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Updated: October 26, 2012 01:03 IST

Gadkari and the business of politics

Sreenivasan Jain
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The BJP president’s financial dealings reek of cronyism and conflict of interest, and could jeopardise his political career

The current shadow of controversy that hangs over Bharatiya Janata Party president Nitin Gadkari has its roots in the distinctive nature of Maharashtra politics, dominated by owners of sugar mills, cooperative banks, dairies, and educational institutions, sometimes by all four at once. It’s a trend which might cause alarm elsewhere but which Maharashtra’s politicians like to present with a benign spin, that there is nothing wrong with padding your political base and bank balances as long as it is also in the public good. Who knows, perhaps in its early years this formula might have made for a certain kind of progressive politics, absent in the cow-belt States. But 50 years down the line, those same cooperative banks and sugar mills have been milked dry and run to the ground. The State’s businessmen-politicians have expanded into areas of hard commerce like hotels, malls, and luxury apartments. As a natural corollary, builders and contractors have been made MLAs, MLCs and MPs. Today, Maharashtra regularly makes headlines as the perfect Petri dish for everything that ails contemporary Indian politics: cronyism, conflict of interest and sometimes, outright corruption.

Mr. Gadkari’s own business career reflects the perils of that model.

As a late entrant to Maharashtra’s politician-businessman club, Mr. Gadkari began with a sugar mill in Vidarbha in 2001, ostensibly to encourage the region’s distress-hit cotton farmers to turn to a less risky crop. Except he chose to locate his plant on the outskirts of Nagpur, somewhat removed from the cotton-growing, suicide-prone districts of Vidarbha. At any rate, his description of himself as politician-cum-social entrepreneur would apply, if at all, to Purti’s early days. Very swiftly, Purti expanded into areas that made it hard to justify outright social benefit, like ethanol and alcohol, which it supplies, among others, to Vijay Mallya’s UB Group. When Purti decided to expand into power, Vidarbha’s sunrise sector, it brought Mr. Gadkari in conflict with his own party, which opposed the diversion of water from Vidarbha’s irrigation dams to a rash of new power projects. On Purti Group’s website, one of his group companies, Avinash Fuels, says it has applied for coal mining in Maharashtra, Orissa, Madhya Pradesh and Chhattisgarh. (The website has since disabled all such pages). But it retains Purti’s basic description as ‘Vidarbha’s leading business group’, ‘a Rs. 3000 million company’ — which only shows how far Mr. Gadkari has come from his self-description as a patron of Vidarbha’s poor.

While all of this may have opened up Mr. Gadkari to questions of conflict of interest, our investigation has raised more serious questions about the source of the capital that financed Purti’s rapid growth.

In its regulatory filings, Purti Sugar and Power Pvt Ltd.’s start-up finance came from a paid-up capital of Rs. 68 crore, raised through the sales of six crore shares. About 70 per cent of these shares are owned by 18 companies. Their identity is impossible to ascertain since, as NDTV reporters discovered, none of them have given accurate addresses. For example, Earnwell Traders and Swiftsol India, which own shares for about Rs. 5 crore in Purti, gave their address as Govind Karman Chawl in Malad East. The residents of the chawl had never heard of these companies. Similarly, another set of investors in Purti, Chariot Investrade, Regency Equifin and Leverage Fintrade, also gave a false address in Malad East. One company, Sterlight Fincom, has changed its address three times in five years. And so on.

Evasive

When we asked Mr. Gadkari in studio last week about the identity of his mystery investors, he was evasive. He first said Purti was owned by 10,000 farmers, and he cannot remember each of their names or addresses. We pointed out that these so-called farmers own only 10 per cent of Purti, and that the rest are owned by 18 companies. He then said he “approached many people from the society: industrialists, traders, businessmen and investors ... and also NRI people”.

But several of these companies have Mr. Gadkari’s personal staff as their directors. Ashwami Sales and Marketing, which invested Rs. 3.2 crore in Purti, has as its director Manohar Panse, Mr. Gadkari’s driver. Sterlight Fincom, which invested about Rs. 4 crore in Purti, has as its director Vishnu Sharma, Mr. Gadkari’s astrologer. Why would the cash-strapped president of a political party borrow money from his own (presumably even more cash-strapped) employees?

Moreover, Mr. Gadkari has advanced loans to at least one of these companies that he is borrowing from. The balance sheet of Regency Equifin, which bought about 40 lakh shares in Purti, shows an unsecured loan from Nitin Gadkari of Rs. 26 lakh in 2009, which is reduced to Rs. 16 lakh in 2010. So not only is Mr. Gadkari borrowing from companies run by his personal staff, he is also lending money to those companies.

In his defence of the BJP president, senior party leader Lal Krishna Advani has said the “allegations [against Gadkari] are about standards of business and not about misuse of power or corruption”. But in the words of a chartered accountant, companies that exhibit such features — ghost directors and addresses, cross-holdings, cronies as directors — fit the pattern of shell companies used to convert black money into white. According to this CA, somewhere, six layers back, these companies would be making cash deposits into a bank account, most likely in a bank with weak regulatory framework. And while these market practices, however dubious, are not unusual for businessmen looking for quick cash-to-cheque conversions, Mr. Gadkari is no ordinary businessman. Congress leader Digvijay Singh was quick to allege that Mr. Gadkari is routing kickbacks via these shell companies.

Mr. Gadkari has vehemently denied this. But one of the early investors in Purti (and the only one whose identity is known) is Ideal Road Builders, a subsidiary of Maharashtra’s biggest toll road company, IRB Infra Developers Ltd. During Mr. Gadkari’s stint as PWD Minister between 1995 and 1999, Ideal Road Builders received six contracts worth Rs. 63 crore. Just a year after Mr. Gadkari demitted office and started his sugar factory, Ideal picked up shares worth Rs. 1.85 crore in Purti, later increasing their shareholding value to Rs. 2.8 crore. D.P. Mhaiskar, a director in IRB, also picked up Purti shares worth Rs. 4 crore on an undisclosed date. In 2010, Global Safety Vision, a company with Mr. Mhaiskar as director, loaned Purti Rs. 164 crore, which Purti used to wipe out its entire debt. Global’s balance sheet shows a paid-up capital of only Rs. 1 lakh. Mr. Mhaiskar told The Times of India this week that he had raised the money by selling a chunk of his personal stake in IRB.

Question of equity

Mr. Gadkari seemed aghast at the suggestion that ex-PWD Minsters should not accept investments or loans from road contractors. He said the tendering process to Ideal Road Builders was above board, a claim contested by the NCP. Mr. Gadkari also said “taking equity is not a fraud. Equity is not a corruption, equity is a shareholding.” True. But for a politician and an ex-Minister, it is important to explain the source of equity. Equity from a road contractor to whom he has awarded tenders carries a strong whiff of conflict of interest. Equity from sources whose identity he has not been able to explain carries more serious implications. Mr. Gadkari has offered himself and his companies up for an enquiry. The government has responded with far greater alacrity than it demonstrated in the case of Robert Vadra, ordering enquiries by tax authorities and the Registrar of Companies into Purti and its investors.

Regardless of the UPA’s blatant double standards, the very fact that he is being probed will do no good to Mr. Gadkari’s political career, poised as it is at a critical juncture. This is quite apart from the damage any potentially damaging findings would cause. Would he in hindsight agree, as some in his own party do, that business and politics do not make for a healthy mix?

(Sreenivasan Jain is Managing Editor, NDTV. He anchors the ground reportage show, Truth vs Hype on NDTV 24x7. E-mail: vasu@ndtv.com)

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A good expose' of a person engaged in relentless pursuit of pelf and power while posturing as a philanthropist (social entrepreneur), and in the process vitiating the dharma of all three. As an eminently 'successful' politician-businessman-swayamsevak, he is unlikely to have any dharmashanka but he has certainly landed his Parivar in a dharmasankat!

from:  K Saint
Posted on: Oct 28, 2012 at 13:36 IST

It is shame for our country that representatives of our common mass are actively involved in graft.It is even more unfortunate to listen them arguing in their defence in a clever manner backed by the concerned political party .Even today most of the people of our country don't know about their wrong doings,the power of their vote& their ownership in this land.

from:  m c pradhan
Posted on: Oct 27, 2012 at 18:40 IST

I am sure that our country will definitely have enough honest men like Nehruji, Kamaraj to rule us. But the practical difficulty is whether they have any slimmest chance of even securing a deposit, leave alone winning. I think the way our Indian ploitica are moving is alarming and very dangerous for the country. Eventhoug I am sure that Mr. Kejriwal will fail utterly, but I am haapy atleast one amn is voicing against these ugly things. We will start shouting about these acts and atleast in the next century after our demise , our holy country will be ruled by honest politicians.

from:  R.Manivarmane
Posted on: Oct 27, 2012 at 15:29 IST

It is depressing to read one case after the other of corruption at the highest level of our
society. One can't help but feel the whole lot is rotten and needs to be thrown out. Perhaps it
is time to give Kerjiwal and his team a chance and see if it possible to bring some honour to
national politics and honourable people to run the country. Otherwise we face a dismal future
much like what has gone on for the last several decades. Some of the poorest countries
have improved their people's lives to a far greater degree. Because of the corrupt nature of
our politics, we still have 836 millions people living on less than a dollar a day and we have
the largest number of people suffering from disease, malnutrition, homelessness and what
not. Let us find our courage and try something different next time.

from:  Virendra Gupta
Posted on: Oct 27, 2012 at 02:22 IST

If Nitin Gadkari resigns today, it would be a big win for IAC team. The best part of this disclosure has been that IAC was successful in making the Congress lock horn with BJP and now both the parties are targeting each others Senior leaders which hasn't been the case before. It also gives strenght to IAC's claim of being a political alternative to BJP and Congress as both of these major parties are fighting against charges of serious corruption by the their top leaders.

from:  Robin Johri
Posted on: Oct 26, 2012 at 21:32 IST

Although what he said might be true..but I seriously doubt the double
standards of media especially if it is NDTV.with out covering any
scams under congress government media is misleading the country.the
best example is Andhra pradesh and Karnataka.national media just
concentrated BJP ruled Karnataka while leaving Andhra Pradesh....is
n't it wrong to call themselves as journalists..

from:  kommu omkaram
Posted on: Oct 26, 2012 at 20:14 IST

Do you know that half of Kejriwal's new party members have indulged in
corrupt practices . What is the developmental background of Kejriwal.
In the name of transparency, he wants to bring back babudom and red
tape. Every action will be seen with suspicious eyes. Poor people of
the country need employment, housing, food , education and good roads.
They are not bothered about high moral grounds. Like Shri Advani said
Gadkari's case may be poor business standards , but not outright
corruption and abuse of power practiced by Congressmen . Benefit of
doubt should be given to Mr.Gadkari. He has created employement in
backward Vidharba. All big businesses in India have started with shell
companies, a case in point is Reliance. But they generated employment
to lakhs and crores of people, apart from revenue to the exchequer.
Hungry people are not bothered about what the well educated and
employed people think about Mr.Gadkari.

from:  RAJESH YADAV
Posted on: Oct 26, 2012 at 20:10 IST

Its sad that virtually all politicians have their hands deep in the dirt. Though they need to be investigated and punished at the earliest we should also focus on the other classes one the IAS/IPS lobby who teach these tricks and facilitate for the politicians/businessmen and of late the media which I think is equally involved. Why before Kejriwal and company started shouting no one was going on a fact finding mission, Radia tapes exemplifies this malaise in all glory. God knows where this country is heading for?

from:  Rahul Dev
Posted on: Oct 26, 2012 at 20:07 IST

As Mr. Kejriwal has said that BJP and Congress are bhai bhai. Same we'll get to see in 2014 elections. Something similar to what we had seen in Nayak movie. When Anil Kapoor became strong all other political parties came together against him. Although in the movie Anil Kapoor won election but that wont happen with Mr. Kejriwal. Interestingly the same audience will become electorate in 2014 and exhibit a kinda weird understanding of current affairs.

from:  Arun
Posted on: Oct 26, 2012 at 19:48 IST

I support Mr.Gadkari. Politics and business can certainly co-exist. If
every politician starts a manufacturing unit based on agro raw
materials in every district of the country, I think majority of
developmental issues in the hinterland will get solved automatically.
It will bring growth and employment to that district. I am from
Maharashtra and tell you that when he was PWD minister here in 1995-
99, he built world quality roads and bridges and prominently Mumbai-
Pune expressway which is first in the country. Your argument that look
clean from outside and be dirty inside is not good for the country.

from:  s.v.bhat
Posted on: Oct 26, 2012 at 19:36 IST

we as indians are totally fed up of all dirty exposures of so called patriots,

from:  JAYESHKUMAR
Posted on: Oct 26, 2012 at 19:09 IST

Ex President Bangrau Laxman in jail . The present President Gadkari on way to jail .
BJP is certainly a party with a difference .

from:  hemant
Posted on: Oct 26, 2012 at 19:02 IST

The current state of politics in Maharashtra is indeed a cause for
great concern. The amount of money that is being made by politicians and
the money that is being spent to buy out voters is mind blowing. As
much as 10000 Rs are being paid per voter to buy their allegiance - A
fact that is common knowledge but you will find no one raising a voice
against it.

Politico-entrepreneurship as a means to wealth and power has been a
characteristic feature of Maharashtra since the days of the Maratha
rule. Over the years the dominant political class of the state have
mastered the art of making big money through activities that at least
appear to be in the public interest - some thing that the writer has
rightly pointed out. Although Gadkari's efforts of being a businessman-
politician is in line with the political tradition of the state, there
is one small deviation, he has raised his money through private
equity. The sugar cooperatives of Maharashtra have all thrived on
goverment support

from:  Mumbaimaniac
Posted on: Oct 26, 2012 at 17:40 IST

From my understanding, there are only two castes in the world: The
predators and the cattle. The politicians (who call themselves as the
'Ruling class'), the rich ('Business Elites'), the bureaucrats
('elites') and terrorist groups ('Maoists', 'Al-Qaeda', etc) form the
predators. The rest are nothing but 'cattle'. In the law of nature, i
have never seen a predator letting its food muscle-up strength to make
a stand. So, obviously these people are hand-in-glove: INC let the UC
chairman escape, UPA let Quttrochi off the hook, UPA reinstated
Kalmadi, Ms. Kanimozhi, etc, etc,etc. And with regard to the 'cattle':
they believe in fate, mislead by faith and communalism, and finally
die (farm suicides, enslavement, etc)
Nothing is going to change, until these 'cattle' realizes the true
nature of the predators. I called the common man 'cattle' because I
could find no evidence of independent thinking process in them

from:  Bharat
Posted on: Oct 26, 2012 at 17:37 IST

The article has suggested the wrongdoings of Mr.GAdkari's firms but they dont present a clear cut case as for Mr. Vadra. Though a comaprison should not be made , still one cannot stop thinking a could-be case of business ill-dealings (by Mr. Gadkari) is being used to supress the more severe case of misuse of political impact(Mr Vadra).THOUGH both chips of the same rock but can be said that congress with help of its mouthpieces has been able to sideline Mr Vadra and push forward Mr. Gadkari. way to go Indian Media(read NDTV and likes).

from:  vijay
Posted on: Oct 26, 2012 at 16:27 IST

Senior BJP leader Shri. L.K.Advani says that this is the case of
business standards and not corruption. But why not follow the business
standards when you are dealing with public money? Clearly the future of
BJP in next general elections of 2014 is blur. Giving a strong answer
to these corrupt politicians and also to the corrupt SYSTEM that they
have made by voting a new party like that led by IAC is the only option
left to Indians. The system has become so corrupt that anyone entering
into it is subjected to or is forced to do the corruption.
As said by IAC, we have to change the SYSTEM. Changing only the ruling
parties will no more work here. Hopefully India will see a whole new
system in the country which is lead by true patriots coming from the
common man level.

from:  vivek patil
Posted on: Oct 26, 2012 at 16:08 IST

Business and politics must not mix but sadly political connections are
required and used to obtain large Loans from banks, Right to minerals,
approvals from Environment ministry and silence army of inspectors.

from:  Atma Gandhi
Posted on: Oct 26, 2012 at 15:02 IST

Good Job done by Srinivasan Jain. I wonder why the entire media hastaken up cudgles with Gadkari, BJP and RSS. Is this a part of a conspiracy to malign the good people, the natioanlists at the behest of Italian Sonia who is ruling this great country of great people by proxy? Why the media was silent on various scams, the most recent of them being that of 'Jamai Raja Vadra's scandal? Will Mr Jain take pains to answer these simple querries of common man like me?

from:  Virag Pachpore
Posted on: Oct 26, 2012 at 14:36 IST

Hope the journalist investigates in such a thorough manner other scams too. Chidambaram, Khurshid, Vadra, the whole DMK cadre, Raja (especially), Maran, should be a few good leads, I think.

from:  luhar sen
Posted on: Oct 26, 2012 at 14:23 IST

Another day another scandal. It is very depressing to read these news day in, day out. With the money, cronies, law favouring his crimes and influence from political front Mr. Gadkari will come out clean and one day may be PM of India.

from:  Vinoth
Posted on: Oct 26, 2012 at 14:06 IST

Crudos to the media for doing wonderful job FOC vis-a-vis Bureaus of Investigation.
For tracing Rs. 65 crores, how much did you spend: Rs. 350 crores. How many
continents did you visit ? All 5 continents your honor. Did you see light at the end ?
No your honor. Shall we close the case ? Yes your honor. Yes your honor.

Media groups would out-smart one and another in exposing. More fireworks in the
offing ??

from:  Krishnan
Posted on: Oct 26, 2012 at 13:50 IST

Unfortunately media is also a big business and all businessmen have to protect their interest..

from:  ramesh
Posted on: Oct 26, 2012 at 13:31 IST

NDTV has done a good job. But ironically, BJP leaders and BJP’s
ideologues journalist-friends do not find anything controversial about
source of funds. Even the RSS has come to the rescue and is providing
moral support to Shri Nitin Gadkari. Both the BJP and RSS are entitled
to do so. But citizens know that the source of funds of companies who
have made investments in Shri Gadkari’s main company requires a
thorough probe. Enough evidence is in now in public domain which calls
for detailed answers from those who made such investments in these
businesses. It is clear that both RSS and BJP would fast lose
credibility if they continue to protect Shri Gadkari.

from:  Narendra M Apte
Posted on: Oct 26, 2012 at 13:27 IST

An old wine in a new bottle.The fact finding exercise has been published many times for different personalities in recent days by"THE HINDU" but public has lost interest of such exposures.Public has come to know the out come of such exercises will end up with a "Drama of Inquiries"and every one INVOLVED will be given a CLEAN CHIT because THE KING IS ALWAYS RIGHT OR MIGHT IS RIGHT. Only good thing media is doing by showing the greed and real faces of so called leaders and well wishers of AAM AADMI.

from:  Ravindra Raizada
Posted on: Oct 26, 2012 at 13:00 IST

Will there be a similar probe against Robert Vadra ?

from:  subs
Posted on: Oct 26, 2012 at 12:49 IST

Moneybags like Gadkari (and there are his equivalents in every
political party in India) should have no place in politics. They
progress through the ranks of their parties based on the strength of
their financial resources, which in turn they secure and multiply
through the abuse of power. It happens at every level of our political
/ government / business system, starting with the small-town road
construction contractor in unholy alliance with the local MLA all the
way to chief ministers and union minsters beholden to mega tycoons.
Time for this cesspit to be cleaned up... political parties should be
subject to regulation by law. We need norms as to their membership,
verified regularly by a constitutional ombudsman. Their selection of
office bearers and electoral candidates should be through election
supervised by the Election Commission of India. Their funding should
be a matter of transparent public record subject to audit. Elections
should be funded by a tax levied on big business.

from:  Ajay Singh
Posted on: Oct 26, 2012 at 12:44 IST

Laudable as the research done in Gadkari's case is - may I ask Srinivasan Jain of NDTV
which seems a mouthpiece of the UPA, why similar vigour hasn't been shown in case of
Vadra? India's biggest problem is not corrupt politicians, but corrupt media...

from:  Jay
Posted on: Oct 26, 2012 at 12:42 IST

Hi Vasu,
Great job... Thanks to you and your team for collecting evidences and stacking it together to do a comprehensive reporting. But the one question that most of us have is, why was this not done for the other businessmen / politicians? Why such intense pressure was not applied on Mr Vadra when the news broke out in ET last year? And if not then, Mr Digvijay singh for quite a long time has been suggesting that Mr Gadkari's Biz interests be probed. It was not done even then. When Mr Vadra, Mr Kurshid & Mr VBS alleged frauds were being aired, this investigation comes up...Now, most news channels have even forgotten the alleged scandals of the trust, Mr Virbhadra's LIC policies & Mr Vadra's dealings with DLF. The pattern seems to be working on Mr Shinde's principle of 'People will forget...' by making them forget.... However, congratulations on a job well done and if this can be done across party lines without partiality, it would be greatly appreciated...

from:  R Ramanujam
Posted on: Oct 26, 2012 at 12:35 IST

Nice one!!.Thanks for bringing out the crude facts in a simplistic
way.
Now how about Mr. Avdani takes an anti-corruption rath yatra with Mr.
Gadkari by his side. There is no doubt that 99.99999% of the political
bigwies are corrupt. Or become so in a matter of days after "winning"
(as if they have fought a fair battle with an honest man) their seats.
Political affiliation whether it is with Congress, BJP, DMK, NCP,
AIADMK, SP, BSP, TMC, JDU, RJD, TDP, LJD etc etc. is completely
independent with corruption. But as a youth of India, I must tell all
these people that we are not going to tolerate this any more. Whatever
you have taken from our country, we will take double back from you.
And it will be WITHOUT exception.
Jai Hind.

from:  Pitambardas
Posted on: Oct 26, 2012 at 12:22 IST

With no offence to Mr. Gadkari, a business man has no business to be
in politics-a field to serve the citizens in an upright manner without
compromising moral and ethical standards. History, particularly in
India, is replete with instances where a businessman enters politics,
he invariably uses his position/ political clout for furtherance of
his/ his favoured one's business interests, at the cost of service to
the nation and the people who he represents. We have reached a stage
where we should reject big money bags with business empires and
replace them with well qualified people endowed with the ability in
serving public causes in an unblemished and accountable manner.
.Besides, legally enforceable ways of funding of elections by the
public should be devised, with severe punishments like life time ban
for contesting any elections on violators, to restore credibility to
the much abused electoral system in India. Corporate funding of
elections should also be banned.

from:  Shekar
Posted on: Oct 26, 2012 at 11:34 IST

Now we have to realize that irrespective of any parties, all politicians are one among the same. As rightly once said by our former Tamilnadu chief minister late shri.Kamrajji “All are soaked in the same dirty pool". ("ORE KUTTAIYIL OORIYA MATTAIKAL")

from:  A.SESHAGIRI
Posted on: Oct 26, 2012 at 09:27 IST

Arvind Kejriwal may have a point. As long as we vote these corrupt gang of politicians
who make public postures to tell us they oppose each other while they actually collude
to loot us , we are going to have the repeat of the same story. Good journalists,
thinkers and others interested in eradicating this scourge must advice Kejriwal and give
him a kick start and a chance to prove himself.

from:  P.N.Shreeniwas
Posted on: Oct 26, 2012 at 07:55 IST

Let us not leave media out of the collusion of business interests and politicians. Its
amazing how quickly the media outlets dig up dirt after the original expose by Mr.
Kejriwal and Co.. Its like they already have the dirt and only peruse it once someone
has opened the can of worms and its hard to contain it.

from:  Abhishek
Posted on: Oct 26, 2012 at 05:56 IST

BJP presidents are very wet behind the ears when it comes to corruption or running a business shrouded in mysterious ownership. Bangaru Laxman was done in by a sting operation. Mr Gadkari with his naivity. His driver mr Panse and his astrolger as investors -- a man not smart enough to cover his tracks in business cannot be entrusted with the job of running the country. The earlier BJP drops Gadkari, the better will be their poll prospects.

from:  mani sandilya
Posted on: Oct 26, 2012 at 04:52 IST

Mr. Gadkari's defense by Ms Swaraj and Mr Advani might yield their
underground financial connections with Mr Gadkari. In any case, Mr
Gadkari has sealed the BJP's fate in the coming election and tons of mud
is already dirtying the Party's image. Most credit goes to Mr Kerjiwal
who has the guts to expose the masked thieves almost single-handed. Hats
off to him.

from:  prem kumar
Posted on: Oct 26, 2012 at 03:35 IST
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