NDTV raises questions about investors of BJP chief’s firm

Bharatiya Janata Party president Nitin Gadkari on Saturday denied on NDTV allegations of murky financial dealings and conflict of interest.

In an exclusive interview with the channel, Mr. Gadkari said he did not agree that there was a conflict of interest in his being a leading politician and a businessman. The latter role, he said, had ceased to be pertinent. His sugar company was one of the biggest companies in the Vidarbha region. Mr. Gadkari said the business was an agriculture cooperative, set up for social good to help farmers driven to suicide.

A statement from NDTV said Mr. Gadkari was the Public Works Department Minister of a Shiv Sena-BJP government in Maharashtra in 1995-99 when a company called Ideal Road Builders (IRB) was awarded hefty contracts. Ideal’s turnover rose from Rs. 41 crore in 1996 to Rs. 67 crore in 1999.

A little after he demitted office, IRB invested in Mr. Gadkari’s Purti group of companies in 2001, picking up almost Rs. 1.85 crore worth of shares. IRB has since become a subsidiary of IRB Infra Developers Ltd. NDTV said IRB founder D.P. Mhaiskar invested in around Rs. 2 crore worth of shares and together they controlled about 8 per cent of Purti Group.

In financial year 2010, Purti Group got a loan of Rs. 165 crore from Global Safety Vision, a company started by Mr. Mhaiskar. With this loan, Purti was able to repay all its outstanding debt. However, in its last regulatory filings, Global Safety Vision had only Rs. 1 lakh paid up capital.

Contractors and friends

While his opponents allege that these loans and investments were quid pro quo, Mr. Gadkari denied it, saying he had not done any favours for IRB. He defended his ties with Mr. Mhaiskar, saying: “I can accept equity from anyone, there is nothing wrong. I am a friend of Mr. Mhaiskar and many contractors are my friends... Purti has losses of Rs. 64 crore, Mr. Mhaiskar loaned me Rs. 165 crore from his company, and I have repaid Rs. 64 crore.”

But NDTV has raised other questions about the investors of Purti Group, which has eight group companies having interests in power, sugar, ethanol, alcohol, bio diesel, among others. NDTV’s investigation found many ‘mystery’ owners and investors. While the total share capital of the company is Rs. 68 crore, almost Rs. 50 crore comes from about 18 such companies. These companies own 70 per cent of Purti. Mr Gadkari, who is shown as chairperson on the company's website, only owns about 200 shares.

NDTV found that two of the firms — Swiftsol India and Earnwell Traders — are registered in a chawl in suburban Malad in Mumbai, where there is no trace of either company. At one address, a family has been living there for over 20 years and has not heard of this company. At another address on Hajibapu Road, again in Malad, are the registered offices of Chariot Investrade, Regency Equifin and Leverage Fintrade, but again all NDTV found was a family which didn’t know these companies. These companies have made investments worth Rs. 17 crore in Purti. Similarly, the NDTV correspondent in Kolkata went looking for an office on MD Road and didn’t find anything. Tracing the directors of these companies — some of whom are common — was futile, the NDTV statement said.

Denying these were shell companies, Mr. Gadkari said the addresses had changed. “A lot of stakeholders have changed their address. There are 10,000 stakeholders,” he said. The BJP chief said he could not be expected to have ready details, but, on prompting, said he could furnish the “addresses of all 10,000.”

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