Did the dealings between the BJP’s Nitin Gadkari, under cloud for corruption charges and discredited business group IRB, really show a nexus between corporates and netas to hide various ‘quid pro quo’ deals?

Yogesh Sapkale

Nitin Gadkari, president of Bharatiya Janata Party (BJP), who is under a cloud for serious breach of ethics and propriety over the way he has grown his business while ostensibly being in public life, has come under the scanner as the Registrar of Companies (RoC) is likely to inquire about the alleged funding of the companies associated with him. However, Ajit Sawant, the former general secretary of the Mumbai Pradesh Congress Committee, who was instrumental in unearthing the shell companies of the BJP president, said that Gadkari, Purti group and Ideal Road Builders (IRB) group are just the tip of an iceberg and feels there could be hundreds of such companies being used for money laundering.

“In Purti Power & Sugar (Purti), over 80% shares are held by about several dummy companies. Some of these companies not only share the same email ID, but also have same directors and even same addresses. Of course, some in the media have found that several addresses provided by these companies do not exist, while four are from slum areas where nobody even heard the name of these companies,” Sawant said.

According to the former Congress leader, Gadkari’s driver Manohar Panse, accountant Kaurav Pandurang Zade, Sagar Kotawaliwale and Nishant Agnihotri (both employees of Purti) are directors of several shell companies. As per the information procured from the RoC, about 19 of these investor companies of Purti, show same email ID—[email protected].

While pointing out that the investigation of shell companies on such a large scale is not the job of a common citizen, Sawant said, “It (the detailed investigations) should be carried out by a government agency. I am planning to file a complaint against these malpractices with the RoC.” Two other agencies that should be involved in the investigation are Economic Offences Wing of the state government and Serious Frauds Investigation Office, set up by the central government. But will these two agencies actually act or will there be a deal to save Mr Gadkari?

During 1995-99, Gadkari was a public works minister in the Shiv Sena-BJP government, in Maharashtra. Incidentally, during this period, IRB, whose owners are said to be close to Sharad Pawar, witnessed a phenomenal growth and was awarded hefty contracts for road building. When Gadkari demitted office, IRB founder Dattatrey Mhaiskar invested in Gadkari’s Purti group. He bought around Rs2 crore worth of shares or 8% of the group.

Similarly, in 2010, Purti group, which had got a hefty loan of Rs164 crore, was provided funding by Global Safety Vision Pvt Ltd, another company related to the IRB founder. IRB Infrastructure Developers (IRB Infra) issued a denial, stating that Global Safety Vision was never a subsidiary of the company.

“Neither IRB Infra nor any of its downstream subsidiaries have ever committed or made any investments in Global Safety Vision Pvt Ltd. We are not privy to business decisions or information on investment made by Global Safety Vision and therefore unable to comment on any investment made or money lent by it to any other entity,” the release said.

However, this is only a half truth. Global Safety Vision is not subsidiary of IRB Infra, because it is one of the promoter entities of the company. IRB Infra said, “In the prospectus dated 8 February 2008, it is disclosed on its page 163 that Global Safety Vision is a Promoter Group Entity.”

Interestingly, Global Safety Vision gave a loan of Rs164 crore to Purti group at 14% interest, after mortgaging several assets (land) of Purti. India Against Corruption (IAC) has made several allegations against the land allotment to Gadkari’s Purti group.

According to media reports, Sudhir Dive, the managing director of Purti and a close associate of Gadkari, said that the loan was to be paid back in 73 instalments and most of it had been repaid.

Surprisingly, Global Safety Vision might require financing. In its last regulatory filing, the company had paid up capital of just Rs1 lakh. How could a company with a tiny capital base, lend Rs164 crore when the land is not even owned by the loanee?

Earlier, in a regulatory filing, IRB Infra had said that Ideal Power or Ideal Energy Projects were never part of the IRB group and it neither committed nor made any investment in Ideal Energy. However, Sawant alleged that Ideal Energy Projects is promoted by the Mhaiskar family and has a power unit, with 540 megawatt capacity, at a close distance from Purti's sugar mill.

Over the years, IRB group built the ‘Ideal’ brand and seems unlikely that anyone but the family will use the brand. If IRB says that Ideal Power or Ideal Energy were never part of the group, then a pertinent question arises: Why has it not taken any action against them for using its ‘brand’ name?

In a separate incident, corporate affairs minister M Veerappa Moily said that the Registrars of Companies will “definitely inquire into it”, after the information on alleged funding of companies with which Gadkari is associated had been made public.

When asked by reporters whether the business dealings of Robert Vadra, the son-in-law of Congress chief Sonia Gandhi, will also be scrutinised, Moily said that the two issues were separate and that there was no link between them.

The BJP has endorsed Gadkari’s stand that the party was open to any investigation by any competent authority and accused Union ministers of taking a partisan position on issues relating to corruption.