NiravGate: another case of organized loot

Categorical Statement by whistleblower Dinesh Dubey on TV explaining how Nirav Modi and Mehul Choksi were helped by the entire Board of Allahabad Bank in 2012-2013 leaves no doubt that the same drama must have been enacted in other Banks at the highest level.

 

Dinesh Dubey was the nominee director appointed by the UPA Government on the Board of Allahabad Bank. He had objected to the renewal of loans given to Mehul Choksi and Nirav Modi. His dissent note was not considered by the Board of the Allahabad Bank.

 

Dinesh Dubey had written to then RBI Dy. Governor Chakravarty. Except praising Dubey for his alertness, the then Dy. Governor Chakravarty did precious little to stop this loan. Role of then RBI Governor Raghuram Rajan also needs to be probed. The man is conspicuous by his silence in this matter. The RBI also had its nominee Mr. Udgatha as Director on the Board. His reaction to the objections raised by Dinesh Dubey that such sanctions/disbursement do happen in rare cases are equally shocking.

 

His charge against then Finance Secretary Takru that he forced him to resign as there was pressure from above is a testimony of involvement of powerful in this scam.

 

This clearly shows the entire system was smoothly working to the advantage of scamster/ fraudster Nirav Modi and Mehul Choksi.

 

Who were the higher ups who could influence the Finance Secretary?

 

Was it Finance Minister Chidambaram? Or PM Dr Manmohan Singh? Or INC President and then de facto PM Sonia Gandhi?  Or Rahul Gandhi who had reportedly inaugurated Nirav Modi’s Delhi show room one day earlier? Or someone from the powerful coterie of Sonia Gandhi such as Ahmed Patel?

 

Even as the Congress targeted PM Modi for being pictured at the World Economic Forum 2018 in Davos, Switzerland, Congress rebel and Rahul Gandhi baiter Shehzad Poonawalla alleged that the Congress President had attended Nirav Modi’s event in 2013:

 

#PNBScam began with fraudulent LoUs & transactions which began in 2011 - Just FYI : Rahul Gandhi was spotted at Nirav Modi events - did not know he had interest in bridal jewellery - 2013 Imperial Hotel event in Delhi.. SCAM began in 2011- should find out Nirav's political links https://t.co/SfbIQyIosS

— Shehzad Jai Hind (@Shehzad_Ind) February 15, 2018

 

Challenge to @OfficeOfRG - was he not at Nirav Modi's event in Delhi's Imperial Hotel in 2013-SPG details will leave no doubt if made public- #PNBScam started in 2011;Nirav hobnobs with Rahul (whose govt in power) in 2013 ;Rahul had interest in women's jewellery? Or something else https://t.co/kbg9U8Hr7i

— Shehzad Jai Hind (@Shehzad_Ind) February 15, 2018

 

 

A thorough, sincere and time bound investigation should reveal the brain and the collaborators in this fraud. This cannot be the brain of a mid-level Deputy Manager like Gokulnath Shetty or Kharat.

 

The exposure of various banks is:

 

• Allahabad Bank: Rs.4,000 crore
• Union Bank: Rs.2,300 crore
• Axis Bank: Rs.2,000 crore
• SBI: Rs.960 crore
• BOI: Rs.300 crore.
• Total: Rs.9,560 crore.

 

Raids on premises of Nirav Modi and Mehul Choksi yielded recovery of 294 fake LOUs and 224 fake LCs.

 

It is said that the magnitude of fraud is around Rs.35,000 crore and not Rs.11,100 crore as is made out to be. Republic TV is carrying out expose in this regard.

 

So far, only 18 PNB officials are suspended. No one has yet been arrested.

 

No action has so far been initiated against the members of the Allahabad Bank Board, the then Finance Secretary Rajesh Takru, then Dy. Governor of RBI Chakravarty, RBI Governor Raghuram Rajan for acting as a moot spectator to this loot.

 

No investigation has been ordered into other Banks mentioned above.

 

Who was that higher authority that was forcing Finance Secretary Takru to silence the dissent towards disbursement of loans to Nirav Modi and Mehul Choksi team? It does not require much of intelligence to infer that similar influence must have been exerted on the Boards of other Banks. If not, they were clearly in cahoot with the fraudsters.

 

If one applies for vehicle loan, the Banks cross check the proforma invoice with the dealer. In this case, no such cross verification that is known as ‘confirmation’ in banking parlance, was done by any of these Banks lending money on the basis of LOUs/LCs of PNB is difficult to digest. This cannot be brushed aside as mere failure – systemic or systematic.

 

In a FICCI session that was held in Kolkata on July 10, 2017, Arundhati Bhattacharya, Chairman of State Bank of India made a jaw-dropping remark justifying emergence of NPAs: "In India NPA is treated as criminal, which it should not be. There is no permission for failures. Permission to fail is not given by the society. But failures will take place." 

 

In its RTI request, Reuters sought data from 20 of India’s 21 state-run lenders and obtained 15 replies.

 

PNB topped the list with 389 cases totaling 65.62 billion rupees ($1.03 billion) over the last five financial years, in terms of the total amounts involved. Reuters was unable to obtain a detailed breakdown on the exact nature and method of the loan frauds the banks reported to RBI over the last five financial years.

 

After PNB, Bank of Baroda had the highest amount of loan frauds reported, with 44.73 billion rupees from 389 cases. Bank of India ranked third, with loan frauds totaling 40.5 billion rupees from 231 cases.

 

India’s biggest lender, State Bank of India has reported 1,069 loan fraud cases in the last five financial years but has not disclosed the amount. That is the magnitude of “accepted failure” in SBI under the Chairmanship of Arundhati Bhattacharya. That is perhaps why she wanted to decriminalize the NPAs so that the likes of Vijay Mallya, Nirav Modi and Mehul Choksi could lead their luxurious life at the expense of a common man. And SBI has mastered that skill. SBI has already recovered Rs.1,772 crore from small depositors in the form of penal charges for not maintaining minimum balance in their savings account during the period April 2017 to November 2017. Tax the poor to pay for the Failure.

 

It is high time Government came down heavily on this organized loot and prosecuted the higher ups in the hierarchy rather than making a scapegoat of ordinary foot soldiers.

DSK – an Empire collapsed

Deepak Sakharam Kulkarni, known as ‘DSK’, a ‘reputed’ builder has gone down the road rather rapidly.

The complaints against Deepak Sakharam Kulkarni, known as ‘DSK’ and his family are not only civil in nature but criminal and can be categorized into two.

Category 1: Fixed Deposits: Failure to pay to the depositors:

DSK has defaulted in repayment of deposits collected from the gullible depositors. It is reported that only one company “D S Kulkarni Developers Limited” is registered with SEBI and RBI (as NBFC) for accepting deposits from public. None of his other companies has been registered with SEBI and RBI for accepting deposits from public. Most of the depositors holding dud cheques showed the cheques were issued by DSK’s private firms DSK & Sons, DSK & Associates, etc. etc. How these deposits were routed to his companies registered under the Companies Act is another aspect of investigation.

This is a criminal offence under the Companies Act, RBI Act and SEBI Act. DSK has also violated Maharashtra Protection of Interests of Depositors (in Financial Establishments) Act, 1999.

Bombay HC vide order dated 04/12/2017 has asked him to deposit Rs.50 crore within 4 weeks. DSK has gone to SC and got reprieve on 22/12/2017 to deposit the same by 22/01/2018. In all probability, DSK will fail to deposit the said amount in Bombay HC and faces imminent arrest as Bombay HC has made it clear that if the applicants fail to deposit the said amount within stipulated time, the interim relief granted shall stand automatically vacated without any further reference to the Court. The Supreme Court has not disturbed this condition while extending the time limit to 22/01/2018.

This aspect has been widely reported in media and the people are aware of it. Almost all properties are mortgaged with banks and financial institutions. It is reported that DSK does not have any free property to dispose off and deposit the money in the High Court.

Category 2: Misappropriation of fund, cheating, criminal breach of trust, etc. etc. of flat buyers:

I will discuss this category of complaint with one example for the sake of brevity.

DSK has declared one housing scheme in 2013-2014 known as “DSK Nandanvan” to be constructed at G. No. 127/128 of Village Pirangut, Taluka Mulshi, Dist. Pune comprising of about 190 flats.

As per the scheme, the flat purchaser was to pay only 10% of the purchase price of the flat. The balance amount was to be arranged from pre-approved loans from Tata Capital Housing Finance Limited and/or HDFC Bank Limited. The EMI on the said loans were to be paid by DSK till the possession was handed over to the flat buyers and the buyer would be required to pay the EMI only after getting the possession of the flat.

Believing in this scheme that was published widely, number of persons entered into the flat buyer’s agreement by paying only 10% of the cost plus stamp duty and registration. Tripartite agreements with the said financiers were also executed for disbursement of loans to DSK as per the schedule specified in the flat buyer’s agreement. The possession of the said complex was stated to be on 30/06/2017.

When the flat buyers approached DSK for possession in June 2017, DSK bluntly told the flat buyers that the said scheme could not be completed because of financial crunch and DSK would hand over the possession only after completion of construction that he is unable to do in view of financial problems.

Meanwhile, the flat buyers received notices form the Tata Capital and/or HDFC Bank as the case may be, to pay the EMIs, further threatening legal action against the flat buyers, who were the borrowers, in case of default.

The flat buyers say that the construction of the said ‘DSK Nandanvan” is not even 30% complete. In some cases, only grass is cut and pits are dung for foundation etc. etc. However, the entire loan amount is disbursed by Lender Financial Institutions. When the angry flat buyers confronted the officials of Tata Capital Housing Finance Limited, they were evasive in their replies clearly indicating their complicity in this sordid financial mess. It is learnt that even a retired District Judge has become a victim in this complex that is ironically named “Nandanvan”!

The following points come up to establish absolute fraud.

1. It is not disputed that payments to DSK was to be made progressively on completion of various stages.

2. How did the financial institutions/NBFCs disburse entire loan without checking the progress of the construction?

3. Whether Tata Capital Housing Finance Limited had verified Architect’s certificate regarding progress of construction?

4. If there is any such certificate, will it not amount to professional misconduct on the part of the said Architect, besides he being the party to this alleged fraud?

5. If Tata Capital Housing Finance Limited has not bothered to ask for such progress certificate, does it not reflect connivance and complicity of Tata Officials with DSK to defraud the borrowers?

6. When DSK has received 100% amount from flat buyers, (10% initial booking amount and 90% loan disbursement), what is the reason for the said project remaining in doldrums?

7. Does it not establish that DSK has used this amount somewhere else resulting into cheating, criminal breach of trust, financial misfeasance, fraud and misappropriation of funds?

The category 2 fraud is not yet widely reported. It is alleged by the affected flat buyers that false and fabricated documents have been made, thus pointing to another angle of forgery of valuable security. It is an enigma how this aspect has been missed by DSK’s statutory auditors M/s. Gokhale, Tanksale & Ghatpande, Chartered Accountants during FY 2015-16. The audit Report for FY 2016-17 is not yet filed with ROC office by the Company.

The entire fraud needs to be investigated. The money trail needs to be looked into to see where the money has gone. When DSK has received 100% of the flat price in DSK Nandanvan, there is no reason for the project to be left incomplete. There is obvious diversion of funds. The matter is complicated particularly when DSK has around 32 companies registered under the Companies Act where either he or his wife or son or daughter-in-law is a Director and one LLP where his wife is a partner.

The road ahead is quite bumpy. Just D S Kulkarni Developers Limited has bank borrowing of Rs.1,498 crore. Not to speak of several hundred crores of deposits collected from public. The dealings of D S Kulkarni Developers Limited with two of its associate concerns M/s. D S Kulkarni & Company (where wife Mrs. Hemanti Deepak Kulkarni and son Shrirish Deepak Kulkarni are partners), D S Kulkarni & Associates, another partnership firm where again wife and son are partners, corporate guarantee of Rs.108.84 crore given to Bank for loans extended to DSK Global Education and Research Limited (known as DSK Global, where his wife, son and daughter-in-law are Directors) and joint development of a land with DSK Global where flats admeasuring 1,15,346 sq. feet along with allotted car parking were given to DSK Global as sales consideration for land owned by DSK Global need forensic scrutiny to ascertain whether any fund diversion has taken place. DSK Global on its own has bank loans of Rs.342.50 crore.

DSK Developers Limited’s investment in two subsidiaries in USA, namely DSK Developers Corporation and DSK Woods LLC in New Jersey, USA and provision of Rs.11.14 crore towards doubtful advances and Rs.5.10 crore towards investment impairment during one FY 2015-16 also need scrutiny.

On 6th August 2017, Pune’s well-known activist Vijay Kumbhar had organized a seminar at Chittaranjan Vatika. Among those seeking his help were a group of DSK investors who are working to dig deep into the reason for the company’s financial problems. These findings have been posted by Vijay Kumbhar in his blog titled ‘DSKDL public limited company or Criminal Enterprise’. Every bit of information, backed by copies of sales deeds, share certificates and other documents, paints a murky picture of forged signatures, dual identities, rampant diversion of funds from the public company to DSK’s relatives, merger of loss-making family firms at inflated valuation and worse.

What is coming out in public domain is certainly serious. The legal notices being issued by flat buyers in DSK Nandanvan to DS Kulkarni Developers Limited and Tata Capital Housing Finance Limited levy serious allegations. It is going to be a herculean task for investigating agencies. Investigation by EOW would be a failure. Matter needs to be handed over to CBI and ED.

DSK certainly has traveled to the wrong side of law. Going to politicians and doing theatrics in the media is a testimony in this regard.

DSK Empire has collapsed.


(Originally published in www.frontlinetoday.net on January 5, 2018)

Vinod Tawade: A failed Education Minister or an Amateurish Experimenter in Education System?

Maharashtra Education Minister Vinod Tawade has again bowled a bad delivery. Under his initiative, the HSC Board has proposed two sets of test papers for Std. XII exam to be conducted in 2019 – A tough question paper for those desirous to pursue medical and engineering degrees and an easy one for the rest. The new paper pattern is already being implemented for class XI.

According to the changed pattern, students will be given fewer choices on questions thus making it tougher to omit to study chapters or topics from a particular subject. The aim was to follow the CBSE pattern and prepare students for National Eligibility-cum-Entrance Test (NEET) and Joint Entrance Exam (JEE).

The justification given by Vinod Tawade on Thursday is: - “In NEET and JEE exams, you don’t have the option to choose what topic to study. You have to study everything. But if you are not going for these exams, then you could perhaps leave out certain topics. Out of roughly 15 lakh students who appear for class XII exams, only 5,000 go to medical colleges and 60,000 to engineering colleges. The rest go for a BSc degree. So I have made this suggestion and the educationists are deliberating on this. We will take a decision on this before the next academic year begins.”

It is known fact that level of examination depth in HSC is less than that in CBSC. Hence, students passing from HSC find it difficult to compete in NEET conducted by CBSC. The same goes for JEE. To increase the competitiveness of the Maharashtra Students is the call of the day. Earlier Congress/NCP Government had realized this and they had made the exam pattern competitive. However, the present Education Minister has been diluting even the syllabus ever since he has occupied that Chair.

A bizarre idea has come to the fertile brain of Education Minister. The Learned Education Minister of Maharashtra further concludes that only 5,000 students go for medical degrees and rest do not go. The Learned Minister does not understand that it is not the case that only 5,000 students opt for medical education; rather the situation is because in Maharashtra, only 5,000 medical seats are available for admission, only 5,000 students can go for medical degrees. Instead of increasing the medical infrastructure in the State so that more students can go for medical education and fill the vacuum in health sector, the Minister is tinkering with the examination pattern promoting mediocrity. If one sees the admissions in engineering colleges, the figure of 60,000 quoted by Vinod Tawade is far from reality. As per DTE, Maharashtra, about 1,20,000 students took admissions in Engineering colleges in the Maharashtra State in 2017 as against the capacity of 2,10,000 seats. That left about 42% of the total seats vacant. According to DTE, while more students appeared for the MH-CET this year, compared to the past few years, there weren’t too many top scores when the results were announced on June 3. Just 1% of the applicants scored above 75% in the exam. This clearly shows the syllabus and the exam patter need to be redesigned to increase the intelligence and the competitiveness of the students and not to make them mediocre.

This move is strongly opposed by the Academicians.

Anil Deshmukh, president, Maharashtra State Federation of Junior College Teachers’ Organization says: “How can there be two papers? Asking students to decide if they are going to give entrances at the time of giving HSC is not a cogent suggestion.”

Dr Ashok Wadia, Principal, Jai Hind College pointed out, “Students only know they have to give exams. The coaching class lobby has raised the bogey of failures as they streamline their coaching to how students can get more marks by studying most likely topics. Students have to study everything. Can a physics student say I can study the topic of ‘light’ but not ‘heat’?”

But Learned Education Minister of Maharashtra thinks Yes; a student can learn ‘light’ but not ‘heat’. Considering this danger, the SC took away the medical entrance from the States to Centre and there is one NEET conducted by CBSC. If left to the likes of Vinod Tawade, we would have Neuro Surgeons who had left brain as option in their medical education.

Mr. Vinod Tawade, the syllabus – whether for SSC – HSC or Engineering – should be such that it produces knowledgeable students/professionals. Industry is laready complaining that 60% of the BE/B.Tech degree holders are unemployable. It is simply because of people like Vinod Tawade who encourage students to leave the topics for option thereby weakening their basic educational foundation by producing mediocracy.

It is said a mediocre produces a mediocre. It is high time we had some professional as Education Minister in Maharashtra.