Author: Jeemon Jacob
Publication: Tehelka
Date: January 1, 2011
URL: http://tehelka.com/story_main48.asp?filename=Ne010111Coverstory.asp
DMK chief M Karunanidhi seems to have been
in the dark as A Raja and his coterie built a huge business empire. JEEMON
JACOB unearths exclusive and mind-boggling details
AS THE 2G spectrum scam unfolded, senior DMK
leaders were in for a shock. Till the raids by the Central Bureau of Investigation
(CBI), they believed that Andimuthu Raja's actions as Union telecom minister
were dictated by his master, DMK supremo and Tamil Nadu Chief Minister M Karunanidhi,
and that the protege was merely taking his 'commission', a well-understood
practice in politics and business - and in the business of politics. But now
they know Raja was aggressively building a parallel business empire that would
have rivalled the K-family's if he had continued in power. Which is ironic,
for when Raja was preferred over family member Dayanidhi Maran for the telecom
minister's post, it was because he was considered so loyal that he could never
be a threat.
No wonder, right from May 2010, when both
Houses of Parliament were rocked by demands for Raja's resignation over the
2G scam, Karunanidhi backed him, saying detractors were opposed to him because
he is a Dalit. But after the December raids and subsequent disclosures, the
DMK chief ended up saying that Raja would be punished if he was found guilty.
If Raja wants to uplift downtrodden Dalits,
a pious declaration he makes from time to time, his starting point is clearly
his own family. Raja has a wife, three brothers and four sisters, and a proportionate
number of nephews and nieces, all of whom provided names and faces for expanding
the diversified conglomerate. His only daughter is still too young, but his
relatives, friends and old associates have all been roped in to run the business
empire.
Raja's modus operandi, say CBI sources, was
not very sophisticated: he did what film folk do, floating companies in different
names and channelling funds to them via two or three other front companies.
He ran this empire through proxy and to ensure that the directors didn't take
their roles too seriously, he apparently asked them to give him advance undated
resignations.
As the CBI puts the jigsaw puzzle together,
it finds Raja had set up front companies well before the spectrum allocation:
a mix of hawala channels, realty firms, NGOs, family trusts and export firms
ensuring safe passage for the spoils of politics. For this, he established
contact with NRIs, audit firms in Malaysia and local companies in Chennai,
Perambalur, Trichy, and Coimbatore. With easy money flowing in, many became
millionaires overnight.
One such man was Sadiq Batcha, who heads several
real estate firms in Chennai. Twenty years ago, he was a salesman in Pallapatti
village in Salem district, knocking at doors to sell sarees on 10 instalments.
Later, he sold radios and tape recorders. Unable to make ends meet, he migrated
to Perambalur, where he met AIADMK's Varathur Arunachalam. This was his stroke
of luck, his key to fame and fortune. Arunachalam introduced him to Raja,
a small-time DMK politician. Both were ambitious and ready to take risks.
It was Raja who told him to venture into real estate. With small investments
on both sides, they grew together. Today Batcha's real estate empire is worth
more than Rs. 2,000 crore.
Batcha floated companies one after another
with Raja's close relatives on the board of directors. Chennai-based Green
House Promoters, a private limited company set up in 2004 with a seed capital
of Rs. 1 lakh, grew exponentially to record a turnover of several hundred
crores in a short span. It opened an office in Singapore in 2006. Raja's wife
Parameshwari joined the board in 2007. The Enforcement Directorate issued
a notice to the company for Foreign Exchange Management Act violations and
the Singapore office was shut down in 2009.
It was clear from the transactions that the
office had been set up to channel huge amounts of money to Chennai. For this,
Batcha used his connections in Malaysia and Dubai. Later, Welcome Communications,
a Malaysia-based telecom company, channelled the scam money to Chennai through
its Indian arm Wellcom. The latter was in the news in March 2009, when there
were reports that a company run by Raja's associate, T Silvarajoo, was participating
in the WiMax franchise allotment by BSNL. Subsequently, BSNL refrained from
shortlisting Wellcom, also dropping Wipro and Cisco for good measure.
WHILE INTERROGATING RP Paramesh Kumar, the
son of Raja's sister Vijayammal, and joint managing director of Green House
Promoters, the CBI has unearthed huge money transfers through export orders.
The Enforcement Directorate is probing the possibility of the use of textile
and vegetable exporters based in Chennai, Tirupur and Coimbatore to channel
the money through hawala operations.
Paramesh Kumar is a common factor in all Raja
companies, whose personal and company accounts show large-scale money transactions.
But then, all the companies made huge profits within a short span of time
- and this happened from 2008 onwards, right when the rest of the world was
coping with the global meltdown.
The money seems to have flowed as follows:
companies that were favoured with spectrum allocation sold it off at a huge
profit, sent the money abroad, from where it flowed back to show up as profit
in Raja's business empire. Raja also depended on his family, friends and associates
to park the money while others dumped their shares in Dubai, Singapore, Malyasia
and Sri Lanka. The money involved was so huge that it could not be absorbed
only in benami properties, which is the usual way to stash away ill-gotten
wealth in India. Swiss bank accounts are no longer safe, as they were for
earlier generations.
The CBI seems to have had good reason to raid
the charity Tamil Maiyam run by Catholic priest Jegath Gasper Raj (Raiders
of the Lost Loot, TEHELKA, 25 December). The NGO, which actively raised funds
for rehabilitation of the 2004 tsunami victims, has links to Sri Lanka, the
Philippines and Singapore, all of which is being probed. More damningly, from
2007 onwards, the NGO received large amounts of money from Green House India
Promoters, Equaas Real Estates and Kovai Shelters. The ETA Ascon Star Group
also made donations. If the CBI manages to establish that spectrum beneficiary
companies gave large donations to Tamil Maiyam, the noose will tighten around
Raja and his close friend Kanimozhi, Rajya Sabha MP and Karunanidhi's daughter,
who is on the non-profit's board of directors.
Raja proved to be the man with the Midas touch
not only for Batcha but also for S Saravanan, who started as a humble servant
in Royal Enterprises, the furniture shop run by Rajathiammal, Karuna - nidhi's
third wife and Kanimozhi's mother. Today, Saravanan is one of Chennai's crorepatis.
His road to riches was paved with shady transactions such as the Voltas land
deal in Chennai, which figured in the Radia tapes. Voltas is a Tata concern.
Though Rajathiammal issued a press release on 17 December distancing herself
from the land deal, she had admitted the mediator in the land deal was her
employee Saravanan, who holds power of attorney of the disputed land, which
is owned by PN Shanmugham, PN Arumugham and 16 others.
Voltas had taken the 53,000 sq ft plot on
a 30-year lease in 1975. In 2005, when the company asked for a renewal, the
owners did not oblige and filed a case in the Madras High Court, which is
still pending. The company kept depositing the rent but the plot was sold
by Saravanan to Shangkalpam Industries Pvt Ltd, Coonoor, for a sum of Rs.
25 crore, much below the market price, which is estimated to be around Rs.
200 crore. The land deal was struck just before the 2009 Lok Sabha elections.
But Voltas never pursued the case and the court never sent notices to the
respondents. It's clear that highlevel mediation silenced the company and
prevented it from actively pursuing legal proceedings. Now it's up to the
CBI to find out how Saravanan was able to get the power of attorney of 18
persons and execute the land deal.
Shangkalpam Industries, which now owns the
property, is run by Dr Shanmughanathan Vellanthurai, 45, a Malay - sian auditor
and businessman. He is also director of Shan & Co, an audit firm which
has close links with Raja and Ratnam, who is Rajathiammal's auditor. Shanmugham
is a tax expert who once worked with Ernst & Young. It's a mystery why
the Income Tax department didn't bother to probe the prime land deal in Chennai
- normally, its intelligence wing does routine checks on big land deals. Only
after the Radia tapes were leaked did the CBI interrogate Ratnam and raid
his residence. The CBI is exploring whether any spectrum money was used for
the land deals.
According to a business associate, Dr Shanmughanathan
has close contacts with Raja and is an influential businessman in Malayasia.
He is also on the board of Kamdar Group (M) Berhad, an investment holding
company, and engages in the import, export, retail and wholesale of textile
and textile-based products globally. The Kamdar group has operations in South
Africa too. It is said his close relatives are manning Shangkalpam Industries
in India. Dr Shanmughanathan was introduced to A Raja by his relative, Dr
Kumaraswamy Shanmughanathan, who heads the Colacumby tea estates in the Nilgiris
and is a PhD in dairy science.
SHANGKALPAM LTD has an office in London, registered
at the address 188 Royal College Street. The company was incorporated in 1993
and Shangkalpam Ltd owns a tea estate in Nilgiris, the constituency represented
by Raja in the Lok Sabha. The company has operations in Singapore, Malaysia,
Australia and Dubai, the countries to which Raja and his men travel most frequently.
Raja & Co's real estate operations were
never innocuous. His henchmen effectively used mafia, police and the district
administration to wrest land from the poor. He didn't shy away from squeezing
poor Dalits in his hometown Perambalur.
Projecting a grand vision of making the town
the industrial hub of Tamil Nadu, Raja contacted MRF and offered 400 acres
to set up a new plant for manufacturing passenger and truck tyres and a trial
track. Batcha signed an MoU with MRF for acquiring land in November 2007.
Atter a month, while inaugurating the district police station in Perambalur,
Raja announced a Rs. 900 crore MRF project, which was greeted with loud cheers
by the poor farmers.
Raja's men had already started buying farmland
offering Rs. 65,000-80,000 per acre in Naranamangalam village. Within months,
they acquired 250 acres of land from 130 villagers.
Some of the villagers, including Dalits, were
not ready to sell their land at such a low price. Then Raja showed his true
colours. First he threatened them that the land will be notified by the government
and forcefully taken over. The poor villagers knew that litigation will swallow
up the next 10-15 years, during which the politician could manipulate anything.
A majority of them yielded to pressure and sold their land. Then Raja targeted
the remaining villagers. Many of them were arrested and threatened by police,
district administration and Raja's men. A few non-Dalits were even arrested
under the SC/ST Act and released abruptly once their land was transferred
to Green House Promoters. Even women were not spared, being detained illegally
in police stations and released only after the title documents were signed.
The MRF plant is scheduled to start operations in April-May, 2011.
According to insider information, Green House
Promoters sold the land to MRF for Rs. 15-18 lakh per acre. District Collector
Anil Meshram and then Superintendent of Police Prem Anand Sinha were the people
facilitating Raja's dream to transform dry Perambalur. After Raja was raided
by the CBI, around 160 villagers, including 80 Dalits, came forward to petition
the National Human Rights Commission about the land grab.
Thanks to his proximity with the K-family,
Raja influenced the state government to announce a Ring Road at a cost of
Rs. 25 crore and announced an SEZ at an investment of Rs. 5,000 crore. Green
House Promoters acquired land nearby and is running a project on 50 acres.
All the directors of these real estate firms,
whose total assets run into Rs 3,000 crore, hail from Perambalur. These firms
were set up just after Raja became a Union minister of state for environment
and forests in May 2004. A Kamaraj, associate editor of Nakeeran, is a sleeping
partner in many of the companies and his wife was running the Chennai operations
of Vaishnavi Com - mu nications. Their books are professionally managed. The
bank accounts in State Bank of India branch at Thiru - vanaikoil indicate
huge transactions in the name of Raja's elder brother A Ramachandran, and
his sister Saroja. Investigators are exploring whether officers in the chief
minister's office were involved, but their focus is not on the K-family, only
on Raja & Co.
But the involvement of Raja's family in these
businesses doesn't need any proving. His wife Parameshwari joined the board
of directors of Green House and Equaas Estates Pvt Ltd in 2007 and resigned
in 2008. While she was on board, the minister's official residence was listed
as her business address. His niece R Malarvizhi is a director in both firms.
The company has 12 projects in posh areas of Chennai and another seven in
Trichy. After resigning, Parameswari transferred her shares to Malarvizhi.
IN FACT, both Green House and Equaas Estates
were floated by Raja's close relatives soon after he became a minister. His
nephew Paramesh Kumar was joint managing director. His brother A Kaliaperumal
and his nephew R Ramganesh are directors. Within a year, the company showed
a turnover of Rs. 755 crore.
Then there is Kovai Shelters and Promoters,
Chennai. Its managing director Dr Krishnamoorthy is a close associate of Raja
dating back to the time when Raja was a lawyer and had an office in Krishnamoorthy's
building in Perambalur. Dr R Sridhar, Raja's nephew and a deputy director
in the Ministry of Environment and Forests, holds 15 per cent shares of the
company. Raja's niece R Anandabhuvaneswari holds another 15 percent stake,
as does another niece R Santhanalakshmi.
Similarly, AGM Investment and Finance Pvt
Ltd, Coimbatore, was promoted by Dr Krishnamoorthy and his brother C Sathyanarayanan
soon after Raja became a Union minister.
If these companies were flush with cash, Raja's
charitable moves also paid off. He donated land for a governmental project
via a trust he floated in the name of his late mother. Velur Andimuthu Chinnapillai
Charitable Trust, headed by his brother Kaliaperumal, was set up in 2001.
Raja and his close relatives offered to donate land for setting up educational
institutions in Othium village. The trust donated 30.28 acres where the government
has announced a medical college, 8.51 acres for an arts and science college
at Karumbalur village and 4.5 acres for a technical school, all these institutions
to be named after his father or mother.
Green House purchased large tracts of farmland
nearby for a price of Rs. 35,000 to 3 lakh per acre. After announcing the
projects, the land value of the area shot up to Rs. 50 lakh per acre. By that
time, Green House Promoters had announced housing projects and commercial
complexes in the area. Thus a huge profit was made on what looked like philanthropy.
Raja has three brothers and four sisters.
He is the youngest of them all but has feathered not only all their nests,
but that of their myriad children as well. The nation is the poorer for this.
As these facts tumble into the public domain,
will Karunanidhi drop Raja? It is a tricky situation as it was the DMK supremo
who bargained hard with the Congress to get him a seat in Nilgiris when Perumbalur,
Raja's home constituency, was listed as a general seat. Even if members of
the K-family like Stalin, Azhagiri and Maran put pressure on the veteran leader
to expel Raja, ostensibly to save the party image, Karunanidhi might hold
back due to fears that Raja can play Brutus. And since his business deals
involved Rajathiammal and Kanimozhi, Raja could implicate them by revealing
too much during interrogation. Such a stab in the back from Raja would hurt
the family.
Not just that, there would be political repercussions
if the DMK first family leaves Raja to his own devices. For the impact on
the Dalit vote of such a drastic move could damage the party's prospects as
Tamil Nadu heads for polls.
SO, WHODUNNIT?
The byzantine rumour bazaar of power-crazed
Delhi is rife with wild conspiracy theories about who leaked the Radia tapes
and for what purpose. Here go some of the most imaginative ones:
THEORY #1 Finance Minister Pranab Mukherjee
had the tapes leaked to kill two birds with one stone: upstage Home Minister
P Chidambaram and teach 10, Janpath, a not-so gentle lesson about nuisance
value. Rumour has it that there is a bitter rivalry between the UPA's two
most powerful ministers. The finance minister is whispered to be close to
Mukesh Ambani; the home minister apparently prefers younger brother Anil.
Both would like the PM's post. There is already talk of Defence Minister AK
Antony being the regent. It did not help that Rahul Gandhi mentioned Antony
at a meeting with youth leaders in Ahmedabad as the most honest politician
and not Mukherjee. It did help that both the Enforcement Directorate and Income
Tax departments come under the finance ministry.
THEORY #2 Chidambaram had the tapes leaked
for exactly the same reasons. Show the finance minister - and his camp - in
bad light. Send a signal to 10, Janpath. Shake up power equations. Particularly
creative theorists say the plot was to fell the government and cobble a Third
Front with Chidambaram in the PM's chair. The home minister is certainly capable
of such precisions.
THEORY #3 Anil Ambani's able man Tony Jesudasan
leaked the tapes. Some say the intention was not just to fix Big Brother but
his uber-able lobbyist Niira Radia: the rivalries of the second rung. Other
rumours have it that Ambani Jr needed a smokescreen to hide his own wrongdoing
and sliding fortunes. He is in big money trouble and needs a bailout. It would
help to have Chidambaram as PM.
THEORY #4 Former telecom minister Dayanidhi
Maran leaked the tapes. Classic revenge tale: he lost the telecom ministry
to A Raja, outmanoeuvered by Radia, her corporate clients and the powerful
Kanimozhi faction in the DMK. Besides, he was piqued that Raja refused to
share the spoils of the spectrum money with the K-family. In one stroke, the
leak educated them all: Radia, Raja, Kanimozhi, Karunanidhi and the Congress.
With Raja disgraced, Maran is now back in the family bosom, attending all
public functions and meeting the K-family regularly. He has even buried the
hatchet with Azhagiri and Stalin, brokered by Selvi, Karunanidhi's daughter.
It's also being rumoured that restored trust always comes at a price.
THEORY #5 Airtel honcho Sunil Mittal had the
tapes leaked. Maran was his man; Raja was hostile to him. The latter's policy
opened up the market, brought in too many players and pooped his party. Raja
may have scammed the country, but Mittal stood to lose a lot of money and
business and his cosy spot in the sun. The end of Raja and all those who supped
with him must seem a sweet dessert.
- jeemonj@gmail.com
