Part 1 of this series was a curtain raiser, describing four different set of SEBI violations committed by NDTV, on which the SEBI has yet to act. That Silicon Valley based firms were allowed to act as a conduit was described in Part 2. Even Goldman Sachs was not spared as it held some stock as part of a fund for a yet-to-be-named owner in Part 3. This is the concluding part.
ICICI Bank transaction under CBI scanner
In an earlier post titled At last CBI catches up with Prannoy Roy (PR) and Radhika Roy (RR) for ICICI bank fraud, I had written about how the promoters of NDTV, Prannoy Roy and Radhika Roy, borrowed money from ICICI Bank to purchase stock in NDTV (this is forbidden by the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI)) and then underpaid the Bank, in the process enriching themselves to the tune of Rs.92 crores ($15 million).
Who or what is VCPL?
Vishvapradhan Commercial P. Ltd. (VCPL) is a shell company, whose ownership has changed hands a few times. The entity itself has no employees, no products yet show significant income. In the NDTV matter, SEBI chose to take action against VCPL by issuing them a show cause notice and referring the matter to its Enforcement Division but conveniently forgot about the other signatories and parties to the agreement i.e. Prannoy Roy, Radhika Roy & RRPR Holding Pvt. Ltd. The following table describes the events that played out in the saga of ownership change (did it or did it not happen?) of NDTV to VCPL:
|Sr. No.||Date||Event/ SEBI Violations|
|1||18 Jul, 2009||Vishwapradhan Commercial P. Ltd. (VCPL), an existing khoka/ shell company comes into the Reliance Industries Limited (RIL) fold, having 1 lakh (100,000) paid up capital & no business or assets.|
|2||21 Jul, 2009||VCPL signs a covert/ illegal agreement to acquire 26% stake in NDTV by having the option of controlling RRPR Holding P Ltd. (RRPR). RRPR is held 50% each by PR & RR and is a holding Co. of NDTV (shell Co. that only owned NDTV shares as the only asset and no employee or other asset). Do note, layering/ money laundering is clear in this case as Rs.403.85 crores (Rs.350 plus Rs.53.85 crores) is exactly the same amount to the last paisa paid by Reliance Ventures Ltd (RVL) to Shinano Retail P Ltd. and then onwards to VCPL and finally to RRPR to control NDTV. The sole objective being to hide the actual source of money. It is very much possible that RVL got this from some other party in India or abroad or maybe some sort of political or illegal money parked overseas.|
|3||3 Aug, 2009||RR and PR transfer 1.15 crores (11.5 million) shares of NDTV to RRPR (which by now is controlled by VCPL) at Rs.4 per share when marked price is Rs.135-140 per share on BSE. This is nothing but a blatant case of fraudulent, insider and bogus trade, thus violating SAST and all SEBI Regulations.|
|4||7 Aug, 2009||
|5||May – Jun, 2011||Further, VCPL had given a statement to DG Investigation Income Tax, New Delhi in May-Jun 2011 that Rs. 403.85 crores were given to RRPR without security & without interest in 2009 August and as it had an irrevocable option to convert this loan at any time into such number of equity shares of RRPR at par so as to own 99.99% of fully diluted equity of the Company (RRPR). Thus, in 2011 itself, DG Investigation and SEBI were clear that NDTV control had changed hands from the Roys to the RIL group. What is clearly evident is that some influential person (maybe political) suppressed this investigation and ensured that it was never pursued by the ED, SEBI or Income Tax Dept.|
|6||Oct 2012||More intrigue and blatant illegality takes place. VCPL, the controlling company of RRPR and thus NDTV further changes hands and is sold by RIL group to HFCL (Mahendar Nahata) group. So effectively as of today VCPL and thus NDTV is under legal control of HFCL Group and one does not know what control/ commercial agreements are executed for this. This fact has also been determined by Income Tax Dept and filed under affidavit in the Delhi HC. Finally, the question that remains unanswered is, who really controls NDTV and how did so many illegal actions and alleged dubious fund movements in shell companies take place in a span of 2 years? If this is not a matter of Insider Trading, Fraud, criminal breach of trust (public shareholder and public news broadcaster involved) then what would be classified as Insider Trading, Fraud and blatant violation of Tax laws, FEMA and PMLA?|