Corpoate Media, corporate, Discussion on Journalism, DNA, Economy of Media, Ethics, Funds for good journalism, Funds for journalism, Future of Journalism, Indrani, Investigative Journalism, journalism career, media, Money matters, Naidunia, new age journalism, Paranjoy Guha Thakurta, Peter Mukarjea, radia, Reliance, Tehelka, Tejpal, the hoot, types of journalism, Values
Writer, speaker, anchor, educator and a commentator Paranjoy Guha Thakurta has worked with Business India, Business World, The Telegraph, India Today, The Pioneer, and Television Eighteen. If we want to learn about the complicated issue of money and media operations, Paranjoy’s stories for independent media site THE HOOT are the best source. We are presenting some of his stories and related links for GJ Community to understand the style of corporate working, financial maze and business relationships of Media Mahabalis.
First is about 9x-Naidunia-Reliance and another one is about Tehelka.
Keeping the veil on Reliance down posted on 25/09/2015
By and large, coverage of the Sheena Bora murder has excluded a 2013 official report suspecting fraud in Reliance’s links with the Mukerjea-owned INX/NewsX group.
An article that appeared in November 2013 has suddenly been attracting considerable attention. Reason: the article was about how Peter and Indrani Mukerjea sold their stake in the INX/NewsX media group of companies and how India’s biggest private corporate entity, Reliance Industries Limited, headed by the country’s richest man, Mukesh Ambani, acquired control over these firms for a period of time in a convoluted manner.
The Hoot stories looked into the examination of these complex deals by the Serious Fraud Investigation Office (SFIO) in the Ministry of Corporate Affairs. A draft report of the SFIO that looked into these rather unusual transactions involving companies linked with RIL and Ambani as well as a two-page official letter were also made available on the Hoot website. At the time the articles were published, there was apparently not much interest in what I had written.
The editor of Hoot, Sevanti Ninan and I, visited the office of the SFIO director Nilimesh Barua in New Delhi’s Central Goverment Office complex on a pleasant winter afternoon. He was politeness personified over a cup of tea and patiently explained why someone in his position could neither confirm or deny the existence of the draft report on Reliance and the INX/NewsX group. At that time, we did not have a copy of the report.
Pic : A relevant extract from the SFIO report
Nevertheless, on the basis of reliable information, the first part of the article titled “Serious fraud’ and self-censorship” was put up by the Hoot on November 7, 2013, with an introduction that read: “A government agency is investigating possible fraud in RIL’s links with INX (9X) Media four years ago, and the role played by multinational private equity firm, New Silk Route.”
Four days later, on November 11, documents containing these sensational allegations were submitted to the Supreme Court on behalf of the Centre for Public Interest Litigation by activist lawyer Prashant Bhushan. The bench of the apex court, comprising Justices G.S. Singhvi and V. Gopalagowda, was urged to order a fresh investigation into the allegations contained in the SFIO’s report. This was part of the larger probe into apparent criminal acts revealed in the telephone conversations of corporate lobbyist Niira Radia that were recorded by the Income Tax Department. One of Radia’s most important clients was Mukesh Ambani.
On November 13, the Hoot published the second part of the article with the title “A ‘sham’ transaction” with the introduction: “Thus, it can be seen that the buyer and seller were one and the same group, that is, Reliance. The maze of companies and web of fund movement was created only to hide the identity of the group”.
That was not all. In an interview to Shougat Dasgupta published in Tehelka on October 23, 2013, two days after he quit his job as editor of The Hindu newspaper, Siddharth Varadarajan was quoted as saying: “On the day I quit, I was editing a blockbuster of a story involving RIL, Mukesh Ambani and a private media company. I am not sure that story – and other hard-hitting investigative pieces, especially on corporate issues – will ever make it to print now. I hope I am wrong. I would be the happiest man if I were proved wrong.”
Fast-forward to the present. I was flooded with telephone calls from fellow journalists, many of them based out of Mumbai, asking me what happened to the SFIO investigation into the INX/NewsX group. I replied that to the best of my knowledge, nothing much had changed and that the draft report of the SFIO (recommending criminal prosecution of certain individuals involved in the transactions) had not been acted upon during the tenure of Sachin Pilot, the former Union Minister of State (holding independent charge) of the Ministry of Corporate Affairs, who held the post from October 2012 till the end of the second United Progressive Alliance government in May 2014.
I suggested to my journalist colleagues that instead of me, they should contact the current minister in charge of the Ministry of Corporate Affairs, Arun Jaitley (who also happens to be Finance Minister and Information & Broadcasting Minister) to find out what happened to the SFIO investigation on the INX/NewsX group’s links with Reliance.
That anything and everything to do with the Mukerjea couple would attract the attention of the media is hardly surprising. What is also not unusual is that there should be intense speculation about the real reasons for the abrupt transfer of former police chief of Mumbai, Rakesh Maria, who was reportedly not only personally taking great interest in the investigation into the murder of Sheena Bora (Indrani’s daughter who she claimed was her sister) but also probing whether there was a financial angle to the case.
A number of reports have appeared suggesting that Maria’s transfer may have been prompted by his ‘over-zealous’ inquiries into the “big” people who were allegedly involved in business transactions with Peter Mukerjea and by his keenness to follow the financial trail behind the sale of INX group firms.
This is what the September 20, 2015, edition of The Week reported in a box which was as part of its cover story: “It was Maria who asked EOW (the Economic Offences Wing of the Mumbai police) officers to probe the shady financial dealings of the Mukerjeas…The SFIO Report has some damning revelations that point to the role of a major corporate house. The SFIO had recommended action under various sections of law but it was never initiated. Maria, sources said, wanted to go to the root of how the channels were funded and how they were sold by the Mukerjeas.”
Mukerjea left his job as head of STAR TV’s operations in this part of the world, to embark on establishing his own media venture together with his wife, Indrani. The financial dealings of the couple have been under investigation for a few years now but they had, until recently, by and large stayed out of the public eye. In an internal audit conducted on the INX/NewsX media group by investor Temasek Holdings of the Singapore government, a number of instances of alleged misallocation and siphoning off of funds by the Mukerjeas were reportedly observed, which apparently led to Temasek selling its shares in the group.
In 2010, a case related to alleged violation of the Foreign Exchange Management Act was registered by the Enforcement Directorate in connection with investments made by three Mauritius based companies in INX Media. The investigation by the Enforcement Directorate came to an abrupt halt in 2012, claimed the DNA on September 17, adding that: “The entire deal (sale of NewsX) has two major aspects – one, the foreign exchange violation by INX Media, and the other, changes in its shareholding pattern.”
The 2013 draft report of the SFIO had revealed that investigations conducted by the Income Tax Department “proved beyond doubt that the sale of NewsX channel” to a company called Indi Media Co Pvt Ltd – by way of subscription of equity to the extent of 92 per cent of INX News Pvt Ltd – was a “sham” transaction and a “premeditated plan” of Reliance Industries to fund the latter corporate entity “through its front companies” employing a “web of transactions”.
The November 2013 articles published in the Hoot remain the only articles that have covered the SFIO report in detail. According to the SFIO report, the allegedly fraudulent set of transactions are linked to corporate entities controlled by Radia, a Mauritius-based associate of multinational investment firm New Silk Route (with which were associated Rajat Gupta and Raj Rajaratnam who have been found guilty. of insider trading charges in the US) and a gas transportation company that was a subsidiary of RIL, which was supposedly “converted” into the “private property” of Mukesh Ambani “through a maze of private companies” in what the SFIO has described as a “classic manoeuvre”.
The SFIO had questioned K.R. Raja, Senior Vice President, Corporate Finance, RIL, during its investigations. On page 25, the draft report stated:
“Thus, as the evidence unfolds, the promoter group companies of Reliance advanced funds in the guise of convertible loans only to acquire equity in INX Media and IM Media Pvt Ltd. The two companies in turn acquired the equity of INX News Pvt Ltd which was operating the NewsX channel. Hence, (on the) one hand, the promoter group companies of Reliance advanced funds to acquire equity of INX News Pvt Ltd at a premium and, on the other hand, one of the RIL companies, namely, Aarthik Commercials Pvt Ltd advanced funds to Indi Media Co Pvt Ltd through Suvi Info Management Pvt Ltd to acquire the same equity from INX Media Pvt Ltd and IM Media Pvt at Rs 10 per share at par causing wrongful loss of Rs 168.50 crore to … INX Media Pvt Ltd and IM Media Pvt Ltd and an equivalent wrongful gain to Indi Media Pvt Ltd.
“Thus, it can be seen that the buyer and seller were one and the same group, that is, Reliance. The maze of companies and web of fund movement was created only to hide the identity of the group and to induce losses in the hands of INX Media Pvt Ltd and IM Media Pvt Ltd and gains at the hands of Indi Media Pvt Ltd as per the premeditated plan…”
Barring a few newspapers and magazines, most publications have refrained from mentioning the ‘R’ word in their reports and have merely suggested that a large company may be involved in the shady transactions. India Today (August 29) alluded to RIL anonymously as a “corporate” that was involved in “sham” transactions with regard to INX.
On the same date, Business Standard referred to “a large corporate entity” involved in the deals, while the Economic Times too did not mention RIL while reporting the financial dealings relating to the INX group.
However, Outlook was less reticent in its cover story (August 29): “It later emerged that the Mukesh Ambani owned Reliance Industries Limited and a group of investment bankers had actually bailed NewsX out…Indrani Mukerjea signed loan agreements by which loans were received from the promoter group companies of Reliance Industries Limited. Shares valued at Rs 10 carried a premium value of Rs 208…”
The DNA (August 31) too had no qualms in mentioning RIL; “A high profile lobbyist was brought in to negotiate a deal for a large conglomerate, into INX media. Industry sources, investigation reports and a Serious Fraud Investigation Office report leaked to the public in 2013, suggest that the lobbyist was Niira Radia, and the company was the Mukesh Ambani-led Reliance Industries Limited.”
Tehelka (September 12) devoted an entire paragraph to analysing the Ambani connection. It stated: “In a complaint to the Press Council of India in 2010, Mukesh’s younger brother Anil Ambani alleged that the Mukesh Ambani Group has lent and advanced over Rs 100 crore to the Vinay Chhajlani Group, M/s Suvi (Info) Management (Indore) Pvt Ltd, and M/s Nai Duniya Media Pvt Ltd”, adding that the “Vinay Chhajlani group owns Suvi Info Management and Nai Duniya, which is a 100 percent subsidiary of Suvi Information Management…Thus, all the three entities were related.”
While the entire media in India have gone to town reporting on the Mukerjeas in excruciating detail, including the fact that Sheena Bora used to work for a company which is part of the Anil Dhirubhai Ambani Group (led by Mukesh Ambani’s younger brother), many publications and television channels have been circumspect in mentioning the Reliance connection with the Mukerjeas.
(Writing and research assistance: Shachi Seth and Srinanda Ganguly)
# Related Read to STORY 1
A ‘sham’ transaction?
“Thus, it can be seen that the buyer and seller were one and the same group, that is, Reliance. The maze of companies and web of fund movement was created only to hide the identity of the group”.PARANJOY GUHA THAKURTA unravels the SFIO documents reported earlier on the Hoot.
A report of the Serious Fraud Investigation Office (SFIO) has levelled a series of allegations against India’s biggest privately-controlled corporate entity Reliance Industries Limited, headed by the country’s richest man Mukesh Dhirubhai Ambani, accusing it of having engineered a series of allegedly illegal transactions to control a company that controlled the NewsX television channel which, in turn, resulted in “wrongful” losses to the extent of hundreds of crores of rupees. Though the SFIO does not explicitly say so, the losses have presumably been incurred by ordinary shareholders of RIL. Read More …
‘Serious fraud’ and self-censorship
Stories & References:
- ‘Serious fraud’ and self-censorship
- A ‘sham’ transaction?
- Yes, There Is Bitterness. ‘The Hindu’ Was On The Cusp Of Something Great: Varadarajan
- Sheena Bora murder: ED may reopen probe into Mukerjeas’ money dealings
- Indrani and others caused deliberate loss of Rs 168 crore to NEWS X
- Complexities found in Indrani’s companies, too
- How Indrani and husband Peter Mukerjea lost the plot at INX Media
- Muddy Waters Flow Through This Channel
- Peter – Indrani Mukerjea saga: Here’s how the money travelled
- Catch A Falling Star
Anant Media’s losses rose from Rs 39.5 crore in 2009-10 to Rs 55 crore in 2010-11 and further to Rs 66 crore the following year.In 2012, Royal Building headed by K.D. Singh invested close to Rs 32 crore in Anant Media by buying 1,30,510 shares of the company at a premium of Rs 2,505 per share.
Records of the Registrar of Companies (RoC) in the Ministry of Corporate Affairs show that at that time, besides Royal Building, other shareholders in the company publishing Tehelka included London-based fashion designer Priyanka Gill (2.14 per cent) and two high-profile politicians from the country’s two largest political parties, Bharatiya Janata Party MP and former Law Minister Ram Jethmalani (0.08 per cent) and current Law Minister and Congress MP Kapil Sibal (0.04 per cent).