| Who to believe: Vadra's bank or balance sheet? |
| BS Reporter / New Delhi Oct 12, 2012, 00:02 IST |
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The curious dealings of Robert Vadra have become even more curious, with a bank mentioned in the balance sheet of one of his companies denying it ever undertook a transaction clearly stated in the firm’s auditor’s report.
Mangalore-headquartered Corporation Bank has said in its reply to a Business Standard report (Vadra: ‘A little help from my friends’, October 10), which pointed out that the bank’s Friends Colony branch had given an overdraft of Rs 7.94 crore to Vadra’s firm Sky Light Hospitality, that such a transaction did not take place. “We have gone though (sic) our records and do not find that any such facility was granted to M/s Sky Light Hospitality as has been reported,” the bank said in a fax this evening, quoting the article mentioned, but did not deny it had business dealings with Vadra or any of his firms.
The overdraft of Rs 7.94 crore by the Friend’s Colony Branch of Corporation Bank, however, is clearly present on page 5 of the auditor’s report for Sky Light Hospitality for 2007-2008, under the head ‘Schedules Forming Part of Account for the Year Ended 31st March 2008’. This document is publicly available on the ministry of corporate affairs (MCA) website.
The document is signed by both Robert Vadra and his mother, Maureen Vadra, both directors in Sky Light Hospitality, as well as chartered accountant, S Ramachandra Bhat, of SRC Bhat and Associates on September 5, 2008.
With Corporation Bank, whose name and branch is plainly stated in the balance sheet, now denying it extended any such facility to Vadra, the veracity of the information with the MCA itself is unclear. The implications are far-reaching. If the transaction was never made, as asserted by Corporation Bank, then it is not beyond reasonable doubt the mistake lies with the company in question, Sky Light Hospitality, or its auditor, SRC Bhat and Associates, or both.
The question also remains open, as a result of this, that if Corporation Bank did not provide Vadra with Rs 7.94 crore, then where else could it have come from? The amount is crucial because the same year Sky Light Hospitality paid the first instalment of Rs 7.94 crore to buy land in Haryana’s Manesar, thereby kicking off Vadra’s foray into the real estate business.
http://www.business-standard.com/india/news/who-to-believe-vadras-bank-or-balance-sheet/489337/
| Corporation Bank probes into overdraft to Vadra's firm |
| The branch had given an overdraft of Rs 7.94 crore to Sky Light, which at that time had a paid-up capital of Rs 1 lakh only |
Abhijit Lele & Somasroy Chakraborty / Mumbai/Kolkata Oct 10, 2012, 21:26 IST
Almost five years after it offered a generous overdraft facility to Robert Vadra’s Sky Light Hospitality, Corporation Bank has initiated an internal probe to examine if the transaction violated any regulatory norms.
The bank’s senior management has asked its Delhi regional office (the overdraft was given by Corporation Bank’s Friend Colony branch in New Delhi ) to send details on the transaction that dates back to 2007-08, sources familiar with the development told Business Standard today.
Public sector bank probing overdraft that helped Vadra buy land
Finance Minister P. Chidambaram may have described the controversial business dealings of Sonia Gandhi’s son-in-law as transactions involving “private individuals” but the disclosure that the public sector Corporation Bank had extended an overdraft of Rs 7.94 crore in 2007-2008 to Robert Vadra’s Sky Light Hospitality when his company had total resources of only one lakh rupees has left officials at the Mangalore-based lender scrambling to understand the circumstances in which the transaction took place and whether it conformed to normal lending guidelines.
Asked what amount Corporation Bank would normally extend as overdraft to a borrower with a company whose issued capital was Rs.1 lakh, Ajai Kumar, Chairman and Managing Director, Corporation Bank, told The Hindu, “It is not a question I can answer until I get the full facts. You should understand. You have to take the full picture.” He cited client confidentiality for not sharing the information, even if he were to get it, on Mr. Vadra's business with the bank. However, he added that he could get the full facts from the branch in Delhi “may be by tomorrow” [Thursday].
Details of the overdraft were reported in Business Standard on Wednesday, which noted that the money—which was used towards the first instalment on a Rs 15.38 crore parcel of land in Manesar, Haryana—was returned to the bank by Mr. Vadra a year later. The land itself was sold by Mr. Vadra to DLF for Rs 58 crore.
It is not clear from Sky Light’s balance sheets what collateral, if any, was put up for the overdraft.
B.K. Divakara, General Manager (Credit), Corporation Bank, told The Hindu: “As of date, we have no liability from that person. It [the overdraft given by the Bank] was two to three years ago. No one is aware who was there that time (sic). We have to take up the details.”
About norms followed by the Bank for extending overdrafts, he said: “There is no such fixed upper limit. It depends on the merits of each case. It cannot be generalised.”
A highly-placed source within the bank told The Hindu that Corporation Bank extends overdrafts to customers based on their “business projects, net worth and past record.” Commenting on the size of the overdraft, one official said that in this particular case, “on the face of it, he [Vadra] can’t be given [an overdraft of that amount]. If [he] has, they [the Bank officials] have to see why he has been given [it].” “Unless he is very regular and well meaning, it is a risk,” he added.
A general manager of another public sector bank said that he could not give a “yes” or “no” reply to whether this specific overdraft could be justified. However, he noted that given the capital of the company, the overdraft amount “definitely” appeared disproportionate.
In August 2011, the Central Vigilance Commission (CVC) had issued a memo to the Department of Financial Services of Corporation Bank seeking an explanation from its former CMD, Ramnath Pradeep, on “noticed lapses” in giving unsecured loans. The CVC, in the memo, had directed the DFS to take “immediate action” to stop the CMD from continuing “the abuse of authority”.
Top executives of the Bank at that time took out a signature campaign to gather support for a memorandum appealing to former Finance Minister Pranab Mukherjee to “save” the bank.
The CMD when Mr. Vadra got his overdraft was not Mr. Pradeep but B. Sambamurthy, currently director of the Institute for Development and Research in Banking Technology, Hyderabad. Mr. Sambamurthy told The Hindu he had no recollection of the overdraft.
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http://www.thehindu.com/news/national/public-sector-bank-probing-overdraft-that-helped-vadra-buy-land/article3985446.ece
Economic Times Editor has tried to do a great favour to DLF and Vodra by giving a confusing headline of this news. Message tried to be conveyed by headlines is at complete variance with what have been given in details given below the said headlines.
Headline says that directors of DLF have given a clean chit to DLF by saying that there is no wrongdoing by DLF to Vodra. But in detailed news given just below headlines at the same place in the same ET, it reports that directors were not even aware of the transaction which took place between DLF and Vodra and it is directors who have also suggested an investigation into the deal in line with what has been demanded by Arvind Kejriwal and opposition parties like BJP, CPI, CPM, SP etc.
8 OCT, 2012, 12.45AM IST, RAVI TEJA SHARMA,ET BUREAU
Robert Vadra deals: DLF denies any wrongdoing; independent directors say no evidence of favour
News published in Economic times on Monday 08.10.12
NEW DELHI: Independent directors of DLF have said the controversial transactions between Robert Vadraand India's largest realty firm were not discussed by the board and if allegations of easy loans and cheap deals are proved, they should be probed.
"The matter was not flagged off at any board meeting. We have not come across any such instance where favours have been done. It's not come to our notice. It is not possible to look at each and every sale transaction. But we try to ensure that all transactions are done at market prices," said KN Memani, an independent director at DLF, and former chairman of Ernst & Young India.
DLF borrows money at 12.38%; lends free to Vadra
As per an analyst presentation (dated 6 August 2012) made by DLF, the gross debt of the company stands at a whopping Rs 25,060 crore as on 30 June 2012. At the end of 31 March 2012, the gross debt had stood at Rs 25,066 crore. (You can access it here).
The annual report of DLF points out “the company’s borrowings from banks and others have a effective weighted average rate of 12.38 percent per annum, calculated using the interest rates effective as on 31 March 2012 for the respective borrowings.”
So what this means is that the company had debt outstanding of Rs 25,066 crore as on 31 March and was paying an interest of 12.38 percent on that debt. The debt outstanding as on 30 June 2012 had not changed much and was at Rs 25,060 crore. It is fair to assume that over a period of three months the interest rate on the debt outstanding wouldn’t have changed significantly.
What is also interesting is that during 2011-2012 (i.e. the period between 1 April 2011 and 31 March 2012), the sales of the company stood at Rs 4,582.67 crore. This means that the debt of the company is nearly 5.5 times its annual sales, which is extremely high.
Another interesting point that comes out while going through the annual report of the company is that it has 65 non-current investments. The annual report of DLF points out that “Investments are classified as non-current or current based on management’s intention at the time of purchase. Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as non-current investments.”
Of the 65 non-current investments only two are joint ventures. One of these joint ventures is with Skylight Hospitality Private Limited, a company owned by Robert Vadra and his mother Maureen. Skylight owns a 50 percent stake in Saket Courtyard Hospitality Private Limited, which runs the Hilton Garden Inn Hotel in Saket, New Delhi. This is the only operational hotel of the company.
When it comes to making non-current investments, joint ventures are not a favoured form of investing with DLF, given that only two out of its 65 non-current investment are joint ventures.
The venture with Skylight is very small by DLF standards. In the annual report of the company the book value of the joint venture is put at just Rs 5.6 crore. Also why would a company as big as DLF enter into a joint venture for a four-star hotel with an individual who has absolutely no or very little prior experience in running a hotel? This is something that needs to be answered.
The entire Congress party has come to the rescue of Robert Vadra and tried to project the deals between Vadra and DLF as normal business transactions. One senior leader even went to the extent of saying “doesn’t Vadra have a right to occupation?” Yes, Vadra has the right to an occupation and so does DLF. But there are too many unanswered questions here that need to be answered.
http://www.firstpost.com/business/dlf-borrows-money-at-12-38-lends-free-to-vadra-481727.html
DLF Vadhera and Role of Bank Officials
This relates to sanction of unsecured loan of Rs.60.00 crores by DLF to Mr. Robert Vadra , son-in-law of Sonia Gandhi, High Command Congress Party and then selling of costly properties to same Mr. Vadra at negligible price is by no means a good act from banking point or from investor's point of view.In lieu of such charity , DLF gets reportedly huge area of land at negligible cost by state government of Harayana and that of Delhi. This is clearly misuse of power .( Read below about the financial health of DLF)
This report is true or false ,I do not know but it is hundred percent certain that this story will become a matter of history very soon.The question is who will investigate? CBI, IT or ED , none has the courage to expose and accept the bitter truth.
Similarly , it is true that sanction of unsecured interest free loan by DLF to its own buyer is gross violation of bank's norms stipulated for compliance by loan sanctioning bank. Credit officials should have objected such entry even before sanction of such loans. But unfortunately Credit processing officer in a bank which prepares proposal for sanction of loan to companies like DLF normally do not want to raise such points at least when the case is related to high profile person or companies which are having good relation with ED or CMD or top ranked officers of the bank.
Normally when ED or CMD make a call to subordinate office to sanction a credit proposal, none of the officers have guts to focus on negative points in proposal, rather they polarize all positive points of the credit proposal and all members of Credit Approval Committee (CAC) put their signature without any objection.
In most of the credit proposals when the company has many sister concerns, the diversion of fund from one company to other sister concern companies is very much common. In the case of DLF, the sanction of unsecured loan to son-in-law of High command of ruling party was taken very casually and bank might have treated such unsecured loan as loan given to affiliates or to suppliers of inputs.
In our country it is the culture that if relative of any VIP comes to office, entire team stands in que to welcome him or his relative or even friends with flower bouquet in hand and they are ready to spend as much as possible to extend red carpet welcome and ready to sacrifice all laws and rules to oblige such high profile persons. This is one of the main reasons behind rise in bad assets in all govt. banks. None can stop its further rise as long as we worship flattery and bribery culture. Concept of CAC suggested by RBI in recent past has also become a mere formality.
http://dkjain497091112006.blogspot.in/2012/10/dlf-vadhera-and-role-of-bank-officials.html
SBI Chairman and Kingfisher Mr. Mallya
SBI Chairman has agreed to pay Rs.60.00 crores to NPA declared and defaulting company Kingfisher on humanitarian ground so that sick company Kingfisher can pay salary to employees.
Is SBI Chairman authorized by investors and depositors to permit such charity to Kingfisher?
Is such whimsical decision of SBI Chairman legally valid and reasonable?
http://dkjain497091112006.blogspot.in/2012/10/sbi-chairman-and-kingfisher-mr-mallya.html
8 OCT, 2012, 06.00AM IST, SAMANWAYA ROUTRAY,ET BUREAU
Robert Vadra not a public servant, can't be booked under Prevention of Corruption Act
NEW DELHI: The charges, levelled by India Against Corruption against Robert Vadra, are similar to those faced by two other key political heirs, Kanimozhi and Jagan Reddy, but Vadra is no "public servant" unlike the other two, say legal experts.
Both Kanimozhi and Jagan are MPs and are, therefore, "public servant" under the Prevention of Corruption Act, 1988. Vadra, in contrast, holds no public office and cannot be booked under the Act, say experts.
Jagan Reddy and Kanomizhi have been charged by CBI for allegedly showing favours to private persons in return for gains to third parties linked to their parties or families. The alleged deals were indirect and are under CBI probe.
But Vadra is a businessman with no direct connection with any public office. "DLF is a private body, Vadra is a private person. What does it have to do with anything?" asked constitutional expert Rajeev Dhavan.
Jagan is facing a probe for allegedly amassing wealth beyond his known sources of income and is still in jail. He allegedly got shares in several companies in return for alleged favours shown to them. Kanimozhi was booked under PCA in the 2G case. Kalaignar TV, in which she owns a 20% stake, was accused of receiving a loan of Rs 200 crore, described by CBI as a bribe, for alleged favours shown by her party to some telecos in early 2008. She is out on bail after spending six months in jail.
Senior lawyer Ram Jethmalani, who supports the anti-corruption movement of Arvind Kejriwal and Prashant Bhushan, said it might not be possible to invoke PCA against Vadra for now, but once more evidence came to light things might change.
"Not with this evidence at the moment," he said when asked if Vadra could be booked under PCA. "As more evidence comes to light it may lead to some public servants like his mother-in-law. I hope Vadra files a libel or defamation case," he said.
Vadra's link to two key public servants - Sonia and Rahul Gandhi - could prove problematic both for Vadra andCongress
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