By Paranjoy Guha Thakurta
What is it with the fathers-in-law and sons-in-law of the two top Nationalist Congress Party leaders? Both Sharad Pawar and now Praful Patel have been embarrassed and pushed into a corner by their ‘samdhis’ who just don’t seem to understand the meaning of the term ‘conflict of interest’.
First it was Supriya Sule, daughter of Union Minister for Agriculture, Food and Consumer Affairs Sharad Pawar, who after categorically stating that her family did not have “a single paisa” invested in the Indian Premier League (IPL) had to
eat crow. Within a day she reluctantly acknowledged that her husband Sadanand Sule controls a 10 per cent stake in Multi Screen Media (formerly Sony Enter-tainment) that holds the television broadcast rights to all IPL matches through a power of attorney given to him by his father BR Sule.
Now it is the turn on Praful Patel and his daughter Niyati’s father in law, Utsav Parekh. Government investigators have now revealed to CURRENT that the promoter chairman of SMIFS Capital Markets, a company that was involved in a major stock market scam and is also now behind the bid to build a huge and controversial 3,500 acre ‘airport city’ in Andal, in Barddhaman district in West Bengal.
As the IPL scam gets murkier by the day, it is also learnt that Prime Minister Manmohan Singh is being briefed every evening on the scandal by the heads of official investigating agencies, including the Income Tax Department, the Enforcement Directorate dealing with foreign exchange transactions, the Directorate of Revenue Intelligence (all of which come under the Ministry of Finance) over and above the Intelligence Bureau (which is under the Ministry of Home Affairs).
Praful Patel’s daughter Poorna Patel has been in the news for allegedly throwing her weight around as hospitality head of the IPL while chartering Air India aircraft to fly players across the country. What has not been talked about is the fact that Niyati’s father-in-law Utsav Parekh and his business associates have been recently implicated in a financial scandal.
On Friday April 23, the Supreme Court dismissed an appeal made by the investment firm Mackertich Consultancy Services (part of the Stewart & Mackertich or SMIFS group) against a ban that has been imposed on the company preventing it from trading in securities for one year. The ban had been imposed on the firm, controlled by Utsav Parekh and Ajay Kayan, by the regulator of the country’s capital markets, the Securities & Exchange Board of India (SEBI) for rigging the prices of shares of DSQ Biotech Limited.
On March 13, SEBI had passed an order holding Mackertich Consultancy guilty of executing “artificial, matched and synchronized” transactions in the scrips of DSQ Biotech to create trading volumes. An inquiry conducted by SEBI revealed that the firm had been acting as both the buyer and the seller of DSQ Biotech shares. SEBI held Mackertich Consultancy guilty of “fraudulent and unfair trading practices” that violated Section 4 of the SEBI Regulations, 1995, and restrained the firm from dealing in the securities market for a year. This order was then challenged before the Securities Appellate Tribunal, which also rejected the plea of the firm which then appealed before the Supreme Court.
Mackertich Consultancy had engaged the services of eminent lawyer and former Attorney General of India Soli Sorabjee to fight their case but a two-judge bench of the apex court comprising Justice SH Kapadia and Justice Swatantra Kumar sharply criticized the firm and told Sorabjee: “They mislead investors”. The judges added that “these kinds of practices must stop” and added that “there should be heavier penalty on firms like these”.
Utsav Parekh and Ajay Kayan were reportedly key players in the “bear cartel” that had opposed “big bull” Harshad Mehta, the late stock-broker who was the lynchpin of a huge stock-market scandal in 1992. These two
individuals had used funds belonging to Citibank and Canara Bank in an unauthorized manner to play the markets at that time. Nine years later, when another stock-market scam broke out, this time involving broker Ketan Parekh, the names of these two men again came up. “Our information is that Utsav Parekh has been frequently in touch with some of the surviving elements of the Ketan Parekh cartel,” an investigator told CURRENT on condition of anonymity.
The second controversial business activity of Praful’s samdhi is a project to build an airport city in the West Bengal hinterland.
The company behind the Rs 10,000 crore airport city or Aerotropolis project is called Bengal Aerotropolis Projects Limited (BAPL) and is promoted by Utsav Parekh and the former Steel Authority of India Limited chairman and CEO Arvind Pande is the chairman. It is reported that the Changi Airports International (CAI) has also taken a 26 percent stake in the company.
BAPL requires huge quantities of one of the scarcest resources in India, land – 3,500 acres of it. And the West Bengal government had entered into an agreement with the company to provide it 2,300 acres for the first phase of development. The West Bengal Industrial Development Corporation was to directly acquire the land from the owners and then lease it to the developer.
The project immediately ran into trouble with objections being raised by Coal Inda Limited (CIL) and then from the Trinamool Congress. CIL said that there were 1,400 million tonnes of mineable coal in the area and that the airport should be shifted to another location. The land acquisition for the first phase was then reduced to 2,182 acres.
So far BAPL has received 1,049 acres of land from the WBIDC on a 99-year lease and has paid a lease premium of Rs 88.48 crore. The project has also received only EIA clearance from the Ministry of Environment and Forests to build a ‘greenfield domestic airport… on 806 acres” and it has been asked to get a “separate environmental clearance for
the development of proposed township of 40,000 people” from the State Level Environment Impact Assessment Authority of West Bengal.
The political strongman backing the Aerotropolis is none other than Nirupam Sen, Industries Minister of West Bengal, who is considered to be the No. 2 man in the Left Front government, the right-hand man of Chief Minister Buddhadeb Bhattacharjee. He was one of the active proponents of the Tata Motors project in Singur and the proposed chemicals complex at Nandigram, both of which got aborted amid considerable controversy. Besides the Chief Minister, Sen was in the forefront of the state government’s attempts to attract private investments to West Bengal and is, therefore, also being held responsible for the fiasco over land acquisition in Singur as well as the police firing in Nandigram – both of which contributed substantially to the poor performance of the CPI(M)-led Left Front in the 2009 Lok Sabha elections. The Singur and Nandigram episodes not only helped in the rise of the Trinamool Congress and the Congress in the state but also facilitated the consolidation of non-Left votes in a state that has been ruled by the Left continuously since 1977.
Nirupam Sen is said to be the “strongman” of the Communist Party of India (Marxist) in the Barddhaman district of the state. Sen’s active support for the Bengal Aerotropolis airport-cum-township project has earned him not a few enemies in his own party, the CPI(M), who have argued that the project is essentially a real estate scheme more than a project to build a new town around a new airport. Those opposed to the project point out that existing facilities at the airport in Kolkata, capital of West Bengal, are grossly underutilised. Even after the Kolkata airport is modernized by the Airports Authority of India, current indications are that barely one-third of its facilities would be utilised.
Official investigators are, however, uncertain how deep they should dig into the affairs of the relatives and associates of the Civil Aviation Minister and his political mentor and head of the Nationalist Congress Party, for a simple reason. Even if the Congress party and the UPA are not particularly worried about the support received from the nine MPs belonging to the NCP in the Lok Sabha, what is a matter of concern for the Congress is that it critically depends on the support of 62 MLAs from the NCP in the Maharashtra assembly to remain in power in the state.
A government source said that further investigations would be an “uphill task” as much of the evidence has already been destroyed. Moreover, digging deeper into the affairs of the in-laws of NCP ministers may prove to be “futile” given the compulsions of coalition politics in the country, it was pointed out.
Modi’s Background
Lalit Modi is the son of KK Modi, who owns Godfrey Philips, India’s second largest cigarette company, ModiCare, a cosmetics firm, Modi Healthcare Placements, Indofil Chemicals, and Modi Entertainment Network. In fact, Lalit is a director on all the group companies and recently, his father has said that he hoped Modi would extricate a bit from IPL and help run the family businesses in a couple of years. But ever since he returned from the US, Lalit has been interested in the business of sports and he wanted to replicate something like a mix of America’s National Basketball Association (NBA) and Europe’s English Premier League (EPL) model in India. That is why he didn’t wish to work for his father and, instead, forced him to start MEN, one of whose first alliance was with ESPN. Lalit has been fascinated by the US’ National Football League (NFL); his designation as IPL Commissioner with full powers is borrowed from NFL, but the post has no official sanction from the BCCI. He has also said that IPL will become much bigger than EPL in a few years’ time.
Modi’s friends, foes, and friends-turned-foes
Friends:
Sharad Pawar
Was his political backer; Lalit fortunately joined hands with Pawar to overthrow Jagmohan Dalmiya as BCCI’s president in 2004
Praful Patel
As a party colleague of Pawar in NCP, he has lately become Lalit’s backer
Vijay Mallya
Probably the only corporate owner, who has done nothing wrong in IPL; hence, he is openly supporting Lalit
Jai Mehta
The part-owner of KKR is an old friend
Preity Zinta
The part-owner of Kings XI Punjab was the brand ambassador for the bravery awards for Red & White cigarette brand, owned by Lalit’s father KK Modi; Lalit was the brain behind the awards
Foes
Jagmohan Dalmiya
Has always hated Modi because of the latter’s support to Pawar
Subhash Chandra
The owner of Zee Network was ejected out of BCCI’s telecast rights because Lalitin 2005; the case was fought in courts and prompted Chandra to launch Zee Sports and ICL which, in fact, forced BCCI to launch IPL
Ashok Gehlot
The Rajasthan CM is possibly the most virulent anti-Modi person because of Lalit’s proximity to Gehlot’s political enemy, BJP’s Vasundra Raje; the CM has forced several criminal cases against Lalit in Rajasthan
Shashank Manohar
The BCCI president wants Lalit out as the latter calls most of the commercial shots in the association; views Lalit as an upstart
Friends-turned-Foes
Vasundra Raje
The former CM of Rajasthan built up his cricket career by helping him become the president of Rajasthan Cricket Association; is now quiet
N Srinivasan
BCCI’s secretary was a friend, he even owns an IPL team (CSK); but he has now joined hands with Shashank Manohar to oust Lalit
Arun Jaitley
A former friend in BJP, he has now joined hands with BCCI’s gang
Rajiv Shukla
A vice president, BCCI, and a Rajya Sabha MP, he was forced to support Lalit; now he has voiced concern as Lalit decided commercial contracts which were under Shukla’s purview in BCCI