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From Tehelka Magazine, Vol 8, Issue 29, Dated 23 July 2011
CURRENT AFFAIRS  
COVER STORY

INVESTIGATION: MONEY-LAUNDERING

High profits of ghost hotels

Hotels, software, tourism, real estate, manufacturing — and money-laundering. The Panoramic Group ran a complex cross-country operation. Ashish Khetan digs up the evidence on a huge black money racket

Kingpin Sudhir Moravekar, the chairman of Panoramic, is said to have started out as a betel and tea shop owner

FROM RELIGIOUS gurus to anticorruption crusaders, all have theorised their own estimates of the Indian black money stashed away in foreign banks. The figures vary from 4 lakh crore to 71 lakh crore, depending on whose rant you’re listening to. However, if you dig a little deeper you will find that these figures have been derived out of speculative and hypothetical calculations, based on overblown and incommensurable facts. After much noise and heat generated by Opposition parties over the 18 bank accounts held by Indians in the European tax haven of Liechtenstein, the total amount in all 18 LGT accounts has turned out to be a mere 39.66 crore. Pune based Hasan Ali, whose imagined fantastic wealth was bandied about as over $8 billion, equal to that of industrialist Anil Ambani and one-third of the total wealth of Mukesh Ambani, eventually turned out to be a small-time hawala operator who would fake Swiss bank statements to swindle unsuspecting businessmen.

While much of the debate around black money has been over-hyped and sensationalised by different vested interest groups, the fact remains that the malaise of black money is eroding our economy, impeding inclusive growth and defrauding the public exchequer.

Successive governments, the two UPA regimes and several non-Congress governments preceding it have done precious little to unearth the black money and bring the guilty to book. It was this lackadaisical attitude of many governments that prompted the Supreme Court to form a special investigation team in the first week of July headed by retired SC judges to investigate cases of black money — a move that has arisen out of sheer despair about systemic apathy towards issues of black money and secret bank accounts in tax havens and thus provides a glimmer of hope to the common man. At the same time, this judicial activism seems impractical and abstract because the mechanisms and systems required to unearth black money are only vested in government agencies like the Income Tax (IT), Enforcement Directorate (ED) and Financial Intelligence Unit. The SIT formed by the court has just one government executive, the chief of India’s external intelligence agency, the Research and Analysis Wing (R&AW).

Related

Indian Black Money: The Swindler’s List
I-T officers in embassies to track black money
Names of black money hoarders to go public after I-T assessment

The question that everyone is asking is: How will two retired judges go around digging up black money, whether in India or abroad? Certainly, the writ of the SIT won’t prevail over Swiss banks or tax havens like Canary Islands or the Principality of Monaco or British Virgin Islands, which has a population of 10,000 but has over 7 lakh registered overseas companies. Despite a SC-monitored investigation into the 2G scam, none of the overseas countries has so far responded to Letters Rogatory (LR) sent from India seeking details about foreign funds and companies involved in the scam. Similarly, in the case of Hasan Ali, LRs sent to over half a dozen foreign countries have so far drawn a blank

The problem of black money is so deep-rooted, multi-layered and complex, that despite its best intentions, just one SCconstituted probe team alone won’t be able to cure the systemic malaise that spawns not just Indian agencies but also the international banking and taxation system

The best way of going forward would be a more persuasive and vigilant approach by the courts, nudging the government agencies to enforce the law. As this TEHELKA story shows, the government and its agencies need to be at the vanguard of this fight against black money, with the judiciary playing the role of a watchdog. The reversal of roles between the judiciary and the executive is a recipe for disaster.

Panoramic’s black empire

Pune, Maharashtra North Carolina, USA Ohio, USA North Carolina, USA

Area 51
Pune, Maharashtra

Baymont Inn and Suites North Carolina, USA

Clarion Inn
Ohio, USA

Econolodge Inn and Suites North Carolina, USA

A month-long TEHELKA investigation has uncovered a suspected money-laundering racket that involves cross-border transactions covering over half-a-dozen countries. And at the centre of this complex web of banking transactions is a Mumbai-based business conglomerate headed by a man who, until 20 years ago, used to sell betel leaves and tea on the streets of the city. The case is a telling example of how sophisticated and complex money laundering rackets are being run across borders. And how lack of coordination between agencies of different countries, coupled with lack of political will and systemic corruption, makes it worse.

The name of the company investigated by TEHELKA is Panoramic Universal Limited, a 1,000 crore business entity with interests in the hotel, software development, tourism, manufacturing and real estate sectors. The chairman of the company is a man named Sudhir Moravekar, who has been variously described by the Indian media in the past as ‘the man of true grit’, ‘business maverick’ and ‘value creator’.

The secret US bank statements, which are in TEHELKA’S possession, show that Moravekar hoarded away Rs 200 crore in US banks between 2005 and 2010. But investigators say that this could be just the tip of the iceberg and that the total money allegedly laundered by Panoramic could run into thousands of crores. Documents available with TEHELKA show that these monies originated from dozens of mysterious, fly-by-night entities in countries like Hong Kong, Singapore and Dubai and were then wired to Moravekar’s company bank accounts in the US. The modus operandi involved transferring small amounts of money almost on a daily basis against seemingly bogus invoices.

The dubious transactions first came to the fore in April 2010 when three company employees, including two senior management executives who were working with the company’s US subsidiary, Panoramic Ace Properties, in a written complaint to the New York County District Attorney, alleged that the company was involved in a massive business of laundering illicit money. The employees alleged that the company’s hotel business in the US was a sham to hide the illegitimate money originating from India. The employees furnished over one thousand documents, including bank statements, bogus invoices, internal email communications and also transcripts of taped conversations, copies of which are now with TEHELKA, in support of their claims.

Panoramic’s black empire

Colva Beach, Goa Malvan, Maharashtra Shirdi, Maharashtra Panvel, Maharashtra

Graciano Cottages
Colva Beach, Goa

Hotel Sagar Kinara
Malvan, Maharashtra

Hotel Sai Sahavas
Shirdi, Maharashtra

Panoramic Resort & Water Park
Panvel, Maharashtra

Speaking to TEHELKA, the Panoramic CEO Gopal Viswanathan refuted all the allegations of money laundering. “Some of our former employees who embezzled company funds are making these allegations to avoid criminal action. We have already successfully launched one criminal prosecution and are in the process of filing another criminal case,” said Viswanathan. But TEHELKA investigation found that the company’s claims were not grounded in facts but only a diversionary tactic (we have dealt with the company’s claims and our investigation into their claims in much detail later in the story).

Six months ago, the whistleblower employees sent all the evidence to the Central Board of Direct Taxes in India.

The investigations wing of the CBDT is now looking into the alleged money laundering business of the company. A senior IT official who is part of the investigation told TEHELKA that 200 crore might just be a fraction of the total money allegedly laundered by the company over the past 10 years. “It’s the whistleblowers from just one subsidiary of the company who have unearthed 200 crore laundered against bogus invoices raised in the name of hospitality consultancy. The company runs dozens of such subsidiaries, both in India and abroad. Many subsidiaries had also been shut down and new ones were opened. We are investigating all of them and following the money trail,” said an investigator on the condition of anonymity (he did not want to be named because of the sensitivity of the matter).

According to the investigators, the company used to buy massive amounts of remittances in India and transfer substantial amounts of money to various offshore destinations over the past decade. The total money thus laundered may run into four or five times the Rs 200 crore reported by whistleblowers, say the sources.

Panoramic’s black empire

Pune, Maharashtra New York, USA Thane, Maharashtra New York, USA

Sai Motels
Auckland, New Zealand

The Georgian Resort
New York, USA

United 21
Thane, Maharashtra

United Inn
New York, USA

What is shocking is how the company could avoid scrutiny for 15 long years, despite the presence of actionable intelligence all along. And it finally took whistleblowers from within the company to blow the lid off and nudge the investigators to launch a probe. As our story will later show, the company began its business with a dubious time-sharing subscription scheme way back in 1995, arousing suspicion of different departments. But somehow the company managed to duck a thorough scrutiny.

Perhaps, the case of Panoramic is the right place for the SIT to begin its probe. And once the guilty are brought to book, the SIT could ask for the list of all other entities being investigated by the government.

SINCE 2010, the company has bought four luxury resorts in India, five hotels in the US and one in New Zealand. Besides, it has set up lavish corporate offices in Manhattan, New York, Prabhadevi, Mumbai, Mahape, Navi Mumbai, UAE and New Zealand. But that’s not all. In the past three years, the company acquired vast strips of land in Jaipur, Goa, Pune, Thane, Kerala and West Bengal. According to market estimates, the total value of his net assets in the US alone is over $100 million.

Documents with the New York County DA shows the complex web of operation

Paper trail Documents with the New York County DA shows the complex web of operation

The company’s astounding expansion has come at a time when the global hotel and tourism industry has been in a free fall because of the economic downturn. Defying the tide of global economic recession, Panoramic has continued to make staggering profits. The company’s consolidated revenues for the year ended 31 March 2009 stood at Rs 1,510.50 million, as compared to Rs 1,348.39 million for the same period in the previous fiscal. For the year ending 31 March 2010, the total revenues stood at Rs 1,337.8 million. Similarly, the company’s operating profit for 2008-09 stood at Rs 665.86 million and for 2009-10 at Rs 584.96 million. In fact, the company featured amongst the Top 20 Wealth Creators, a list published by a reputed business magazine in January 2009.

However, the IT sleuths are now suspecting that most of these monies have dubious origins.

PANORAMIC UNIVERSAL’s is an incredible rags-to-riches story but one that is founded not on any innovative business combination or breakthrough technology that could justify its meteoric rise and make sense of the staggering assets it has acquired globally in just a short span.

The promoter of the company is 57-year-old Sudhir Moravekar, born in a poor family in a lower income neighbourhood in Girgaum, Mumbai. His father was a clerk in Brihan Mumbai Municipal Corporation with a paltry salary of Rs 150 per month. After passing out of Mumbai’s Wilson College in the late 1970s, Moravekar tried his hands at a string of odd jobs, from working as a clerk in a marine insurance company to distributing Marathi films to selling betel leaves and tea on the city’s pavements. In the early 1980s, Moravekar ventured into the business of real estate and started buying and selling plots in Lonawala, a hill station 70 km from Mumbai.

Until the mid-1990s, Moravekar remained a small-time real estate agent, like the one you would find on every street in Mumbai. However, his fortunes changed around 1995 when he came into contact with Sahara Group promoter Subrato Roy, who at the time was on a land acquisition spree for his ambitious ultra-luxury residential project, Amby Valley in Lonavala. According to the information posted on Panoramic’s website, Moravekar bought over 100 acres of land in Lonavala and sold it to Sahara at a stupendous profit. However, it’s not known from where Moravekar got the money to buy such a large swathe of land costing hundreds of crores.

How the money laundry works

Money-laundering is a web of complex and sophisticated transactions involving all kinds of professionals

Reasons/ methods for Cross-border transfers

i. Parking money overseas by Indian Entities
a) To evade taxes
b) To mask the identity of the person (terrorist money, drug receipts, black money, bribe money)
c) To mask the location of accrual of income

ii. Inward remittances required by Indian entities for
a) Introduction in regular books (layering)
b) Higher domestic returns
c) Making payoffs contractual or otherwise

iii. Conventional methods
a) Hawala, Money Transfer Agencies, invoice manipulation, over-priced acquisitions of foreign companies and inflated import bills

iv. Masking site of income
a) Treaty shopping, tax havens & countries like Hong Kong, Dubai, CIS nations (not traditional tax havens)
b) Limited liabilities partnerships and similar entities in US, etc.
c) Sub Accounts or Participatory Notes in FIIs through wholly-owned subsidiaries taken over directly or through swap

v. Acquiring banks or, financial institutions overseas

Methods of reintroduction of funds

i. Foreign gifts and donations
ii. Over-invoicing of export proceeds through invoice manipulation/ indenting agents
iii. Investment through foreign direct /debt instruments routes using places where disclosure norms are lax
iv. Investment in infrastructure and other projects
v. Borrowings in India against overseas collaterals: LCs/ SBLC (Standby Letters of Credit)/ Bank guarantees

Intermediaries in India

1. There are certain known CAs, brokers, legal firms who are in the business of arranging cross-border parking of funds including creation of tax haven companies and opening bank accounts. They are potentially a good source for zeroing in on actual account holders. Further, there are fund operators / fund managers who also do the services for a fees, which may be lump sum or as a percentage

2. There are certain professionals who provide services of round tripping i.e. arranging to bringing back the funds parked overseas as legal investments / debt in the form of FCCB (Foreign Currency Convertible Bonds), GDRS (Global Depositary Receipts), ADRS (American Depositary Receipts), external borrowings, etc.

Anyway, in a curious co-incidence, once he had transacted with the controversial Sahara Group, there was no looking back for Moravekar. In 1996, he launched a unique scheme named Pancard club, through which he raised a substantial amount of money. According to an IT intelligence report which is available with TEHELKA, the Pancard club scheme was extremely dubious and is now a subject of investigation. Under the scheme, as per the IT report, a small subscription fee from small investors was charged against which the customer was entitled to stay for seven days in a hotel every year. However, if a customer chose not to avail the facility, he would be reimbursed the full annual fee along with some interest. The IT department now suspects that under the guise of this scheme, dubious money could have been injected into the company. Like the rest of the company’s operations, this scheme too is now being probed.

In 1996, Moravekar acquired an IT company named IT Microsystems and turned it around into a multi-million-dollar profitable venture. Again, the key to Moravekar’s Midas touch remains a mystery. The company was later re-christened as Panoramic Universal, with real estate and hotels forming its core operations. The company, which is listed on both the Bombay Stock Exchange and National Stock Exchange (NSE), has interests in IT, hospitality and tourism.

Moravekar acquired his first hotel in the US in 2003 when he bought Econo Lodge Hotel in North Carolina. Over the next three years the company acquired four more hotels: Georgian Resort at Lake George in New York, Holiday Inn in Ohio, United Inn at Syracuse, Central New York and Comfort Inn in North Carolina.

Documents detailing the transfer of funds from cross-border entities

Legal proof Documents detailing the transfer of funds from cross-border entities

However, contrary to Moravekar’s public claims made in his annual reports, Panoramic’s hotel business has not been doing well. Documents available with TEHELKA show that all his hotels had a dismal occupancy rate of 12-15 percent between year 2005 and 2010. One of company’s hotels, United Inn in Syracuse, which was set up to compete with luxury hotels like Sheraton and Hyatt, has an occupancy rate of less than 5 percent. According to industry experts, the US Hotel Industry benchmark is of a minimum occupancy of 50 percent for a property that has broken even. But despite its poor occupancy rates, Panoramic not only broke even, it also showed decent profits. However, a closer look at the company’s cash flow will reveal that 60-70 percent of company revenues in the US came not from hotel occupancy but from ‘overseas consultancy fee.’ Evidence available with TEHELKA shows that the company’s aggregate revenue from hotel guests stayed at $6.3-$7.64 million between 2006 and 2010. It’s the money coming from dubious entities in the Middle East and South East Asia which kept the company afloat.

The logical question which then arises is: What was the actual source of all this money? Was it coming from Moravekar’s legitimate businesses or was the source of this staggering flow of funds illegitimate?

ON 15 APRIL 2010, Arvind Kumar Thirukonda Jawaharlal, a Non-Resident Indian holding an H1B visa who was engaged by Panoramic Ace Properties, New York, as an IT Business Systems Analyst, walked into the office of Marc Scholl, senior investigator, Major Economic Crimes Bureau of Manhattan at New York County District Attorney, and submitted thousands of documents related to Panoramic’s banking transactions. Kumar was a qualified SAP Finance & Control IT professional trained in configuring accounting and financial systems for the hospitality industry.

In March 2009, Kumar was engaged by Panoramic to study and implement hospitality accounting and revenue forecasting systems across all their US properties, including integrating with their parent entity in India.

Kumar told Scholl that during his employment in the company he stumbled upon a well-oiled racket of money laundering being run by the company. He told Scholl that the company was receiving suspicious money from overseas entities in the name of ‘overseas hospitality consulting revenue’ on a daily basis. But in reality the company was not providing any overseas hospitality and the invoices raised for the purpose were all bogus, Kumar alleged. He told the district attorney’s office that the company was not only guilty of money laundering but was also committing employment fraud and thus he was dutybound to report it to the authorities.

A senior IT official probing the case says the 200 crore is just be a fraction of the total money allegedly laundered by the company over the past 10 years

Kumar furnished the company’s financial statements which showed that over 60 percent of company’s revenues in the US were coming from overseas hospitality consultancy. In the financial year ending 31 March 2005, the company earned an overseas hospitality consultancy fee of $1.6 million. In 2006, it rose to $3.8 million. Next year, the overseas revenue almost tripled to $9.18 million. In 2008, it steadily rose to $10.47 million. In 2009, there was a small decline in this mysterious hospitality fee and the figure stood at $9.3 million. For year 2010, the figure was $6.9 million. The total money thus allegedly laundered for which Kumar could provide evidence aggregated to $41.2 million.

Kumar returned to India a year ago and is now living with his wife at a safe house, fearing reprisal from his former employer. When TEHELKA met him at his residence, this is what he said: “Once I discovered the illegitimate money transactions I decided to report it to the authorities. But I needed evidence. For that, I not only collected the bank statements and the bogus invoices, I also recorded my conversations with other company accountants and managers who were in the know of the things. I gave it all to the New York County District Attorney’s office.”

Kumar provided TEHELKA all the clandestine recordings. In one tape, a close confidante of Moravekar who was working as one of his secretaries in the US could be heard calling Moravekar’s operations the business of money laundering.

In another such taped conversation, a senior auditor of the company could be heard telling Kumar the following: ‘This Overseas Hospitality Consulting Income has no basis… these are fraudulent financial statements… money is coming from UK, Hong Kong… from a source that they are trying to hide… is it just consulting income or whatever income we don’t know or is it coming from drugs?”

Steele and Kumarrisked ther lives and careers to unmask the racket

Blowing the lid Steele and Kumar risked ther lives and careers to unmask the racket

AFTER LODGING a formal complaint with the US authorities, Kumar resigned from the company. Along with him, two more company employees, both US nationals, also put in their papers and turned whistleblowers.

One of them was Joseph P Steele, a senior US hospitality professional who was hired by Panoramic Ace Properties in September 2007 as the General Manager to manage Baymont Inn and Suites located at Greensboro, North Carolina State. In March 2009, Steele was promoted as Operations Director responsible for the operational results for all properties of Panoramic. Interestingly, a few bogus invoices regarding hospitality consultancy were raised in Steele’s name as well.

“It was Carol Brown Surprenant, the General Manager of Georgian Resorts, located at Lake George (Lake George is a small resort town, located three hours drive from Manhattan and 30 minutes from Albany, the capital of New York state) and I, who first detected the mysterious accounting entries being made under the head of overseas consultancy. Sometime in April 2009, we brought it to the notice of Arvind who promised to investigate. Being posted at the Corporate Office in Manhattan, he had access to many of the records,” Steele told TEHELKA on phone.

Arvind Kumar told TEHELKA that just around the time Carol and Steele alerted him about the company’s dubious finances, an incident occurred which deepened his suspicion. “In May 2009, I was asked by the company to secure bank loans to buy new hotel properties. I went to Citibank and provided them the balance sheets, etc. However, a senior banker in-charge of commercial banking unit at the bank flagged the disproportionate amount of cash flow under the head of ‘hospitality consultancy’ from overseas firms. He sent us a few emails asking several probing questions. But when I sought details from Moravekar so that I could explain it to the bank, I was told to not respond to Citibank’s queries and instead look for some other bank,” said Kumar. He also provided TEHELKA copies of mails between him and Citibank to buttress his claim.

Whistleblower Kumar furnished proof to show that over 60 percent of the company’s revenues came from overseas hospitality consultancy

Over the next 10 months, Kumar collected as much evidence as he could from the company’s corporate office at Manhattan and finally in April 2010 handed it over to the office of the New York District Attorney.

“Suspecting that both Carol and Steele were conducting enquiries into company’s funds, they were both asked to leave,” Arvind told TEHELKA. Steele was asked to leave in August 2010 and Carol in February 2010. Steele and Carol soon joined Arvind in forming a group named Panoramic American Whistle Blowers Protection & Welfare Association.

Steele and Carol also sent complaints to their respective state labour departments in New York and North Carolina for employment fraud and cheating. In March 2011, they sent written complaints to the Manhattan District Attorney Office, alleging that Panoramic was conducting money laundering in the garb of hotel businesses.

But shockingly, the email communication between Manhattan DA office and the whistleblowers does not inspire much confidence that the US authorities would carry out an urgent and detailed investigation.

In an email dated 6 October 2010, Scholl wrote to Arvind that he couldn’t see a clear violation of any US laws. He wrote, “If a parent company wants to allocate its revenues to subsidiaries and those subsidiaries pay taxes on the money, there is no clear United States law broken.”

In another email sent on 1 November 2010, Scholl wrote to Arvind saying that he would be happy to speak to Indian authorities if they wished to speak to him. Overall, it showed a lackadaisical approach on the part of the US authorities to investigate the matter.

TEHELKA wrote an email to Manhattan DA office asking about the status of the investigation but had not received a reply at the time of going to press.

TEHELKA ALSO sent a detailed and specific questionnaire to Panoramic which led to an interview with CEO Gopal Viswanathan.

In his company’s defence, Viswanathan said that there was a case of embezzlement of company funds, for which an employee in the US, Ravi Kumar Loganathan, was arrested in March 2010. TEHELKA found out that Loganathan embezzled $4.5 lakh (roughly Rs 2 crore) of company money and also confessed to his crime. He is currently in jail.

But in a bid to obscure the facts, Viswanathan claimed before TEHELKA that, “Arvind Kumar was also involved along with Loganathan in siphoning the company money and that’s the reason he had been making these false allegations.”

TEHELKA investigated and found out that Viswanathan’s claims were a pack of lies.

CEO Viswanathan claims Kumar, along with Loganathan, had siphoned off company funds and hence these allegations. TEHELKA found this to be untrue

In more than a year since Loganathan has been arrested, Panoramic has not lodged any criminal complaint against Kumar for the alleged stealing of company money. In fact, the company tried to muzzle him by sending him a civil defamation notice. TEHELKA has a copy of the same and there is no mention of any charge of siphoning off of funds.

Two, TEHELKA accessed Loganathan’s confession and found that while he admitted to his own wrongdoings, he made no mention of Kumar’s involvement. Three, TEHELKA found that Moravekar had delegated all his administrative and financial powers to Loganathan in the US and until he was arrested it was Loganathan who was running the show. In fact, Kumar was interviewed and hired by Loganathan. Four, when TEHELKA told Panoramic that the allegations of money laundering were not leveled by Arvind alone but two other former senior employees Steele and Carol have also complained to US authorities, Panoramic had no defence.

When asked by TEHELKA about the nature of the dubious entities in countries like Hong Kong, Singapore and Dubai which had been transferring funds into company’s US accounts, Panoramic came up with a very bizarre explanation. “We develop software in India and then sell it to wholesalers who in turn sell it to small countries in different parts of the world. And then the money is remitted by both wholesalers and retailers in our US account,” claimed Viswanathan. In the same breath, Viswanathan accepted that the company had no software development operations in the US. He said that the software development happens at one of the company’s facilities in Navi Mumbai but offered the outlandish explanation that the sales money was routed to a US subsidiary.

On the day of going to press, this reporter received an intimidating phone call from a man who identified himself as Hari Singh, an additional Superintendent of Police posted with the Special Crime unit of CBI. The ‘officer’ wanted this reporter to think twice before publishing any article. TEHELKA immediately lodged a formal complaint with CBI Director AP Singh and is awaiting his reply.

PANORAMIC IS presently being investigated by the CBDT.

TEHELKA has a list of a few more cases of suspected money laundering being investigated by the CBDT and ED. Perhaps, the SIT, once it’s done with Panoramic investigation, could start with them as well.

A Delhi-based banker who was earlier an employee in a major private Indian bank and is now Assistant Vice President in a private wealth management company based out of Dubai (UAE) is also under investigation. He has been meeting high net worth individuals of Mumbai and Delhi in the recent past and offering to remit their funds with the FII in Dubai where it can be utilised more gainfully, mostly by trading in equity, commodity and other instruments.

During the search operation by the IT on a company which was trying to bring an IPO issue in 2007-08, the investigators stumbled upon the name of an Investment advisory company which is a subsidiary of a Zurich-based entity. The latter is providing services to investors (institutions, banks and individuals) from India, Switzerland and Europe of subscribing to funds being operated by it. These funds are making investments in Indian companies by way of PE stake-holding. Each fund has about 15 investors. This Zurich-based entity is one of the units founded by a Swiss banker who started his career with UBS. Two funds have already been launched in India and are now being investigated for alleged money laundering. Investments in these funds are being made through the Indian subsidiary. It appears that the Zurich-based unit claims to be organising funds mostly from Switzerland and making the same available to Indian companies. Market intelligence available with the agencies suggests that the unit is facilitating re-routing of funds parked in Switzerland in the garb of PE to Indian promoters. All the five entities that have received investments are low-profile companies with no serious track records, allegedly with links to certain dubious entities.

A Bengaluru-based chartered accountant/ tax consultant as well as a known middleman has taken the status of a Non-Resident Indian, though he stays and operates in India. He handles funds for liquor barons and a series of middlemen and transfers the funds through his Singapore operations. He is now being probed.

The Enforcement Directorate has intelligence on the Indian subsidiary of a London-based company which, according to agencies, is one of the foremost roundtrippers of funds and is one of the largest ‘merchant bankers’ for FCCB (Foreign Currency Convertible Bonds) and ADR/GDRs. Prior to joining this, the promoter was an investment banker with Credit Suisse First Boston. His modus operandi involves actually transferring money out of India either through hawala or invoice manipulation and bringing the same back in the form of FCCB or investments. His clients include companies with dubious credentials.

The SIT formed by the apex court has been given a loose and undefined mandate of investigating a whole issue rather than specific cases. This has led to a debate, with many people asking whether such special probe teams would be more efficacious if they are entrusted with specific cases instead of investigating the entire parallel economy of black money.

Hasan Ali is the only specific case before the SIT at this stage. A multi-disciplinary team comprising over half-a-dozen agencies have already slogged for over a year and could only track down Rs 3.25 crore which he had wired to a Swiss bank.

As mentioned earlier, it wouldn’t be a bad idea for the SIT to oversee the Panoramic investigation, which appears to be a far more concrete case than that of bluffmaster Ali. And then perhaps to take over the mettle of a watchdog, nudging the agencies to take up other concrete cases and investigate them to their logical conclusion.

Ashish Khetan is Editor, Investigations with Tehelka.
ashish.khetan@tehelka.com


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From Tehelka Magazine, Vol 8, Issue 29, Dated 23 July 2011
 

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