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SoniaG family ghotala up for decision in Patiala House, June 2, 2014: Dr. Swamy's complaint against SoniaG & others
The case coming up before Patiala House Court of ADJ Gomti Manocha on June 2, 2014 is a thin end of the wedge of loot of gargantuan proportions by SoniaG family, Chidambaram, Maran, Hassan Ali et al. These littany of ghotalas have been adequately documented and processed for SIT on Black Money headed by Justice Shah to get into a fast-track action mode to restore confidence in the people of Bharat that the NaMo government means business in implementing the solemn promise made to get back the loot from tax havens and distribute the money to the poor people of India, to whom the restituted wealth truly belongs.
Today is the D-day when first meeting of Justice Shah SIT will be held and in a parallel remarkable coincidence, on the same day, today, a case coming up in Patiala House petitioned by Dr. Subramanian Swamy, the indefatigable fighter for justice, who complements NaMo's roadmap for maximum governance in a country destined to realize her true role in global polity and reach the level of contribution to world GDP which India had in 1 CE
If Rs. 90 lakh crores from just SoniaG family computed by Ram Jethmalani can be restituted, the pace of GDP growth can quicken for India to get to her due share in World GDP.
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Together, NaMo and Swamy should work to implement the promises. Aasha of the people of India is immense. NaMo, Swamy, do not disappoint their hopes and aspirations for an abhyudayam Bharatam.
This post also includes a select littany of cases (including Bofors recent 2013 exposes and Arun Shourie's expose of 1999 of property frauds) which should be prosecuted WITHOUT ANY FURTHER DELAY.
Eternal vigilance is the price of Swarajyam which should become meaningful only if the nation is rid of the scourge of corruption and the corrupt are brought to book enforcing the Rule of Law and declaring to the world that Bharat ain't no more a peanut or banana republic. Swarajyam Bharatam has arrived with NaMo in maximum governance.
Prove it, Namo, Swamy. Jeevema s'aradah s'atam. More power to you in your valiant efforts to protec dharma. Dharmo rakshati rakshitah.
Kalyanaraman
BEFORE THE LEARNED CHIEF JUDICIAL MAGISTRATE
.........Patiala House. New Delhi
CASE NO. 9/1/13 OF 2012
Dr Subramanian Swamy
A-77, Nizamuddin East
New Delhi ..110013 Complainant
Versus
1. Sonia Gandhi @ Edwige Albina Antonia Maino
President, All India Congress Committee
10 Janpath
New Delhi..110011
2. Rahul Gandhi
Vice President, All India Congress Committee
7, Tughlak Lane
New Delhi..110011
3. Motilal N Vohra.
Treasurer, All India Congress Committee
33 Lodi Estate
New Delhi 110011
4. Oscar Fernandes
General Secretary, All India Congress Committee
8 Pandit Pant Marg
New Delhi 110001
5. Suman Dubey
125 Panch Sheel Park
New Delhi 110017
6. Satyen Gangaram Pitroda [US Citizen]
301 Trinity Lane
Oak Brook, Illinois 60523 USA
7. Young Indian
5A Herald House
Bahadur Shah Zafar Marg
New Delhi..110021
8. All India Congress Committee
28, Akbar Road
New Delhi..110011
All Accused
Concluding Statement of Complainant regarding facts about and offences committed under Section 120B r/w 405 and 420 the Indian Penal Code and also substantive offences u/s 120B, 405 and 420 of the IPC
1. The crime reported in this Complaint is most extraordinary and flagrant in that the Accused holding controlling positions in two institutions recognized as essential to democracy, one of the media viz., The Associated Journals Limited[AJL] and the other of a political party viz., the Congress Party [CP], have dishonestly misappropriated properties worth over Rs 2000+ crores created from publicly donated funds and government granted concessions, to fraudulently convert the said properties for their own use in a private limited company of Young Indian [YI], a Rs 5 lakh authorised capital company, and which also is controlled by the same Accused. Thereby the public has been cheated as well.
2. This Complaint is filed under u/s 190 of IPC and this Complainant prays cognizance be taken by this Hon’ble Court, and that u/s 204 of IPC, there is sufficient ground for a direction be given to the Police to register the case, and that this Hon’ble Court to issue Summons to all the above named Accused.
3. It is alleged in this Complaint and prima facie proved that various offences have been committed, inter alia, under Section 120B r/w 405 and 420 the Indian Penal Code by thecommon principal office bearers of, Young India, the Congress Party [Annexure C-5, p.61], who are the Accused in this Complaint, and have in a conspiracy committed these offences as follows:
4. In eight steps [pages 3-8], Young Indian Pvt Ltd, a Section 25 private limited company of Rs 5 lakh authorised capital, in 2012 came to own another private limited company viz., Associated Journals Limited [AJL], a publishing company exclusively for newspapers and magazines but which had ceased publication in 2008 due to continuing losses. AJL had unencumbered immovable properties of Rs 2000 crores or more and about Rs 90 crores in outstanding debt..
5. The Board of Directors of AJL, and the principal Office Bearers of the Congress Party and the Board of Directors of YI, all being the same Accused thus conspired clearly with a common intention to commit a criminal breach of trust and fraud as follows:
[i] The Directors of YI being the same persons as the principal Office Bearers of the Congress Party colluded among themselves to permit the Directors of YI to make a proposal to AJL to acquire its overwhelming majority shares which accepted the same [Annexure C-6 at p. 62].
[ii] This was reported by the Young Indian in its Annual Accounts [Extracts in Annexure C-12, p. 86 at p. 87].
6. The shareholders at the time of incorporation of AJL in 1937 and till 1947, were mostly ordinary citizens fired up with patriotic zeal for the Freedom Movement. Subsequently after Independence from colonial rule, public institutions such as public sector banks, liberal grants from the Congress Party out its corpus of collected donations from the public enjoying tax exemption u/s 13A of the Income Tax Act, and the union and state governments allotted lands for buildings to house the offices of AJL.
7. These properties enabled by public funds were entrusted with the Board of Directors or with dominion over the said properties, to facilitate the editing, printing and publishing of three daily newspaper and magazines.
8. The said AJL Board under a corporate veil of liquidating its debt received a loan of about Rs. 90 crores from CP to re start its newspaper publication.
9. The Congress Party without sanction of law (see RTI reply) extended the loan on the express condition that the loan will help in restarting the newspaper publication.
10.Instead under the cover of the corporate veil the said Board committed u/s 405 an offence of a criminal breach of trust and misappropriation of public funds entrusted to it, by illegally disposing of the properties of AJL worth over Rs. 2000 crores to YI, and which by piercing the corporate veil was nothing but a ploy to transfer the said properties to YI almost free and thus without any liability enrich the above named Accused.
11.Thereafter the AJL, as a wholly owned subsidiary of YI, has ceased to be a newspaper publisher and has put out its premises out commercially for rent accruable to YI.
12.If AJL could not make ends meet as a newspaper publishing company and had accumulated substantial debts, it could have sold some its immovable assets and easily liquidated the debt.
13.In any case the AJL was set up for a public cause of dissemination of news for which the State provided funds at concessional rates of interest and cheap land to build offices around the country.
14.Hence the AJL infrastructure properly belongs to the public, hence ought to have been entrusted to the government and not to private interests of YI and its Board of Directors, viz., the Accused Nos. 1 to 6.
15.Young Indian, judging from its Memorandum of Association, is excluded from the business of publishing newspapers and magazines. This has been confirmed by Mr. Rahul Gandhi in a press statement who is a Director holding 38% of the equity of the Young India [p. 91-2].
16.Hence, by the acquisition of AJL by Young Indian, the sole activity of publication of newspapers has been snuffed out. AJL has thus been reduced to a real estate outfit for the benefit of the private limited company of the Accused.
17.These transactions were clearly intended to extinguish the newspaper activity of the AJL and reduce it to a real estate company, for augmenting the income of YI.
18.The Herald House in New Delhi which is a huge building on Bahadur Shah Zafar Marg worth over Rs. 1000 crores has already been commercially rented two of the eleven floors to Passport Seva Kendra of the Ministry of External Affairs at a huge rent.
19.Thus by conspiracy hatched by Accused A1-6, criminal breach of trust by Accused A3-4 as Directors of AJL, and misappropriation of Congress Party funds, YI a Rs 5 lakh private limited copy controlled and owned by Ms. Sonia Gandhi and her son Rahul Gandhi has become worth Rs 2000 crores or more.
PRAYER
20.Thus it is prayed by this Complainant that this Hon’ble Court takes cognizance u/s 190 of the Cr. PC, the Police be directed to register the case, and u/s 204 of IPC to issue Summons to all the above named Accused.
Appendix
Offences made out
1. The core of the Complaint is as follows: The Accused persons Nos 1-7 have fraudulently and illegally enabled Young Indian, a Rs 5 lakh authorised capital company with no interest in journalism , to wholly own AJPL worth Rs 2000 crores or more of unencumbered immovable properties. For this the Accused persons have conspired to commit the offences of dishonestly misappropriating, cheating, and criminal breach of trust by the following acts and modus operandi, namely:
i. On November 23, 2010, Sonia Gandhi [A1] and Rahul Gandhi [A2] came together with other accused for a common intention and thus formed a company named Young Indian [A7] under Sec 25 of the Companies Act in which A1 and A2 control 76% of the total shares and together with A3 and A4, who are their loyalists, 100%. A copy of the same is herewith annexed as Annexure No. C-3.
ii. The funds of 'National Herald' are entrusted to, and also controlled by, A1 to A3 as President, Vice President, and Treasurer / office bearers of the party.
iii. The very next month, December 2010, the Accused A1 and A2 with other Accused persons conspired and got assigned to themselves the debt of Rs 90.25 Crores owed to the Congress Party by APJL since 2008, which was publishing 'National Herald' till March 31, 2008.
iv. The Accused persons misrepresented that AJPL had no net-worth and is unable to re- pay the said debt to the Congress party when in fact APJL has huge real estate of thousands of crore rupees and relatively very little liabilities.
v. By this step, A7, the surrogate of A1 and A2 got the right to recover Rs 90.25 crores from APJL by paying just Rs 50 lakhs, thus, A1 to A4 dishonestly cheated, misappropriated and committed criminal breach of trust on the Congress party to the extent of Rs 89.75 crores [equal to Rs 90.25 minus 050 crores];
vi. Finally, on 20.2.2011, A3 who was director in APJL since 2002 and A5, made director on 21.12.2010, and A6, made director on 17.6.2010, passed resolutions to convert the loan of Rs 90.25 crores, that had been assigned to Young Indian [A7], into almost all the equity shares so as to vest control and indirect ownership of 99% of real estate worth thousands of crores of rupees in Young Indian [A7],
vii. The Accused persons committed criminal breach of trust on the Congress and/or the shareholders of APJL and properties of the shareholders of APJL and/or the rights which ought to have accrued to the Congress by converting the loan of 90.25 crore as equity. The Accused persons dishonestly misappropriated the funds but also cheated the Shareholders of APJL and/or the Congress Party;
viii. It is prima facie and sufficiently a case of double cheating, double criminal misappropriation and double criminal breach of trust –
1. Once by getting the loan of Rs 90.25 crore due to the Congress from AJPL assigned for Rs50 lakhs in favour of A7 controlled by A1 and A2 with the participation of A3 and A4 and
2. Secondly by misrepresenting that APJL's net-worth is negative when its book value as well as the real net-worth were hugely positive and once more by converting the loan costing Rs 50 lakhs only in the hands of A7 into equity shares of the face value of Rs90.25 crore and with real values running into thousands of crores of rupees.
2. Sometime in the second/third quarter of the year 2010, the Accused persons, who are fiduciaries entrusted with the funds and properties of the Congress party and APJL, which was the funded on a regular basis by the Congress party and is therefore the property of the Congress party in substance entered into a criminal conspiracy, with dishonest and fraudulent intention, to cheat the Congress party and misappropriate and embezzle its funds entrusted to the care of the First, Second, Third and Fourth Accused and conspired with the other accused namely Fifth, Sixth, Seventh and Eighth Accused.
3. All the Accused persons used the funds of the Congress Party illegally to subscribe for and take over 99% control of the shareholding of APJL through a company which A1 to A4 controlled 100 % and thus cheat and embezzle the funds and the properties belonging to over a thousand shareholders of APJL who had invested into it and/or the Congress party which had lent Rs 90.25 crore to it, the ultimate object of the conspiracy being to misappropriate the assets of the Congress and APJL impressed with the character of trust and convert those assets to their own control and use.
4. But, by deep criminal design and defying the Constitution of the Congress party and law, the Accused Persons misappropriated the control of APJL's more than Rs. 2000 crores worth real estate without paying a single paisa to APJL's shareholders and to the Congress which had funded the subsistence APJL from time to time and also lent Rs 90.25 crore to close down the publication of National Herald so as to make it debt free and convert it into high value real estate company.
5. In just three months, between November 2010 and February 2011 and in three moves, control of thousands of crore worth properties, belonging to the shareholders APJL and/or the Congress Party passed to the control of A1 to A4 particularly to the family of A1 and A2.
6. The criminal conspiracy dishonestly and fraudulently to double-cheat and misappropriate assets of the Congress Party on the one hand and the shareholders of APJL on the other as well as the properties of APJL were criminally misappropriated unfolds thus:
i. As the First step, preparations for forming a company under section 25 of the Companies Act with a view to criminally misappropriate the funds and properties of the Congress party and APJL as explained in detail hereinafter began and on 17.6.2010, A4 was made director of APJL.
ii. As the Second step, on 23 November 2010, the charitable trust company under Section 25 of the Companies named “Young Indian” [Accused 7] was formed with capital of just Rs 5 lakhs, in which, finally, Sonia Gandhi [A1] and Rahul Gandhi [A2] acquired and owned 38 percent each [total 76 percent between the two of them] and two close associates of A1 and A2, Motilal Vohra, Treasurer of the Congress Party [A3] and Oscar Fernandez, General Secretary of the Congress Party [A4] owned the balance 24 percent, making it cent percent owned and controlled by A1 to A4. The intention is self-evident that 76 percent of the voting rights in the company which virtually means the full ownership of a corporate under the law should vest between A1 and A2.
iii. The Third step, the very next month, December 2010, the A1 and A2 got the Congress party to assign the Rs 90 crore (approx.) loan given to APJL in 2008 to Young Indian [Accused 7] by paying to the Party a paltry sum of Rs 50 lakhs by dishonestly misrepresenting to the Congress Party that the amount of Rs 90 crore was irrecoverable and therefore had to be written off. The Congress wrote off the balance Rs 89.75 crore as irrecoverable.
iv. This creative and criminal accounting which enabled cheating and misappropriation of the funds of the Congress Party by the Accused persons particularly A1 and A2, substituted Young Indian for the Congress, entitling Young Indian [A7] to recover Rs 90 crore (approx.) due from APJL. And simultaneously, A5 and A6 were made directors of APJL to enable the criminal conspiracy to be executed.
As the last step, finally, in February 2011, APJL converted the Rs 90 crore (approx.) due to Young Indian [A8] into equity shares and allotted them amongst the Accused persons. By this step, Young Indian [A8] which was 100 percent controlled by A1 to A4 became almost 99 percent owner of APJL, and as much of the real estate of APJL. The very fact that when APJL had assets worth Rs 2000 crore the Congress was forced by the Accused persons A1 to A4 write off Rs 89.75 crore due from it as bad debt when it is a good and recoverable debt considering the extent of properties of APJL, makes explicit the dishonest and fraudulent intention of the Accused persons.
Littany of cases which should receive immediate action by SIT on Black Money headed by Justice Shah:
http://bharatkalyan97.blogspot.in/2014/06/remembering-arun-shouries-1999-article.html
Remembering Arun Shourie's 1999 article on how SoniaG continues control over government assets.
Details an absolute fraud of annexing a Government Trust which had received over Rs. 134 crores of tax payers' money, a Trust which had received twenty three acres of invaluable land...Read on...http://bharatkalyan97.blogspot.in/2014/06/remembering-arun-shouries-1999-article.html
http://bharatkalyan97.blogspot.in/2012/04/bofors-deep-throat-reveals-all-cbi.html
March 13, 2013.
Mr. Ranjit Sinha,
Director, Central Bureau of Investigation,
CGO Complex, Lodi Road,
New Delhi.
Dear Mr. Sinha,
I write this letter in reference to my earlier letter (copy enclosed for ready reference) to your predecessor Mr. A.K. Singh, dated Feb 23, 2012 wherein I had enclosed a detailed description of offences committed under the Prevention of Corruption Act, in a complaint against Ms Sonia Gandhi, presently Chairperson of the National Advisory Council.
While I urge specifically to seek a review of the decision taken by your predecessor on the materials I had submitted making my intention clear that based on your reply, I would be able to decide whether to take this matter to the High Court/Supreme Court to seek enforcement of your statutory duties.
Best Regards,
Yours sincerely,
( SUBRAMANIAN SWAMY )
Encl: a/a
NOTE: In response to this letter, CBI responded by passing the buck to Enforcement Directorate.
http://bharatkalyan97.blogspot.in/2014/06/sc-judgement-on-black-money-full-text.html
JUN
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SC Judgement on Black Money (Full text). Black money of SoniaG, Hassan Ali and others -- Swamy, Gurumurthy, Assange, VishwaBandhu, Ram Jethmalani
Judgement of Supreme Court 4 July 2011 on Indian Black Money
Bofors ‘Deep Throat’ reveals all. CBI should act on ACACI's request for FIR. Restitute money stashed in tax havens.
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BOFORS ‘DEEP THROAT’ REVEALS ALL: HOW RAJIV PROTECTED QUATTROCCHI
by FP Staff Apr 24, 2012
In April 1987, a secret Swedish source leaked nearly 350 documents to Indian journalist Chitra Subramaniam-Duella. The resulting media expose – based on minutes of meetings, private notes, bank instructions, contracts, and a diary – became the biggest political scandal in modern Indian history, bringing down the Rajiv Gandhi government.
On its 25th anniversary, the Swedish Deep Throat has revealed himself to the Indian media blog, The Hoot.org, in an explosive interview with none other than Subramaniam-Duella. He is Sten Lindstrom, the former head of Swedish police, who led the investigation into the Bofors-India gun deal. [Read the interview here]
Deep Throat reveals that Rajiv Gandhi did not personally take a bribe but allowed a massive cover-up aimed to protecting Ottavio Quattrocchi. KM Kishan/Reuters
So what does he have to say?
For one, Rajiv Gandhi did not personally take a bribe but allowed a massive cover-up aimed to protecting Ottavio Quattrocchi:
There was no evidence that he (Rajiv Gandhi) had received any bribe. But he watched the massive cover-up in India and Sweden and did nothing. Many Indian institutions were tarred, innocent people were punished while the guilty got away. The evidence against Ottavio Quattrocchi was conclusive. Through a front company called A.E. Services, bribes paid by Bofors landed in Quattrocchi’s account which he subsequently cleaned out because India said there was no evidence linking him to the Bofors deal. Nobody in Sweden or Switzerland was allowed to interrogate him.
And in the pecking order of protection, Quattrocchi merited greater protection than even Rajiv Gandhi’s relative Arun Nehru: ”He [Managing Director of Bofors Martin Ardbo] had written in his notes that the identity of N (Nehru) becoming public was a minor concern but at no cost could the identity of Q (Quattrocchi) be revealed because of his closeness to R (Rajiv Gandhi). ”
The Quattrocchi-Gandhi link is also up-front and centre: “[Ardbo] had also mentioned a meeting between an A.E. Services official and a Gandhi trustee lawyer in Geneva. This was a political payment. These payments are made when the deal has to be inked and all the numbers are on the table.” A.E. Services was a front company used to facilitate the transfer of money from Bofors to Quattrocchi.
So determined was the Indian government to cover up the scandal that when Bofors officials arrived in India with a list of names, “nobody of any consequence received them.” And yet even the VP Singh administration, which was voted to power in late 1989 on an anti-corruption platform, does not come out looking any better. According to Lindstrom, only one team of Indian investigators met with the Swedish team even after VP Singh took power, and their primary aim was to force him to link the Bachchans to the kickbacks. When he refused to do so, they planted a story in a leading Swedish newspaper instead – for which the paper was successfully sued by the Bachchans.
In fact, Rajiv’s fall from power did little to improve the efforts of Indian investigative agencies:
Whenever the public prosecutor Ekblom and I heard of any Indian visits to Stockholm, we would speak to the media expressing our desire to meet them. Can you imagine a situation where no one from India met the real investigators of the gun deal? That was when we saw the extent to which everyone was compromised. Many politicians who had come to my office claiming they would move heaven and earth to get at the truth if they came to power, fell silent when they held very important positions directly linked to the deal.
Lindstrom’s lesson in Indian politics rings truer than ever 25 years later.
Read his interview in its entirety on The Hoot website.
http://www.firstpost.com/politics/bofors-deep-throat-reveals-all-how-rajiv-protected-quattrocchi-286710.html
The Bofors story, 25 years after
“I knew what I was doing when I leaked the documents to you. I could not count on my government or Bofors or the government of India to get to the bottom of this.” STEN LINDSTROM explains why he chose to turn whistleblower to CHITRA SUBRAMANIAM-DUELLA
Posted/Updated Tuesday, Apr 24 11:19:37, 2012
April 2012 marks the 25 anniversary of the Bofors-India media revelations, which began on April 16, 1987 with revelations on Swedish state radio. The Hoot presents an interview with the man who decided to leak over 350-documents to former Indian journalist Chitra Subramaniam-Duella, then with The Hindu and later with The Indian Express andThe Statesman. The documents included payment instructions to banks, open and secret contracts, hand written notes, minutes of meetings and an explosive diary. They led to the electoral defeat of an Indian prime minister and blew gaping holes into a Swedish prime minister’s record as a champion of peace and disarmament. Above all, they formed the basis for the first ever transfer of secret bank documents from Switzerland to India.
Sten Lindstrom is the former head of Swedish police who led the investigations into the Bofors-India gun deal. In an interview to Subramaniam-Duella, he reveals himself as the Swedish Deep Throat and explains why he chose to turn whistleblower.
Q - Why did you decide to identify yourself now?
A – Twenty five years is a good land-mark. We have had some time for reflection. Now it is time to speak again. Corruption levels in the world are increasing. There is new business around corruption with companies selling products that measure corruption instead of questioning why it is there in the first place. In a world of shrinking resources and ruthless ambition, we have to ensure that survival instincts that brought us out of the caves do not push us back in there because of a few greedy people. I hope I can contribute to the global struggle against corruption by sharing what I know.
Q – Tell us something about yourself.
A – Like many Swedes of my generation, my wife Eva and I were raised in the best traditions of social-democracy. Swedes are a hard-working people. Equity and justice for all is something we hold dear and for which we have strived as a nation. We built our institutions, our political and social systems around principles that were gold standards. We led the world as much in business forums as in the social arena.
Q – Nostalgia?
A – No, I base myself on hard evidence that is even more relevant today than it was 25 years ago. We are still world leaders in many fields, but somewhere our guiding principles have fallen by the wayside. No one is against successful businesses and it can be done. Here in Sweden we have the Wallenbergs, in India you have the TATA group. These are global companies and institutions. Their business ethics and corporate social responsibility work is not a slide on a power-point. It is generations of hard work. Bofors was a good company. Their products were good. Unfortunately in the race to expand business, they resorted to illegal shipments, bribery and corruption. They claimed a tax-deduction for the money they had to pay as bribes.
In my long career as a police officer I have seen many things. What was shocking in the whole Bofors-India saga was the scale of political involvement in Sweden breaking all rules including those we set for ourselves. Bofors was a wake-up call for most Swedes who thought corruption happens only far away in Africa, South America and Asia. There was disbelief and hurt when they found that some of their top politicians, bureaucrats and businessmen were no better than others. The $1.3 billion deal with India for the sale of 410 field howitzers, and a supply contract almost twice that amount was the biggest arms deal ever in Sweden. Money marked for development projects was diverted to secure this contract at any cost. Rules were flouted, institutions were bypassed and honest Swedish officials and politicians were kept in the dark. Our former Prime Minister Olof Palme was talking peace, disarmament and sustainable development globally, while we were selling arms illegally, including to countries that were on our banned list. My office, the office of Hans Ekblom, the public prosecutor in Stockholm, our National Audit Bureau – everything was ignored. So was the Swedish tax-payer.
The Managing Director of Bofors Martin Ardbo had worked very hard for this deal. He brought over 900 jobs to Karlskoga where Bofors is headquartered for atleast a decade. When the stories started appearing Ardbo was a shaken man. He knew that I knew that he had made a political payment even more secretly than the rest to close this deal. He told me he didn’t have a choice.
Q – How did the India angle in Bofors crop-up?
A – It was an accident. We were conducting several search and seize operations in the premises of Bofors and their executives. I have some experience in this area, so I asked my team to take everything they could find. In the pile were one set of documents to Swiss banks with instructions that the name of the recipient should be blocked out. An accountant doing his job asked why anonymity was necessary since the payments were legal. Bofors was unable to explain and then we found more and more documents leading to India.
Q – Looking back, what would you say are some of the lessons learnt?
A – There are several, but I could mention a few. The role of the whistle-blower is a part of democracy. When all official channels are clogged, you have to take a decision. We have a culture here that it is okay to blow the whistle. I have met other whistle blowers. I knew what I was doing when I leaked the documents to you. I could not count on my government or Bofors or the government of India to get to the bottom of this. My only option was to leak the documents to someone we could trust.
There needs to be a free and fair discussion in the media about itself. The media is the watchdog of our society – but who is watching the media? Most whistle blowers around the world leak information to the media because they feel they owe it to their country, their job or the position they are elected to.
Genuine whistle-blowers also expect the media to be responsible and according to me this means that the media has to understand the motives of whistle-blowers. Not everyone is driven by the same motive. This is where investigative journalism comes in. Every role has its limits. I cannot become a journalist, a journalist cannot become a judge and a judge cannot become a politician. Who controls the media, what are their interests? What happens if a reporter is also part of the management? Do journalistic ethics compete with business and political interests of the media organisation? Can an ombudsman be the answer? If not, let us all work together globally to find a solution we all respect and understand.
There is also a lot of debate in the world about the role of middlemen in arms deals. Some say they should not exist at all, others say they have a role. I believe they have a role insofar as marketing a product is concerned and they should be remunerated accordingly in a transparent way so that the cost to the buyer is not circulated as kickbacks. Where it becomes illegal and dangerous is when the ambit of their work includes paying politicians and bureaucrats and in some cases journalists to push their product. Once you are in their clutches, it is very difficult to extricate yourself.
Q – What is your view on Wikileaks?
A – All leaks have a motive and they play a role. Wikileaks went up to a point and it is welcome. I have not seen many instances of journalists or governments taking the leaks further to the next level. It is not enough for journalists to ask questions. In their privileged positions as watchdogs, they have to take the leaks further without fear or favour.
Q – With time and distance, how do you view your leaks?
A – I believe I did the best I could. I watched you work for almost one year before I took my decision to leak the Bofors-India documents to you. You were one of many journalists from India and Sweden as well as many politicians from India who visited me during this period. I was lectured to and told how to do my job. Many mentioned Rajiv Gandhi’s involvement and that the guns were duds hoping I would react. I am used to these tricks. I told everyone the guns were excellent. The problem was in the procurement process.
People trust people. Trust is built over time. The one and only visit by your former editor N. Ram of The Hindu to my office in whose presence I handed over the documents is a detail. I would have leaked the documents to you even if you had worked for any other newspaper.
The Hindu’s role in all this was that of a medium of communication. I met them because you insisted. I was disappointed. They published the documents as and when they wanted without any respect for the risks other people were taking to get the facts out.
The most explosive documents that involved the political payments were Ardbo’s notes and diary. The Hindu published them several months after they had them. In the meantime there was a serious difficulty. I got a message that my name was circulating in Delhi’s political circles as the whistleblower. This caused a lot of stress and difficulty for me. You will recall the month you were not allowed to call me while we investigated who leaked my name as the whistle-blower in India. There were consequences for me and my family. The Hindu seemed unconcerned.
Q – Any regrets?
A – No. I took an informed decision to give you the documents. But I will say this much - when newspapers think they are more important than the story, journalism suffers. When editors cross their limits, it can be dangerous.
Q - Tell us something about those days, people’s reactions, your difficulties.
A - People in Sweden were shell-shocked. Bo G Andersson of the Dagens Nyhetter (DN), Burje Remdahl and Jan Mosander of the Swedish Radio are investigative journalists of repute. They were exposing illegal sales of arms to eastern Europe, the middle-east, even Vietnam through Australia. There was total disbelief in Karlskoga. The Indian deal was the straw that broke the camel’s back because it showed that corruption had reached right to the top in Sweden and in India. They were very brazen about it. There was no evidence of any bribe being paid to Palme, but he and some of his ministers knew exactly what was going on.
Q- Quarter century later, any reflections on why Rajiv Gandhi’s name came up?
A– There was no evidence that he had received any bribe. But he watched the massive cover-up in India and Sweden and did nothing. Many Indian institutions were tarred, innocent people were punished while the guilty got away. The evidence against Ottavio Quattrrocchi was conclusive. Through a front company called A.E. Services, bribes paid by Bofors landed in Quattrocchi’s account which he subsequently cleaned out because India said there was no evidence linking him to the Bofors deal. Nobody in Sweden or Switzerland was allowed to interrogate him.
Ardbo was terrified about this fact becoming public. He had hidden it even from his own marketing director Hans Ekblom who said marketing middlemen had a role, but not political payments. Ardbo was also concerned about the role of Arun Nehru who had told Bofors in 1985 that his name and Rajiv Gandhi’s name should not appear anywhere. As the stories began to appear, Ardbo knew what I knew. He had written in his notes that the identity of N (Nehru) becoming public was a minor concern but at no cost could the identity of Q (Quattrocchi) be revealed because of his closeness to R (Rajiv Gandhi). He had also mentioned a meeting between an A.E. Services official and a Gandhi trustee lawyer in Geneva. This was a political payment. These payments are made when the deal has to be inked and all the numbers are on the table. I spent long-hours interrogating Ardbo. He told me Nehru was the eminence grise but not much more. He said often that he would take the truth with him to his grave. I met him a little while before he passed away.
Under pressure from Swedish and Indian media and with the threat of a cancellation of the contract hanging over them, Bofors sent its top executives to India with the one-point task of giving out the names. Nobody of any consequence received them.
Q– What was your experience with the Indian investigators?
A – The only team I met in early 1990 damaged the seriousness of my work and the media investigation. I met them on a courtesy call. They were in the process of filing a letter-rogatory (LR) in Switzerland. Without an official request from Switzerland, Sweden could not intervene. They gave me a list of names to pursue including the name of Amitabh Bachchan. They also told me they did not trust you entirely because you had refused to link the Bachchans to the kickbacks. During that trip to Sweden, the Indian investigators planted the Bachchan angle on DN. The Bachchan’s took them to court in the UK and won. DN had to apologise and they said the story had come from Indian investigators. I was disappointed with the role of many senior journalists and politicians during that period. They muddied the waters.
After the LR was lodged in Switzerland, I was waiting for the official track with India and Switzerland to begin. It never did. Whenever the public prosecutor Ekblom and I heard of any Indian visits to Stockholm, we would speak to the media expressing our desire to meet them. Can you imagine a situation where no one from India met the real investigators of the gun deal? That was when we saw the extent to which everyone was compromised. Many politicians who had come to my office claiming they would move heaven and earth to get at the truth if they came to power, fell silent when they held very important positions directly linked to the deal.
Q – Any final thoughts?
A – There cannot be final thoughts on something like this. False closures of corruption bleed the system. Every day has to matter. When something like the scale and violence of Bofors happens, you begin to question your own faith as a professional and a human being. When you start losing faith, you begin to lose hope. When hope is lost, everything is lost. We cannot afford to let that happen. Maybe we will get nowhere, but silence cannot be the answer.
http://thehoot.org/web/home/story.php?storyid=5884&mod=1&pg=1§ionId=1&valid=true
With the expose of RahulG, PriyankaG, SoniaG scams related to their forays into journalism industry and Backops Mumbai millions including moneylaundering and landgrab scams of Robert Vadra, it is time to follow up on the dormant complaint of Action Committee Against Corruption in India (ACACI) lying with CBI which passed the buck on to ED.
There is credible evidence provided by the driver of 10 Janpath who was engaged in the Quattrochi-Sonia pow-wow (India today expose) together with the Swiss investigator's report on Bofors scam.
CBI has failed to register FIR despite SC directive which clearly states that if no FIR is registered under PC Act, the complainant can proceed to the court of law.
As a follow-up of the cases still under adjudication by the 2G bench of the SC, it may be appropriate to tag the imperative for setting up an SIT under SC supervision to inquire into
Aircel-Maxis (PC, Maran brothers)
Reports of acquisition of Aga Khan property in Sardinia by SoniaG and politically exposed persons who happen to be SoniaG relatives
Great Robbery of a Telephone exchange by Marans (exposed by Gurumurthy & Ram Jethmalani)
Since new evidences have come to light on PEPs of SoniaG transactions related to Backops pointing to moneylaundering, a case can be made out for SIT?
Black money loot is the big narrative which has not yet received attention of the SC despite Ram Jethmalani's case with another SC bench on a race-horse owner's millions in tax haven accounts and huge defaults in IT payments. GOI under Manmohan Singh dodged acting on the directive of SC to set up an SIT headed by an ex-SC judge, specifically nominated by the SC Bench.
Now that NaMo Government has acted on SC directions and set up SIT on Black Money headed by Justice Shah, this saga of loot should be unravaled without any further delay and looted wealth restituted for distribution to the poor citizens of India.
http://timesofindia.indiatimes.com/india/Black-money-Indians-have-stashed-over-500bn-in-banks-abroad-says-CBI/articleshow/11871624.cms?utm_source=twitter&utm_medium=tweets
Black money: Indians have stashed over $500bn in banks abroad, says CBI
Indians are the largest depositors in banks abroad with an estimated 500 billion US dollars of illegal money stashed by them in tax havens, the CBI director said.
NEW DELHI: Indians are the largest depositors in banks abroad with an estimated 500 billion US dollars (nearly Rs 24.5 lakh crore) of illegal money stashed by them in tax havens, the CBI director said on Monday.
India, in particular, has suffered from the flow of illegal funds to tax havens such as Mauritius, Switzerland, Lichtenstein, British Virgin islands etc.
"It is estimated that around 500 billion dollars of illegal money belonging to Indians is deposited in tax havens abroad. Largest depositors in Swiss Banks are also reported to be Indians," CBI director A P Singh said speaking at the inauguration of first interpol global programme on anti-corruption and asset recovery.
He said getting information about such illegal transactions is a time taking process as investigators have to peel each layer by sending judicial requests to the country where such deposits have been made.
"53 per cent of the countries said to be least corrupt by the Transparency International Index are offshore tax havens, where most of the corrupt money goes. The tax havens include New Zealand which is ranked as the least corrupt country, Singapore ranked number five and Switzerland number seven," Singh said.
He said there is a lack of political will in the leading tax haven states to part with the information because they are aware of the extent to which their economies have become "geared to this flow of illegal capitals from the poorer countries."
http://bharatkalyan97.blogspot.in/2012/02/indian-black-money-abroad-500-billion.html
| Updated Feb 13, 2012 at 05:45pm IST
Full text of the CBI Director's speech on black money
New Delhi: Indians are the largest depositors in banks abroad with an estimated $ 500 billion (nearly Rs 24.5 lakh crore) of illegal money stashed by them in tax havens, the CBI Director AP Singh said on Monday.
Here is the full text of the CBI Director's speech:
On behalf of the Central Bureau of Investigation, I extend a very warm welcome to all of you present here today for the inauguration of the 1st Interpol Global Programme on Anti-Corruption and Asset Recovery.
Full text of the CBI Director's speech on black money
This is a great moment for us because this is the first time that CBI has been given the privilege of jointly organizing a Training Programme with the Interpol Anti Corruption Office for which I must thank the Secretary General of the Interpol and Shri Jaganathan, who is present here.
I am grateful to Hon'ble Minister for Personnel for not only having spared his time to grace this occasion here today, but also for his support in organizing this training programme. Without the administrative support from the Ministry of Personnel, the programme would not have taken shape.
I am also grateful to the Director General, BPR&D for his gracious presence as well as for extending all assistance from the BPR&D for this training programme.
I also extend a very special welcome to all our guests from abroad. I hope your journey was comfortable and that you have a pleasant stay during the week here in India. You have come to India at the best time of the year and am sure will enjoy your stay with us and will be enriched professionally to strengthen international cooperation in the efforts to fight corruption and recovery of illegal assets.
Corruption has become a major governance challenge in today's world. Its effect on the economy of a country, more so of a developing country, is debilitating as it hampers socio-economic development. Corruption is a complex socio-economic and cultural phenomena the fight against which not only calls for innovative and localized solutions but also requires the support of the global community through INTERPOL and such other multilateral organizations.
There is no single remedy for fighting the menace of corruption. The battle has to be fought at many levels. The design of development programmes should provide for more transparency and accountability. Systems and procedures which are opaque, complicated, centralized and discretionary are a fertile breeding ground for the evil of corruption. 'Ethics in Governance' would hold key to good governance in any society. I am prompted to recall a famous verse from the ancient Indian scriptures which says "Yatha Raja Tatha Praja" in other words if the king is immoral so would be his subjects.
Development of new methods of financial flows and communication technology have made it easier for the corrupt to conceal and stash away stolen wealth. On the other hand, differences in legal systems, high costs in coordinating investigations, inadequate international cooperation and bank secrecy laws have made the task difficult for the anti-corruption authorities.
The World Bank estimates the cross border flow of money from criminal activities including corruption and tax evasion to be around 1.5 trillion US Dollars annually.
Around 40 billion US dollars of this flow is on account of bribes paid to public officials in the developing countries. Out of this, the World Bank estimates that only 5 billion USD in stolen assets have been repatriated over the past 15 years. That leaves a wide gap between the outflow from the developing countries and its subsequent repatriation.
Tracing, freezing, confiscation and then repatriation of stolen assets is a legal challenge. Managing the asset recovery investigation is complex, time consuming, costly and most importantly requires expertise and political will. There are many obstacles to asset recovery. Not only is it a specialized legal process filled with delays Page 3 of 4 and uncertainty, but there are also language barriers and a lack of trust when working with other countries.
The global financial market allows money to travel further and faster than ever before. In cases in which that money is the illicit proceeds of crime, particularly in the case of organized crime, this makes the tracing, freezing and recovery of assets even more difficult.
One of the most complicated aspects of international asset tracing is the issue of jurisdiction. Generally, the jurisdiction in criminal law is territorial and it is a well established principle that one State will not enforce their legal formalities on another State without following proper procedures. Criminals use these principles to their advantage, often spreading the crime over at least two jurisdictions and investing in a third.
In some of the recent important cases being investigated by CBI such as 2G/CWG/ and Madhu Koda, we find that money is taken to Dubai/Singapore/Mauritius
from where it goes to Switzerland and then British Virgin Island/Caymen Islands and other such tax havens. For the criminals all it involves is setting up of a few shell companies and then making layered transfers from one account to another in a matter of hours as there are no boundaries in banking transactions.
For the investigators, however, each layer has to be peeled by sending an L.R. through judicial channels, and obtaining information from each leg of the transaction can take in many cases several years.
53 per cent of countries said to be least corrupt by the Transparency International Index are offshore tax havens, where most of the corrupt money goes. The tax havens include New Zealand ranked the least corrupt country, Singapore ranked No 5 and Switzerland ranked No.7.
There is a lack of political will in the leading tax haven States to part with
information required to trace such assets as they are all too aware of the extent to which their own economies have become geared to this flow of illegal capital from the poorer countries.
India in particular has suffered from the flow of illegal funds to tax havens such as Mauritius, Switzerland, Lichtenstein, British Virgin Islands, etc. It is estimated that around 500 billion dollars of illegal money belonging to Indians is deposited in tax havens abroad. Largest depositors in Swiss banks are also reported to be Indians.
We need to relentlessly pursue asset recovery strategies to make such illegal acquisitions a "No Profit High Risk" proposition.
It is in this backdrop that this Global Programme is being organized. The main
objective of the programme is to enhance the knowledge and skills of the police
investigators and prosecutors in tracking the assets created out of corrupt activities, within the country and across the borders in an effective and expeditious manner. It is Page 4 of 4 also intended to sensitize them to mutual legal assistance in international and transborder investigations.
During the training they would be exposed to some of such complex investigations by persons who have actually dealt with tracing the proceeds of crime.
The problems that were encountered during such investigations especially when it related to trans-border issues will also be highlighted.
The participants are also being taken to the Centre for Training in Cyber & HiTech Crime Investigation. This was established by the Government of India in 2010 at the CBI Academy to train personnel from the CBI and from other law enforcement agencies in Cyber Forensics, Mobile Forensics and other such areas. These are an essential and integral part of any investigation related to financial frauds and transnational crimes.
I am sure the deliberations during the Training Programme would lead us all one step closer in achieving the daunting task of "assets recovery" in the emerging global scenario.
I once again wish all the participants a very pleasant and meaningful stay in
Delhi.
With these words, I once again welcome you all to this First INTERPOL Global
Programme on Anti-Corruption and Asset Recovery and wish this training programme a grand success.
Thank you.
http://ibnlive.in.com/news/full-text-of-the-cbi-directors-speech-on-black-money/229889-3.html
http://www.deeshaa.org/dr-subramanian-swamy-sanction-to-prosecute-ms-sonia-gandhi/
Dr Subramanian Swamy: “Sanction to Prosecute Ms Sonia Gandhi”
15, April 2011
Dr.Manmohan Singh
Prime Minister as Sanctioning Authority
u/s 19 of the Prevention of Corruption Act (1988) [PCA]
South Block, New Delhi.
Re: Sanction to prosecute Ms.Sonia Gandhi, Chairperson (in Cabinet Rank), NAC, under Prevention of Corruption Act (1988).
Dear Sir:
1. Ms.Sonia Gandhi MP, wife of the deceased Rajiv Gandhi, was first appointed as Chairperson National Advisory Council [NAC] in May 2004. She resigned in 2006 but was re-appointed by an Order of the Cabinet Secretariat dated March 29, 2010, read with Order dated October 8, 2010 [Annexure 1].
2. As per Order of May 31, 2004 [Annexure 2] the Prime Minister’s Office will provide Central Government funds to meet the expenditure of the NAC, and service the NAC for its secretarial needs. Hence she is a public servant as defined in Section 2 ( c ) of the Prevention of Corruption Act (1988).
3. You, in your capacity as deemed appointing authority are therefore the Designated Authority under Section 19 of the Prevention of Corruption Act for granting Sanction to prosecute the said Ms. Sonia Gandhi. As you know, there are no laches or statute of limitations for prosecuting offences of corruption.
4. Your Sanction is required by me for prosecuting Ms. Sonia Gandhi on a private complaint proposed to be filed by me in the criminal court under Prevention of Corruption Act (1988), based on the materials available to me (and enclosed with this letter/application) with reference to two issues:
FIRST ISSUE:
5. Ms.Sonia Gandhi holds office which enables her to give direction to Government departments and Ministries and also call for confidential reports from CBI, and according to the then Union Law Minister, she can even call for files [Annexure 3]. She has been as Chairperson of NAC giving directions to several ministries and departments.
6. It is charged that she obtained for, and colluded with family friend, Mr. Ottavio Quattrocchi—an Interpol Red-Corner Noticee & a proclaimed offender under Indian criminal law, to obtain for him the pecuniary advantage from defreezing of his CBI-frozen account, thus committing offence u/s 13 (1)(d) of the PCA, and also conspired with Quattrocchi to enable him to escape prosecution in Bofors Gun Purchase scam.
7. Bofors scam that occurred in 1986 represents corruption in very high places and the key figure in the scam is Mr. Ottavio Quattrocchi, the Italian family friend and fixer. The then Prime Minister, Rajiv Gandhi was manipulated by Ms.SoniaGandhi, his Italian born wife, to abet the crime in Bofors gun purchase committed by Quattrocchi against the nation.
8. Ms.Sonia Gandhi stationed Mr.Walter Vinci, her brother-in-law, in Sweden to influence her husband and then Prime Minister, when on a visit to Sweden to finalize the Bofors Deal. Also present in the same hotel was the Italian fixer, small arms supplier, and Snam Progetti agent, Mr. Ottavio Quattrocchi, [who was hailed as the catalyst in the deal by the CBI in their Letters Rogatory documents], and who had in return for a hefty commission prevailed on the Prime Minister to sign the deal before March 31, 1986.
9. Thereafter when the arm of the law began reaching near him, he escaped from India in 1993, then from Malaysia in 2002 via a rigged court judgment obtained by collusion with as yet unnamed parties and from Argentina— by the CBI fudging the records – all achieved under the influence exerted by Ms. Sonia Gandhi under three different and consenting Prime Ministers.
10. This is further confirmed in the interview conducted by Ranjit Bhushan of Outlook magazine [Annexure 4 ] in 1998 with Mr.Sten Lindstorm, the Chief of the Investigation Division of Swedish National Bureau of Investigation and Special Prosecutor of the Swedish Government into the Bofors payoffs. The Swedish National Audit Bureau which he assisted concluded after an independent probe that bribes had indeed been paid in the Bofors deal.
11. Lindstorm states in the interview, which has not been contradicted by anyone including Ms. Sonia Gandhi, that: “The Bofors Papers all point to the [Sonia] Gandhifamily” and further that Ms.Sonia Gandhi should “explain how Quattrocchi-owned companies got such fat sums as payoffs from the Bofors deal.”
12. This report is corroborated by another interview given by Lindstorm to Chitra Subramanian [Indian Express, March 22, 1998] wherein he stated; “All information we had at that time pointed to the Gandhi link—Sonia Gandhi should place her cards on the table. The bribes have been traced to her friend and this is not something out of the blue. This is no coincidence.”
13. Headlines Today is in possession of the written statement of then Intelligence Bureau officer Naresh Chandra Gosain made before CBI Inspector Ghanshyam Rai on March 29 1997. Between 1984 and 1987, Gosain was posted in the Special Protection Group[SPG] of the then Prime Minister Rajiv Gandhi. He was part of the escort team. Between 1987 and 1989, Gosain served as the Personal Security Officer or the PSO ofSonia Gandhi.
14. During the tenure of Prime Minister Deve Gowda in 1997, Gosain deposed before the CBI. This deposition has so far never been made public. Headlines Today dug out this deposition, in which Gosain talks at length about the close family ties between the Gandhis and the Quattrocchis.
15. In his testimony Gosain says, “Mr.Ottavio Quattrocchi and his wife Ms Maria Quattrocchi were very close to Mr Rajiv Gandhi and Mrs Sonia Gandhi. When Shri RajivGandhi became Prime Minister, Mr. Quattrocchi and his family members used to visit PM house and the family members of Shri Rajiv Gandhi also used to visit the house of Mr.Quattrocchi.”
16. He adds: “In the initial period of Prime Ministership of Shri Rajiv Gandhi, the children of Shri Rajiv Gandhi used to stay at Mr.Quattrocchi’s house during the foreign visits/domestic visits of the Prime Minister. We used to perform our shift duties at the residence of Mr.Quattrocchi on such occasions. Sometimes, Mrs Sonia Gandhi has also stayed in the house of Mr.Quattrocchi and at that time we used to perform our duties there.”
Gosain goes on to add that Mr.Quattrocchi and his wife Maria enjoyed free access to the Prime Minister’s house. “At No. 5 & 7 Race Course Road, private cars were not allowed to enter inside the bungalow. Only the ferry cars of SPG, after severe security checks, used to carry such visitors from reception to porch and back. Mr. Quattrocchi and Mrs Maria Quattrocchi were very close to Shri Rajiv Gandhi’s family and they got free access to the PM’s House.”
He further added: “All visitors to No 5 & 7 Race Course Road were issued passes at the reception near the alighting point. Every time, a card was kept ready for Mr. Quattrocchi and his family members as and when they visited the PM’s house. Everybody in SPG posted at PM house knew Mr Quattrocchi and his family members. Hence, there was no question of identifying them.”
17. Ottavio Quattrocchi’s proximity to the Gandhis is well known. What is also known is this proximity continued even after Quattrocchi began to be linked to the Bofors scandal.What documents show is that despite the cloud of suspicion surrounding Quattrocchi’s involvment in the Bofors paybacks, he continued to have unfettered access to 10 Janpath, the residence officially assigned to Ms.Sonia Gandhi, which in itself makes her a public servant under the Prevention of Corruption Act.
18. It is important to recollect that by January 25, 1990, a team of CBI officials was already in Switzerland with a list of suspected recipients of the Bofors payback. According to a Frontline magazine story of the time, Ottavio Quattrocchi was the first name on that list. Between 1988 and 1990, the media too carried many stories about the involvement of Quattrocchi as a middleman in the Bofors deal.
19. It is clear from records that Mr.Quattrocchi was the direct beneficiary of bribe payments in the Bofors scam. It is now confirmed by the ITAT Report of the Hon’ble Tolani & Sharma Bench [Annexure 5 ].
The testimony of Mr. Sasi Dharan is crucial in further unravelling the proximity of Quattrocchi to Ms. Sonia Gandhi.. Sasi Dharan worked as a driver in Snam Progetti. Snam Progetti was an Italian public sector giant that was represented in India by Ottavio Quattrocchi. Sasi was Quattrocchi’s personal driver. He drove Mercedes No.DIA 6253. In his testimony before the CBI, Sasi details the frequent meetings between the Gandhis with the Quattrocchis.
20. In his testimony Sasi says: “Shri Quattrocchi and Mrs Maria Quattrocchi were very close to Shri Rajiv Gandhi, Sonia Gandhi and his family. I do not know what type of relation they had but Quattrocchi and his wife Maria used to frequently visit the house of Rajiv Gandhi and Sonia Gandhi. I knew it since 1985 when I joined service. At that time they used to visit the house of Rajiv Gandhi twice or thrice in a day. Whenever SoniaGandhi’s mother or father visited India, I used to drive them to the house of Quattrocchi. They used to remain there for the whole day and Mrs Maria Quattrocchi would take them for shopping. They used to come to India four or five times in the year.”
21. What is clinching is the car log maintained by driver Sasi Dharan. In this log, Sasi details the exact dates when Ottavio Quattrocchi came to meet Rajiv and Sonia Gandhi at 5 and 7 Race Course Road or 10 Janpath. These logs are for the period 1989 to 1993. In this log book, Sasi Dharan has mentioned 41 occasions when Quattrocchi came to meet the Gandhis.
22. It is important to note that the meetings between Ottavio Quattrochi and Sonia Gandhicontinued even after the death of Rajiv Gandhi in 1991 even as Ms.Sonia Gandhiremained as a public servant under the Prevention of Corruption Act.
23. According to Sasi Dharan, Quattrocchi came to 10 Janpath 21 times after May 1991. Considering the long financial dealings of Mr.Quattrocchi since 1976 with LTTE (the assassins of Rajiv Gandhi), this fact is a subject of a future application for sanction as well.
24. Sasi concludes by saying: “Shri Quattrocchi left India on the night of July 29, 1993 and on this day also I had driven him to the airport. At that time he did not have any luggage except one briefcase and he told me he was going for an urgent meeting. Usually, whenever Mr. Quattrocchi wanted the car, he would tell me in advance, but the day he left, he did not tell me (in advance)”. Obviously he had notice of his impending arrest by CBI in advance.
25. As a consequence of the misuse of her office and position, Ms. Sonia Gandhihelped Ottavio Quattrocchi not only escape from the country, and in 2005 even to withdraw $ 29 million from his de-frozen accounts and thus let off scot free.
26. Hence, it is prima facie obvious that Ms.Sonia Gandhi had misused her office [ she was Life President in the Government funded Indira Gandhi National Centre for Arts Trust(IGNCA Trust) during 1991-2002] and thus a public servant with considerable influence in government to enable Mr. Quattrocchi to escape from India in 1993 and later in 2005 to benefit Mr.Quattrocchi to illegally gain monetarily at the expense of the Consolidated Fund of India, by defreezing his London accounts.
SECOND ISSUE:
27. This complaint against Sonia Gandhi also includes the corrupt monies held under her control in the tax haven of Switzerland as a legatee of the corrupt money which was banked in the name of her late husband or deposited by her of funds obtained from the erstwhile KGB, the Soviet Union’s Intelligence Agency, or by sale of illegally exported antiques in the country. I retain the right to submit details of other illegal accounts in other havens such as Macao at a later stage in another application to you or before the court.
28. It is well-reported that Sonia Gandhi is the beneficiary of Rajiv Gandhi’s estate which includes the corrupt monies continued even now to be held in a tax havens. Why this money is held abroad (even if held as a trust to benefit family members) instead of its being held in India within the Indian financial system to benefit the nation is a question which Ms.Sonia Gandhi must answer.
29. Violations of FEMA have occurred as also under Prevention of Money Laundering Act. In case any transaction on this account which is not reported in the Income Tax Returns, and FCRA is also a violation. There may also be an issue of obtaining RBI prior permission for holding such large sums abroad if it is claimed to be a legitimate account.
30. It is clear that this wealth was not reported in Election Affidavits of SoniaGandhi & Rahul Gandhi as a beneficiary of the monies so held [Annexure 6]. The total wealth of both Gandhis, as per their election returns, is just Rs 363 lakh, Sonia owns no car. ”
31. When Schweizer Illustrierte a prestigious German language Swiss magazine alleged that Rajiv Gandhi held an illegal account in Swiss banks of about US $ 2 billion, neither she nor her son, protested, or sued the magazine, then or later [Annexure 7].
32. When major papers, The Hindu and The Times of India included, had carried in the year 1992 the official confirmation of KGB payments to the Rajiv Gandhi family, adding that the Russian government owned the payments in the disclosures, neither of the two Gandhis challenged or sued them [Annexure 8].
33. Nor did they sue Dr. Yevgenia Albats, a member of the official Commission on KGB Operations set up by President Yeltsin, when she wrote about KGB payments to RajivGandhi and family in her book: The State within State [Annexure 9]
34. More than $ 2 billion in 1991 was being held by Ms. Sonia Gandhi as a legatee, or otherwise obtained by receiving stolen movable and immovable properties, monies and securities, kept illegally in tax haven banks of Switzerland and elsewhere, and which is disproportionate to her known sources of income. She thus has also committed offence u/s 13(1)(e) of PCA. It also attracts the IPC Sections for receiving stolen property.
35. The recent deposition of Hasan Ali, alleged to have siphoned money of the nation to Switzerland secret accounts admits to his close association not only with her but with Mr.Ahmed Patel MP and political adviser to Ms.Sonia Gandhi[Annexure 10 ].
36. Ms. Sonia Gandhi is also obviously culpable under Indian criminal law such as FCRA for the pay offs in the Iraqi Oil-for-Food scam of 2002. The United Nations had set up an independent inquiry committee under Dr. F. Volcker which found that the “Congress Party” headed by Ms. Sonia Gandhi as a beneficiary of a free oil quota from the now deposed and deceased dictator Saddam Hussein, which the beneficiary sold at market price through Marc Rich, the notorious swindler who had been convicted by a US Court for 350 years and several million dollars as fine. He was pardoned by US President Clinton in 2000 on Israeli Prime Minister’s intervention. He lives in Switzerland.
37. No one in Congress Party but Ms. Sonia Gandhi as party President could have been this beneficiary. The other beneficiary listed in Volcker’s Report was by name: Natwar Singh, who got much less [Annexure 11].
38. I reserve the right to further petition you to enlarge the scope of this sanction at a future date to include other violations and offences committed by Ms.SoniaGandhi under Prevention of Corruption Act (1988), for which I will file with you a separate application if necessary..
39. But, in this application alone there is substantive prima facie evidence for an appropriate court to take cognizance of the offence committed by Ms.Sonia Gandhiunder the Prevention of Corruption Act, and thus I seek your sanction to initiate the criminal law to prosecute her under the Act
40. Ms. Sonia Gandhi is habitually committing acts of corruption since 1972. On November 19, 1974, I brought it to the attention of the Rajya Sabha that Ms. SoniaGandhi, then an Italian citizen had functioned as a benami insurance agent of public sector insurance companies, and giving her address as 1, Safdarjung Road, New Delhi which was then the official residence of the Prime Minister of India. She thus committed an offence under FERA. The then Prime Minister Mrs.Indira Gandhisubsequently informed the Rajya Sabha that following my disclosure, Ms. SoniaGandhi had resigned from this agency earning commissions.
41. Between January 25, 1973 and January 21, 1975 she held a post of Managing Director of Maruti Technical Services on a salary despite it being an offence under FERA. But then she had become Managing Director of Maruti Heavy Vehicles Pvt Ltd with an even bigger remuneration. For neither post she had the necessary qualifications having never passed even High School.The Justice A.C. Gupta Commission appointed in 1977 by the Janata Party Government found her guilty of multiple offences under FERA and IPC.
42. In 1980 and January 1983 Ms. Sonia Gandhi then still an Italian citizen enrolled herself as a voter in the New Delhi constituency despite having been struck off the list in 1982 upon the ERO receiving a complaint from a citizen. She thus committed an offence under Section 31 of the Representation of the People’s Act read with Form 4 of the Registration of Electors Rules(1960).
43. Ms.Sonia Gandhi’s Indian citizenship acquired in record speed in April 1983 is vitiated by her incomplete answers to mandatory questions in the citizenship forms. She did not submit documents from the Italian government of relinquishing her Italian citizenship required for Indian citizenship, stating in the Form that it was ‘not applicable” [Annexure 12]. Italian Embassy in New Delhi simply affirmed what she told them and hence that cannot be taken as a valid document of relinquishment for the purposes of citizenship. She also retrieved her Italian passport in 1992 after citizenship laws in Italy were amended which under Section 10 of the Citizenship Act (1955) means cancellation of her Indian citizenship.
44. All these facts stated above were put together and published in USA in a full page advertisement in the New York Times in 2008 by NRIs N. Kataria and others.The Congress Party unit in USA thereafter engaged the most expensive law firm and filed a $200 million defamation suit. However Ms.Sonia Gandhi refused to appear in the witness box and be cross examination. Therefore, Justice Emily Goodman of the New York State Supreme Court dismissed the suit since defamation suits in law have to be filed by the person claiming to be defamed, and therefore cannot be assigned to others [Annexure 13]. Ms. Sonia Gandhi had a case to rebut these facts, then why she failed to turn up in court?
(SUBRAMANIAN SWAMY)
http://bharatkalyan97.blogspot.in/2014/01/ndtv-accused-of-money-laundering-scam.html
JAN
16
NDTV &Chidambram Accused of Money Laundering Scam of Rs. 5500 cr.
Published on Jan 15, 2014
IT Commissioner SK Srivastava's Battle against Thwarted Probe into Hawala & Tax Evasion Scam by NDTV - Madhu Purnima Kishwar
IT Commissioner SK Srivastava’s Battle against Thwarted Probe into Hawala & Tax Evasion Scam by NDTV
Some weeks ago, my office received a big bundle of papers along with two DVDs by courier. The name and address of the recipient was Ranthambore Rana, D 55 Defence Colony, New Delhi. I do not know any such person but the bunch of papers and the two DVDs contained very disturbing information. (When a Manushi volunteer went to check at the given address, we found someone else living there)
They provide in-depth information with detailed documentation regarding an unholy partnership between Finance Minister P Chidambaram and directors of premier TV channel—NDTV. It took me days to go through and make sense of these papers which I also got vetted by a senior lawyer. Even so I was diffident in putting this information in the public domain lest I make an error of judgment. However, on 6 December 2013, former Law Minister and now MP, Shri Ram Jethmalani sent a letter to Mr Chidambram directly accusing him of receiving a bribe of Rs 5000 crores and then getting it laundered by NDTV and harassing Srivastav who attempted to inquire into this economic offence.
Chiadambram has not denied or rebutted anything. Rather, he offered to get himself inquired by his own subordinates. Following this exchange of letters between a former Law Minister and the present Finance Minister of the country, I felt compelled to share the information I had received with the public at large.
As per the information in these papers, Chidambaram whose job it is to stand guard over public money and state revenues is allegedly involved in a Rs 5500 crore money laundering scam in collaboration with NDTV and consequent tax-evasion of 3,500/- crores. To facilitate this loot, two IRS officers of 1999 Batch were paid huge amount of bribe and illegal gratification, including an all expenses paid pleasure trip with family to Europe for one officer while the other officer was sent on pleasure jaunt to Mauritius. This is borne out by documentary evidence presented by Srivastav in the High Court.
The two DVDs I received contained a video recorded conversation between S.K. Srivastava, 1987 batch Indian Revenue Service Officer and a small team of lawyers. After having studied the papers and going over the video recorded conversation twice over, I phoned SK Srivastava and asked for an appointment. I met him with a Manushi volunteer at his residence in Pandara Park, in the hope of interviewing him to confirm or refute the authenticity of those documents and the DVDs. He took no time in confirming that the papers were genuine and that he stood by all that was stated in those IRS and court documents. But he said he had no idea how the conversation got to be recorded or why and who sent me the DVDs. When I tried asking him further questions, he refused to answer them saying that as a government official he is not allowed to speak to the media or give interviews for public consumption. However, he did give me the names and phone numbers of his lawyers, including that of S K Gupta, Advocate (Mobile No.-9811211218) who has for years defended him in court against the powerful adversaries like NDTV and Chidambaram.
From his house, I went straight to the Supreme Court chamber of Advocate SK Gupta (chamber No.-57, Old Lawyers Chambers) who also confirmed the authenticity of the documents. He saw the two DVDs on his computer monitor and confirmed that that particular conversation indeed took place in his office. But he said he had no idea how and why it came to be video recorded.
The battle waged by SK Srivastava is no less mind boggling and benumbing than that of ISRO scientist Nambi Narayanan against forces out to subvert India. (For details of Nambi Narayanan’s battle, read….RB Shreekumar: Hero of the Secular Brigade - Part I, How India’s Space Program was Sabotaged -- Nambi Narayanan Describes the Targeting of ISRO by Shreekumar Masterminded Team of IB Officials Part II, Third Degree Torture by IB Officials of ISRO Scientist and Others - PART III .
I was told by his lawyer that Srivastava is fighting more than 100 cases before civil & criminal courts right up to the Supreme Court of India against NDTV and corrupt IRS Officers who are hand in glove with these tax-evaders and money launderers. As per Srivastava’s lawyer, these cases have been allegedly engineered by NDTV and a host of corrupt IRS officers working allegedly at Mr Chidambaram’s behest to break Srivastava’s resolve to unearth this scam and have the guilty punished.
The papers reveal how when Srivastava could not be coaxed or threatened into submission by NDTV and its agents within the Income Tax department from exposing the huge scam, he was issued four charge sheets and repeatedly put under suspension-- totaling to a period of more than 3 years--allegedly due to the personal vested interest of P. Chidambaram on illegal grounds and false charges of sexual harassment of two female IRS officers of 1999 Batch of IRS both of whom are alleged to have received huge bribe and illegal gratification and one of whom had got her spouse (Abhisar Sharma) employed by NDTV while she was its Assessing Officer and also that of its Directors while another was in-charge of foreign tax division (FTD) of the CBDT and personally camped in Mauritius to arrange transfer of money laundered by NDTV through U.K. subsidiary.
Two Delhi based women IRS officers who are allegedly partners in the NDTV scam were set up to make false allegations of sexual harassment against Srivastava. But he put together a pile of evidence to prove to the court and in official enquiries that followed the allegation of sexual harassment that the two women officers of IRS who charged him with sexual harassment were on the pay roll of NDTV. Both these women were proved lairs in court for lodging false complaints. Srivastava also managed to get his suspension orders quashed by the Central Administrative Tribunal since they were patently illegal. By all accounts Srivastava had an outstanding service record and was found to have merely done his duty with due diligence. Therefore, he could get his suspension orders quashed by Court. Since in 2010 Chidambaram was no longer at the helm of affairs in the Finance Ministry, the Govt. not only accepted those Orders but also implemented those them!
Chidambaram has also tried transferring Srivastava far away from Delhi but Srivastava was successful in getting his Mangalore transfer quashed by CAT because it was found to be motivated.
It is noteworthy that the previous finance Minister, Mr Pranab Mukherjee who is now the President of India had allowed the investigations initiated by Srivastava to go on! But after Chidambaram became Finance Minister, he is alleged to have taken active interest in keeping Srivastava from investigating the illegal acts of NDTV and its directors, just as in his capacity as the Home Minister he did not allow CBI to cooperate in the 2G scam investigations regarding money laundering by NDTV as requested by Srivastava before the court of CBI Special Judge Saini.
Srivastava in his submission in the 2 G scam case had alleged that NDTV has laundered a huge chunk of this money for compromised politicians. Chidambaram as Home Minister got two FIRs registered against Srivastava for reporting about the corruption of those two female IRS officers of 1999 Batch. The ostensible charge was that Srivastava had outraged their modesty and committed offences U/s 509 of IPC, 1860.
As part of their resolve to browbeat Srivastava, vested interests in collusion with NDTV obtained a mischievous medical report from a private hospital, VIMHANS, Delhi that Srivastava is suffering from a mental disorder and therefore whatever he says doesn’t merit being taken seriously by the court. Srivastava describes in the video recording how he defeated that conspiracy by getting himself examined by doctors in 5 reputed Government hospitals like AIIMS, Hindu Rao and Safdarjang. This medical report was later withdrawn by VIMHANS at the mere hint of an inquiry by the Medical Council of India (MCI).
Advocate S.K. Gupta says he has been again and again offered inducements and enticements by NDTV and a host of corrupt IRS officers to stop him from defending and protecting Srivastava. But he says he has withstood all those pressures because he believes in the rightness of Srivastava’s cause.
The full text of the SK Srivastava’s discussion with his lawyers is available at...
This is not a sting operation, nor am I exposing anything “secret”. SK Srivastava’s battle has been going on in the courts for several years now. The documents that I received are part of court records and hence in the public domain.
We are posting the unedited version of the DVDs sent to me (barring a small section which has unsubstantiated charges, unlike the rest of the conversation) because the case has been successfully hushed up by the media for obvious reasons. A brief summary of the case is given below:
Srivastava’s Allegation against P. Chidambram
That P. Chidambaram received several thousand crores by way of bribes which NDTV laundered through dummy companies. Using his power positions, Mr Chidambaram has scuttled all attempts at inquiry.
P. Chidambaram’s counter case: S.K Srivastava is in-disciplined and should be removed from government service. CBDT under P. Chidambaram told the Delhi High Court that Srivastava’s "performance ... has not been satisfactory" and "the department ... are not satisfied with the manner of his work"
A Partial List of NDTV’S Alleged Illegal Acts
No 1: SCAM OF 5,500 CRORES PLUS :
NDTV allegedly laundered 5500crores by raising funds through “private placements”, from undisclosed investors in NDTV subsidiaries based in UK and Holland.
The sums raised by it through dubious investors not only paid off its 3,500 crores liability but left an amount in excess of 2000 crores to be transferred to another account.
These funds were transferred to a Mauritius based NDTV subsidiary.
These funds were then routed to several other NDTV subsidiaries in India.
These Indian subsidiaries were later merged with NDTV Ltd., India without giving a fair share holding right to the companies of Mauritius or UK or Holland.
Shockingly, both, the UK and Holland based NDTV subsidiaries, were closed down and so was the Mauritius company!
Why would investors in UK and Holland allow such actions if this were not a plain money laundering scheme?
At present dollar values, with penalties and interest, the scam exceeds 5,500 crores.
Shockingly none of the UK and Holland based subsidiaries of NDTV appeared in the annual reports filed that year by NDTV India and subsequently no critical details were provided to the relevant Ministry when special intimation was filed before it for condoning the lapse. None was asked for either!
It is alleged by Srivastava that this money itself is “illegal”; it is not a case of undeclared business profits or money on which income tax has not been paid. It is money transferred out of the country, received as bribes by ministers, politicians or public servants or just one unknown politician through the same hawala route that terrorists use!
No 2: SCAM OF 300 CRORES
NDTV allegedly showed false exports to Star TV in Hongkong under section 80 HHF of the Income Tax Act. This act defrauded the government of revenue worth at least 300 crores at present value.
NDTV claimed illegal income tax deductions without making any actual exports and by bringing in Indian rupees instead of foreign exchange as stipulated in supporting judgements!
This deduction was allowed by a Income Tax officer Sumana Sen (IRS 99005) whose husband Abhisar Sharma has been an employee of NDTV, a fact that she had concealed all through her employment.
Going against service conduct rules, Sumana Sen accepted a gift of a luxurious all expenses paid European holiday from NDTV whereby NDTV allegedly also paid her shopping bills. All this totals to an expense of 1 Crore. She filed false reports that her involvement with NDTV was in her official capacity. She claimed eligibility for accepting this Rs 1croreholiday as one of the perks allowed to her husband as an employee of NDTV. Records show that NDTV has incurred no such expense on any of its employees, including Abhisar Sharma. Srivastava’s allegation that it was a bribe to Sumana Sen for giving undue tax rebates to NDTV has been backed by solid documentary evidence.
Sumana Sen failed to inform the Income Tax Department that her husband was an NDTV employee while she was handling their tax matters. This is an obvious case of conflict of interest. In fact, she manipulated her transfer to the Circle under whose jurisdiction NDTV and its directors—including Prannoy Roy, Radhika Roy, Barkha Dutt, Vikram Chandra etc. come for the purpose of income tax assessment.
In order to pre-empt SK Srivastava from proceeding with these inquiries, Sumana Sen and her collaborationist…….filed false charges of sexual harassment against SK Srivastava. Srivastava alleges that P. Chidambaram had set up these women and used their false cases to suspend him and harass him through various unholy means.
Ashima Neb undertook tourism of Mauritius with her companion for about 10 days and incurred huge expenditure o shopping and hotel stay, etc., while claiming to spend a princely sum of 60,000/- only on everything from air travel to hotel stay to local travelling to shopping to food for she and her companion accompanying her, et-all!
All these cases against Srivastava were quashed yet P. Chidambaram continues to harass him and has set-up another illegal inquiry that has been stayed by the Central Administrative Tribunal (CAT). Even though P. Chidambaram has been named by Srivastava in the inquiry, Chidambaram has not had the courage to file a reply. (Here is the link to the departmental inquiry report vindicating Sanjay Srivasatav on Sexual harassment charges : NDTV money laundering - Annexure 9)
NO. 3 - SCAM OF RS. 1.46 CRORES
In the same Assessment Year, Sumana Sen, allowed tax refund of 1.46 crores to NDTV instead of implicating it in the above scams! She handed the cheque to NDTV through her husband Abhisar Sharma, then an NDTV employee (a direct conflict of interest, not statutorily disclosed by her, therefore illegal) in gross violation of the rules of refunding dues! The refund was not admissible and she passed illegal orders to illegally pay money to NDTV from Government accounts!
Due to relentless battle waged by Srivastava and because of some still remaining honest IRS officers like the incumbent CIT, Delhi V and his subordinates, the I.T. Deptt. in Delhi could no longer ignore the fraud and loot of the public exchequer and public money. It has now succeeded in levying income tax on Rs 900 crores of laundered money in on assessment year alone, i.e. 2009-10. Another Rs 2003 crores of laundered money and bribe paid to public servants is under consideration for similar action.
The fraudulent acts and conduct of NDTV is made out from their abject inability to cross-examine Srivastava who recorded his statement on oath and offered to be cross- examined by NDTV. Nor could it rebut documentary evidence submitted by Srivastava to I.T. Deptt.
But, all because of Chidambaram, the Dispute Resolution Panel (the DRP II, Delhi) of the Income Tax Deptt. still managed to save NDTV and Chidambaram as it did not ask for the list of investors who contributed the Pound Sterling 300 millionsto NDTV and its subsidiary in U.K. and then forgot to recover their money as that would have, revealed the link of Chidambaram with NDTV as alleged by Srivastava. The DRP has not exercised its powers to order search of NDTV to recover that list and the Member (Inv.), CBDT who is known to be a blue eyed boy of Chidambaram and was deputed by him to harass the Chief Minister of his home state has simply turned a blind eye to this case to cover up the link between NDTV and Chidambaram.
There is a lot more to this case than the above mentioned scams.
Since Srivastava’s battle is unlikely to get a proper hearing in mainstream media, I am posting his account in Hindi on You Tube.
Was all this material sent to me because I am seen as someone similarly battling mainstream media’s partisan conduct and conspiratorial silence on many issues?
I am in no position to judge these issues but feel strongly that this case deserves to be known widely at least through the social media so that the Government can be pressured into starting a fair probe into these allegations.
For viewing SK Srivastava’s account to his lawyers, click here for video
(Links to Ram Jethmalani letters: Ram Jethmalani's letter to P. Chidambaram in NDTV money laundering matter, P. Chidambaram?s reply to Ram Jethmalani and Ram Jethmalani's reply to P. Chidambaram in NDTV money laundering matter)
Manushi
Source: http://www.indiandefence.com/forums/social-current-affairs/41509-ndtv-chidambaram-accused-money-laundering-scam-rs-5500-cr.html#ixzz2qWT4MvjD
http://www.indiandefence.com/forums/social-current-affairs/41509-ndtv-chidambaram-accused-money-laundering-scam-rs-5500-cr.html
Wednesday, December 5, 2012
Indian direct investment abroad
My article with this title appeared in the Dec 8 2012 issue of the Economic & Political Weekly as a commentary. It is reproduced below. The article has been quoted in the India blog of New York Times here
A considerable part of the discussion on economic policy in India is devoted toforeign investment in Indian equity and debt securities. The reverse flow of capital from India into foreign equity and debt, though equally important for this discussion, attracts far less attention in the financial media and is the subject of this paper.
A rapid rise in the flow of Indian investments abroad was noted early on by Nagraj (2006). Nayyar (2008) extensively analysed investment by Indian firms in the context of international investment from developing countries using all available data. Both these studies used data up till 2006; since then, India’s investments abroad have grown manifold as we will see later.
More recently, Chalapati Rao and Dhar (2011) have examined direct investments fromIndia in a critique of the policy regime governing cross-border direct investment flows. They look at the sector wise composition of investments, derived from recently available RBI data, as well as at individual cases to understand why Indian business houses are investing abroad.
A major concern of this paper is with the official investment data. The RBI provides a confusing array of data sets[1] relating to outward investments. This paper begins by looking for clues in RBI’s regulations and accounting practices to reconcile the different data sets. It goes on to uncover some of the key features of the outward investments and concludes by examining the shortcomings in the regulatory environment which allow the end use of investments to remain mostly opaque.
RBI’s accounting practices
The Reserve Bank of India (RBI) regulates cross-border investment in securities and is the primary repository of data on investment by Indian entities abroad. Following International Monetary Fund standards, RBI presents Indian investment abroad involving equity and debt securities (other than those held by the RBI as reserve assets) under two heads - ‘direct investment’ and ‘portfolio investment’ (RBI, 2010).
While ‘direct investment’, carries the usual connotation of being investment made with the objective of obtaining a “lasting interest and control” in a foreign enterprise, the key characteristic of ‘portfolio investment’ is considered its “negotiability”, facilitating ready withdrawal of investment by the investor.
RBI regulations[2] permit various Indian entities including companies, mutual funds, and individuals to invest in equity and debt of foreign entities. Each entity has multiple avenues for making overseas investments. Companies can set up or acquire Joint Ventures (JV) or Wholly Owned Subsidiaries (WOS) abroad and invest in them. They can also invest in the securities of unrelated foreign companies (neither JV nor WOS). Individuals can invest in the equity of companies directly as well acquire a portfolio through the medium of mutual funds. The question under consideration is how RBI categorizes different investors and the different avenues of investment abroad as ‘direct’ or ‘portfolio’ investment.
The RBI Balance of Payments Manual (RBI 2010) documents “current practices” in compiling Balance of Payments statistics. According to the manual[3], the main component of ‘direct investment’ is the investment by Indian entities in equity and debt of JV companies or WOS. Another component is the investment by banks in their branches abroad. Investments by mutual funds and investment by Indian companies in equity and debt securities of unrelated foreign companies is considered ‘portfolio investment’. The manual is formally silent about the treatment of investments by individuals in foreign securities, but there are hints[4] that these are being included in ‘direct investment’ instead of ‘portfolio investment’ where they should belong.
However, what has been described above is only “current practice”. Going back in time, reveals other practices. Companies were permitted to invest directly in non-related foreign entities that had a minimum of 10% holding in a listed Indian company, from Jan 2003[5]; such investments were opened up to Mutual funds and even individual investors and all these investments were considered ‘direct investments’.[6] The condition restricting this form of investment to companies with 10% Indian holding was dropped, first for mutual funds in July 2006[7] and then for companies in Sept 2007[8]. However, Foreign Exchange Management Regulation of Dec 2007[9] still called such investments ‘direct investment’.
RBI documentation down to the present[10] continues to shirk from providing sharp distinctions between ‘portfolio investment’ and ‘direct investment’, an indication that there have been no strong reasons from a policy perspective for RBI to distinguish between the two[11].
With this background, we proceed to look at the different data sets from RBI on investments abroad[12].
The disinterest in portfolio investment
Cross-border investments are available in two periodic statements of the RBI – the Balance of Payments (BOP) and the International Investment Position (InIP). The BOP statement reveals the movement of capital over a period while the InIP statement shows the stock of international financial assets and liabilities, held as direct and portfolio investment, at the end of a period.[13]
Table 1 contains select data from InIP statements showing the stock of India’s ‘direct investment’ and ‘portfolio investment’ abroad. India’s investment abroad is overwhelmingly in the form of direct investment and is growing rapidly. The remainder of this paper will be confined to a discussion of direct investment.
Cross-border flows of direct investment
Table 2 shows the net yearly flow of direct investments out of and into India (columns A and D respectively). Heightened flows are observed in both directions from 2006-07. Data from the table shows that net Indian direct investment abroad in the last six years is just over 50% of the net FDI that has come into India. Interestingly, the percentage is the same if the comparison is extended to the last decade.
A closer look at the components of direct investment provides additional insights. Following IMF standards, direct investment flows reported by RBI include flows into equity and debt as well as reinvested earnings[16]. Columns B and E in Table 2 show the reinvested earnings of Indian investment abroad and FDI in India respectively. While the reinvested earnings of foreign capital show a steady increase over the years, the reinvested earnings of Indian capital abroad have remained constant from 2005-06 in a period when the stock of investment increased over 10 times (see Table 1). RBI figures of reinvested earnings of Indian companies seem doubtful[17].
A useful comparison between direct investment flowing abroad and FDI flowing into India is from the point of view of how they affect the balance of payments. In such a comparison, reinvested earnings must be excluded from the flows as they do not affect the balance of payments[18]. Figure 1 shows the yearly flow of Indian direct investments abroad and FDI in India after excluding reinvested earnings in both cases.
Intriguingly, as the figure shows, outflows have moved more or less in tandem with FDI inflows between 2002-03 and 2009-10. Net annual outflows rose sharply between 2004-05 and 2006-07 to plateau at higher levels, with the exception of a sharp dip[19] in 2011-12. In 2010-11, from a balance of payments perspective, more direct investment went out of India than came into India! Again, from the same perspective, the net outflow in the last six years is nearly 65% of the net inflow, showing the extent to which the contribution of FDI to shoring up India’s balance of payments is negated by outward investments.
Another point of interest is the performance of India’s direct investments abroad in terms of the return on investment. Unfortunately, the data available publicly is rather limited in extent and quality. There are two components to the returns – earnings reinvested abroad and dividend and profits repatriated. The unreliable nature of the estimates of the earnings reinvested abroad has already been pointed out. The data on dividend and profits is available only up till 2008-09[20]. It shows maximum yearly dividend and profits of under $ 0.5 billion on an investment stock that amounted to nearly $ 50 billion by the start of 2008-09. The announcement of a 50% reduction in the tax rate on dividends from investments in joint ventures and subsidiaries abroad in the last budget[21] is an indirect admission by the government that dividend repatriation is below expectations.
Disaggregating direct investments
As has been noted earlier, RBI data on Indian direct investment abroad aggregates several categories of investments including investments by Indian entities in Joint Ventures (JV) and Wholly Owned Subsidiaries (WOS). More recently, RBI has started making another data set publicly available - the outward investment flow into JV/WOS abroad as reported by authorized dealers[22].
The financial commitments of Indian entities towards their JV/WOS abroad are in the form of equity, loans and guarantees. The equity and loan components together constitute the outward investment flow into JV/WOS. The guarantees (backed by assets inIndia), provided to obtain financing abroad, do not entail an immediate flow of funds. Table 3 shows these components of the financial commitment in JV/WOS. It also contains the outward direct investment in equity and debt reported in the BOP[23] statements for comparison.
The cumulative investment into JV/WOS abroad by Indian entities in the last five years has been to the tune of nearly $70 billion, while the cumulative direct investment is a little over $82 billion. Investment in JV/WOS forms the most part – nearly 85% - of outward direct investment.
However, a substantial amount - $12 billion spread over five years - is being invested elsewhere (unless RBI data on JV/WOS investments is somehow incomplete). This would include investment of banks in their branches abroad and investments by individuals. One hopes that in the interest of greater transparency, RBI will also provide details of these investments in future.
Table 3 reveals another important feature of the financial commitments in JV/WOS abroad, namely the large guarantee component, pointing to the highly leveraged nature of acquisitions by Indian companies. The financial commitment made in the form of guarantees is about 47% of total financial commitments made in the last 5 years. Guarantees have been rarely invoked in the past[26]. However, with the strong possibility of acquired companies failing to perform in a deteriorating economic environment, mounting guarantees pose heightened risks to Indian banks backing the guarantees made by companies.
An important attribute of the RBI data is that it allows the identification of investing entities by name and provides the amounts they have invested. An analysis of the data for the last five years (July 2007 – June 2011) reveals[27] that just over 380 companies have invested over $10 million each and account for over 82% of the investments flowing abroad in the last five years.
Grouping the companies by business conglomerates shows the ten largest outward investor groups to be Tata, Bharti Airtel, Essar, Gammon, Reliance, Religare, Suzlon, Reliance – ADAG, Vedanta and United Phosphorous in that order. These groups, through their 35 odd companies, account for more than a third of the investment outflows for this period. Just five of these groups – Tata, Bharti Airtel, Reliance, Reliance-ADAG, and Suzlon account for over half of the total guarantees extended for this period.
The opaqueness of investments in foreign ventures
The main drawback of the RBI data on JV/WOS is that it identifies only the immediate recipient of the investment. These by and large turn out to be intermediaries - shell companies that do not have any operations; few Indian companies directly invest in the company that is the actual target of their investment.
There is a marked preference for locating these intermediaries in Singapore, Mauritius, and Netherlands - countries that provide an attractive ‘tax neutral’ regime for holding companies. These have been the top three investment destinations for Indian investors’, together accounting for over 55% of the outward investment in the period April 2008 to Feb 2012.[28]
The distancing of the foreign target from the Indian investor is often through multiple layers of shell companies. Multi-tiered intermediate structures located across several countries are justified as necessary to exploit tax treaties between different countries to the most advantage. With RBI regulations not insisting on full disclosure of how investments are routed to the target companies[29], these complex structures make it difficult to identify the actual destination of the investments and its end use, unless the investors volunteer this information.
With a liberal policy regime in place, companies can generally make investments without seeking prior approval, within generous limits[30]. Combined with a weak regulatory environment, this leaves enough room for investment from India to be channeled into areas prohibited by regulation, such as real estate and banking, or else be ‘round tripped’. ‘Round tripping’ allows investors to hide their identity and avoid taxes by taking the investment out of India and bringing it back under the cloak of foreign investment.
The opportunity for tax arbitrage arises from the differential tax treatment meted out byIndia to foreign investors from certain countries in comparison to Indian investors.Mauritius and Singapore are popular staging points for investing in India. India’s tax treaties with these countries allows investors coming through intermediaries based there to avoid paying taxes on capital gains made in India.
The existence of ‘round-tripping’ is periodically confirmed by media reports on investigations into suspect cases[31]. The RBI is aware of the problems with the policy on direct investments abroad and it appears that these have been transmitted to the government[32]. The government, however, has chosen to maintain the status quo.
Concluding remarks
Export of capital by Indian companies rose dramatically in tandem with FDI and measures up to a sizeable fraction of the FDI inflows over the last six years. While there is a keen debate on the public interest in allowing or limiting FDI, it is surprising given its scale, that there is no such engagement with Indian direct investment abroad.
The government justifies the public interest in this policy by repeating the ‘textbook’ benefits – the markets that will open up for Indian goods and services increasing exports and employment, the technology and skills infusion that will take place, or the energy resources that will be secured for India’s benefit.
It is difficult to evaluate if any of these benefits indeed accrue to India, given the absence of even basic data on the end use of investments, leave alone metrics designed to measure the efficacy of policy. What is clear from the enthusiasm with which India’s business conglomerates export capital is that the policy certainly works in their interest.
References:
Chalapathi Rao, KS and B Dhar (2011): “Formulating India’s FDI Policy: Waiting for Godot” in Alternate Survey Group, Indian Political Economy Association (ed) Economic Growth & Development in India: Deepening Divergence (New Delhi: Yuva Samvad Prakashan)
Khan, HR (2012): “Outward Indian FDI - Recent trends and emerging issues” in RBI Monthly Bulletin, April 2012, (http://www.rbi.org.in/scripts/BS_ViewBulletin.aspx) last accessed on 8 Aug 2012
Nagaraj, R (2006): “Indian Investments Abroad”, Economic & Political Weekly, Vol - XLI No. 46, November 18, 2006
Nayyar, Deepak (2008): “The Internationalization of Firms From India: Investment, Mergers and Acquisitions”, Oxford Development Studies, Taylor and Francis Journals, vol. 36(1), pages 111-131
RBI (2010): Balance of payments manual for India (Mumbai: RBI), (http://www.rbi.org.in/Scripts/PublicationsView.aspx?Id=13013) last accessed on 7 Aug 2012
Notes:
[1] RBI puts out data on outward investment from India as part of the Balance of Payments statement and in monthly press releases on “Overseas Direct Investment”. RBI also occasionally publishes articles on Indian direct investment abroad in its monthly bulletins. For a recent example of the latter, see Table 1 in Khan (2012).
[2] The latest regulations are available in RBI’s “Master Circular on Direct Investment by Residents in Joint Venture (JV)/ Wholly Owned Subsidiary (WOS) Abroad, July 02, 2012” (http://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=7352), last accessed on 7 Aug 2012.
[3] See sections 5.59 to 5.61 and 5.68 of RBI (2010).
[4] See section 6.20 of RBI (2010) - “On the issue of survey on outward portfolio investments .... transactions of high net-worth individuals are not being included.” See also the comments at the end of Table 1 in the article“Indian Investment Abroad in Joint Ventures and Wholly Owned Subsidiaries: 2009-10 (April-March)” in the RBI monthly bulletin of July 2010.
[5] RBI circular “A.P. (DIR Series) Circular No.66 dated Jan 13, 2003” (http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=1038&Mode=0), last accessed on 8 Aug 2012
[6] RBI regulation “Foreign Exchange Management (Transfer or Issue of any Foreign Security) (Second Amendment) Regulations, 2003” (http://rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=1300) last accessed on8 Aug 2012.
[7] RBI circular “A.P. (DIR Series) Circular No. 3 dated July 26, 2006” (http://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3028&Mode=0), last accessed on 8 Aug 2012
[8] RBI circular “A. P. (DIR Series) Circular No.11 dated Sept 26, 2007”(http://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3833&Mode=0), last accessed on 8 Aug 2012
[9] RBI Regulation “Foreign Exchange Management (Transfer or Issue of any Foreign Security) (Third Amendment) Regulations, 2007” (http://rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=4652) read along with “Foreign Exchange Management (Transfer or Issue of Any Foreign Security) (Amendment) Regulations, 2004” (http://rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=2126) last accessed on Aug 8 2012
[10] In the latest available regulations (referenced in note 2), Section B6.1(i) concerning “Portfolio investments by listed Indian companies” is a subsection ofSection B titled “Direct Investment outside India”
[11] This is in line with the assertion made by Chalapati Rao and Dhar (2011:111) that regulations for investing abroad have been primarily designed to “move towards full capital account convertibility”
[12] The dataset in Khan (2012: Table 1) on outflows in respect of outward FDI has not been considered in this paper as it does not come with any explanation of how it can be reconciled with BOP data.
[13] See section 2.3 of RBI (2010) for the differences between BOP and InIP data.
[14] RBI puts out InIP data in press releases every quarter. The data up to Mar 2012 is available at (http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=26761), last accessed on 8 Aug 2012
[15] BOP statement is included in the Reserve Bank of India Bulletin issued every month, available at the RBI website (http://www.rbi.org.in)
[16] Earnings from pre-existing direct investment may be reinvested in the enterprise or paid out as dividend.
[17] Poor data has been attributed in the past to RBI’s data collection through a “Survey of India’s Foreign Liabilities and Assets” to which it was not mandatory for companies to respond. The author is unaware of the current practice.
[18] Reinvested earnings of FDI in India appear as a credit entry under the ‘foreign direct investment’ head of the ‘capital account’ of the BOP and as a debit entry under the ‘investment income’ head of the ‘current account’. Reinvested do not affect the balance of payments. Indian investment abroad is similarly treated.
[19] There is some inconsistency in RBI data that could account in part for the sharp dip. This inconsistency is also seen in RBI’s figure on investments in joint ventures and subsidiaries (see Table 3) for 2011-12 which are higher than its BOP figure for the total direct investment outflow.
[20] See “Invisibles in India’s Balance of Payments: An Analysis of Trade in Services, Remittances and Income” Mar 10, 2010 available athttp://www.rbi.org.in/scripts/BS_ViewBulletin.aspx?Id=11029 last accessed on27 Sept 2012
[21] This tax concession has been noted by Khan (2012: para 43)
[22] Data on Outward Direct Investment is published every month by the RBI and is available at (http://www.rbi.org.in/scripts/Data_Overseas_Investment.aspx), last accessed on 8 Aug 2012
[23] In this table, the outward direct investment abroad is the direct investment in equity and debt in that year and does not include reinvested earnings or the proceeds of disinvestment.
[24] See note 24
[25] For BOP data see note 17
[26] See table 1 in Khan(2012) for the guarantees invoked each year
[27] Analysis carried out by the author using outward direct investment flow data (note 24).
[28] Calculated from the data in table 4 of Khan (2012)
[29] The reporting requirements are specified in Appendix A of the ‘master circular’ detailed in note 2
[30] Exhibit 1 in Section E of Khan (2012) explains how the policy has been ‘relaxed’ in the last few years
[31] See for example the PTI report “Mauritius funds into Indian stocks face Sebi, RBI probe” Times of India, July 22, 2012(http://timesofindia.indiatimes.com/business/india-business/Mauritius-funds-into-Indian-stocks-face-Sebi-RBI-probe/articleshow/15090438.cms) accessed onAug 8 2012
[32] See Deepshikha Sikarwar: “Frame a policy on overseas investments: RBI to government” Economic Times, Aug 19, 2011(http://articles.economictimes.indiatimes.com/2011-08-19/news/29905392_1_tax-havens-spvs-direct-taxes-code) accessed on 8 Aug 2012
http://kkasturi.blogspot.in/2012/12/indian-direct-investment-abroad.html
Overseas Direct Investments
(updated as on October 22, 2013)
Q.1. What is the significance of overseas direct investments (ODI) for the country and for the investor?
A. Joint Ventures/Wholly Owned Subsidiaries abroad promote economic co-operation between India and the host countries. They result in transfer of technology and skills, sharing the results of Research & Development, access to the global market, promotion of the brand image, generation of employment and utilization raw materials available in India and the host country, increased exports of plant and machinery and goods and services from India, foreign exchange earnings through dividend earnings, royalty, technical know-how fee, etc. Since globalization of trade is a two-way process, integration of the Indian economy with the rest of the world with all its attendant benefits is achieved through overseas investment. It is the reverse of Foreign Direct Investment (FDI) i.e. Indian direct investment abroad.
Q.2. Where are the guidelines pertaining to overseas direct investments available?
A. The guidelines have been notified by the Reserve Bank of India vide Notification No. FEMA 120/RB-2004 dated July 7, 2004, as amended from time to time, which can be accessed at the Reserve Bank’s website http://www.rbi.org.in/scripts/Fema.aspx. A Master Circular titled ‘Master Circular on Direct Investment by Residents in Joint Venture (JV) / Wholly Owned Subsidiary (WOS) Abroad’, which is a compendium of all notifications/circulars incorporating the developments, is also available at the website http://www.rbi.org.in.
Q.3. Where can one get clarifications pertaining to the guidelines on overseas investment?
A. Please see answer to Q. 2 above. Any clarifications in respect of cases not covered by the instructions may be obtained, giving full details of the case, from the Central Office of the Reserve Bank at the following address:
The Chief General Manager
Reserve Bank of India
Foreign Exchange Department
Overseas Investment Division
Central Office
Amar Building, 5th Floor
Mumbai 400 001
or
By e-mail
Q.4. What are the general permissions available to persons (individual) resident in India for purchase / acquisition of securities abroad?
A. General permission has been granted to persons (individual) resident in India for purchase / acquisition of securities as under:
Out of funds held in the RFC account;
As bonus shares on existing holding of foreign currency shares;
When not permanently resident in India, from the foreign currency resources outside India.
General permission is also available to sell the shares so purchased or acquired. A resident Indian can remit up to USD75,000/- per financial year under the Liberalised Remittance Scheme (LRS), for permitted current and capital account transactions including purchase of securities. The resident individual is allowed to set up/acquire JV/WOS overseas within the LRS limit with effect from August 5, 2013 in terms of FEMA Notification No. 263 subject to the terms and conditions specified therein.
Q.5. What is direct investment outside India?
A. Direct investment outside India means investments, either under the Automatic Route or the Approval Route, by way of contribution to the capital or subscription to the Memorandum of Association of a foreign entity, signifying a long-term interest in the overseas entity (setting up / acquiring a Joint Venture (JV) or a Wholly Owned Subsidiary (WOS).
This is different from portfolio investment which is stated as answers to Qs 39, 40 and 44.
Q.6. Does the definition as given in Q.5 mean that one cannot acquire an existing company either partially or wholly?
A. An eligible Indian entity is free to acquire either a partial stake (JV) or the entire stake (WOS) in an already existing entity overseas, provided the valuation is as per the laid down norms. Please also see Q No. 16.
Q.7. Can overseas direct investment be made in any activity?
A. An Indian Party can make overseas direct investment in any bonafide activity (except those that are specifically prohibited as stated in answer to Q. 9). However, for undertaking activities in the financial services sector, certain additional conditions as specified in Regulation 7 of the Notification should be adhered to. Please refer answer to Q.25.
Q.8. Who are eligible to make overseas direct investment under the Automatic Route? Who is an “Indian Party”?
A. An Indian Party is eligible to make overseas direct investment under the Automatic Route. An Indian Party is a company incorporated in India or a body created under an Act of Parliament or a partnership firm registered under the Indian Partnership Act 1932 and any other entity in India as may be notified by the Reserve Bank. When more than one such company, body or entity makes investment in the foreign entity, such combination will also form an “Indian Party”.
Q.9. What are the prohibited activities for overseas direct investment?
A. Real estate as defined in Regulation 2(p) of the Notification and banking business are the prohibited sectors for overseas direct investment.
However, Indian banks operating in India can set up JVs/WOSs abroad provided they obtain clearance under the Banking Regulation Act, 1949, from the Department of Banking Operations and Development (DBOD), CO, RBI.
An overseas entity, having direct or indirect equity participation by an Indian party, shall not offer financial products linked to Indian Rupee (e.g. non-deliverable trades involving foreign currency, rupee exchange rates, stock indices linked to Indian market, etc.) without the specific approval of the Reserve Bank. Any incidence of such product facilitation would be treated as a contravention of the extant FEMA regulations and would consequently attract action under the relevant provisions of FEMA, 1999
Q.10. What exactly is covered under the term real estate business?
A. Real estate business means buying and selling of real estate or trading in Transferable Development Rights (TDRs) but does not include development of townships, construction of residential/commercial premises, roads or bridges.
Q.11. What is the Automatic Route?
A. Under the Automatic Route, an Indian Party does not require any prior approval from the Reserve Bank for making overseas direct investments in a JV/WOS abroad. The Indian Party should approach an Authorized Dealer Category – I bank with an application in Form ODI and the prescribed enclosures / documents for effecting the remittances towards such investments. However, in case of investment in the financial services sector, prior approval is required from the regulatory authority concerned, both in India and abroad.
Q.12. What are the limits and requirements for direct investment to be made under the Automatic Route?
A. The criteria for direct investment under the Automatic Route are as under:
The Indian Party can invest up to 100% of its net worth (as per the last audited Balance Sheet) in JV / WOS for any bonafide activity permitted as per the law of the host country. The ceiling of 100% of net worth will not be applicable where the investment is made out of balances held in the EEFC account of the Indian party or out of funds raised through ADRs/GDRs; Further, if the source of funding is through availing ECB, the permissible limit is 400% of the networth of the Indian Party.
The Indian Party is not on the Reserve Bank’s exporters' caution list / list of defaulters to the banking system published/ circulated by the Credit Information Bureau of India Ltd. (CIBIL) /RBI or any other credit information company as approved by the Reserve Bank or under investigation by the Directorate of Enforcement or any investigative agency or regulatory authority; and
The Indian Party routes all the transactions relating to the investment in a JV/WOS through only one branch of an authorised dealer to be designated by the Indian Party.
Q.13. What is the procedure to be followed by an Indian party to make direct investment in a JV/WOS under the Automatic Route?
A. The Indian Party intending to make a direct investment under the automatic route is required to fill up form ODI duly supported by the documents listed therein, i.e., certified copy of the Board Resolution, Statutory Auditors certificate and Valuation report (in case of acquisition of an existing company) as per the valuation norms listed in answer to Q.16 and approach an Authorized Dealer (designated Authorized Dealer) for making the investment/remittance.
Q.14. Where does one find the Form ODI?
A. Form ODI is available as an Annex to the ‘Master Circular on Direct Investment by Residents in Joint Venture (JV) / Wholly Owned Subsidiary (WOS) Abroad’ dated July 2, 2013’ available on the RBI website.
With effect from March 2, 2010, Authorized Dealers Category – I banks have to file Part I (Sections A to D), II and III of form ODI on-line in the Overseas Investment Application with the Reserve Bank for allotment of UIN, reporting of subsequent remittances, filing of APRs, etc. AD Category –I banks would continue to receive the ODI forms in physical form from the Indian Party.
Q.15. What is ‘financial commitment’?
A. Financial commitment means the amount of direct investments outside India by an Indian Party -
by way of contribution to equity shares of the JV / WOS abroad
as loans to its the JV / WOS abroad
100% of the amount of corporate guarantee issued on behalf of its overseas JV/WOS and
50% of the amount of performance guarantee issued on behalf of its overseas JV/WOS.
bank guarantee/standby letter of credit issued by a resident bank on behalf of an overseas JV / WOS of the Indian party, which is backed by a counter guarantee / collateral by the Indian party
Creation of charge (pledge / mortgage / hypothecation) on the movable / immovable property or other financial assets of the Indian party / its group companies
(Note: The amount and period of the guarantee should be specified upfront).
Q.16. What are the valuation norms referred to in Q. 6 and Q. 13?
A. In case of partial / full acquisition of an existing foreign company where the investment is more than USD five million, share valuation of the company has to be done by a Category I Merchant Banker registered with the Securities and Exchange Board of India (SEBI) or an Investment Banker/ Merchant Banker outside India registered with the appropriate regulatory authority in the host country and in all other cases by a Chartered Accountant/ Certified Public Accountant.
However, in the case of investment by acquisition of shares where the consideration is to be paid fully or partly by issue of the Indian Party’s shares (swap of shares), irrespective of the amount, the valuation will have to be done by a Category I Merchant Banker registered with SEBI or an Investment Banker/ Merchant Banker outside India registered with the appropriate regulatory authority in the host country.
In case of additional overseas direct investments by the Indian promoter to it’s WOS which is made at premium or discount, the concept of valuation as indicated above shall be applicable.
Q.17. Can one freely creates a pledge/mortgage/hypothecation/charge on immovable/moveable property or other financial assets of Indian party/group companies in favour of a non- resident entity?
A. Prior permission of the Reserve Bank is required for creating such a charge on immovable/moveable property or other financial assets of the Indian parent / group companies.
Q.18. Are overseas investments freely allowed in all the countries and are there any restrictions regarding the currency of investment?
A. Investment in Pakistan is allowed under the approval route. Investments in Nepal can be only in Indian Rupees. Investments in Bhutan are allowed in Indian Rupees and in freely convertible currencies.
Q.19. What is the concept of a ‘designated Authorised Dealer’? Can there be more than one ‘designated Authorised Dealer’ for the same JV/WOS in case the JV/WOS has more than one Indian promoter?
A. The Indian party is to route all transactions in respect of a particular overseas JV/WOS only through one branch of an Authorized Dealer. This branch would be the ‘designated Authorised Dealer’ in respect of that JV/WOS and all transactions and communications relating to the investment in that particular JV/WOS are to be reported only through this ‘designated’ branch of an Authorized Dealer. In case the JV/WOS is being set up abroad by two or more Indian promoters, then all Indian promoters collectively called the Indian party, would be required to route all transactions in respect of that JV/WOS only through one ‘designated Authorised Dealer’.In case the Indian Party wants to switch over to another AD, an application by way of a letter may be made to the Reserve Bank after obtaining an NOC from the existing Authorized Dealer.
Q.20. What if one Indian promoter has more than one JV in either the same country or in different countries?
A. The Indian promoters are free to designate different branches of the same Authorised Dealer or branches of other Authorised Dealers for their separate JVs/WOSs. The only requirement is that regardless of the number of promoters, one JV/WOS will have only one ‘designated Authorised Dealer’ to route all its transactions.
Q.21. Is prior registration with the Reserve Bank necessary for direct investments under the Automatic Route?
A. No prior registration with the Reserve Bank is necessary for making direct investments under the automatic route. After the report of the first remittance / investment in Form ODI is received by the Reserve Bank, a Unique Identification Number (UIN) for that particular JV/WOS will be issued for the purpose of taking on record the overseas direct investment with the objective of maintaining a database for monitoring the outflows/inflows in respect of the overseas entities. Subsequent investments in the same project can be made only after allotment of the UIN.
Q.22. Does the allotment of UIN by the Reserve Bank for direct investments under the automatic route constitute an approval from the Reserve Bank?
A. No. The allotment of UIN does not constitute an approval from the Reserve Bank for the investment made/to be made in the JV/WOS. The issue of UIN only signifies taking on record of the investment for maintaining the database. The onus of complying with the provisions of FEMA regulations rests with the AD bank and / or the Indian party.
Further, with effect from June 01, 2012 an auto generated e-mail, giving the details of UIN allotted to the JV / WOS under the automatic route, shall be treated as confirmation of allotment of UIN, and no separate letter shall be issued by the Reserve Bank to the Indian party and AD Category - I bank confirming the allotment of UIN.
Q.23. What is the Approval route? What is the procedure to be followed for investment proposed to be made under the Approval Route?
A. Proposals not covered by the conditions under the automatic route require the prior approval of the Reserve Bank for which a specific application in form ODI with the documents prescribed therein is required to be made through the Authorized Dealer Category – I banks. Some of the proposals which require prior approval are:
i) Overseas Investments in the energy and natural resources sector exceeding 100% of the net worth of the Indian companies as on the date of the last audited balance sheet;
ii) ii) Investments in Overseas Unincorporated entities in the oil sector by resident corporates exceeding 100% of their net worth as on the date of the last audited balance sheet, provided the proposal has been approved by the competent authority and is duly supported by a certified copy of the Board Resolution approving such investment. However, Navaratna Public Sector Undertakings, ONGC Videsh Ltd and Oil India Ltd are allowed to invest in overseas unincorporated / incorporated entities in oil sector (i.e. for exploration and drilling for oil and natural gas, etc.), which are duly approved by the Government of India, without any limits, under the automatic route;
iii) Overseas Investments by proprietorship concerns and unregistered partnership firms satisfying certain eligibility criteria;
iv) Investments by Registered Trusts / Societies (satisfying certain eligibility criteria) engaged in the manufacturing / educational / hospital sector in the same sector in a JV / WOS outside India;
Applications in Form ODI- Part I may be forwarded through the designated Authorized Dealer Category – I bank to:
The Chief General Manager
Reserve Bank of India
Foreign Exchange Department
Overseas Investment Division
Central Office
Amar Building, 5th Floor
Mumbai 400 001.
Q.24. What are the parameters for considering proposals under the approval route?
A. Requests under the approval route are considered by taking into account, inter alia, the prima facie viability of the JV / WOS outside India, likely contribution to external trade and other benefits that may accrue to India through such investment, financial position and business track record of the Indian party and the foreign entity, experience and expertise of the Indian party in the same or related line of activity of the JV / WOS outside India, etc.
Q.25. a) Can any Indian company make investment in a JV/WOS abroad in the financial services sector?
A. Only an Indian company engaged in financial services sector activities can make investment in a JV/WOS abroad in the financial services sector, provided it fulfills the following additional conditions:
has earned net profit during the preceding three financial years from the financial services activities;
is registered with the appropriate regulatory authority in India for conducting financial services activities;
has obtained approval for undertaking such activities from the regulatory authorities concerned both in India and abroad before venturing into such financial activity;
has fulfilled the prudential norms relating to capital adequacy as prescribed by the regulatory authority concerned in India; and
Any additional investment by an existing JV / WOS or its step down subsidiary in the financial services sector is also required to comply with the above conditions.
b) Can an Indian company in the financial services sector make investment in a JV/WOS abroad in the non-financial services sector?
A. Regulated entities engaged in financial services sector activities in India making investment in non-financial services activities overseas are also required to comply with the additional conditions mentioned in Q. 25 (a) above.
c) Can an Indian company set up JV / WOS for trading in Overseas Commodities Exchanges?
A. Trading in Commodities Exchanges overseas and setting up of JV / WOS for trading in Overseas Commodities Exchanges will be reckoned as financial services activity and will require clearance from the Forward Markets Commission (FMC). The FMC has put in place guidelines for allowing FMC registered members of Commodity Exchanges to undertake commodity related activities abroad. Indian entities desirous of setting up of JV / WOS overseas for trading in overseas commodities exchanges may, therefore, approach the FMC for regulatory clearance.
Q.26. What are the permissible sources for funding overseas direct investment?
A. Funding for overseas direct investment can be made by one or more of the following sources:
Drawal of foreign exchange from an AD bank in India.
Swap of shares (refers to the acquisition of the shares of an overseas entity by way of exchange of the shares of the Indian entity).
Capitalization of exports and other dues and entitlements.
Proceeds of External Commercial Borrowings / Foreign Currency Convertible Bonds.
In exchange of ADRs / GDRs issued in accordance with the Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and the guidelines issued by Government of India in the matter.
Balances held in Exchange Earners Foreign Currency account of the Indian Party maintained with an Authorized Dealer.
Proceeds of foreign currency funds raised through ADR / GDR issues.
In respect of (6) and (7) above, the ceiling of 100 per cent of the net worth does not apply.Further, if the source of funding is through availing ECB, the permissible limit is 400% of the networth of the Indian Party.
Q.27. Can an Indian Party utilise the net worth of its Indian subsidiary / holding company for investing in a JV/WOS abroad?
A. For the purpose of reckoning net worth of an Indian party, the net worth of it’s holding company (which holds at least 51% direct stake in the Indian Party) or its subsidiary company (in which the Indian party holds at least 51% direct stake) may be taken into account to the extent not availed of by the holding company or the subsidiary independently and has furnished a letter of disclaimer in favour of the Indian Party. However, this facility is not available to partnership firms. Also the partnership firm’s net worth cannot be taken into account by an incorporated entity.
Q.28. Can an Indian Party capitalise the proceeds of the exports to its overseas JV / WOS?
A. Yes, an Indian Party is permitted to capitalise the payments due from the foreign entity towards exports, fees, royalties or any other dues from the foreign entity for supply of technical know-how, consultancy, managerial and other services within the ceilings applicable.
Capitalisation of export proceeds remaining unrealised beyond the prescribed period of realisation will require the prior approval of the Reserve Bank.
Indian software exporters are permitted to receive 25 % of the value of their exports to an overseas software start-up company in the form of shares without entering into Joint venture Agreements, with the prior approval of the Reserve Bank.
Q.29. Can an Indian Party extend loan or guarantee to an overseas entity without any equity participation in that entity?
A. i) No. Loan and guarantee can be extended to an overseas entity only if there is already existing equity participation by way of direct investment, within the overall ceiling of 100% of the Indian party's net worth as on the date of the last audited balance sheet.
However, based on the business requirement of the Indian Party and legal requirement of the host country in which JV/WOS is located, proposals from the Indian party for undertaking financial commitment without equity contribution in JV / WOS may be considered by the Reserve Bank under the approval route
In case, however, the overseas entity is a first level step down operating subsidiary of the Indian party, guarantee may be issued by the Indian party on behalf of such step down operating subsidiary provided such guarantee is reckoned for the purpose of computing the financial commitment of the Indian party.
In case, the overseas entity is a second or subsequent level step down operating subsidiary of the Indian party, guarantee may be issued by the Indian party on behalf of such step down operating subsidiary with prior approval of the Reserve Bank provided such Indian party holds indirect stake of not less than 51% in the step down operating subsidiary and guarantee is reckoned for the purpose of computing the financial commitment of the Indian party.
ii) Navaratna Public Sector Undertakings, ONGC Videsh Ltd and Oil India are allowed to invest in overseas unincorporated/incorporated entities in oil sector (i.e. for exploration and drilling for oil and natural gas, etc.), which are duly approved by the Government of India, without any limits, under the automatic route.
iii) Eligible Indian companies are allowed to participate in a consortium with other international operators to construct and maintain submarine cable systems on co-ownership basis under the automatic route.
Q.30. How are Compulsorily Convertible Preference Shares (CCPS) to be treated for the purpose of Overseas Direct Investment?
A. With effect from March 28, 2012, Compulsorily Convertible Preference Shares (CCPS) are treated at par with equity shares and the Indian party is allowed to undertake financial commitment based on the exposure to JV by way of CCPS.
Q.31. What is the requirement for direct investment in an overseas concern by way of share swap?
A. Direct investment outside India in a JV/WOS by way of share swap arrangement can be made under the automatic route provided the valuation norms prescribed i.e. valuation of the shares is done by a Category I Merchant Banker registered with the SEBI or an Investment Banker outside India registered with the appropriate Regulatory Authority in the host country are satisfied, and the shares are duly issued / transferred in the name of the Indian investing company. Investors may also please note that all share swap transactions require the prior approval of the Foreign Investment Promotion Board (FIPB) for the inward leg of the investment.
Q.32. What are the permitted activities that partnership firms can undertake through overseas direct investment route?
A. Partnership firms registered under the Indian Partnership Act, 1932 can make overseas direct investments subject to the same terms and conditions as applicable to corporate entities.
Q.33. Can the partners hold shares of the overseas concerns for and on behalf of the firm?
A. Individual partners can hold shares for and on behalf of the firm in an overseas JV/WOS, where the entire funding for the investments has been done by the firm provided the host country regulations or operational requirements warrant such holding.
Q.34. Are there any restrictions for setting up of a second generation company? Can such step down subsidiaries be set up under the Automatic Route?
A. There are no restrictions on entities having JVs/WOSs abroad setting up second generation operating companies (step-down subsidiaries) within the overall limits applicable for investments under the Automatic Route. However, companies wishing to set up step-down operating subsidiaries to undertake financial sector activities will have to comply with the additional requirements for direct investment in the financial services sector as indicated in Q 25 (a).
Q.35. Can an Indian Party have a JV/WOS through a Special Purpose Vehicle (SPV) under the Automatic Route?
A. Yes. Direct investment through the medium of a SPV is permitted under the Automatic Route, for the sole purpose of investment in JV/WOS overseas.
Q.36. Can an Indian Party directly fund such step- down subsidiaries?
A. Where the JV/WOS has been established through a SPV, all funding to the operating subsidiary should be routed through the SPV only. However, in the case of guarantees to be given to the first level step down operating subsidiary of the SPV, these can be given directly by the Indian Party provided such exposures are within the permissible financial commitment of the Indian Party.
Q.37. Can the shares of a JV/WOS abroad be pledged for the purpose of financial assistance?
A. The shares of a JV/WOS can be pledged by an Indian Party as a security for availing fund based or non-fund based facility for itself or for the JV/WOS, from an authorised dealer/ public financial institution in India or from an overseas lender, provided the overseas lender is regulated and supervised as a bank and the total financial commitments of the Indian entity remain within the limit stipulated by the Reserve Bank for overseas investment from time to time.
Q.38. What are the obligations of the Indian party, which has made direct investment outside India?
A. An Indian Party will have to comply with the following: -
receive share certificates or any other documentary evidence of investment in the foreign entity as an evidence of investment and submit the same to the designated AD within 6 months;
repatriate to India, all dues receivable from the foreign entity, like dividend, royalty, technical fees etc.;
submit to the Reserve Bank through the designated Authorized Dealer, every year, an Annual Performance Report in Part III of Form ODI in respect of each JV or WOS outside India set up or acquired by the Indian party;
report the details of the decisions taken by a JV/WOS regarding diversification of its activities /setting up of step down subsidiaries/alteration in its share holding pattern within 30 days of the approval of those decisions by the competent authority concerned of such JV/WOS in terms of the local laws of the host country. These are also to be included in the relevant Annual Performance Report; and
in case of disinvestment, sale proceeds of shares/securities shall be repatriated to India immediately on receipt thereof and in any case not later than 90 days from the date of sale of the shares /securities and documentary evidence to this effect shall be submitted to the Reserve Bank through the designated Authorised Dealer.
Q.39. Is it mandatory to furnish Annual Performance Reports (APR) of the overseas JV/WOS based on its audited financial statements?
A.Where the law of the host country does not mandatorily require auditing of the books of accounts of JV / WOS, the Annual Performance Report (APR) may be submitted by the Indian party based on the un-audited annual accounts of the JV / WOS provided:
The Statutory Auditors of the Indian party certifies that ‘The un-audited annual accounts of the JV / WOS reflect the true and fair picture of the affairs of the JV / WOS’ and
That the un-audited annual accounts of the JV / WOS has been adopted and ratified by the Board of the Indian party.
Q.40. What are the penalties for non-submission of Annual Performance Reports (APRs)?
A. Delayed submission/ non-submission of APRs entail penal measures, as prescribed under FEMA 1999, against the defaulting Indian Party.
Q.41. Can a resident individual in India acquire/sell foreign securities without prior approval of the Reserve Bank?
A. Please see answer to Q.4 also.
Resident individuals can acquire/sell foreign securities without prior approval in the following cases: -
as a gift from a person resident outside India;
by way of ESOPs issued by a company incorporated outside India under Cashless Employees Stock Option Scheme which does not involve any remittance from India;
by way of ESOPs issued to an employee or a director of Indian office or branch of a foreign company or of a subsidiary in India of a foreign company or of an Indian company irrespective of the percentage of the direct or indirect equity stake in the Indian company;
as inheritance from a person whether resident in or outside India;
by purchase of foreign securities out of funds held in the Resident Foreign Currency Account maintained in accordance with the Foreign Exchange Management (Foreign Currency Account) Regulations, 2000; and
by way of bonus/rights shares on the foreign securities already held by them.
Q.42. Can Indian corporates invest overseas other than by way of direct investment?
A. Yes. Listed Indian companies can invest up to 50 % of their net worth as on the date of the last audited Balance Sheet in overseas companies, listed on a recognized stock exchange, or in the rated debt securities issued by such companies.
Q.43. Can a resident individual acquire shares of a foreign company in his capacity as Director?
A. Yes, Reserve Bank has given General Permission to a resident individual to acquire foreign securities to the extent of the minimum number of qualification shares required to be held for holding the post of Director. Accordingly, resident individuals are permitted to remit funds under general permission for acquiring qualification shares for holding the post of a Director in the overseas company to the extent prescribed as per the law of the host country where the company is located and the limit of remittance for acquiring such qualification shares shall be within the overall ceiling prescribed for the resident individuals under the Liberalized Remittance Scheme (LRS) in force at the time of acquisition.
Q.44. Can resident individuals acquire shares from a foreign entity in lieu of the professional services rendered by them or in lieu of Director’s remuneration under General Permission?
A. Resident individuals are allowed under General Permission to acquire shares of a foreign entity in part / full consideration of professional services rendered to the foreign company or in lieu of Director’s remuneration. The limit of acquiring such shares in terms of value shall be within the overall ceiling prescribed for the resident individuals under the Liberalized Remittance Scheme (LRS) in force at the time of acquisition.
Q.45. Can a resident individual subscribe to the rights issue of shares held by him?
A. Yes, a resident individual may acquire foreign securities by way of rights shares issued by a company incorporated outside India provided the existing shares were held in accordance with the provisions of FEMA.
Q.46. Are there any relaxations for individual employees/Directors of an Indian company engaged in the field of software for acquisition of shares in their JV/WOS abroad?
A. General permission is available for the individual employees/Directors of an Indian promoter company engaged in the field of software for acquisition of shares of a JV/WOS abroad provided:
the consideration for purchase does not exceed the ceiling as stipulated by RBI from time to time. the shares acquired by all the employees/directors do not exceed 5% of the paid-up capital of the Joint Venture or Wholly Owned Subsidiary outside India; and
after allotment of such shares, the percentage of shares held by the Indian promoter company, together with shares allotted to its employees is not less than the percentage of shares held by the Indian promoter company prior to such allotment.
Resident employees of Indian companies in the knowledge based sectors including working directors may purchase foreign securities under the ADR/GDR linked stock option scheme provided that the consideration for purchase does not exceed the ceiling as stipulated by RBI from time to time.
Q.47. What are the avenues available to Indian Mutual Funds for investment abroad?
A. Indian Mutual Funds registered with SEBI are permitted to invest within the overall cap of USD 7 billion in:
a) ADRs / GDRs of the Indian and foreign companies;
b) equity of overseas companies listed on recognized overseas stock exchanges; initial and follow on public offerings for listing at recognized overseas stock exchanges;
c) foreign debt securities- short term as well as long term with rating not below investment grade - in the countries with fully convertible currencies;
d) money market investments not below investment grade; repos where the counter party is not below investment grade;
e) government securities where countries are not rated below investment grade;
f) derivatives traded on recognized stock exchanges overseas only for hedging and portfolio balancing with underlying as securities;
g) short term deposits with banks overseas where the issuer is rated not below investment grade; and
h) units / securities issued by overseas Mutual Funds or Unit Trusts registered with overseas regulators.
Q.48. What are the investment opportunities for Domestic Venture Capital Funds?
A. Domestic Venture Capital Funds registered with SEBI may invest in equity and equity linked instruments of off-shore VCFs subject to an overall limit of USD 500 million.
Q.49. Is investment in agriculture permitted?
A. Resident corporates and partnership firms registered under the Indian Partnership Act, 1932 may undertake agricultural operations including purchase of land incidental to such activity either directly or through their overseas offices, provided:
the Indian party is otherwise eligible to invest under Regulation 6 of the Notification ibid and such investment is within the overall specified limits, and
for the purpose of such investment by acquisition of land overseas the valuation of land is certified by a certified valuer registered with the appropriate valuation authority in the host country.
Q.50. Can an Indian party issue performance guarantee in favour of overseas JV/WOS?
A. Yes. Indian party is permitted to issue performance guarantee and only 50 per cent of the amount of the performance guarantees will be reckoned for the purpose of computing financial commitment to its JV/WOS overseas which should be within 100 per cent of the net worth of the Indian Party. Further, the time specified for the completion of the contract will be the validity period of the related performance guarantee. In cases where invocation of the performance guarantee breach the ceiling for the financial exposure of 100 per cent of the net worth of the Indian Party, the Indian Party is required to seek prior approval of the Reserve Bank before remitting funds from India, on account of such invocation.
In case of invocation of a performance guarantee, which had been issued before August 14, 2013, the limit of 400% shall be applicable and remittance on account of such invocation over & above 400% of the net worth of the Indian party shall require prior approval of the Reserve Bank.
Q.51. Can an Indian party issue corporate guarantee on behalf of its second generation subsidiary abroad?
A. Indian party is permitted to issue corporate guarantee on behalf of second generation or subsequent level step down operating subsidiaries and such requests are considered under the Approval Route, provided the Indian Party indirectly holds 51 per cent or more stake in the overseas subsidiary for which such guarantee is intended to be issued.
Q.52. Can individual indirect promoters of the Indian Party issue personal guarantee to an overseas lender on behalf of the JV/WOS under general permission?
A. With effect from March 28, 2012, issuance of personal guarantee by the promoters of the Indian Party as presently allowed under the General Permission has also been extended to the indirect resident individual promoters of the Indian Party with same stipulations as in the case of personal guarantee by the direct promoters
Q.53. (a) What are the different modes of disinvestments from the JV / WOS abroad
A. Disinvestment by the Indian party from its JV / WOS abroad may be by way of transfer / sale of equity shares to a non-resident / resident or by way of liquidation / merger / amalgamation of the JV / WOS abroad.
(b) Can an Indian Party disinvest in case where write off is not involved?
A. Yes. The Indian Party can disinvest in cases where write off is not involved without prior approval from Reserve Bank subject to the following:
the sale is to be effected through a stock exchange where the shares of the overseas JV/ WOS are listed;
if the shares are not listed on the stock exchange and the shares are disinvested by a private arrangement, the share price is not less than the value certified by a Chartered Accountant / Certified Public Accountant as the fair value of the shares based on the latest audited financial statements of the JV / WOS;
the Indian Party does not have any outstanding dues by way of dividend, technical know-how fees, royalty, consultancy, commission or other entitlements and / or export proceeds from the JV or WOS;
the overseas concern has been in operation for at least one full year and the Annual Performance Report together with the audited accounts for that year has been submitted to the Reserve Bank; and
the Indian party is not under investigation by CBI / DoE/ SEBI / IRDA or any other regulatory authority in India.
(c) In case of disinvestment of stake in overseas JV/WOS, can an Indian party disinvest with write off of part of investment?
A. Indian Party may disinvest without prior approval of the Reserve Bank, in the under noted cases, where the amount repatriated on disinvestment is less than the amount of the original investment:
i) in cases where the JV / WOS is listed in the overseas stock exchange;
ii) in cases where the Indian Party is listed on a stock exchange in India and has a net worth of not less than Rs.100 crore;
iii) where the Indian Party is an unlisted company and the investment in the overseas JV / WOS does not exceed USD 10 million and
iv) where the Indian Party is a listed company with net worth of less than Rs.100 crore but investment in an overseas JV/WOS does not exceed USD 10 million.
(d) Are there any pre-conditions/compliances subject to which such write off at the time of disinvestment is permitted ?
A. Yes. Please refer to part B of Q 49.
Q.54. Whether restructuring of the balance sheet of the JV / WOS abroad involving write-off of capital and receivables is allowed
A. Indian company which has set up WOS abroad or has at least 51% stake in an overseas JV may write off capital (equity / preference shares) or other receivables (such as loans, royalty, technical knowhow fees and management fees in respect of the JV /WOS) even while such JV / WOS continue to function subject to the following:
(i) Listed Indian companies are permitted to write off capital and other receivables up to 25% of the equity investment in the JV /WOS under the Automatic Route; and
(ii) Unlisted companies are permitted to write off capital and other receivables up to 25% of the equity investment in the JV /WOS with prior approval of the Reserve Bank.
The write-off / restructuring have to be reported to the Reserve Bank through the designated AD bank within 30 days of write-off / restructuring. The write-off / restructuring is subject to the condition that the Indian Party should submit the following documents for scrutiny along with the applications to the designated AD Category – I bank under the Automatic as well as the Approval Routes:
a) A certified copy of the balance sheet showing the loss in the overseas WOS/JV set up by the Indian Party; and
b) Projections for the next five years indicating benefit accruing to the Indian company consequent to such write off / restructuring.
Q.55. Can an Indian Party open/maintain an account in Foreign currency abroad?
A. With effect from April 2, 2012, an Indian party is allowed to open, hold and maintain Foreign Currency Account (FCA) abroad for the purpose of overseas direct investments wherever the host country regulation stipulate the same subject to certain terms and conditions.
Q. 56 Can open ended corporate guarantees be extended by an India party on behalf of its overseas subsidiary?
Ans: As per A.P. (DIR Series) Circular No. 29 March 27, 2006 no guarantee can be open ended.
Q. 57 Can a loan given to an overseas venture be converted into equity? If yes what are the reporting requirements?
Ans: Yes, a loan can be converted into equity and reported to RBI by a letter.
Q.58. Whether equity exposures can be converted into loan or other forms of funded exposure like preference capital, debentures, etc.?
A. In terms of the extant provisions under Regulation 16(2) of the Notification No. FEMA.120/RB-2004 dated July 07, 2004, as amended from time to time, the disinvestment proceeds are to be repatriated to India within the prescribed time limit. Therefore, conversion of equity based exposure into loan or other form of funded exposures like preference capital, debenture, etc., without repatriating the disinvestment proceeds to India, shall require prior approval of RBI.
Q.59. How the preference shares, other than the compulsorily convertible preference shares (CCPS), are to be treated for the purpose of ODI?
A. All types of preference shares, other than CCPS, are to be treated as loan extended by the Indian party to its JV / WOS abroad and compliance to the provisions inter alia under Regulation 6(4) of the Notification No. FEMA.120/RB-2004 dated July 07, 2004, as amended from time to time, is to be ensured. The AD banks shall report funded exposure like preference capital, debentures, notes, bonds, etc. under the head ‘Loan’ in Form ODI Part II.
http://bharatkalyan97.blogspot.in/2014/04/operation-hawala-moin-qureshi-exposed.html
APR
17
Operation Hawala: Moin Qureshi exposed, has 'links' with 10 Janpath -- Zeebiz
Last Updated: Thursday, April 17, 2014, 00:41
Operation Hawala: Moin Qureshi exposed, has 'links' with 10 Janpath
Operation Hawala: Moin Qureshi exposed, has 'links' with 10 JanpathZee Media Bureau
New Delhi: The 60-day long raid and survey by the IT department on alleged Hawala operator and meat exporter Moin Qureshi ended Tuesday exposing links with cabinet ministers and a political leader allegedly very close to 10 Janpath.
Since its first raid on February 16, 2014, the IT department has so far raided various locations at Delhi, Gurgaon, Noida and a farmhouse at Chhatarpur belonging to Moin Qureshi.
According to sources, the department seized over Rs 6 crores in cash and 20 lockers in the name of Qureshi's employees during its first raid. Later during interrogation, Qureshi is said to have admitted that lockers belonged to him which had huge cash deposit.
The raid followed after IT officials intercepted over two months of call recordings.
In the 520 hours of call recordings, names of four cabinet ministers, a political leader allegedly very close to 10 Janpath and many big corporates linked to 2G scam have surfaced, as per sources.
The 520 hours phone recordings in digital format is stored in DGIT office at Jhandewalan.
According to the source, a former CBI director had rented out his house (C-134, Defence Colony), registered in his mother's name to Moin Qureshi for office space. The bribe money, which the former CBI director received from a corporate named in 2G case, is allegedly routed by Qureshi via Dubai-London route.
The IT department has also searched two other offices in Defence Colony D-318 and D-268. D-318 which are being operated as the office of Doon School Old Boys' Association where Qureshiis the President.
Cabinet minister RPN Singh is the Vice President of the association.
Qureshi has seen phenomenal growth in his wealth in the last decade. His meat export business AMQ Agro India has posted a turnover of Rs 167 crore which, as per the IT department, is less than the actual wealth.
Qureshi has also deflated his actual wealth on paper as his bank account transactions in London and Dubai are not concomitant with his disclosed income, as per the IT dept.
As per sources, the IT department is likely to collate seizures and interrogation details and make the disclosure within two months.
IT Department may also interrogate ministers and corporate named in the recordings. It may also be referred to Enforcement Directorate for investigating under money laundering case.
http://zeenews.india.com/business/news/economy/operation-hawala-moin-qureshi-exposed-has-links-with-10-janpath_97962.html
http://bharatkalyan97.blogspot.in/2014/05/coalgate-ed-slaps-money-laundering.html
MAY
10
Coalgate: ED slaps money-laundering charge on Parakh, Kumar Mangalam Birla. Book the PM and SoniaG too.
Coalgate: ED slaps
money-laundering charge on Parakh, Kumar Mangalam Birla
Coalgate: ED slaps money-laundering charge on Parakh, Kumar Mangalam Birla
TNN | May 10, 2014, 02.12 AM IST
The CBI in its FIR alleged that PC Parakh, when he was the coal secretary in 2005, abused his position and showed undue favour to Hindalco in allocation of Talabira II and Talabira III coal blocks.
NEW DELHI: The Enforcement Directorate (ED) has lodged 16 cases under Prevention of Money Laundering Act (PMLA) in connection with coal block allocations scam with the latest being filed against former coal secretary PC Parakh and KM Birla of the Aditya Birla group besides Congress MPs Dasari Narayan Rao and Naveen Jindal.
All these cases were registered last week after CBI sent case files related to 16 of the 19 FIRs it has lodged in the case to ED. Interestingly, the CBI has already filed closure reports in four of the 19 FIRs.
Sources said the case against Parakh and Birla is in connection with alleged irregularities in allocation of Talabira coal block to Hindalco, an Aditya Birla Group company, in 2005. A CBI raid at Hindalco premises last year had yielded Rs 25 crore unaccounted cash. Income Tax department had launched an investigation following which the company paid taxes accruing to the recovered cash. ED is likely to investigate the source of this money as well.
The ED case is based on the CBI FIR which has alleged that Neyveli Lignite Limited was to be given Talabira II block but Parakh allegedly favoured Hindalco and allowed it to share the block with Neyveli, leading to notional loss to the exchequer.
The agency has alleged that during 2005, these people had entered into a criminal conspiracy and the then public servant (Parakh) abused his position and showed undue favour to the Odisha-based industry in allocation of Talabira II and Talabira III coal blocks.
Parakh, who was recently questioned by CBI in connection with the case, has strongly denied any wrongdoing and said that if he was guilty of the allocation then so was the PM.
In the 16 FIRs that ED has registered, companies booked by CBI such as AMR Iron and Steel, JLD Yavatmal Energy, Vini Iron and Steel Udyog, JAS Infrastructure Capital Pvt Ltd, Vikash Metals, Grace Industries, Gagan Sponge, Jindal Steel and Power, Rathi Steel and Power Ltd, Jharkhand Ispat, Green Infrastructure, Kamal Sponge, Pushp Steel, Hindalco, BLA Industries, Castron Technologies and Castron Mining and others are under scanner.
http://bharatkalyan97.blogspot.in/2013/08/swissgate-linked-to-2g-scam-mps-letter.html
AUG
22
Swissgate, linked to 2G scam? An MP's letter to PM floating around in Lutyens' Delhi
After Coalgate, will it be Swissgate?
By Niticentral Staff on August 22, 2013
After Coalgate, will it be Swissgate?
A veteran Member of Parliament who has in the past exposed many a scam involving black money and tax evasion is believed to have written to Prime Minister Manmohan Singh, bringing to his attention extremely serious allegations of a top politically-connected official of the UPA regime having parked huge sums of money in the Singapore branch of a prominent Swiss bank.
Niti Central is in possession of a copy of the letter. But since the MP, who is not affiliated to the BJP or any of its allies, has so far refused to comment on the purported letter, specific details of it are not being placed in the public domain. Copies of the letter, however, are floating around in Lutyens’s Delhi.
The Prime Minister is yet to reply to the purported letter whose explosive contents, if true, could rock the UPA Government and send ruinous tremors through the Congress establishment.
If the contents of the letter are true – no material evidence has been offered in the letter which seeks the Prime Minister’s views on the allegations – then Central agencies were reportedly alerted two years ago in 2011 by foreign agencies about huge sums of money being shifted and parked in this alleged account.
The information is claimed to have come from the Financial Services Authority of Britain and the Monetary Authority of Singapore. It has been alleged that India’s Central agencies have been sitting on the information.
The account is believed to have been opened in 1997 when the beneficiary was working for a State Government. Between 1997 and 2007, “huge amount of foreign currency was deposited frequently… It might be in hundreds of crores ” in this account, according to the purported letter.
The MP then adds: “Suddenly in 2007, huge amount of money was transferred to the account of (the senior official’s) daughter in the same branch of the same bank … As (the senior official) is an Indian citizen, both Singapore and UK agencies have alerted the Indian authorities, following the principles of international practices on curbing money laundering and illegal activities.”
The purported letter points to a potential link between the 2G spectrum scam and benefits accruing to the holder of the alleged account in the Singapore branch of the Swiss bank.
There are whispers in the corridor that the MP who is said to have written the letter has documents pertaining to the allegations levelled against the official. But he is waiting to hear from the Prime Minister before proceeding any further.
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27.2.12
Monday, February 27th, 2012 | Posted by News Desk
Hasan Ali Case: Court Directs 2 Employees of UBS to Appear for Probe
Two former employees of United Bank of Switzerland have been directed by the Enforcement Directorate to appear before a special court to probe against the money laundering case that involves Hasan Ali Khan, the Indian billionaire businessman. Prabhu Guptara, former executive Director of UBS and Peter Willie, another employee have been issued under section 59(1) of the Prevention of Money Laundering Act. They have to be present before the court on a date of convenience between 9-13 April.
Letters Rogatory has also been issued to Luxembourg, the European nation to pass on any additional information regarding transfer of funds made by Hasan Ali Khan and Kashinath Tapuriah, his associate. The amount is estimated to be over 18 million USD from the Royal Bank of Luxembourg.
Sources state that Guptara helped Khan establish a connection with Adnan Khashoggi, international dealer of arms and ammunition. The enforcement directorate states that Khan and Tapuriah sent a notarised document through Philip Anandraj, an associate. The same was handed over to Guptara, who was in Switzerland. This was passed over to the UBS. The document is alleged to contain information pertaining to financial transactions and dealings done with Khashoggi.
The ED and Income Tax department is making a probe into allegations of immense financial discrepancies against Hasan Ali Khan, his wife Rheema, Kashinath Tapuriah and his wife Chandrika Tapuriah. Section 59(1) of the Prevention of Money Laundering Act is stringent and is used for “reciprocal arrangements for processes and assistance for transfer of accused persons”.
Short URL: http://indiawires.com/?p=8080
Money laundering case against Marans registered
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By PTI
08 Feb 2012 10:28:43 AM IST
NEW DELHI: The Enforcement Directorate has registered a money laundering case against former Union Minister Dayanidhi Maran and his brother Kalanidhi in connection with the 2G spectrum allocation case.
The case, registered on Tuesday under the Prevention of Money Laundering Act (PMLA), pertains to an alleged illegal gratification of about Rs 550 crore allegedly received by the Maran brothers in the Aircel-Maxis deal.
Maran, a former Union Telecom Minister, had quit from the Cabinet last year after allegations were made that he had favoured Malaysian firm Maxis over Aircel in grant of telecom licences in 2004-05.
Maran had denied the allegations.
The CBI too is probing Maran and his brother and Sun TV MD Kalanidhi in connection with these allegations.
The agency is also investigating the case for alleged contraventions of foreign exchange rules in this deal as it registered an Enforcement Case Information Report (ECIR), an equivalent of the FIR.
The agency has also registered another case in the 2G case, pertaining to the NDA regime and has named former telecom secretary Shyamal Ghosh, then deputy director general J R Gupta and few telecom companies for alleged irregularities in the grant of additional 2G spectrum during 2001-03.
ED will now record the statements of the individuals named in its ECIR.
http://expressbuzz.com/nation/money-laundering-case-against-marans-registered/361465.html
http://bharatkalyan97.blogspot.com/2011/11/friend-father-and-philosopher-of-black.html
16.11.11
Friend, father and philosopher of black money is Chidambaram
WEDNESDAY | NOVEMBER 16, 2011
--Source: SG
Palaniappan Chidambaram, whom I shall for the sake of brevity call just Chidambaram, is best seen through black and white. And please don't get me wrong and accuse me of racism. I refer not to epidermis or mane, but to the economic colour of money. Some of his greatest contributions to the economy of India are his brilliant pioneering initiatives for changing the colour of money from black to white. And this passion has never left him.
Many of us have forgotten the Voluntary Disclosure of Income Scheme (VDIS) 1997, which he announced when he was Finance Minister with the United Front government, granting income-tax defaulters indefinite immunity from prosecution under the Foreign Exchange Regulation Act, 1973, Income Tax Act, 1961, Wealth Tax Act, 1957, and Companies Act, 1956, in exchange of self-valuation and disclosure of income and assets. The scheme was brilliantly conceived. While all schemes in the past valued declared assets at current prices, VDIS 1997 brought in an arbitrary date of 1 April 1987. Gold and silver hoarders, and large property holders got an exceptional bonanza on this valuation system. Further, proof of purchase was not insisted upon, which gave complete freedom to the confessors to fudge any date they wanted to their own financial advantage and further plunder of the country. So, even if gold was bought after 1987, it could be shown as having been bought before 1987, and it was a win-win game for all stakeholders to rake in the cuts. The Comptroller and Auditor General of India condemned the scheme in his report as abusive and a fraud on the genuine taxpayers of the country. But the issue was forgotten, and the illustrious career of Palaniappan Chidambaram rose to greater heights in the UPA regime.
Those were his innocent days. What a long way he has come since the era when he was cooking up VDISs, so utterly transparent, that the loopholes and avenues to give relief to the looters stared you in the face. The world economy was also then a little simpler than it is today, and his best achievement was getting caught about his investments in Fairgrowth, which was involved in the Securities Scam of 1992. Chidambaram had to resign for this utterly transparent investment in a company whose scam would have paid rich dividends. Unfortunately, he was not Finance Minister at the time and did not have the machinery to hush things up, and could only remotely control the markets, unlike his present capabilities as former Finance Minister and thereafter.
Being Finance Minister in the UPA government was his finest hour. He could fiddle around with share markets, capital markets, banks, financial instruments, such as, securities, participatory notes, tax treaties, not to speak of spectrum sale, and use his extraordinary innovative powers of black money magic to plunder our country with complete impunity. He assiduously cultivated the media with his clipped English accent (that led him down, now and then), occasional freebies, and sustained shadows of the Enforcement Directorate that he commanded.
Chidambaram cannot get black money out of his blood. Dr Subramanian Swamy has clearly stated in his website, "I now have further information from my usually reliable sources in the Union Government that the tapping of Finance Minister Mr. Pranab Mukherjee and his close associate in the Ministry, enabled Mr. Robert Vadra the son-in-law of Ms. Sonia Gandhi and Mr. Karthik son of Mr. P. Chidambaram, to use the data thereby collected to manipulate and rig the Mumbai stock market. Earlier these data were directly provided by the then Finance Minister Mr. Chidambaram. I demand that the SEBI be asked by PM to initiate 'Insider Trading' investigation and prosecution of Mr. Vadra and Mr. Karthik."
If what is put out by Dr Subramanian Swamy is false why doesn't Chidambaram sue him?
The dark clouds of the 2G scam and the repeated evidence being given by A. Raja and other accused of his tacit involvement and other acts of omission and commission are menacingly closing in on Chidambaram. He is losing his cool, and more importantly, losing his carefully clipped English accent to its more indigenous roots more often. And like his colleague Digvijay Singh, his mind seems to be disintegrating to a stage where he has started talking gibberish. Take this, for example: in reply to the BJP demand for his resignation for his involvement in the 2G scam, Chidambaram claims that the BJP is targeting him since he initiated a probe by the NIA into Hindu terror. Can any rational person see the connection between the two?
Take also his comments regarding the recent Mumbai blasts. As Home Minister, instead of taking stock of the situation, and providing leadership, the only intelligent thing he could think of saying was, "No intelligence is not intelligence failure." Even a college debating society expects better logic. It's something like saying "illness is not a failure of health" or "impotence is not a failure of potency".
Chidambaram's special financial skills have diversified into electoral politics also. He has the distinction of having been declared defeated in the last Lok Sabha election, after which he galvanized his special skills and local machinery, in particular, a data entry operator, and doctored a marginal victory on the recount. That is quite a record for fraud. And can one forget how the Indian Bank was cleaned up and left with only non-performing assets thanks to him and his Tamil Maanila buddies?
Chidambaram's record as Home Minister has been disastrous. Neither has he made any impact on internal security, with the worst massacres of his own paramilitary forces taking place in his time, nor on terrorism, which carries on in complete complacency because there are neither effective preventive or punitive systems in place, nor political will and national legislation to combat terrorism. It is on record and in the public domain that the Home Ministry gave incorrect names of India's most wanted list of terrorists allegedly hiding in Pakistan, some of whom were tracked living in India or in custody. Is this a testament to his fabled efficiency and commitment?
What a laughing stock we must be before the world. It is almost as if India is determined that it shall not combat terrorism, shall not have enabling legislation as enacted by the US, such as the Homeland Security Act 2002, and the Prevention of Terrorism Act 2005 of UK and similar legislations in European governments. India is determined not to have an effective national agency on the lines of the Homeland Security Department of the US. The ramshackle National Investigation Agency showed itself as a complete failure during the recent Mumbai attacks. Understandable, because its only mandate appears to be to investigate "Hindu terror", the last refuge for failed and hopeless Congressmen like Chidambaram. The CCTNS, JIC, ARC, NTRO (presently in another scam), and NCTC remain effete, scattered and unmonitorable, even by the Home Ministry. With such an unequivocal determination by the UPA government not to address terrorism effectively, I can only grieve for my country.
http://www.ibtl.in/news/exclusive/1326/friend--father-and-philosopher-of-black-money-is-chidambaram
http://bharatkalyan97.blogspot.com/2011/11/friend-father-and-philosopher-of-black.html
16.11.11
Friend, father and philosopher of black money is Chidambaram
WEDNESDAY | NOVEMBER 16, 2011
--Source: SG
Palaniappan Chidambaram, whom I shall for the sake of brevity call just Chidambaram, is best seen through black and white. And please don't get me wrong and accuse me of racism. I refer not to epidermis or mane, but to the economic colour of money. Some of his greatest contributions to the economy of India are his brilliant pioneering initiatives for changing the colour of money from black to white. And this passion has never left him.
Many of us have forgotten the Voluntary Disclosure of Income Scheme (VDIS) 1997, which he announced when he was Finance Minister with the United Front government, granting income-tax defaulters indefinite immunity from prosecution under the Foreign Exchange Regulation Act, 1973, Income Tax Act, 1961, Wealth Tax Act, 1957, and Companies Act, 1956, in exchange of self-valuation and disclosure of income and assets. The scheme was brilliantly conceived. While all schemes in the past valued declared assets at current prices, VDIS 1997 brought in an arbitrary date of 1 April 1987. Gold and silver hoarders, and large property holders got an exceptional bonanza on this valuation system. Further, proof of purchase was not insisted upon, which gave complete freedom to the confessors to fudge any date they wanted to their own financial advantage and further plunder of the country. So, even if gold was bought after 1987, it could be shown as having been bought before 1987, and it was a win-win game for all stakeholders to rake in the cuts. The Comptroller and Auditor General of India condemned the scheme in his report as abusive and a fraud on the genuine taxpayers of the country. But the issue was forgotten, and the illustrious career of Palaniappan Chidambaram rose to greater heights in the UPA regime.
Those were his innocent days. What a long way he has come since the era when he was cooking up VDISs, so utterly transparent, that the loopholes and avenues to give relief to the looters stared you in the face. The world economy was also then a little simpler than it is today, and his best achievement was getting caught about his investments in Fairgrowth, which was involved in the Securities Scam of 1992. Chidambaram had to resign for this utterly transparent investment in a company whose scam would have paid rich dividends. Unfortunately, he was not Finance Minister at the time and did not have the machinery to hush things up, and could only remotely control the markets, unlike his present capabilities as former Finance Minister and thereafter.
Being Finance Minister in the UPA government was his finest hour. He could fiddle around with share markets, capital markets, banks, financial instruments, such as, securities, participatory notes, tax treaties, not to speak of spectrum sale, and use his extraordinary innovative powers of black money magic to plunder our country with complete impunity. He assiduously cultivated the media with his clipped English accent (that led him down, now and then), occasional freebies, and sustained shadows of the Enforcement Directorate that he commanded.
Chidambaram cannot get black money out of his blood. Dr Subramanian Swamy has clearly stated in his website, "I now have further information from my usually reliable sources in the Union Government that the tapping of Finance Minister Mr. Pranab Mukherjee and his close associate in the Ministry, enabled Mr. Robert Vadra the son-in-law of Ms. Sonia Gandhi and Mr. Karthik son of Mr. P. Chidambaram, to use the data thereby collected to manipulate and rig the Mumbai stock market. Earlier these data were directly provided by the then Finance Minister Mr. Chidambaram. I demand that the SEBI be asked by PM to initiate 'Insider Trading' investigation and prosecution of Mr. Vadra and Mr. Karthik."
If what is put out by Dr Subramanian Swamy is false why doesn't Chidambaram sue him?
The dark clouds of the 2G scam and the repeated evidence being given by A. Raja and other accused of his tacit involvement and other acts of omission and commission are menacingly closing in on Chidambaram. He is losing his cool, and more importantly, losing his carefully clipped English accent to its more indigenous roots more often. And like his colleague Digvijay Singh, his mind seems to be disintegrating to a stage where he has started talking gibberish. Take this, for example: in reply to the BJP demand for his resignation for his involvement in the 2G scam, Chidambaram claims that the BJP is targeting him since he initiated a probe by the NIA into Hindu terror. Can any rational person see the connection between the two?
Take also his comments regarding the recent Mumbai blasts. As Home Minister, instead of taking stock of the situation, and providing leadership, the only intelligent thing he could think of saying was, "No intelligence is not intelligence failure." Even a college debating society expects better logic. It's something like saying "illness is not a failure of health" or "impotence is not a failure of potency".
Chidambaram's special financial skills have diversified into electoral politics also. He has the distinction of having been declared defeated in the last Lok Sabha election, after which he galvanized his special skills and local machinery, in particular, a data entry operator, and doctored a marginal victory on the recount. That is quite a record for fraud. And can one forget how the Indian Bank was cleaned up and left with only non-performing assets thanks to him and his Tamil Maanila buddies?
Chidambaram's record as Home Minister has been disastrous. Neither has he made any impact on internal security, with the worst massacres of his own paramilitary forces taking place in his time, nor on terrorism, which carries on in complete complacency because there are neither effective preventive or punitive systems in place, nor political will and national legislation to combat terrorism. It is on record and in the public domain that the Home Ministry gave incorrect names of India's most wanted list of terrorists allegedly hiding in Pakistan, some of whom were tracked living in India or in custody. Is this a testament to his fabled efficiency and commitment?
What a laughing stock we must be before the world. It is almost as if India is determined that it shall not combat terrorism, shall not have enabling legislation as enacted by the US, such as the Homeland Security Act 2002, and the Prevention of Terrorism Act 2005 of UK and similar legislations in European governments. India is determined not to have an effective national agency on the lines of the Homeland Security Department of the US. The ramshackle National Investigation Agency showed itself as a complete failure during the recent Mumbai attacks. Understandable, because its only mandate appears to be to investigate "Hindu terror", the last refuge for failed and hopeless Congressmen like Chidambaram. The CCTNS, JIC, ARC, NTRO (presently in another scam), and NCTC remain effete, scattered and unmonitorable, even by the Home Ministry. With such an unequivocal determination by the UPA government not to address terrorism effectively, I can only grieve for my country.
Thieves are smarter than the cops especially in India.
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