The Curious Case Of Prannoy Roy And NDTV
I have been saying this for last seven years or may be more. All our media
houses engage in corrupt practice with NDTV having the darkest of underbellies among the lot. A company which never had shown ‘GREEN’ in their balance sheet is
still running without a problem. Either it has to be plain magic or something
sinister behind the scene that kept NDTV running for such a long period without generating any self-sustaining revenue. It
even becomes more enigmatic when one searches for the investors in a company
like NDTV that has got nothing to write home about in their business viability.
Either you would struggle to find the list of investors officially being acknowledged
by the company or you would find shell companies with no legal or financial
obligations turning out to be generous enough to lend out hundreds of crores to
NDTV for fun. If at all one could get the detailed transactions of NDTV for one
financial year, one would be shocked to see the one-way nature of funding that
always makes its way to NDTV but never goes out as repayment. Now I don’t quite
phantom how an investor would conveniently forget the hundreds of crores he/she
has invested just like that. It only points at massive financial mismanagement
by choice to hoodwink the tax man and SEBI and I am glad that the government is
finally acting on these frauds, which I feel is already late by six-seven
years.
Now how NDTV was allowed to run amok all this while without
being acted upon? When UPA assumed power in 2004 NDTV was in the verge of bankruptcy.
They didn’t even have enough money to pay-out salaries of their employees. All
these are documented facts which even NDTV can’t deny. Few of their employees
of that time in fact went public under anonymity to let know their plight. If
anything, they weren’t being paid for last three to four months in average, they
told. Interestingly NDTV never objected to this claim which was run by another
reputed media house. This proves that the disgruntled employees weren’t
entirely untruthful. But suddenly after 2004 NDTV started rising in their
financial part exponentially though their viewership drastically kept on
declining every quarter. Now this equation simply is not fitting in. During the
same time NDTV launched at least 20 subsidiary companies on foreign land. At
least the eight that they started in UK had the same correspondence address,
which again was shared by 3000 other companies. All these shell companies appear
shoddy in whichever way you look at them. They largely were placed there as
window for the mother ship to accumulate funding under bogus investment deals. Most
of these companies were shut down within days they got the dividends for their
earlier investment. It can’t be co-incidence that the companies which have
potential to raise hundreds of crores for NDTV would close their doors within a
week they received their return of investment. This simply isn’t digestible at
all. There too is no account for the money that the channel earned after
selling ‘NDTV-Imagine’ to a foreign buyer. The $ 117 million seems to have
vanished in thin air. They never even cared to clear their balance sheet while
closing these phoney shell companies either. Under the pretext of no financial
or legal obligation clause they simply shut these bogus companies and conveniently
siphoned the money. The taxation that otherwise the government would have got
against these high valued financial transactions were gone too. How this could
be possible that our tax-men would be so willing to let go hundreds of crores on which they have legitimate claim? At least I haven’t seen our Tax-men being so
generous ever.
But there is a trick and connivance in the manner NDTV was
allowed to operate with their shoddy business ethics. And the clue here is the
vicious P. Chidambaram, the then finance minister in the UPA government. The financial
rise of NDTV and the role and help of Chidambaram can’t be separated and I will tell you
why. In a series of E-Mails that were been leaked, the conversation
between Prannoy Roy, his wife Radhika
Roy and the PWC (Price Waterhouse Coopers)member, the one who were managing and auditing the
NDTV record books, points at the sinister plot of mass scale money laundering
that was going around NDTV. In clear violation of business ethics, Mr. Roy was
suggesting to keep the $ 400 million raised through various bogus funds with NDTV,
rather than pushing it to their network of channels, presumably for which the shareholders
(both corporate and retail) invested their money. This is a clear cut violation
of SEBI guidelines. By not pushing it to the channels, NDTV managed to inflate
their books thereby resulting in increase of their share value. This is not
all; while filing the books, along with the mother company all subsidiary units
too need to furnish the details of their books including the book details of
the child companies if any to SEBI. But interestingly NDTV never was forced to
do so as per the regulation. They continued to omit the names of its shell companies in every year balance
sheet. This practice is not allowed in normal circumstances unless you back it
up with the special approval of the finance as well as the tax department. Surprisingly
NDTV could manage to procure the required approvals in no time. This smells rat
since even a state owned organization like Indian Oil were declined such a
request when they wanted to keep the books of their child company in Iran out
of the purview of our Tax laws. Now how Indian Oil is denied, though there
weren’t any baleful plot/s but NDTV is duly obliged by P. Chidambaram to continue
with their shoddy financial deals? We will see how and why there is so much of
love towards NDTV from the UPA government in general and Chidambaram in
particular.
Prof. Gurumurthi has nicely pointed out with examples on how
the connivance of a private channel and a political outfit outran the state
interest with ease. It all started in 2006 when an honest tax officer going by
the name S.K Srivastava dug out the nefarious deals between Chidambaram and
NDTV. The financial mess or rather payoff between Chidambaram and NDTV
eventually went up to 5000 crores. Within three days of unearthing this unholy
association, Mr. Srivastava was arm-twisted to change the content of the file.
When eventually the officer declined to act like a clown the overzealous Chidambaram
and his cronies in the tax department actually destroyed the file and created
another file related to the said investigation and recommended Mr. Srivastava’s
suspension insted. Not only that, a woman ‘tax official’ also complained
against him and accused Mr. Srivastava of sexual harassment. Later it was found
that the husband of the said lady officer was employed by NDTV with no
designation and they too were sponsoring the couple’s foreign junkets for free.
When this revelation was done the husband of the lady officer promptly resigned
from NDTV and never brought into the context. Mr. Srivastava also unearthed
huge tax fraud by NDTV and assessed it close to rupees 300 crore. But how small
the fraud amount Mr. Srivastava thought it to be, no? Today the amount has gone
up to a staggering rupees 1400 crore and even the NDTV has agreed to pay it out
to save its skin. Any tax official unearthing so much fraud should have been
awarded by the finance minister himself but here with Mr. Srivastava, the case
was little different. The very next day after Mr. Srivastava sent his findings
to the finance ministry, Chidmbaram himself directed his cohorts to suspend Mr.
Srivastava immediately citing bad behavior. This sounds so interesting when you join the dots. In a
mail/notice sent by Ram Jethmalini to Chidambaram, he pointed out all these
facts that Mr. Srivastava has unearthed to which Chidambaram never objected but rather laid out his phoney
explanation which further solidified the claims of Mr. Srivastava, which eventually
our courts too accepted.
Not just daylight robbery but valuating itself is also a special art with NDTV. In fact their self-valuation ranges from rupees 192 crore to rupees 10000 crore and all within a
year and half timeframe. That is some range I must say and that too within a double quick timeline. When Reliance industries wanted to buy a sizable
portion of the channel the valuation of NDTV was kept at four hundred millions.
The same valuation went to a precarious 192 crore when Naveen Jindal wanted to
purchase 15% stake of the company. The same company also floated an inflated
valuation when they were inflowing money through their bogus shell companies.
This massive variation of its value also was objected and questioned by both
SEBI and the tax department on technicality and practicality grounds. Poor Ambani
had to lose close to 350 crores and eventually had to sell the shares he bought
at a throwaway price of 50 crores. And the company in Himachal that bought the
shares so damn cheap is owned by a very close relative of Mr. Roy. By the way,
the lowest valuation when Ambani sold his shares and when GE Corporation raised
400 million for NDTV after valuating it to 10000 crores happened in a span of
three months. That is almost 1000 times growth in 90 days only. This again can’t
be a coincidence. If experts were to be believed, from these shoddy devaluations
alone NDTV would have siphoned close to 800 crores of tax payer and shareholder’s
money. And no wonder there would have been many in UPA, not just Chidambaram,
to get their share from this public loot.
The dark underbelly of NDTV is too long to be covered in a
single post. What surprises me here is how the motor-mouths of NDTV and their
secular supporters in various political parties and other walks of life are
crying foul. They are crying vindictive politics when it is all about financial
fraud of a company that has never gone green in its existence. There isn’t
anyone who is trying to curtail the so called press freedom, which these
selfsame flag bearers of free speech are crying about. Here is the fact – Government
of India is acting against a fraudulent organization that has made corrupt
practice as their forte. During the entire period of UPA rule NDTV declined to
furnish their investors list which automatically tantamount to FEMA violation
but surprisingly neither Chidambaram nor the finance ministry ever bothered to
act against this open violation. Instead Cidambaram was making sure to cover the crimes of NDTV
even if that means suspending honest officers like Mr. Srivastava. There was a
time when every alternate day Chidambaram was used to come on NDTV for one or
the other bogus discussions.
I too had hoped the Modi government would act against NDTV
as quickly as possible and I always feared Mr. Roy could easily turn out to be
another Vijay Mallya otherwise. The promoters and the directors of the channel
anyway have bought huge ranches in the country of their choice. Running away
from prosecution couldn’t have been any easier. That said I am in fact quite
surprised that the current NDA government actually acted against the frauds
like NDTV. In many of my earlier posts I had written how Arun Jaitley is so
dear to NDTV whereas he should be acting against their forgery instead. In the
autobiography of the late Vinod Mehta he has nicely narrated the episode of ‘Radia
Tapes’ and how Mr. Jaitley bailed out Barkha Dutt from the imminent mess she was
in. Before the start of the winter session Barkha Dutt paid a visit to Mr.
Jaitley’s residence and literally pleaded to not pick the ‘Radia Tapes’ for
debate during the zero hour. Not to mention here, Mr. Jaitley was the leader of
opposition and his silence on such an important issue where the opposition could
have cornered the ruling party came as a huge surprise for many. It took late
Vinod Mehta to lay out the precise reason for Mr. Jaitley’s silence. No wonder,
NDTV is yet to run a single program criticizing Mr. Jaitly though they are
quite vocal in running vendetta full campaigns against each one of them from
BJP. No one would have seen a single program on NDTV about the monumental
corruption that happened in DDCA under Mr. Jaitley's watch. If Dr. Manmohan Singh could be termed as corrupt in Coal scam I wonder how Arun Jaitley managed to stay safe.
By the way I won't be surprised a little if their latest decision of shutting down NDTV-Profit has another mega tax loot in the background just as they did with NDTV-Imagine.
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