SHCIL vs SSL

The dilution of SHCIL8217;s shareholding in SSL began by allowing a private company called Nilanchal Capital to infuse Rs 15 lakh into the company. The shares allotted to Nilanchal were subsequently transferred to several individuals. This was done under the false pretext that the National Stock Exchange NSE required 51 per cent of the shareholding to be held by individuals when, in fact, SSL is a broker on the Bombay Stock Exchange BSE, which has no such rule. Jayaraman and Ramanathan, through systematic 8220;abuse of power8221;, used the foreign direct investment FDI route to allot shares to Singapore-based entities in a 8220;clandestine and surreptitious8221; manner. This marginalised SHCIL8217;s control, but it wasn8217;t evident because there was no overt change in management. The petition raises some doubts about the antecedents of foreign shareholders who were 8220;fraudulently8221; allotted shares 8212; we reported this several weeks ago. SSL also acquired Unitec Value Solutions Pte, a Singapore-based company which is 8220;being clandestinely used as a conduit for fraudulent activities8221;. We had earlier reported that a Singapore-based entity called E-ventures Capital Pte holds a substantial 33 per cent stake in SSL; the petition provides additional information and says that E-ventures also holds 18,86,250, 7 per cent non-cumulative convertible preference shares in SSL. Together this will give it virtual control over SSL. Interestingly, some government investigation agencies already have evidence about the suspect background of E-ventures.

Crimson Logic

When SHCIL bagged the prestigious e-stamping contract, it hired Crimson Logic, a well-known Singapore-based company, as the technology vendor. At that stage, Jayaraman Iyer 8220;defrauded8221; SHCIL by splitting the contract with Crimson Logic and unnecessarily routing it through SSL and its 100 per cent subsidiary Unitec Value Solutions. So SHCIL signed an agreement with Unitech and Unitech, in turn, signed the technology agreement with Crimson Logic. SHCIL8217;s petition says that Crimson Logic was originally to be paid 5million, but this was doubled to 10 million while splitting the contract and a hefty royalty of 4 per cent was additionally charged on SHCIL8217;s net revenue. The petition calls the dealings a 8220;clandestine conspiracy to transfer funds out of India8221; in foreign exchange to the benefit of a few individuals. If all this weren8217;t bad enough, the petition says that R Jayaraman Iyer received a monthly remuneration from SSL without informing the SHCIL board, where he was CMD. Simultaneously, he made Ramanathan CEO of SSL an advisor and later sr vice-president of SHCIL, ensuring complete control over both entities and obfuscating their activities. The petition openly alleges that Jayaraman and Ramanathan probably had other sources of income that need to be investigated. Finally, it charges what we have already disclosed earlier 8212; that SHCIL8217;s infrastructure was being utilised by SSL with impunity and without appropriate compensation and causing losses to the parent entity. The brazenness of SHCIL8217;s CMD in defrauding a public sector company under his management is probably unparalleled in recent decades. The fact that Iyer and Ramanathan were extremely close to the Sebi brass arguably provided them additional credibility. KPMG has now been assigned the task of unraveling all their dubious contractual arrangements, quantifying the loss to SHCIL and checking the antecedents of all entities who were allotted SSL shares.

Gelli scores

Chairman Ramesh Gelli8217;s indiscriminate loans to Ketan Parekh and his bunch of crony industrialists were large and reckless enough to destroy Global Trust Bank GTB during the scam of 2000. A shotgun marriage with Oriental Bank of Commerce OBC, arranged by the regulator, salvaged depositors8217; money. Last week we learnt how Ramesh Gelli8217;s bold but risky bet on Bangalore-based Avesthagen fetched handsome to OBC. Several years ago, Gelli gave a Rs2 crore loan to Villoo Morawala-Patell without any collateral to get her started. Later, when she got venture funding, the loan was converted into equity. Recently, Morawala-Patell bought back the shares in the still unlisted Avesthagen at a hefty Rs 475, netting Rs 14 crore for OBC.