So the tables seem to have turned. The story has moved on from Robert Vadra to Nitin Gadkari. Veerappa Moily, the Union Corporate Affairs Minister, had been quick to jump to Vadra’s defence and had said, “I have already verified these allegations and no wrongdoings have been found in any of the six Robert Vadra-owned companies.”
Now with allegations against Gadkari coming out thick and fast, Moily has jumped in at the same quick speed and ordered an inquiry against Gadkari. “I have told our ministry to make some discreet inquiries to find out what exactly is the matter... are there any violations of the Companies Act?” said Moily. He also added that the ministry would probe it as the matter was in the public domain. “It is all coming in the newspapers,” he said.
What is interesting here is that Vadra’s dealings with DLF are also in the public domain and the news was all coming in the newspapers, as Moily put it in Gadkari’s context. That being the case, shouldn’t Moily have ordered a “discreet inquiry” against Vadra as well?
Digivijaya Singh, the chief muck raker and one of the General Secretaries of the Congress party, has written a letter to Prime Minister Manmohan Singh. “Gadkari has also said he is open to a free and fair investigation. [He] being the national president of the BJP, it is in the fitness of things that his case is properly investigated and he gets a fair opportunity to prove his innocence and clear his name,” wrote Digvijaya Singh in his letter to the Prime Minister. “A prime facie case does exist,” added Singh, and requested the Prime Minister to ask the Corporate Affairs Ministry to initiate an inquiry by the Serious Fraud Investigation Office.
There are two things that come out of this statement. In the Congress’ world view, Robert Vadra remains a private individual, even though he must be the only private individual in the country who is being defended by a phalanx of central cabinet ministers (you can read a more detailed argument on this here). But Gadkari is not a private individual and hence he needs to be investigated. The second point is that Digvijaya Singh sees a prima facie case existing in the case of Gadkari. I agree. But it also exists in the case of the Vadra-DLF dealings. I am sure Diggi Raja would have a different view on that.
Before I get into some other points let us try and understand what the Gadkari case is all about. Gadkari calls himself a social entrepreneur. He was the Chairman of Purti Sugar till about 14 months ago. “Purti Sugar Ltd is a sort of cooperative that is owned by the farmers it was meant to benefit. It’s true that the list of shareholders is long, about 10,000 names, that carry the flavour of rural Maharashtra. But farmers (if they are, indeed, farmers) own only 10 percent of Purti. Mr Gadkari himself owns only 200 shares. The bulk of Purti is owned by just 18 companies. These companies invested about Rs 2-4 crore each, to form the bulk of Purti’s paid-up capital of Rs 68 crore. This, essentially, was Purti’s start-up money,” Sreenivasan Jain recently wrote in DNA. Purti Sugar is located at Khursapar (Bela) village, about 60 km from Nagpur.
So far so good. What makes things interesting is the fact that some of the companies that invested in Purti Sugar were not found to be operating at their registered addresses. “When our reporters paid them a visit at their registered addresses, they (surprise, surprise) hit a dead end. Two of the firms — Swiftsol India and Earnwell Traders — are registered at a chawl in the Mumbai suburb of Malad, surprising for companies which have invested about Rs 4 crore in Purti. None of the residents at the given addresses had heard of Swiftsol or Earnwell. The same dead end at the addresses of Chariot Investrade, Regency Equifin, Leverage Fintrade, etc, scattered across suburban Mumbai and Kolkata,” wrote Jain.
This is something that a report in The Times of India said as well. “According to records with the Registrar of Companies, five private limited companies with shareholdings in Purti Group - Nivita Trades, Swiftsol (India), Rigma Fintrade, Ashwami Sales and Marketing and Earnwell Trades - are registered in and supposedly operating from a room in Dube Chawl on Andheri-Kurla Road. Four other shareholders - Jasika Mercantile, Leverage Fintrade, Regency Equifin and Chariot Investrade - are registered in an under-construction building meant to house slum-dwellers under the SRA scheme.”
What complicates matters further is the fact that Manohar Panse, who used to be Gadkari’s driver, was also a director in many of these companies. A couple of employees of Purti and even Gadkari’s accountant were directors in these firms.
It is well known that businesses tend to operate through a web of companies when they want to hide the real owner’s identity. Also it is easier to channelise ill-gotten wealth through a maze of companies. Prima facie that is what seems to be happening in the case of Purti Sugar as well. So the accusation against Nitin Gadkari is pretty strong and hence an investigation is called for.
Robert Vadra was smart on this account. He also operates through several companies (Sky Light Hospitality, Sky Light Reality, Real Earth Estates, North India IT Parks, Blue Breeze Trading, etc). But the ownership in each and every case can be easily traced back to him and his mother Maureen.
Getting back to Gadkari, one of the investors in Purti was Ideal Road Builders(IRB). As Jain writes, “Ideal Road Builders purchased shares worth Rs 1.85 crore in Purti in 2001, just over a year after Mr Gadkari demitted office as Maharashtra’s PWD Minister. During his tenure, Ideal was awarded a number of contracts by the PWD department, which eventually led to it becoming one of Maharashtra’s leading toll road companies. DP Mhaiskar, founder of Ideal Road Builders, also bought shares worth about Rs 2 crore in Purti. Together, IRB and Mr Mhaiskar control about 8 percent of Purti Group… In 2010, Purti Group received a secure loan of Rs 165 crore from a company called Global Safety Vision, which has DP Mhaiskar as its director. With this one loan, Purti was able to repay all its outstanding debt.”
So the question being asked here is did Mhaiskar and IRB invest in Purti because Gadkari as the PWD minister awarded contracts to IRB? Gadkari was the PWD minister in the Shiv Sena-BJP government that ruled Maharashtra in the mid and late-nineties. Hence, a case for a quid pro quo seems to exist and can be established if a proper investigation is carried out.
In the case of Robert Vadra and DLF, things were a little different. DLF gave Vadra an advance of Rs 50 crore against a piece of land of 3.5 acres that Vadra sold to DLF. This advance was paid in installments starting in the year 2008-2009. The advance stayed on the books of Vadra for a period of between three to four years. An advance is typically given for the short term. DLF explained this to be a normal commercial transaction but has been unable to tell us about other cases in which it carried out a similar transaction. The advance was essentially an interest-free loan to Vadra. Other than this DLF gave Vadra’s companies other advances as well. It also gave an unsecured loan of Rs 5 crore to Real Earth Estates Private Ltd, a Vadra company.
Vadra used this money to go on a property and flat buying spree in Rajasthan and Haryana. (You can read about it here and here). But what is difficult to establish is how did DLF benefit from all this? Allegations are being made that the Congress government in Haryana went out of its way to favour DLF. Was this because DLF was being nice to Vadra? This business-politics nexus is not easy to establish as it is in the case of Gadkari and IRB.
Other than the government breathing down Gadkari’s neck, the Rashtriya Swayamsevak Sangh (RSS) which installed him as the president of the Bhartiya Janata Party seems to have asked him to come clean on all the allegations by the end of this month. Vadra, on the other hand, has the full support of his mother-in-law’s party.
At the heart of both the Vadra and Gadkari issues is the nexus between businessmen and politicians. The basic difference is that Vadra is Sonia Gandhi’s son-in-law and Gadkari is not. To conclude, the smartest thing that Vadra ever did was to marry Priyanka Gandhi. “Mere paas Saasu Ma Hai,” Vadra can say proudly. Gadkari, meanwhile, needs to consult a good astrologer and figure out when his stars will turn around.
(Vivek Kaul is a writer. He can be reached at firstname.lastname@example.org