime Minister’s Office and concerned people in power need to act immediately.
Here is a copy of the FIPB approval: