Glamour model arrested over £3million scam 'masterminded by father of footballer Gareth Bale's fiancee'

Former hairdresser held by police in Spain and faces extradition to the US
It is alleged that she made £50,000 from the share-selling scam
Footballer's wedding believed to be on hold after arrest of father of the bride

A former reality TV star has been held on suspicion of playing a part in a £3million fraud allegedly run from Barcelona by the father of the fiancee of footballer Gareth Bale.

Jamie-Lee Church, who won a record deal after appearing on ITV's Popstars: The Rivals in 2002 was arrested as US detectives investigate whether she was involved in the 'boiler room scam'.

The crime is thought to have been run from Spain by Martin Rhys-Jones, 49, the father of Real Madrid player Mr Bale's fiancee Emma.

The footballer and Miss Rhys-Jones are not accused of any wrongdoing.
Jamie Lee-Church has been arrested in Spain and faces extradition to the US

Jamie Lee-Church has been arrested in Spain and faces extradition to the US

Mr Rhys-Jones is currently on remand in a US jail, after people claimed that they were sold 'near worthless' shares at sky high prices.

The Sunday Mirror reported that Miss Church, 27, is one of 12 defendants being investigated in connection with the fraud and now faces extradition to the US.

She is accused of posing as 'Charlotte Keys' and cold-calling victims to persuade them to buy stocks containing 'false and fraudulent representations'.
Gareth Bale with his fiancee Emma Rhys-Jones and their daughter Alba Violet Bale. Neither the footballer, nor his partner have been accused of any wrongdoing

Gareth Bale with his fiancee Emma Rhys-Jones and their daughter Alba Violet Bale. Neither the footballer, nor his partner have been accused of any wrongdoing

It is alleged that Miss Church, a former hairdresser from Brighton who has also appeared in men's magazines, made £50,000 from her part in the scam.

She was arrested earlier this month.

A Foreign Office spokesman said: 'We can confirm the arrest of a British national in Spain in November 2013.

'We provided consular assistance.'

The gang are believed to have been operating for at least three years.

Mr Bale, 24 and his fiancee are believed to have put their wedding plans on hold after Mr Rhys-Jones was extradited to the US in June and, along with 11 others, charged with conspiracy to commit wire fraud and money laundering.

He is accused of running a telemarketing scam from offices in Barcelona between 2006 and 2009 that duped victims in the UK and Canada into buying expensive shares that were almost worthless.

Rhys-Jones set up business in the Spanish city – where there is a ferocious footballing rivalry with Bale's new Real Madrid – in 2005 after separating from his wife, Suzanne, in Cardiff.

He is facing up to 30 years in prison and a maximum fine of £160,000 if convicted.

Investigators claim Rhys-Jones got staff to generate false press releases claiming share prices were of a much higher value than they were being traded.

He allegedly hired staff to make fraudulent calls, offering them rent-free homes in Barcelona and a sales commission.

US investigators say the sales team would not tell customers that the stocks were restricted, meaning they could not be easily sold on the open market.
Twitter picture of Martin Rhys-Jones, who is the father of footballer Gareth Bale's girlfriend Emma Rhys Jones. Martin Rhys-Jones is on remand in an American jail accused of global financial fraud

Twitter picture of Martin Rhys-Jones, who is the father of footballer Gareth Bale's girlfriend Emma Rhys Jones. Martin Rhys-Jones is on remand in an American jail accused of global financial fraud

The indictment states that when customers were eventually sent share certificates ‘the value of the stock had dropped to nearly nothing’.

More than £3.2million was invested by unwitting customers in the scheme before the money was transferred to bank accounts in New York, Spain, the UK and Switzerland, prosecutors say.

They have accused Rhys-Jones of laundering money through an Abbey National branch in the Channel Islands, along with banks in Barcelona and Germany.

The US probe is being run by the Homeland Security Investigations, Internal Revenue Service and Immigration and Customs.

US Grand Jury indictment documents reveal that Rhys-Jones also used the aliases Martin Reece and John Allen while in Barcelona.

Miss Rhys-Jones and Bale, who became childhood sweethearts at Whitchurch High School in Cardiff, carried out a long-distance relationship for eight years after Bale’s moves to Southampton and Tottenham Hotspur and she moved into his Essex mansion only two years ago.

The notoriously private pair, who have a one-year-old baby Alba Violet Bale, have tended to eschew public appearances together in the past.
Courtesy:
By Hayley O'keeffe
PUBLISHED: 11:01 GMT, 24 November 2013 | UPDATED: 16:51 GMT, 24 November 2013
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Agusta Westland Chopper SCAM: CBI seeks info from Italy, Mauritius, Tunisia

CBI has sent judicial requests to Italy, Mauritius and Tunisia seeking details of financial transactions of the companies named in the Rs 3600-crore VVIP helicopter scam.

CBI sources said the agency has despatched Letters Rogatory for details of financial transactions, meetings of alleged middlemen and their interests in Indian and Tunisian companies, among others.

The top executives of Italian firm Finmeccanica and its United Kingdom-based subsidiary AgustaWestland are facing trial in Italy for alleged corruption in supply of 12 VVIP helicopters to India.

The Rs 3600-crore contract is also under probe of Indian agencies for alleged kickbacks paid to Indian officials, including former IAF chief S P Tyagi, to clinch it.

The alleged bribes were routed through a company with subsidiaries in Tunisia and Mauritius, the sources said.

Tyagi has denied allegations of any kickbacks.

Giuseppe Orsi and Bruno Spagnolini, former and current Chief Executives of AgustaWestland respectively, are facing trial in Italy for alleged corruption.

Orsi was heading AgustaWestland when the deal was signed in 2010 and is now the Chief Executive Officer of parent company Finmeccanica.

The statements of both these top executives are important for CBI for finalising its charges which would be levelled in the charge sheet, the sources said.

India has become a civil party in the ongoing trial in Italy which helped it in getting court documents submitted by Italian prosecutors in connection with the case.
Courtesy:
By PTI - NEW DELHI
Published: 21st November 2013 08:05 PM
http://newindianexpress.com/nation/Chopper-scam-CBI-seeks-info-from-Italy-Mauritius-Tunisia/2013/11/21/article1903667.ece

Illegal mining scam: Lad on his way out?

The illegal mining scam may claim its first wicket in the Siddaramaiah ministry with Infrastructure Minister Santosh Lad expected to resign soon. Chief Minister Siddaramaiah on Thursday night is said to have asked Lad to quit ahead of the winter session of the state legislature set to begin in Belgaum from Monday.

According to sources, Lad, who is in New Delhi, is lobbying with senior Congress leaders to save his post. He is expected to return on Friday and tender his resignation, latest by Saturday.

Sources close to the CM said the decision is being seen as part of Congress strategy to blunt the opposition attack during the Belgaum session. Also, growing pressure from within the party seems to have influenced the CM’s decision in asking Lad to quit, sources added.

Fresh documents released
Meanwhile, social activist S R Hiremath on Thursday released a fresh set of documents against Infrastructure Development and Information Minister Santosh Lad and alleged that four mining companies were not separate companies but interconnected. The four mining companies are VS Lad and Sons, VSL Mining Company Pvt. Ltd, VSL Steels Limited and Aina Minerals Trading and Logistics.

Hiremath said a letter issued by the State Bank of India (SBI) to the Central Empowered Committee (CEC) establishes the interconnection. Hiremath said all the four companies hold common interest and interconnection among these companies in several areas have been established. Hiremath said these were substantiated by the cover letter issued by the SBI to member secretary to CEC M K Jiwrajka, dated October 31, 2013, saying that VSL Mining Co Pvt Ltd is connected with VS Lad and Sons.

Hiremath also urged the state government to issue a notification under Section 5 of the Delhi Special Police Act, 1946, which enables the CBI to probe.

Minister Santosh Lad said the companies were represented by different people. “How can it be called interconnected if representatives of the companies are different. I am a partner in VSLS and also promoter of VS Steels Limited. It is only a financial statement of the SBI and I am not connected with the other two companies,” Lad said.
Courtesy:
By Express news Service - BANGALORE
Published: 22nd November 2013 08:22 AM
http://newindianexpress.com/states/karnataka/Illegal-mining-scam-Lad-on-his-way-out/2013/11/22/article1904629.ece

NSEL scam: Cops arrest producer of 'Satya 2'

MUMBAI: The city police's economic offences wing (EOW), which is probing the Rs 5,600-crore National Spot Exchange (NSEL) scam, on Monday arrested Arun Kumar Sharma for defaulting on the repayment of Rs 159 crore he had borrowed earlier. Sharma is the producer of the recently released Bollywood movie "Satya 2" and also a director of Lotus Refineries, one of the biggest borrowers from the spot exchange.

Himanshu Roy, joint commissioner of police (crime), said, "We have arrested Sharma for his involvement in the NSEL case. We have found some fake receipts with him." Rajvardhan Sinha, additional commissioner of EOW, said, "He was called for questioning and later we arrested him once his role was established in the case. He had borrowed Rs 159 crore from NSEL, which is outstanding. His books of accounts suggest that they splurged the money on real estate, decorating their office, etc."

Sharma invested money to produce "Satya 2" and "Dehradun Diary". He invested up to Rs 15 crore in "Satya 2". Talking about Sharma's role, Sinha added, "The intention was to splurge money in non-productive areas and not to return the money."

Sharma claimed NSEL was using his account for trading. However, the police said they found it was Sharma's login and password that was used in the trading by him. He will be produced before the Esplanade court on Tuesday.

Wearing a gold chain and jacket, Sharma was taken to an EOW office in the police head quarters where the cops asked him to remove the gold chain and jacket before they started recording his statement, again.

The media wing of Sharma's firm is known as Lotus Allied Mediamatics and he had joined hands with Ashwagandha Entertainment and Swami Samartha Creations in 2013 for the marketing and distribution of "Dehradun Diary".

Sinha said Sharma purchased an office in Worli for Rs 38 crore. He is said to have spent Rs 1 crore on furniture and Rs 10 lakh on furnishing it. "He created books of accounts showing all payments were made in advance for the goods he would receive. However, he could not produce the relevant papers to show the transactions and the deals," added Sinha.

Sharma's company is one of the biggest borrowers in the NSEL scam with an outstanding aggregating to about Rs 252 crore when the scam broke. Interestingly, soon after NSEL had declared Lotus Refineries a defaulter, on September 30 Sharma had moved Bombay high court with a counter claim of Rs 2,773 crore from NSEL. In its suit, Lotus Refineries had alleged the NSEL officials had fudged bank statements relating to funds transfer through the RTGS mode, aggregating to Rs 1,704 crore.

During the day, EOW also froze the immovable properties of three ex-employees of NSEL - Anjani Kumar Sinha, Amit Mukherjee and Jai Bahukhandi. The properties included several flats in and around Mumbai owned by the three accused, all of whom are in jail now. "No third-party rights can be created on these properties," Rajvardhan Sinha told reporters.

The day also witnessed Joseph Massey and Shrikant Javalgekar, both top officials in the Financial Technologies (FTIL) group, being questioned by the police about their roles in the NSEL scam. The top police official said that Massey was questioned about how his signatures appeared on the minutes of some of NSEL board meetings even though he was not present in the city on those days.

Massey is a director at NSEL while Javalgekar is a former director who resigned from the bourse's board after the scam was exposed.

Rajvardhan Sinha also said that several teams from EOW have gone to various warehouses of the NSEL to take stock of the products in those store houses. "By Saturday, we will be able to get a clear idea about the stocks in those warehouses. There are about 18-20 warehouses," he said. People from SGS, a Switzerland-based firm involved in auditing the warehouses, are helping the cops, he said.
Courtesy:
Partha Sinha & Mateen Hafeez, TNN | Nov 12, 2013, 03.43AM IST
http://timesofindia.indiatimes.com/business/india-business/NSEL-scam-Cops-arrest-producer-of-Satya-2/articleshow/25609009.cms

Cops summon another defaulter in NSEL scam

MUMBAI: The city economic offences wing (EOW) of the Mumbai police on Wednesday summoned Balbir Singh Uppal, the director of Loil Overseas Foods, Loil Continental Food and Loil Health Foods, in connection with the Rs 5,600-crore NSEL scam. The three companies together defaulted over Rs 703 crore to NSEL.

According to details earlier published by NSEL, initially Loil Continental Foods had an outstanding of Rs 335 crore, Loil Health Foods Rs 289 crore and Loil Overseas Foods Rs 84.5 crore. Part of this was paid off by the three companies during the initial months.

Rajvardhan Sinha, additional commissioner of police (EOW), said that they summoned Jagmohan Garg, director of Mohan India, too, for questioning. "Till date, we have identified 166 properties belonging to different defaulters. Of these properties, we have attached 102 properties and are busy in other properties. The EOW has frozen various bank accounts and sealed properties collectively worth Rs 145.57 crore," Sinha said. Among the attached properties, 12 belong to N K Proteins and are located in Mumbai, Ahmedabad and Delhi.

"We will be making some arrests in the case soon and don't want to disclose the findings of our probe. We are collecting evidence against the accused and will be attaching some more properties in the days to come," Sinha said. The police have so far arrested five persons in this case.

Jignesh Shah, chairman of the FTIL group, the promoters of NSEL, will again be summoned for questioning, said a police source.

"While we had issued summons to 74 people, more than 70 have turned up till date. Some of them did not come for questioning citing health reasons. We are not in a hurry. We are in the process of recording and corroborating statements," said a police officer.
Courtesy:
Mateen Hafeez, TNN | Nov 14, 2013, 06.33AM IST
http://timesofindia.indiatimes.com/business/india-business/Cops-summon-another-defaulter-in-NSEL-scam/articleshow/25730501.cms

Yashwant Sinha alleges another telecom scam, writes to PM

BJP leader Yashwant Sinha on Tuesday alleged another telecom scam was taking place and urged Prime Minister Manmohan Singh to reject TRAI (Telecom Regulatory Authority of India) recommendations of spectrum reserve price and user charges.

"I would like to draw your attention to another scam which seems to be taking place in the telecom sector," Sinha said in his letter to the prime minister on November 9.

The letter was released to the media on Tuesday.

"I urge your office to take immediate remedial measures and in order to realise the true economic value of spectrum and to uphold the interest of Indian citizens and the revenue objectives of the government, the recommendations of the TRAI with respect to reserve price and SUC (spectrum usage charges) should be rejected forthwith," Sinha said in his letter.

According to Sinha, as per the TRAI recommendations the reserve price for 1 MHz of spectrum on pan-India basis in 1800 MHz band has been reduced from Rs.2,376 crore to Rs.1,496 crore or by 37 per cent.

In case of key circles like Mumbai and Delhi, this reduction is much steeper by over 50 per cent, he said.

Similarly for spectrum in 900 MHz band, TRAI has proposed reduction in reserve price in three metro service areas by 62 per cent from Rs.1,718 crore to Rs.650 crore for a block of 1 MHz spectrum, he said.

These changes would result in a loss of around Rs.35,000 crore, he alleged.

"With these reserve prices and the amount of spectrum intended to be auctioned in the forthcoming auction, the potential loss to the government can be as high as Rs.35,000 crore," said Sinha.

"Even with the telecom commission's recommendations that have proposed 25 per cent increase in metro and category A circles for 1800 MHz band reserve price and metro circles for 900 MHz band, the potential loss amounts to Rs.27,000 crore," he said.

Sinha, a former union finance minister, has noted that "the spectrum reserve price and SUC are serious issues which involve pricing of scarce natural resources and, therefore, will always be subject to scrutiny -- today and in future."

The Central Bureau of Investigation is probing the controversial 2G spectrum allocations in which a loss of revenue worth Rs.1.76 lakh crore has been alleged by the Comptroller and Auditor General.
Courtesy:
IANS  New Delhi, November 12, 2013 | UPDATED 18:07 IST
http://indiatoday.intoday.in/story/yashwant-sinha-alleges-another-telecom-scam-writes-to-pm/1/322746.html

MBBS scam in Jammu and Kashmir, ex-exam board chief surrenders

A massive MBBS exam scam has been unearthed in Jammu and Kashmir with police tightening the noose around a top official for allegedly leaking the test papers in 2012.

"Two close associates of Mushtaq Ahmad Peer, the then chairman of Jammu and Kashmir Board of Professional Entrance Exams (JKBOPEE), allegedly sold the test papers to over a dozen candidates," a Crime Branch official said.

The official said that accepting huge sums of money from the parents of the candidates, JKBOPEE officials set up a special exam centre for them in a hotel on Boulevard Road in Srinagar.

The former JKBOPEE chairman surrendered before the Crime Branch on Wednesday.

"He was avoiding arrest for some days but this morning, he surrendered," said the official.

Police had been raiding his houses in Srinagar and Jammu for the past few days. Peer's conduct was under their scanner for a long time.

However, it was only after one of his two close associates started spilling the beans that the Crime Branch began the raids.

Sources in the probe team said Peer allegedly sold Common Entrance Test (CET) papers for lakhs of rupees to two brokers -- Sajid Hussain and Farooq Ahmed -- who in turn took crores of rupees from parents of many students.

Bank accounts and records of peer's properties and his associates are being examined.

A case has been registered following complaints about the selections process in BOPEE in 2012.

Interestingly, Peer was given an extension after his retirement and reemployed as an expert in the Services Selection Board.

The state government did this despite voices coming out against his conduct during his tenure as BOPEE chairman.
Courtesy:
Shuja-ul-Haq   |   Headlines Today  |   Srinagar, November 20, 2013 | UPDATED 16:57 IST
http://indiatoday.intoday.in/story/kashmir-mbbs-kashmir-mbbs-munnabhai-medical-entrance-test-kashmir/1/325680.html

‘CPM leader son brain behind MBBS scam’

Kollam: The CPM is on the defensive after Kavitha Pillai, the medical seat scam accused, gave a statement to the police that the son of a CPM leader is the  brain behind the scam.

Rash Lal, son of former Kollam district committee member D. Radhakrishnan, is the prime accused in the scam, according to Kavitha’s statement.
Police said Rash Lal had taken money from 60 persons promising seats. A look-out notice has been issued for him.

Radhakrishnan, according to sources, is a supporter of the Pinarayi Vijayan faction in the party, though he was earlier with the VS faction. In 2005, when he was a district committee member, his son  got involved in a spirit case, leading to his  losing his membership in the district committee.

The Kollam DCC has used this opportunity to attack the LDF.  “Why is the LDF not responding to this scam after creating an uproar over the  Saritha issue? It should come up with its response at the earliest,” said Prathapavarma Thampan, Kollam DCC president. Kavitha Pillai is likely to be produced in a Kollam court on Friday.
Courtesy:
DC | 15th Nov 2013
http://www.deccanchronicle.com/131115/news-current-affairs/article/%E2%80%98cpm-leader-son-brain-behind-mbbs-scam%E2%80%99

8 execs of MLM firm arrested in Rs 425-cr scam

Eight top executives of the multi-level marketing firm Qnet have been arrested by the Economic Offences Wing (EOW) of the Mumbai Crime Branch regarding a scam believed to be around Rs 425 crore.

Bangalore-based Qnet, which offers holiday packages and herbal products besides other products, invited investments promising big returns. The EOW suspects the firm used binary pyramid model for seeking investment, which is an illegal business model wherein the emphasis is on recruiting people and have them invest money, only to find the top management (people on top of the pyramid) siphoning of the funds.

The firm, which is headquartered in Hong Kong, has been booked for cheating, and EOW has also frozen bank accounts having deposits of more than Rs 100 crore. Those arrested on Friday have been identified as Namrata Pande (alleged to have illegally pocketed Rs 2.5 crore in commissions), Vivek Singh (Rs 1.8 crore), Sabina Mathews (Rs 1.2 crore), Rohit Chandra (Rs 1.2 crore), Vijay Mathews (Rs 74 lakh), Shashi Pande (Rs 70 lakh), Jaydev Parmar (Rs 70 lakh), and Manish Bharwali (Rs 42 lakh).

“We have arrested the Qnet leaders who we suspect had used the illegal binary pyramid scheme to bag investments,” Additional CP (EOW) Rajvardhan said.
Courtesy:
Mumbai Mirror Bureau mirrorfeedback@timesgroup.com TWEETS @_MumbaiMirror
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Man held at airport for multi-crore bank fraud

Mumbai: A Vashi resident, Brian Castellino, accused of cheating, breach of trust and forgery was arrested on Saturday at the Mumbai airport after he landed from Dubai.

Immigration department officials arrested Castellino after his name flashed on the lookout notice (LOC) list. The department then alerted the CBI, which had been looking for him in connection with a cheating case. Castellino has been sent to police custody.

According to a CBI source, R PArora, deputy general manager of Corporation Bank, Thane, had lodged a complaint early this year against Castellino and his wife Rajini, both directors of R-Tec Systems Pvt Ltd. He alleged that the couple had cheated the bank’s Nerul branch by availing undue financial benefits in form of post-shipment finance against 28 fake software export bills covering 35 invoices, without the software actually being exported, causing a loss of Rs 6.82 crore to the bank.

“When he could not be traced, we issued a lookout notice in June. We found he had also cheated Abhyudaya Co-Operative Bank’s Vashi branch of Rs 49.79 crore and Navi Mumbai Co-op Bank of Rs 24.15 lakh,” said an official. But, Castellino is not cooperating, he said. TNN
Courtesy:
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Multi-level mktg firm QNet used various names

Mumbai: The EOW of Mumbai police probing a case against QNet, accused of using the banned binary-pyramid business model for their multi-level marketing scheme to entice investors, also targeted people in Chennai, Bangalore, Sangli and different parts of Andhra Pradesh, albeit under

different company names.

A source said the Hong Kong-based firm has been in existence since 2000. It started as GoldQuest, then QuestNet and lately QNet. The eight QNet team leaders who have been arrested were on Saturday and remanded in police custody till November 26. TNN
Courtesy:
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Kunal Ghosh held in Saradha scam

Kolkata: More than six months after the Saradha Ponzi meltdown, police arrested Trinamool MP Kunal Ghosh late on Saturday evening, charging him with an “equal rolein theconspiracy” along with Saradha CEO Sudipta Sen and his associates.

Kunal’s arrest came after 11 rounds of police interrogation and on the day he accused the Bidhannagar detective department chief, Arnab Ghosh, of “criminal blackmail”. Police say they took the Rajya Sabha MP into custody after getting fresh evidence against him.

Kunal, the Saradha Group Media CEO, was detained at Bidhannagar south police station for about three hours for interrogation soon after he went there to lodge the complaint against Arnab Ghosh. Ironically, it was the same IPS officer who announced Kunal’s arrest at 7pm in connection with a case lodged by Channel 10 employees. Channel 10 was owned by the Saradha Group. Although the complaint was about nonpayment of salary, police say they got hold of documents to substantiate the charge that Kunal played a muchbigger role than a mere “salaried employee” of Saradha.

Fearing arrest, Kunal had hurriedly called a press meet at his Sukeas Street residence on Friday, alleging that Arnab Ghosh was putting “undue pressure” on him toextort a statementover where the Saradha money has been stashed other than the media businesses.
Courtesy:
TIMES NEWS NETWORK
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‘ 22,000cr bribe paid on roads every yr’

New Delhi: Corruption on Indian roads by enforcement agencies is an open secret. Now, a study conducted across a dozen major transport hubs covering over 1,200 truck drivers has revealed that in 60% cases, cops and officials extort money from truckers by stopping them without giving a reason. It has also revealed that around 90% of the bribe goes to policemen and transport department personnel.

The study was conducted by Centre for Media Studies and MDRA at transport hubs including Ludhiana, Delhi, Ahmedabad, Indore, Mumbai, Kolkata, Vijaywada, Bangalore and Chennai. Sharing the finding at an event which was attended by over two dozen truck drivers last week, Alok Srivastava, a director at CMS, said the situation was not improving. When he cited the example of illegal tokens, passes and stickers that these government agencies issue to allow vehicles to pass without checks, drivers said, “These are valid for a month.”

Srivastava said in many cases, government officials use holograms on bribe receipts to distinguish ‘original’ from ‘fake’ and use code words like ‘April Fool, May Day and Independence Day’. During the study, drivers also said that mobile phones were used to convey ‘links’. The study estimated the total bribe on roads to be close to Rs 22,000 crore every year.

The findings — based on the surveyors interaction with drivers, fleet operators and law enforcing agencies — also exposed how truck and commercial heavy vehicles were the punching bags for enforcement agencies. Drivers claimed that in 12% cases, authorities challan truckers even when there is no overloading.

They said harassment by police and transport department officials were the two major irritants for drivers on roads. While 77% of them felt police were the biggest irritant, 73% said it was harassment by transport department officials.

However, drivers and truck operators admitted they paid bribe for failing to meet norms or to get things done quickly. They conceded that the major reasons for paying bribe at transport department offices were getting registration and fitness certificates besides permits. On roads, truckers often pay bribe for lack of proper documents, overloading and rash driving. They also said by paying bribe, they avoided hassles in physical verification of goods.
Courtesy:
Dipak Kumar Dash TNN
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Insurance co can’t unilaterally change policy terms

Background: Insurance companies unilaterally and surreptitiously change policy conditions without the knowledge of the insured. When a dispute arises, the company claims that it is a yearly contract and it has the right to revise the terms governing the policy. Insurers adopt a “take it or leave it” attitude, and claim that the policy holder can opt out if he/she does not agree to the revised terms. This is patently illegal.

Case study: 
Jayshree Shah had first taken a medical insurance policy of New India Assurance in 1999. Later, the insurance company changed it to ‘Hospital benefit policy/ Mediclaim Policy 2007’, with revised terms and conditions. This policy was also renewed and premiums for 2011-12 were paid. After Jayshree fell ill and was hospitalized, she lodged a claim for Rs 29,155. The insurance company’s TPA, Health India, processed the claim and sanctioned Rs16,879, disallowing an amount of Rs12,276 under the revised terms and conditions. Jayshshree protested against this deduction, contending the claim ought to be paid according to the original terms when the policy was first taken. She filed a consumer complaint through the Consumers Welfare Association.

The insurance company contested the case, saying that it had the right to change the terms and conditions, and the insured was free to opt out if the terms were not acceptable. The South Mumbai District Forum,
in its judgment of September 27, 2013 observed that the policy stated that it was issued on the basis of a proposal form and declaration dated February 2, 1999. The original policy as issued in 1999 provided for a claim to be reimbursed up to the sum insured, without imposing any limits under each head of expense. But these terms were changed and limits were not prescribed for various heads of expenses. The forum held that such unilateral change in the terms of the policy was not permissible. It relied on the judgment of the Supreme Court in the case of Biman Krishna Bose v/s United India Insurance Co Ltd, where the apex court had observed that a renewal of an insurance policy means repetition of the original policy. The renewed policy merely extends the period of insurance on identical terms and conditions contained in the original policy. The forum then set aside the revised terms of the policy and directed the insurance company to renew the policy as per the original terms prevailing when the insurance coverage was first taken. It ordered the company to pay Shah the balance claim of Rs12,276 along with 9% interest from May 12, 2011 and Rs 5,000 as litigation cost.

Conclusion: 
Once issued, the policy terms cannot be unilaterally changed, unless specific consent of the insured is obtained for such changes.
Courtesy:
Jehangir B Gai
(The author is a consumer activist and has won the National Youth Award for Consumer Protection. His email is jehangir.gai.articles@hotmail.com)
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State gives CM’s wife 3,000 for ‘loss of crop’

Mumbai: The state’s crisishit relief and rehabilitation department led by senior Congress leader Patangrao Kadam has paid a compensation of Rs 3,000 to chief minister Prithviraj Chavan’s wife, Satwasheela, for loss of crop in the wake of the worst ever drought in western Maharashtra in 2011-12.

“The survey on loss of crop owing to drought was completed recently. As per the recommendations of a committee headed by the collector, we have paid Rs 3,000 to Mrs Chavan, as well as her mother’s brother. Mrs Chavan is among the 4,000-odd farmers who have been paid the compensation. The amount has been credited in the accounts of the farmers,’’ a high-ranking bureaucrat told TOI on Sunday.

According to the bureaucrat, Chavan’s wife owns 2.5 hectares of agriculture land in Bedag village in Sangli. More than 10,000 villages involving 4,000 farmers were affected by the drought. “The relief and rehabilitation department has so far disbursed Rs 1.38 crore; the compensation depends on whether the land is irrigated or not,’’ he said.

The bureaucrat made it clear that Satwasheela Chavan had never made an application, but the amount was credited in her account with the district central cooperative bank as a routine procedure.

Min Kadam accused of bias
Mumbai: The state’s relief and rehabilitation department has credited Rs 3,000 into the account of the ‘droughthit’ wife of the CM. Elaborating on the procedure, the bureaucrat said that when the farmers complained that owing to drought there was an adverse impact on the crops, officials conducted an extensive survey of the entire district as per the laid down procedure. After they confirmed that there was indeed a loss of crop and the yield was less than 50%, a general policy decision was taken to grant financial aid to the aggrieved farmers.

While minister Patangrao Kadam has been generous in granting compensation to Sangli farmers, his department paid a meagre compensation of Rs 70 to a farmer in Selu tehsil of the suicide-prone Wardha in Vidarbha. “We feel when it comes to extending financial aid for farmers, the policy should be impartial. But it seems Kadam is partial and has a soft corner for farmers in western Maharashtra,’’ Kishore Tiwari, a farmers’ leader, said. — Prafulla Marpakwar
Courtesy:
Prafulla Marpakwar TNN
http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=TOIM/2013/11/25&PageLabel=3&EntityId=Ar00306&ViewMode=HTML

EOW struggles with frauds worth 12K cr

Mumbai: A manpower shortage in the city’s Economic Offences Wing has led to slow disposal of hundreds of cases, involving nearly Rs 12,394 crore.

Records with TOI show that from January 1, 2010, to October 2013, the EOW has registered 449 cases, the biggest involving SpeakAsia and the National Spot Exchange Ltd (NSEL).

Most officers are burdened with more than 10 cases each. An officer said, “In each case, we have to record the statements of hundreds of people (especially in the case of ponzi / ‘double your money’ schemes), make seizures, conduct raids and send evidence for forensic audit and analyses. Staff shortage delays investigations.” The fraud amount in the NSEL case alone stands at Rs 5,600 crore, while in the case of SpeakAsia, the police estimate it to be more than Rs 2,276 crore.

Since its inception in 1994, the EOW has registered more than 2,000 cases. But it has only 76 police officers and 174 constables in its 11 units. “Our priority is to help people by disposing of cases so that the culprits can be punished,” an officer said.

SHORT-STAFFED
Economic Offences Wing, with just 76 officers, probing cases involving over 12,000 crore

Most officers burdened with about 10 cases each
They say most cases are long-winding, involving hundreds of people and lack of staff is delaying investigations

EOW units work overtime as court proposal pending
Mumbai: Lamenting the shortage of staff and the battle to dispose of mounting cases in the city Economic Offences Wing, an officer said, “But most often, victims do not come on board and charges are not framed. In 2012, the city police chief had sent a proposal to the state law & judiciary department recommending the setting up of a special court to try EOW cases. But the proposal is still pending.” Last month, a reminder was sent about the recommendation.

Another officer said, “Nowadays, many people have become greedy and fall prey to ponzi schemes. They want their money to double overnight and hence invest randomly. We have found victims who have invested in three to four ‘double your money’ schemes.” Such victims, he said, feel that if they lose money in one scheme, they will recover it from another.

SpeakAsia has more than 24 lakh investors or panelists, but one investigating officer is struggling to file the chargesheet against more than one-anda-half dozen accused. In fact, many EOW units are working overtime. In the case of NSEL, the EOW had to take help from the detection crime branch to raid more than 185 places at a time last month. The team was to raid, videograph and record statements of the accused and seal premises.

HOW PONZI SCHEMES WORK
A fraudulent company floats a scheme. People invest. The money collected is used to reimburse initial investors. As people start getting money, more invest. As money is collected from new investors, commission is paid from their kitty to those who joined earlier. Older investors start showing cheques they received to new and prospective investors, boosting confidence in the scheme. Investors start getting friends and relatives into the scheme. The founders shut shop and flee once a huge amount is collected.

UNDER PROBE FOR FRAUD

• Ravindra & Vasuda Deshmukh | Aryarup Travel and Club Resort | Promised investors 86% returns a year and commission if they roped in others
• Sandeep Shukla | Aurum Realty, Yes Cube Infrastructure, Bristal Builders & Developers | Promised investors 75-100% returns a year
• Masood Ahmed | City Limousine | Promised 50% returns a year
• MMM India | Duped more than 70,000 people of nearly Rs 2,000 crore
• SpeakAsia | Duped investors to the tune of Rs 2,276 crore

Courtesy:
Mateen Hafeez TNN
http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=TOIM/2013/11/25&PageLabel=3&EntityId=Ar00307&ViewMode=HTML

SC bans sale of Sahara assets, bars Roy from going abroad

New Delhi: In a major jolt to the Sahara group, the Supreme Court on Thursday put an interim ban on the business house disposing of any of its properties, including its housing projects across the country, and restrained its boss Subrata Roy and other top officials from going abroad.

    “We are prima facie satisfied that our order dated October 28, 2013, has not been complied with. The Sahara group companies shall not part with their properties,” a bench of Justices K S Radhakrishnan and J S Khehar said.

    On October 28, the court had asked Sahara to submit the original title deeds of its assets worth Rs 20,000 crore and warned that failure to do so would result in orders restraining Roy and others from undertaking foreign travel. The court had asked for the title deeds as it had found that two Sahara companies, which were on August 31 last year directed to refund Rs 24,000 crore they had collected from investors in an irregular manner, had used every possible trick to avoid compliance.

    The Sahara firms had paid up Rs 5,120 crore and said the total outstanding after that stood at only Rs 2,000-odd crore, the rest having already been paid back to the investors through field offices.

Can’t go by potential worth of plot: SC to Sahara
New Delhi: The Supreme Court, which has banned the Sahara group from selling its properties, had issued notices to two Sahara companies and the group’s boss Subrata Roy on a contempt petition filed by Sebi over the firms’ failure to refund Rs 24,000 crore collected from investors. While Sahara firms said the outstanding was only about Rs 2,000 crore, Sebi contested the claim and said the companies were not furnishing receipts for refunds they claimed to have made through their field offices.

    During the hearing, senior advocate C A Sundaram told the bench that Sahara had given title deeds of two plots in Mumbai, one of which was a 106-acre parcel at Versova which was independently evaluated to be worth more than Rs 19,000 crore. But Sebi pointed out that the land value was calculated on the basis of its potential worth in 2020 when Sahara would build villas, golf courses and houses on the land. “The government record shows it is valued at Rs 108 crore. This was mainly because it had been declared a no-development zone,” senior advocate Arvind Datar argued for Sebi.

    Though Sundaram tried to explain that the government had allowed development on the land, the bench said it was not going to be taken in by the potential worth of a plot at a future date. When it passed the order restraining the entire group from selling any of its properties, Sundaram said, “I did not understand. Is it because there is some problem with the title deed submitted by the Saharas?”

    The bench said, “It is important for the Saharas to understand that till they comply with the (October 28) orders, they will not be heard. First comply with the orders. We will hear the contempt petition (by Sebi) later. We are restraining the entire group from alienating any immoveable property.” The court has posted the matter for further hearing on December 11 and said Sahara could seek vacation of the interim order once it complies with the October 28 order in letter and spirit.

‘LAND VALUE INFLATED’

• On Oct 28, SC asked Sahara to submit original title deeds of its assets worth 20,000 cr
• Two Sahara companies were told on Aug 31 last year to refund 24,000 crore irregularly collected from investors
• Sahara firms paid up 5,120 crore and said only 2,000-odd cr dues remained. Sebi contested the claim
• On Thursday, SC told Sahara gave title deeds of only two Mumbai plots; Sebi said land value of one was its potential worth in 2020 once a golf course, villas and houses were in place

Courtesy:
TIMES NEWS NETWORK
http://epaper.timesofindia.com/Default/Client.asp?Daily=TOIM&showST=true&login=default&pub=TOI&Enter=true&Skin=TOINEW

SC bars asset sale by Sahara, grounds Roy

Group's attempt to pass off green-zone land as Rs 19k-cr property displeases court

The Supreme Court on Thursday came down heavily on the Sahara group after it found that the group had not satisfactorily complied with the court’s October order to submit title deeds of properties worth over Rs 20,000 crore. The court imposed restrictions on the entire group from selling any immoveable or moveable property and barred its promoter Subrata Roy Sahara from leaving the country.

The order was passed in a contempt case filed by Securities and Exchange Board of India (Sebi) against two group companies Sahara India real Estate and Sahara Housing Invest, which allegedly have not complied with the Supreme Court’s August 2012 order to refund Rs 24,029 crore they raised by issuing optionally fully convertible debentures(OFCD). Sahara, which paid Rs 5,120 crore to Sebi, claims it has refunded the rest directly to investors.

The court adjourned the contempt proceedings to December 11.

Last month, the apex court had directed the group to file original title deeds of properties worth Rs 20,000 crore to cover its dues.  It emerged that there were several flaws in the documents filed by the group. 

“They have not complied with the order. They also know it. Everybody knows it,” Judge KS Radhakrishnan said after hearing the explanation of Sahara counsel CA Sundaram and Sebi’s counter arguments.

When Sundaram pleaded with the court to clarify which part of the order they have not complied with, Radhakrishnan said “This property is not worth Rs 19,000 crore.”

Judge JS Khehar told Sundaram, “It is not for you to understand. It is for Sahara to understand.”

Earlier, Sundaram had presented a detailed explanation of a valuation report of the 106-acre property in Versova done by Knight Frank. He presented an additional clarificatory report from the valuer explaining the methodology of valuation. He also presented an additional report by a second valuer.

Both entities had put the valuation of the property between Rs 18,800 crore – Rs 19,300 crore under internationally accepted valuation methods such as market approach method and income method.

The Sahara counsel also presented an additional clarificatory report from Knight Frank addressing certain objections raised by Sebi on Wednesday. He said the property was located in close to the upmarket Andheri-Lokhandwala complex in Mumbai and was within a kilometre’s distance from the proposed Metro terminus in Versova. The property also was said to enjoy a premium for its sea-view, being located between a river and the sea.

He said, quoting the valuers, that a residential complex developed by Oberoi just opposite the plot was selling flats at rates of Rs 36,000 per square feet. Windsor, another developer in the vicinity, was selling at Rs 30,000 to rs 35000 per square feet.

The valuers assumed an average rate of between Rs 27,000 to Rs 37,000 per square feet. This translated into a value of Rs 181-190 crore per acre, which in turn put the value of the entire plot.

But, all these arguments came to a naught, when Arvind Datar, the Sebi counsel pointed out that the entire property was situated in the middle of a “no-development zone” and that there was a clear direction by the Union Ministry of Environment and Forests barring any development. “It is in the green zone. Nothing can be built on it. The FSI allowed is 0.5 and that is why there was a plan to develop a golf course.”

Datar also pointed out that the land was part of a larger disputed area of 614 acres and Sahara has been engaged in legal disputes with the original owners B Jeejeebhoy Wakaria and associates since 2001.

Datar pointed out that the court direction was to submit “title deeds” and not reports of investment value. He submitted in view of the facts submitted that this property could not be considered worth more than Rs 118 crore. 

Sundaram pointed that there was a notification issued by Maharashtra government in December 2012 allowing development of townships alongside transport corridor and this would allow Sahara to develop the township. But, neither Sebi nor the court was convinced. 
Courtesy:
BS Reporter  |  New Delhi
November 22, 2013 Last Updated at 00:59 IST
http://www.business-standard.com/article/current-affairs/sc-bars-asset-sale-by-sahara-grounds-roy-113112100679_1.html

Scam Of NSEL : Living Dangerously

Despite the National Spot Exchange (NSEL) scam running into a whopping Rs 5,600 crore, and its details out in the open, the authorities seem reluctant to act. While arrests have been made in all major scams - from Hawala to 2G to Coalgate - Jignesh Shah, the alleged kingpin behind the multi-crore NSEL scam, continues to roam freely. After the gfiles story in June 2013, NSEL operations were halted. But investigations began only after the gfiles cover story in September 2013. Still, Jignesh Shah roams scot-free. Sources disclose that Shah has engaged some of the best lawyers in the country to pre-empt any government move to arrest him. Is the law for scamsters or for exposing the truth? Neeraj Mahajan analyses the scam and brings the latest updates on the developments taking place in the law enforcement agencies and the Ministry of Consumer Affairs.

THERE is a saying in Gujarati that if your mother is serving and even if you are way behind in the queue – the least you can expect is an extra ladoo (sweets) in your plate. This explains why both Jignesh Shah and Ketan Parekh are managing to hoodwink the law even after committing grave financial crimes. Unlike Harshad Mehta, Hasan Ali and A R Telgi, Shah and Parekh have managed to evade the law because of their political connections.

“NSEL fraud makes the Harshad Mehta scam look like child’s play. Mehta, at best, cheated a few banks, while NSEL has eroded the confidence of the entire nation in electronic commodity or stock exchange platforms,” quipped a commodity broker.

Jignesh Shah managed to retain his position by convincing the MCX board to allow him to stay on for some time? Till the last minute, it was expected that Shah would step down owning moral responsibility for all that has happened. But, till date, there is no sign of Shah’s arrest or ban on the unlawful trading activities in La Fin, FTIL, MCX, MCX-SX, NSEL and other companies in his group. So far, only those who owe him money or those to whom he owes money seem to be feeling the heat of the investigations. The only aberration to this rule has been how Shah, Joseph Massey (MD MCX-SX) and Shreekant Javalgekar (MD MCX) were forced to resign from the board of MCX-SX a fortnight ago.

Frankly, would you call a person or company that has been accused of being ‘dishonest’, involved in insider trading, making false claims, holding unproven deposits in client account, unaccounted brokerage income, unexplained cash and jewellery, ’fit and proper’ to run commodity or equity exchanges?

Looking at it purely from a management or governance perspective, does the promoter, who appoints people to run his company, have no responsibility towards the stakeholders that he took the right decision by selecting and monitoring the right people? Similarly, what would you call a company whose Managing Director, Assistant Vice-President, Business Development, and Assistant Vice-President, Warehousing, are cooling their heels behind bars for allegedly defrauding some 13,000 investors?

PRELIMINARY investigations by the Income Tax authorities seem to suggest severe lapses, mismanagement, cheating, criminal breach of trust, conspiracy and forgery at NSEL. It was not functioning as a spot exchange as it was supposed to be. “If the NSEL management and Board of Directors say that they failed to see piles of bounced cheque and forged warehouse receipt right on top of their table, they are either incompetent or impractical,” says a broker.

A few other instances of misdemeanours of the company are: NSEL was offering future contracts, even though spot exchanges are not supposed to do so. The FTIL software, being used at its own exchanges, has been found to be rigged. NSEL seemed to be making false claims about highest safety with 100 per cent stock collateral, 10-20 per cent margin money and post-dated cheques. These were empty promises. NSEL was making false claims about holding licenses to operate in nine States, including Maharashtra. The fact is that Maharashtra Agriculture Department cancelled NSEL’s direct marketing license on December 26, 2012.

What else do you call a company that announced a payout plan on August 14, but was unable to stick to schedule even once and defaulted on payment schedule ten times in a row. That’s when NSEL holds over 90 per cent market share of National Bulk Handling Corp Ltd, which runs the nation’s largest warehousing facilities. A handful or tradeers inside NSEL were cornering all the paired contracts. They were just paying the difference in prices between the spot and futures contract for the same commodity. According to an FTIL official, who resigned in 2005, the mandatory margin money was not being collected from all those using the MCX and NSEL platforms. Apart from this, positions of some of the investors were being revealed to others, giving them an unfair business advantage. This has been corroborated by the fact that Anjani Sinha’s wife, Shalini Sinha’s company, SNP Designs, was allowed to trade worth Rs 40,000 crore on MCX without paying any margin. The heavy losses were written off. Apparently, SNP also had business relations with Mohan India, one of NSEL’s largest debtors.

SO far as the High Networth Individual (HNI) investors are concerned, the moot question is: are they as sinned against as they claim? Why did they take advantage of the corrupt system till the going was good, and are complaining now when they lost money?

“They were using NSEL as a private club. HNI investors all along knew what they were getting into when they started trading in these unregulated exchanges. If the exchange was functioning without the oversight of an independent board of directors, the brokers were party to it. Why are they complaining now?” asks Shriram Subramanian, MD, InGovern, a corporate governance research firm.

Another big question is what happens to the money. The NSEL Investor’s Forum officials say that they are working with the Economic Offences Wing (EOW) and others to recover the money. They are sadly mistaken if they think that the EOW and the Income Tax authority’s job is to recover money at their behest and hand it to them. First, in a white collar crime, money recovered becomes the case property which needs to be produced as evidence. It cannot be handed over, even to the rightful owner, till the case is finally disposed off or the court orders to do so. Second, criminal investigation wing of the Mumbai Income Tax department is asking investors to produce evidence about the source of their funds and whether they paid tax on the income from commodity trading. Some of the other details being sought are about brokerage and commissions’ transactions for investments in the spot exchange. This is proving to be a booby trap, as failure to provide the details sought can lead to fine of up to Rs 10,000 under Section 272 (1) (c) of the I-T Act.

“Law enforcement agencies are not recovery agents to recover money from defaulters of defaulters. Tomorrow, if Dawood gives you a list of people who owe money to him, you may not allow him to go free till the last of his borrowers has paid him his due. Jignesh Shah too should not be allowed to go free. You are setting a wrong precedent,” said a senior Delhi Police officer.

Significantly, this is not the first time FTIL promoters or employees have been accused of serious penal offenses. Immediately after MCX became the first exchange in India to initiate evening sessions to coincide trading with Tokyo, Shanghai, London, New York exchanges, the Central Board of Excise and Customs (CBEC) issued a notice under section 15 of the central Excise Act, 1944. The case is still pending. This apart, as many as three criminal cases are pending against Joseph Massey and one against C Subramaniam, one of the longest serving Non-Executive Director and shareholder of FTIL, who initially promoted a company called Worldwide Technologies. The company’s latter avatar is today called Financial Technologies.

Anil Lal Chetta filed a criminal case (No. 1909/02) against Subhash Dalal (Director) and Joseph Massey (Executive Director), Vadodara Stock Exchange, for illegally declaring him “defaulter” and auctioning his membership. The case is pending before the Chief Judicial Magistrate in Vadodara.

In another case, the Government Labour Officer, Vadodara, filed a criminal case (No. 1831/97) against Joseph Massey and Vadodara Stock Exchange for noncompliance of Minimum Wages Act and non-filing of annual returns. This case is also pending before the Judicial Magistrate, First Class, Vadodara.

Similarly, Harish Chand Jain filed a criminal case (No. 1288/2003), alleging that Joseph Massey, the then Managing Director of the Inter-connected Stock Exchange of India, and other officials were refusing to refund the admission fees and connectivity charges paid by him at the time of membership. This case is pending before the Chief Judicial Magistrate, Agra.

In yet another instance, the CBI reportedly filed a criminal case against C Subramaniam (No. 16/2001) under the negotiable Instruments Act, 1871, for attempting to defraud Central Bank of India, Janpath branch. The case is being considered by the CBI Special Court, Tis Hazari, New Delhi.

Apparently, one of the reasons why Shah has not been touched so far is reportedly because of an understanding between the Congress at the Centre and Sharad Pawar’s Nationalist Congress Party (NCP) in Maharashtra.

“Someone close to Pawar is believed to have invested lot of money in Jignesh Shah’s company, which he suddenly withdrew and this may be the reason why MCX’s settlement guarantee fund suddenly shrunk in size,” sources said.

So far as the High Networth Individual (HNI) investors are concerned, the moot question is: are they as sinned against as they claim? Why did they take advantage of the corrupt system till the going was good, and are complaining now when they lost money?

ANOTHER twist in the tale is how former MD and CEO of NSEL Anjani Sinha denied the August 14 affidavit and claimed to have “filed it under duress.” Sinha is now saying that he was made to sign the old affidavit by the NSEL board, in the office of the exchange.

This seems to coincide with the version of former NSEL Assistant Vice-President, Business Development, Amit Mukherjee’s claim that he and others were made scapegoats to save Shah and other “influential people” who were involved. Both Mukherjee and Jai Bahukhandi are in police custody and have agreed to become prosecution witnesses.

Meanwhile, the EOW arrested Nilesh Patel, the son-inlaw of Shankarlal Guru, who resigned as the chairman of NSEL. Patel is the managing director of NK Proteins Limited, the biggest of the 24 borrowers of National Spot Exchange Ltd (NSEL). Patel’s company allegedly raised funds from NSEL on the pretext of a castor seed contract, without depositing any collateral in the warehouses. This money was allegedly siphoned off to fund a joint venture for export of castor oil with a Gujarat-based industrial house. NK Proteins, which owes around Rs 930 crore to NSEL, apparently had no intensions of returning the money, sources said.

Meanwhile, enquiries by the Forward Markets Commission (FMC) have revealed over 2,000 instances of mismanagement in the exchange over the past few years. This is bad news for Shah, whose name figures among the key management personnel of the spot exchange between FY06 and FY12 and was only dropped in 2012-13. He was the key management personnel in 2009 when the decision was taken to go ahead with “paired contracts”—against the rules for spot exchanges was taken. Interestingly, this list kept shrinking every year and Anjani Sinha was the only person in the list in 2012-13. It is reliably learnt that in 2007 some highly placed IRS officers observed instances of bungling in the Jignesh Shah empire.

Based on their tip-off, an Income Tax ’search and seizure’ operation was conducted on Shah, FTIL, MCX, their other directors and brokers on June 19, 2007.

FOLLOWING the raid, MS Sahoo, the then Director (Securities) in the Finance Ministry, wrote a confidential DO to MS Roy, ED of SEBI, enclosing documents received from the Central Board of Direct Taxes. “Though the above documents do not provide final findings, these provide adequate basis to conclude prima facie that Financial Technologies, MCX and Jignesh Shah are not fit and proper to acquire shares in stock exchanges.” He was referring to a bid by Shah to acquire 5 per cent stake in the Delhi and Vadodara stock exchanges.

“Sebi is advised to defer any proposal to acquire shares in stock exchanges by these entities, until CBDT issues a show cause notice to them or clears them of any tax liability,” he advised further

Strangely, one of the annexures in Sahoo’s note was a letter dated from SSN Moorthy, Director-General Income Tax (Investigation), addressed to the Member Investigation, Central Board of Direct Taxes, giving details of the amount or assets seized from FTIL, C Subramanium (Director, FTIL), Reymount Commodities (commodity broker), AM Futures (commodity broker) and RJ Commodities (commodity broker).

Curiously, SEBI chief general manager D Ravikumar, while overruling Sahoo’s concerns, wrote, “initiation of an enquiry may not by itself disqualify the concerned entity from being considered as fit and proper, especially when the outcome of such an enquiry is not known”.

According to reliable sources, the 2007 income tax raid itself was stage-managed. The main purpose of the raid was not to recover money and assets, but to trouble Shah enough to make him arrive at an unofficial settlement. One of the officers behind the raid is an informal ‘economic trouble-shooter’ for Shah while another is holding an important post in SEBI today, sources said.

Based on a tip-off, an Income Tax ’search and seizure’ operation was conducted on Shah, FTIL, MCX, their other directors and broker

Though the raid was targeted on FTIL, MCX and Shah, no undisclosed income was claimed to be recovered from them. Only Rs 1 crore was claimed to be seized from FTIL and Rs 1.15 crore from C Subramanium, in addition to Rs 17 lakh from AM Futures and Rs 38 lakh from RJ Commodities.

On its part, FTIL was charged with withdrawing a bogus claim of Rs 18 crore in depreciation, while Reymount Commodities, owned by a Dubaibased NRI businessman, was accused of accepting unproven cash deposits of Rs 15 crore from 856 people across the country whose “identity and creditworthiness” could not be proved.

Interestingly, one of the entities under the income tax scanner in 2007 was also found to be involved in the Kochi IPL fiasco. But Reymount Commodities, having its registered office in Chennai and another office opposite the Police Commissioner’s Office in Pune, deserves a special mention. Though the company, promoted by Muhammed Abdul Kareem Faisal PV, PV Shamusudeen and K Satya Prasad, was suspended on July 7, 2007, “for various violations/ irregularities”, its website still claims to be “a prime member in MCX India”. According to sources in the Intelligence Bureau, the company is allegedly involved in helping banned Islamic terrorist outfits like SIMI and Indian Mujahideen to regroup and form a combined base in Kerala. With such dubious friends and associates, Shah can be anything but fit and proper.

But the issue is, who will pierce the corporate veil. Technically, though FTIL holds almost 100 per cent in NSEL, both are different companies and the promoters of NSEL and FTIL are common. But, since the promoters are common, they should at least be held accountable for their lapses. g
Courtesy:
Neeraj Mahajan 
http://www.gfilesindia.com/frmArticleDetails.aspx?id=800&Name=Living%20Dangerously

EXPOSE : Land Deals In Haryana : Where land sharks rule

The nexus between politicians and builders in Gurgaon is responsible for largescale loot of public resources in the millennium city

AMIT Jain, Director-General of Federation of Apartment Owners Association (FAOA), frequently draws a parallel between Gurgaon, the millennium city abutting South Delhi, and Mandwa, a hamlet near Mumbai made famous by Hindi film titled Agneepath. While in Mandwa, Jain points out, criminals multiplied their income through smuggling of narcotics, in Gurgaon, builders and developers do it through shady property deals.

Jain would know. The FAOA, a group of 35 apartment owners associations from different parts of the country fighting against builders for upholding interests of apartment residents, gets 24 of its enrolments from Gurgaon alone. The Federation has taken over some 20 cases from apartment associations against the builders. Out of these, half a dozen are against DLF Ltd, arguably the largest commercial estate company in the country. In a case pertaining to Silver Oak, the first apartment developed by DLF, the FAOA is awaiting an order from the Supreme Court. Jain accuses the Haryana Government of partnering with DLF and other builders to rip off every ounce of public resources in Gurgaon. “It’s not collision. It’s a partnership. The system is run by politicians and builders together,” Jain alleges.

Surprisingly, despite having a booming market where prices have multiplied several times in the last decade or so, the Haryana Government, according to Jain, has kept the circle rate ridiculously low and allowed people to park their black money in the city.

Jain’s accusation finds an echo in statement of Raman Sharma, President of the Progressive Gurgaon Forum (PGF), an umbrella body of around 68 Resident Welfare Associations (RWAs). “The Town and Country Planning Department (TC&P) is there to benefit the builders,” he says. The Forum has filed close to 200 complaints against the builders and the department in the last four years. The department is spearheaded by a Director-General and represented by a Senior Town Planner in Gurgaon. Sharma also has five complaints pending before the Lokayukta, the anti-corruption ombudsman in Haryana.

Sharma has accused the builder of encroaching his residential society, Malibu Towne in Sector 47, on open space (common area). “The builder has constructed a telephone exchange and raised electric infrastructure and other things on 15 acres. The market value of this land is around Rs 375 crore (Rs 25 per acre),” he claims. The Malibu Towne builder has not handed over the common area to HUDA (Haryana Urban Development Authority) even nine years after the launch of the residential society, though the Haryana Development and Regulation of Urban Areas Act, 1975, stipulates that the builder should transfer the project to HUDA within seven years after the launch.

In fact, the most shocking part is that none of the over 920 licensees, who have been granted licenses by the TC&P Department till October 11, 2013, in Gurgaon, have transferred their projects to HUDA for maintenance. HUDA, headed by a Chief Administrator in Chandigarh and an Administrator in Gurgaon, has also done nothing to take over these projects. Sharma charges Gurgaon builders with not doing enough to provide proper roads, treated water, sewerage, solar water heating and community centre, etc., to their residents.

Sharma puts the quantum of scam on account of construction in common area and its non-transfer to the local agency by the builders at Rs 1,80,000 crore. But, the total property scam could run into much more—according to experts in Gurgaon’s estate market, it could be anything between Rs 4,00,000 crore to Rs 5,00,000 crore in the last nine years alone, if one were add up CLU (Change of Land Use) certificates the government grants to the builders and developers to the non-transfer of common area to the HUDA.

Despite having a booming market where prices have multiplied several times in last decade or so, the Haryana Government, it is alleged, has kept the circle rate ridiculously low and allowed people to park their black money in the city collects Rs 2 crore underhand for CLU for every acre of land. The CLU apparently allows influential people like Sonia Gandhi’s son-in-law Robert Vadra to become ultra-rich overnight.

Congress MP and Hooda’s bête noire Rao Inderjit Singh has demanded a probe into licensing of 21,000 acres of land by the State Government in first eight years of its tenure. Hooda, in turn, has pointed out that his government even granted license to a collaboration between Inderjit and Unitech for development of a colony on 83 acres of land, under the ‘small farmer’ norm.

THERE are strong indicators of the Haryana Government’s complicity with the builders in Gurgaon. For one, the Government has till date never punished a builder for violations of the 1975 Act. It has never moved beyond cancellation of license and invoked Section 10 of the Act, which prescribes maximum of three-year jail and fine to an offender. It also has not invoked Section 11B of the Act, which empowers the police to arrest such an offender. On the contrary, the cancellation of license is invariably revoked after some time, allowing the builder to go scot-free and resell his plots/flats at a much higher rate.

A befitting example of the government’s soft and one-step-forwardtwo- step-backward approach is Mayfield Garden, a 327-acre township developed by five builders near a star hotel in Gurgaon. On February 4, 2012, DG TC&P T C Gupta cancelled all 26 licenses of the five builders and put an embargo on further sale of plots after his Senior Town Planner confirmed that some of the roads were in ‘worst condition’ and the builders were yet to construct community building. In addition, the builders had raised a commercial market in a place earmarked for a dispensary in the approved layout plan. The cancellation was revoked on September 5, 2012, after the developers gave it in writing that they would lay water lines, carpet the roads and provide sewerage and parks.

The internal development was to be done within six months (before March 5, 2013). But none of this has happened. In the meantime, the Haryana Lokayukta has issued notice to Gupta, on a complaint filed by Sheetal Residents Welfare Association, alleging Gupta’s complicity with the developers. Dharambir Yadav, President, Sheetal Residents Association, has alleged that Gupta “knowingly and intentionally favoured the licensee companies for not prosecuting the developers for cognizable offences, committed by them in construction of illegal independent floors by dividing the plots vertically, in contravention of prescribed rules and has failed to recover the public money on account of regularisation fee of illegal independent floors”. Gupta has denied the allegation and claimed to have initiated action against the colonisers.

Jain cites Kunskapsskolan Eduventures Limited, a school offering K12 education based on KED programme for Indian and International students, as another example of builder-government complicity in Gurgaon. The school began its first session earlier this year. DLF gifted five acres of land, earmarked for 80 plots and a park, to the school in April 2009, much to the dismay of resident welfare associations.

JAIN raises questions on the functioning of the judiciary on the basis of cases pending against builders in the Supreme Court, and what the Punjab & Haryana High Court did in January this year on the petition of residents of DLF Phase I against the Kunskapsskolan School. The High Court allowed the petitioners to withdraw their plea, though the latter claim to have never asked for it!

Since 1981, when the TC&P gave the first license to DLF to develop a high-rise apartment building, less than half-a-dozen licenses, out of over 924 licenses approved, have been cancelled in Gurgaon. But not a single builder or developer has had to face prosecution or arrest as stipulated in Section 10 and Section 11 B of the Haryana Development and Regulation of Urban Areas Act, 1975. “Why does the department not invoke Section 10?” asks an intrigued Dharambir Yadav.

On September 13, 2013, DG, TC&P, Haryana, withdrew approval of demarcation-cum-zoning plans of the licensee, Countrywide Promoters Private Limited, for developing a residential colony over 108.069 acres in Sector 102 and Sector 102-A, after it observed that the licensee had not cleared EDC (External Development Charges), amounting to over Rs 73 crore. The department directed the licensee to stop all development work at the site. But a visit by gfiles saw the development work still going on.

Another evidence of governmentbuilder nexus in Gurgaon was a memo issued by the TC&P on September 15, 2008. “The license application of only those registered cooperative house building societies will be considered for grant of license, who have a collaboration with the builders/devel- opers having the financial capacity to undertake the development and technical expertise in development of residential colonies,” the memo reads. It was clearly aimed at forcing cooperative societies to enrol builders into their projects. The move considerably increased the societies’ budget, defeating the very purpose of floating a cooperative society.

THE number of licenses granted has been highest in 2008 (150 out of 210 given for different projects in Gurgaon) till date. Is it a mere coincidence that this was a few months before the State went to polls?

It is apparent that Hooda has used select bureaucrats to dole out land largesse to builders in Gurgaon and silence voices of dissent like that of Ashok Khemka, whistleblower IAS, who exposed Vadra’s land deal earlier this year. Is it just a coincidence that Sudeep Singh Dhillon, currently Principal Secretary to Haryana Chief Minister and former Principal Secretary, TC&P, and TC Gupta, currently Principal Secretary in Food & Supplies Department and former head of TC&P, have been in the forefront of taking on Khemka on behalf of the State Government? Gupta was held guilty of contempt of court last year by the Punjab & Haryana High Court for giving licenses to builders in contravention of a HC order.

There are also allegations that Gupta has been involved in amassing property. In fact, there are many officers in the HUDA and the TC&P who face charges of graft. These include several Haryana Civil Service officers and engineers. Both the departments report to the Financial Commissioner and the Principal Secretary. While the TC&P is responsible for issuing licenses and mutation of land for development of residential colonies, institutions, commercial structures and recreational avenues, etc., HUDA is supposed to provide infrastructure.

HUDA Administrator in Gurgaon, Praveen Kumar, has himself been under a cloud since Khemka alleged in a report that the former’s mother Krishna Kanta, who hails from Hooda’s native village Sanghi, got a prime piece of usurped land in Faridabad when her son was Deputy Commissioner in Faridabad. Kumar refutes the allegation. But his zeal to demolish illegal structures and improve infrastructure in Gurgaon has definitely proved to be a false starter. One example is that a part of the land freed from encroachments by him in DLF Phase V is being looked after by a top developer now. Estate experts believe that it is just a matter of time before the developer gets a license to build an apartment or commercial structure there. g

BOX
Some observers put the quantum of scam on account of construction in common area and its nontransfer to the local agency by the builders at Rs 1,80,000 crore. But, the total property scam could run into much more.
Courtesy:
By Narendra Kaushik
http://www.gfilesindia.com/frmArticleDetails.aspx?id=801&Name=Where%20land%20sharks%20rule

2G scam accused cite HC order, want trial stayed

Continuance of trial would mean contempt of court: Raja
New Delhi: Former telecom minister A Raja and other accused in the 2G scam on Friday pushed for a stay on the proceedings of the case in a Delhi court in the wake of the ruling of the Gauhati High Court holding as “unconstitutional” the setting up of the CBI.

In a related development, Congress leader Sajjan Kumar wanted the court to declare as “illegal” the probe and charge sheets filed by the CBI in a 1984 anti Sikh riots case against him in the wake of the High Court verdict.

Raja and other 2G accused including top corporate executives said continuance of the trial in the case which has been probed by CBI would amount to contempt of court.

“Before we proceed today I want to mention that the nation today woke up with banner headlines in newspapers that the CBI is not police.

“By coincidence the chief Investigating Officer happens to be in the court today and in view of the Gauhati High Court judgment, we should not proceed with the proceedings otherwise it would be a contempt of court,” Majeed Memom, appearing for accused Swan Telecom Promoter Vinod Goenka, told the court. “Sir, I can show you the judgment here,” Raja’s counsel Manu Sharmahe told Special CBI Judge O P Saini who declined their oral plea to halt the trial and went on with the testimony of Chief Investigating Officer and CBI SP Vivek Priyadarshi. “I have read the newspaper but I cannot go by the media reports,” the judge said.

At the end of the day, the defence lawyers placed before the court judgement of the high court and said they will move a formal application in this regard in the court on Monday.

In its judgement, the High Court has struck down the 1963 resolution through which the Central Bureau Investigation (CBI) was set up and held all its actions “unconstitutional”.
The Centre has decided to file an appeal in the Supreme Court against the High Court verdict.

Kumar’s counsel mentioned the judgement before District Judge J R Aryan and said if CBI itself is unconstitutional, its probe and charge sheets are also illegal. The judge, however, said the effect of this judgement is not clear at this stage as it is too early and asked the counsel to proceed with the case which will now come up for hearing on November.

The court had earlier framed various charges including murder and rioting against Kumar, Brahmanand Gupta, Peru, Khushal Singh and Ved Prakash in connection with killing of a man in Sultanpuri area in the riots. —PTI
Courtesy:
Published Date:  Nov 09, 2013
http://epaper.dnaindia.com/story.aspx?id=54883&boxid=33942&ed_date=2013-11-09&ed_code=820009&ed_page=10