Saturday, 20 October 2012

Is India a Banana Republic - Indians Mango People ? The Sonia's Son-in-law's Story of Success.


The Unreal Estate Of Robert Vadra :
The intricate web of his five companies has done no other business since being incorporated in 2007-08 other than buying and selling property or giving and taking loans.
By Bhavna Vij-Aurora | India Today.
In 2007, Robert Vadra was a middle-of-the-road businessman with all the prospects of an exporter of brass who had not managed to export much, but had the contacts to grow at a pace that power can propel. He set up three companies, with mother Maureen as director. There was Blue Breeze Trading Pvt Ltd, whose state objective was "business of services and hiring of air charters", even though there was no evidence that it actually chartered any planes.Sky Light Hospitality Pvt Ltd was set up to "carry on business as hoteliers" and Sky Light Realty was incorporated to make an entry into real estate. His flagship company remained Artex, set up in 1997, the year he married Priyanka Gandhi.
It was a profitable business, but not extraordinary. Vadra wanted to grow far, and fast. An opportunity soon presented itself. In 2008, Sky Light Hospitality bought a 3.5-acre plot in Manesar close to DLF's recently launched residential apartment project, Primus, for Rs 15.38 crore. The funds for this purchase were raised largely from two sources: An overdraft from public sector Corporation Bank in 2007-08 worth Rs 7.94 crore and a Rs 4.45 crore loan from Vadra's own firm, Artex. The huge overdraft from Corporation Bank to Sky Light Hospitality which had a paid up equity capital of only Rs 5 lakh, and no income stream, deserves closer examination. The bank has been quoted in the media saying that it is in the process of probing the terms of the overdraft. The bank needs to answer whether, in the absence of significant paid up equity capital, any collateral was offered by Vadra in exchange for the Rs 7.94 crore overdraft.

In 2008-2009, within a year of purchasing the Manesar property, Vadra sold the land to DLF, India's largest property developer, in exchange for an advance of Rs 58 crore, paid in instalments over the next four years. Vadra made a tidy profit of Rs 42.61 crore. The appreciation of the value of the land by 300 per cent in a single year is unusual. In its response, DLF says that it is not out of the ordinary for property prices to appreciate by that much in Gurgaon. With this deal, Vadra entered the world of big boys; DLF, with a net worth of Rs 14,500 crore, was the biggest of them. That one sweet Manesar land deal in 2008-2009 set the ball rolling for Vadra's investments in a series of high-end apartments as well as a 50 per cent share for Rs 31.7 crore in Saket Courtyard Hospitality, which owns the 114-bed Hilton Garden Inn, built on DLF land in South Delhi.
Could Vadra have feasibly bought all the remaining properties in his portfolio with Rs 42.62 crore earned in a single deal? His companies' balance sheets show this sum as his only significant source of fund. Displaying a knack for purchasing land and property at particularly low prices, Congress President Sonia Gandhi's son-in-law bought a plot in South Delhi's upscale Greater Kailash II for Rs 1.2 crore. His Sky Light Realty bought seven 6,000 sq ft flats at the 600-flat complex, DLF Magnolias, in Gurgaon for Rs 5 crore, re-selling five to DLF within a year. His company also bought 15 1,000-1,400 sq ft flats for Rs 5 crore in DLF Estates' Capital Greens Complex in Delhi's Shivaji Nagar when the 2,856-flat project was launched in April 2009. He also bought the 10,000 sq ft exclusive Aralias flat, one of a 234-flat development in Gurgaon, for Rs 10.4 crore in 2008.
Vadra's real estate empire saw an unreal expansion. Within three years, he has amassed a property portfolio worth about Rs 200 crore. The intricate web of his five companies has done no other business since being incorporated in 2007-08 other than buying and selling property or giving and taking loans.
Going by Vadra's own company documents, he has either been extremely lucky or excessively intuitive. In 2007, DLF floated a subsidiary, DLF SEZ Holdings, with a paid-up capital of Rs 5 lakh. In October 2008, Vadra's company, North India IT Parks Pvt Ltd, set up that year itself, bought a 50 per cent share for Rs 2.5 lakh in DLF SEZ Holdings, though Vadra has no known expertise in it. A year later, the global market tanked, and Vadra re-sold his share, for the same price, says DLF. There was, claims DLF, no profit, no loss. In 2008, Vadra brought a 100-acre plot of land in Faridabad to DLF's attention. They gave him an advance of Rs 15 crore to purchase it, before calling a halt on it after due diligence, which discovered dubious title deeds. Vadra returned the money to DLF, averting a possible bum deal.

Why did DLF choose Vadra as a partner in its real estate dealings? Was it because Vadra's status as the country's 'first son-in-law' would benefit DLF? Or was it merely because, as he says, the Vadras and Singhs (owners of DLF) are family friends? When The Economic Times wrote about "Vadra's low-key entry into the real estate business" in March 2011, he was quoted as saying, "I have a good understanding with DLF. Our children are friends, we are friends. They are seasoned businessmen. They are not daft. They don't need me to enhance them. They've existed for years."
Activist-turned-politician Arvind Kejriwal, who revealed the extent of Vadra's entrepreneurial abilities on October 5 at a press conference at Constitution Club in Delhi, says Vadra and DLF were in a mutually beneficial partnership. According to him, Vadra got loans and property at very low rates, while DLF got favours from the Congress government in Haryana-which both have denied. Despite its denials, DLF's share price was punished by the stock markets, falling by 12 per cent in the three days after Kejriwal's revelations. For a company already saddled with a huge debt problem-it had liabilities of Rs 26,470 crore in March 2012 compared with a net worth of Rs 14,500 crore-this was a piece of bad news it could have done without.

The noise of Kejriwal's allegations was enough to break through the positive chatter that had begun to build around the Congress's new-found reform narrative. The party was blindsided. Its senior leaders were forced to declare loyalty to the first family to their last drop of blood on national television. Wearing a pained expression, Law Minister Salman Khurshid went on TV to say that "Sonia Gandhi is my leader and I would defend her till my last breath".

Khurshid now has to defend himself against the sordid revelations about the charity he heads: That it forged documents to siphon off money meant for physically disadvantaged children. His ministerial colleague, Jayanthi Natarajan, engaged in a war with the Prime Minister on the formation of the National Investment Board, was in a TV studio when Khurshid's mawkish soundbite was played out. Not to be left behind, she declared, "Sonia is our president and we are ready to give up our lives for her."

This show of competitive sycophancy was not enough. Kejriwal was in a mood to feed the frenzy. As he told india today on October 8 at his home in Kaushambi, Ghaziabad, "People had been talking about Vadra's questionable business but there was an unwritten understanding between the Congress and the main Opposition party that we should not target individuals. It was collusive corruption."

Are either Vadra or DLF culpable? No, says senior lawyer KTS Tulsi. "Legally, neither Vadra nor DLF have cheated anybody. There is no criminal breach of trust. These are private transactions between private parties. The Prevention of Corruption Act, 1988, can also not be applied since neither holds any public office," he says. As for an investigation under the Income Tax Act, Tulsi says that can happen only if it is proved that the properties and land Vadra bought were grossly undervalued. "For that, one has to go back to the date of booking of a flat and the offer price by the builder at the time. If any discrepancy is found only then a case can be made out," he explains.

On October 9, Kejriwal revealed even more details about Vadra's empire and his dealings with DLF, which controls 340 million sq ft of developable land across the country. He charged that the Haryana government in 2007 allowed DLF to build an SEZ on 30 acres of prime land in Gurgaon which had been initially acquired to build a hospital. When the decision was challenged in the Punjab and Haryana High Court, the court saw a nexus between DLF and the Haryana government. The state government, in a statement on October 10, claimed that the permission was granted after following "due process of law".

The matter is now pending in Supreme Court. In another instance of supposed favour to DLF where the realty firm got 350 acres of land in Gurgaon, Kejriwal alleged that rules were tweaked at the last minute to disqualify other bidders-Unitech and Country Heights-on technical grounds. A DLF spokesman said the land was allotted "through international bidding" and the matter was sub-judice before the Punjab and Haryana High Court.

The Haryana Government clarified that the entire bidding process was conducted in accordance with an advertisement published in the matter. Senior hsidc officials deny that changes were made to prequalify the tendering process in favour of DLF before the bids were opened. Officials also point out that neither Unitech nor Country Heights had earlier protested the allotment in favour of DLF.
For the first time after Bofors in 1989, corruption is knocking at Sonia Gandhi's door. In two recent scams, Congress has had room to distance itself. In the Commonwealth Games scam, Suresh Kalmadi was dispensable. dmk was involved in the 2G scam, and A. Raja was equally perishable. The mud started to stick with Coalgate, which was seen as a total Congress operation. Ironically, a transaction somewhat similar to the advance given to Vadra to buy the 3.5 acre plot landed Raja in trouble, when DB Realty gave an unsecured loan of Rs 200 crore to DMK's Kalaignar TV in 2008-09. With the public mood completely against corruption, the attack has now moved from different tiers of the party to the heart of it.
A member of the Gandhi family stands accused of making money from the use of power. The Vadra effect also means that the Omerta code around the first family has broken. On October 6, author Madhu Kishwar wrote an angry blog about being stonewalled when she filed an rti query for information on Rahul Gandhi's foreign visits. Clearly, Kejriwal has ensured there are no holy cows left in the public domain.

Perhaps Vadra never thought his business practices would be questioned in a "banana republic", as he described India in a Facebook post. His derision towards the "mango people (aam aadmi)"created an angry outcry and he was forced to close his account, accusing the people of lacking in humour. Before that, he tried a sentimental response. "I have lost people I loved, what can be worse?" was his enigmatic post. Indeed. His closest relatives have died unnatural deaths. His father Rajinder was found dead in a rundown Yusuf Sarai motel in April 2009 during the run-up to the Lok Sabha elections. His brother Richard is also believed to have committed suicide in September 2003 in Moradabad at the family's ancestral house. Vadra's sister Michelle died in a car accident on the Delhi-Jaipur highway in April 2001. His mother, Maureen, an Anglo-Indian of Scottish origin, continues to be a director in five of his companies.

Vadra's relations with his family members had reportedly soured after marriage and he disassociated himself from his father and brother through a public legal notice in January 2002. After Kejriwal's revelations, there was a lot of speculation on his whereabouts, ranging from Australia to Dubai. His close associate Manoj Arora told india today on October 9 that "as of today, he is here in India". Arora said that it was business as usual for Vadra as he attended to his work at his 268, Sukhdev Vihar office, the address where his five companies are listed. "Vadra is not going to give any statement. What is there to say?" asked Arora.
With Kejriwal's dark hints about revealing Vadra's dealings with other corporates, Congress is also wondering: If this is the beginning, how bad is the end going to be? "The disclosures are not new," says a Congress MP, but he adds, "this will add to the perception of corruption against the Government." India Today had broken the conspiracy of silence with a cover story ('The Fifth Wheel', February 2012) when Vadra demanded political space for his wife and himself in the middle of the Uttar Pradesh campaign. The Congress fears the immediate casualty of the Vadra bomb will be its prospects in Gujarat elections. It was hoping to improve its tally in the state, going for polls in December. The spin doctors even came up with a suggestion: Postpone the Parliament session, scheduled for mid-November, until after Gujarat votes. The Opposition is certain to stall Parliament over Vadra and corruption will be back in the centre of attention.

The fact that no senior leader from BJP has so far taken up the family scandal offers little comfort to the Congress. The BJP has its own problems: It does not want to give credibility to Kejriwal, especially because it fears that he will target one of its own. Congress is losing the battle of perception entirely by itself. Grumbling at Kejriwal's attempts to keep the news alive in the media by making a new disclosure every few days, they have resorted to querulous whining. On October 8, Natarajan wanted to know why he did not come out with all he had in one go. The Congress strategists have realised that the more this news remains in the headlines, the more damaging it is for them.
Kejriwal says he is not going to back off. "Somebody had to do it," he says. He claims that people from all over the country were coming to him offering information about Vadra and his shady deals. "I will confirm and cross-check everything. Only then will I bring them out in the public domain. It is a question of my credibility," he adds.
It's a credibility the Congress would like to see destroyed. Congress strategist Ahmed Patel knew on the morning of October 5 that Kejriwal had planned to target Vadra. Team Kejriwal had been dropping ominous indications that they would be making damaging revelations against "someone in the Congress, someone who does not hold a designation". Patel spoke to Sonia Gandhi and Rahul who was away in Kashmir. The party's defence was firmed up by Patel, Sonia, Rahul along with Priyanka Gandhi and Rahul's aide Kanishka Singh. It was decided that the family would not react. Instead, the party would launch an aggressive defence of Vadra, claiming that this was a proxy war against Sonia.

Accordingly, Patel lined up leaders for the party's defence: Khurshid, Parliamentary Affairs Minister Rajiv Shukla and Information and Broadcasting Minister Ambika Soni. He also spoke to Janardan Dwivedi, the chairperson of the party's media cell. The problem was that the party itself did not know the extent of Vadra's involvement and did not dare to ask. Hamstrung, the Congress defence varied between two stands. The first reaction was that Vadra was a private individual and not a politician. This was countered by Kejriwal and Co who pointed out that Vadra was the son-in-law of the most powerful politician in India. The next day, the Congress changed tack and claimed that there was no quid pro quo between the advances given by DLF to Vadra and the real estate company.

On October 6, the Congress tried to distract the media by crowding the news cycle. Around noon that day, the Prime Minister's Office issued a strong denial that the Government had funded any of Sonia Gandhi's trips abroad. This was a somewhat delayed response to allegations made by Narendra Modi at least a week ago. Later that day at 4 p.m., Dwivedi made an unscheduled appearance at the party's daily briefing at 24 Akbar Road. He briefed the media on the Kejriwal-led India Against Corruption's charges against BJP chief Nitin Gadkari. Since these had broken on September 26, his reaction was a bit delayed as well.
But once Kejriwal held his press conference at 5.30 p.m. targeting Sonia's son-in-law, there was only one headline in the media. The commentariat, particularly that section opposed to Congress, has begun to write the first drafts of a dynasty obituary. Rajya Sabha MP Rajeev Chandrasekhar has coined a term for the Vadra syndrome: "Political entrepreneurship, where people associate with politicians or join politics primarily to create a new kind of venture capital." It's a step above crony capitalism.

It has serious political repercussions. Allies who have held the UPA Government in place, like Mayawati and Mulayam Singh Yadav, were forced to support calls for an inquiry into the Vadra-DLF link. The sharpest impact was on the credibility of Congress itself, which was immobilised by the prospect of electoral collapse. A party that has begun to prepare for a setback was staring at the serious probability of doom in the next General Election. The public's anger is palpable, and finds expression though a range of reactions, from jokes on sms to pils based on the documents put into public domain by Kejriwal. As the mire deepens, one fact on the horizon gets closer: Elections.
- With Priya Sahgal and Shravya Jain
Reproduced From India Today. © 2012. LMIL. All rights reserved.

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