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Real Estate Companies under scanner for 2G spectrum scam

Postby dheerajjain » Sat Nov 20, 2010 12:05 pm

Enforcement Directorate (ED) is probing the role of one of top real estate companies in 2G scam. Case involves creation of many subsidiaries and then illegal transfer of funds between them.

Here is an article from Times of India ... 940321.cms

Quoted Text from article

NEW DELHI: The Enforcement Directorate (ED) has questioned the founders of Unitech for alleged irregular transfer of funds to the company from a series of subsidiaries in several countries including Libya and Cyprus in connection with the 2G spectrum allocation scam that has embarrassed the government and toppled telecom minister A Raja .

ED officials said they had questioned Ramesh Chandra and Sanjay Chandra, the promoters of Unitech, and the two may be summoned again as the investigation progresses.

An ED official, investigating Unitech under the Prevention of Money Laundering Act, told ET that the agency had sent formal requests in letter rogatories to these countries and sought details from Unitech on all its bank accounts. Unitech and Swan telecom are at the centre of an ED probe on the 2G spectrum scam .

"We suspect that these subsidiaries might have been used to route money into the firm. In Cyprus alone, Unitech has 20 subsidiaries and information so far reveal irregular fund transfers by some of these firms," said an official who did not want to be identified.

Unitech confirmed the company was being investigated by the ED but did not respond to specific questions on details of its subsidiaries, transfer of funds or what the owners of the company told ED officials.

"The government bodies are doing their work and pending such enquries, it is not appropriate for us to comment on anything relating thereto. We are providing full co-operation to these authorities and will continue to do so in future as well.

"At this stage, we have to say that Unitech is one of the large business groups in India having a proven track record of more than 35 years. Unitech and its subsidiaries, part of their regular business activity, enter into arrangements with other companies having presence in different international markets," the official added.

Officials said investigations had revealed Unitech had subsidiaries in tax havens such as Cyprus, Isle of Man, British Virgin Islands, Mauritius and Channel Islands and countries such as Libya and the UAE. Investigators have written to all these countries seeking details of all these transactions.

The ED has also alleged that a top corporate lobbyist, who is also getting investigated by ED for her role in the 2G scam, "advised" Unitech on how to treat the money it got for the stake sale. The lobbyist, who also owns a Public Relations firm, was handling the Unitech account.
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First Arrest : D B realty founder gets arrested by CBI in 2G

Postby dheerajjain » Wed Feb 09, 2011 9:41 am

India's top investigative agency said Wednesday it has arrested Shahid Balwa, founder of DB Realty Ltd. and Swan TelecomPvt. Ltd., in connection with alleged irregularities in the allocation of airwaves to carry telephone signals.

It is there on Wall Street Journal :-) WSJ new look portal was created by my previous organization colleagues ... 10934.html
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2nd Arrest: Unitech Chief Sanjay Chandra sent to Tihar Jail

Postby dheerajjain » Thu Apr 21, 2011 6:54 am

Economic Times 21st April 2011 ... 043373.cms

NEW DELHI: Unitech chief Sanjay Chandra, DB Realty founder Vinod Goenka and three senior executives of Anil Ambani-controlled ADAG were bundled into Delhi's Tihar jail on Wednesday, sending shockwaves across corporate India and stocks in these companies crashing.

A special court hearing the highprofile 2G spectrum scam threw out bail applications by the five, terming their pleas "meritless" in the face of 'serious allegations' and 'incriminating evidence' in a chargesheet filed by the Central Bureau of Investigation , or CBI.

Judge OP Saini said the CBI has expressed fears the accused could tamper with evidence by trying to win over witnesses and could also flee. "These apprehensions cannot be dismissed as too farfetched at this stage, in the light of the serious nature of the case," he told a packed courtroom. The judgement, which can be challenged in the high court, has been keenly watched as it could set the precedent for arrests of other telecom executives in the coming weeks.

The 2G scam case, in which a clutch of companies are accused of receiving precious telecom spectrum at throwaway prices, has become a byword for largescale plunder of state resources in public minds and become a major embarrassment for the Congressled government that is battling a raft of corruption scandals. Soon after the order was pronounced, the five were placed under arrest and taken to jail.

Besides Chandra and Goenka, they included ADAG executives Gautam Doshi, Surendra Pipara and Hari Nair. This is the first time in years that businessmen and officials of such profiles have been put behind bars. Soon after they were arrested, these executives moved the Delhi High Court to set aside the judgement. A high court bench will take up their appeal on Thursday. Shares in their companies bore the brunt of the arrests, with DB Realty's stock falling as much as 11.5% at one point.

From Boardroom to the Slammer

Refusal of bail to the five executives sets a precedent for dealing with the other accused the CBI will chargesheet over the next 40 days.

Who All were Arrested

Vinod Goenka, Director, Swan Telecom Sanjay Chandra , MD, Unitech Gautam Doshi, Group MD, ADAG Surendra Pipara , President, ADAG Hari Nair, Senior VP, ADAG Executives Already in Jail Shahid Balwa, ex-MD, DB Realty Asif Balwa , CFO, DB Realty Rajiv Agarwal, ED, DB Realty

How long will they be in jail?

All five have applied for bail in the Delhi HC, which is likely to set a hearing date today. If their application is rejected, chances are, they will go to the SC. If SC too strikes down their plea, they may have to stay in jail through the full trial.

Will there be more arrests?

CBI will file a second chargesheet by April 24 and a third by May 31. The second chargesheet is likely to cover the money trail between alleged 2G beneficiaries and Kalaignar TV. The chargesheets will also cover allocation of spectrum and licences to other telecom companies in the contentious January 2008 round. Which companies got new licences? Unitech, Swan, Datacom Solutions, Loop Tele, S Tel, Shyam Telelink and Spice Communications
Setting a Precedent

Unitech fell as much as 8% and ADAG flagship Reliance Communications fell nearly 6%. They retraced some of their losses by close of trading, but ended the day lower in a broader market that closed higher.

These executives will now join the other accused who are already in judicial custody-former telecom minister A Raja, his aide RK Chandolia, former telecom secretary Siddhartha Behura and Swan Telecom and DB Realty promoter Shahid Balwa. Raja and the officials are accused of conspiring with corporate groups to grant mobile licences and airwaves to companies that the CBI claims were ineligible.

The Comptroller & Auditor General estimates Raja's decision cost the government a revenue loss of up to. 1.76 lakh crore. All the accused deny any wrongdoing. Legal experts said the denial of bail and arrests could set a precedent in a host of other similar cases that are coming up in the next few weeks. Indeed, one called Wednesday's judgement "worrisome".

"My personal view is that this is not a case for which bail can be denied. Today's development is a worrisome trend," said Harish Salve, one of India's top lawyers and also a former solicitor general. The CBI will file a supplementary chargesheet on April 25, which will include details of the money trail in the 2G scam and may also name DMK president and Tamil Nadu chief minister M Karunanidhi's second wife Dayaluammal, and his daughter and Rajya Sabha member Kanimozhi as accused.

The CBI has also told the Supreme Court, which is monitoring the investigations, that it will file a third chargesheet before Mayend. Its first chargesheet, an 80,000-page document, was filed on April 2. The case has dented the reputations of some of India's richest and left a trail of deaths, notably two people close to Raja. If being packed off to jail wasn't enough, Unitech's Chandra came under pressure from partner Norway's Telenor to step down from their joint venture, Unitech Wireless.

Telenor, which owns a controlling stake in the company, said it had asked Chandra to step down as chairman and urged the country's second-largest real estate company to appoint a substitute for Chandra for as long as the '2G court case is ongoing'. Sanjay Chandra is the son of Unitech founder Ramesh Chandra.

"Withdrawing from the chairman position is the most appropriate and decent thing for Sanjay Chandra to do given the current circumstances. It is of vital importance that the running business of our Indian operation is not hampered," said Glenn Mandelid, director of communications for Telenor Group region Asia. Unitech sources said Chandra would not step down.

Relations between the two partners are already strained because of differences over funding the expansion plans of Unitech Wireless , and the latest statement by the Norwegian company would only worsen it. Telenor also reiterated its earlier stance that the alleged wrongdoings had taken place prior to its entry into the company, adding that it had zero tolerance for corruption. "If the CBI trial proves any malpractice, those responsible must be brought to book. However, no charges have been proven and we expect Sanjay Chandra to defend himself in court," Mandelid said.

Mumbai-based real estate company DB Realty, whose stocks have been battered in the wake of the scandal, said its managing director Vinod Goenka's failure to get bail will have no impact on the company's operations and added it was in the process of inviting new directors on the company's board.

"It is unfortunate that the bail plea of Vinod Goenka has been rejected by the lower court. We have immense faith in our judicial system and are confident that justice will prevail," the firm's director for business, strategy and finance, N Shridhar, said in a statement. The accused had sought interim bail for 7-15 days to approach higher courts and argued that senior executives needed additional time to have their power of attorneys in place and address other business issues before surrendering to court.
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