NDTV Frauds
NDTV Frauds
A classic example of BREAKING OF law by Indian media houses
Sree Iyer
PGurus.com
Why this book?
As Managing Editor of PGurus.com, while publishing a series of frauds, tax violations, siphoning of money committed by India’s premier TV channel NDTV and its major promoters, an idea struck me to put together an uncomplicated and simple book to educate and disseminate the illegalities committed by this major media organization, which is considered as a holy cow by many people. This book is a classic example of how media organizations misuse, violate laws in connivance with crony capitalists, pliant law firms and politicians to amass personal wealth. This is a narrative of how two Promoters of NDTV along with key top management colluded over the years with government functionaries and politicians to break laws, evade taxes and deceive shareholders of a public listed company. All this obviously through political patronage and “wheeling-and-dealing” as part of the Lutyens club and how they created a biased public discourse for a select elite class.
In the minds of the Indian citizen, there is a space and respect for media. Using the halo of journalism and under the garb of Freedom of Press, media owners misuse their position and in the end, degrade the values of journalism. On several occasions media became the tool of false propaganda, blackmailing and illegal money making with the blessing of uncouth politicians and corporate icons with hidden agendas. This ought to be exposed and that is the reason for this book. Once this comes out, I am reasonably sure that NDTV will accuse me of having a hidden agenda. However, the agenda is very clear – to expose the frauds committed by the Promoters of NDTV, which the common man is entitled to know.
Yours truly
Sree Iyer
Managing Editor
PGurus.com
4167 Pinot Gris Way
San Jose, CA 95135.
Table of Contents
LIST OF TABLES AND FIGURES
Promoters and companies
Cheating from the beginning
Beginning of hit jobs and unethical journalism
Muzzling the whistleblower Income Tax Officer
Minority shareholder revolts
Enforcement Directorate catches NDTV
Income Tax slaps Rs.525 crore on NDTV frauds
The Confession:
Prannoy Roy and wife Siphoned Rs.146 crores to personal accounts
First siphoning of Rs 92 crores:
Second siphoning of around Rs.54 crores:
Long arm of Law catches up with NDTV
ANNEXURE DOCUMENTS
Annex 1: Income Tax findings against 2 IRS Officers
Annex 2: Directorship and shareholding pattern of the London based company NDTV Networks Plc.
Annex 3: Swamy’s complaint to the Prime Minister
Annex 4: Income Tax notice slapping Rs. 525 crores fine
Annex 5: IT reports on NDTV shell companies
INDEX
LIST OF TABLES AND FIGURES 3
Promoters and companies 4
Cheating from the beginning 5
Beginning of hit jobs and unethical journalism 7
Muzzling the whistleblower Income Tax Officer 10
Minority shareholder revolts 12
Enforcement Directorate catches NDTV 23
Income Tax slaps Rs.525 crore on NDTV frauds 26
The Confession: 28
Prannoy Roy and wife Siphoned Rs.146 crores to personal accounts 29
First siphoning of Rs 92 crores: 29
Second siphoning of around Rs.54 crores: 30
Long arm of Law catches up with NDTV 31
INDEX 33
LIST OF TABLES AND FIGURES
Table 1. Source: NDTV public issue prospectus filed with SEBI in 2004.
Table 2. Fraudulent trades/shares sales & purchase to hoodwink shareholders, tax authorities, SEBI and MIB
Figure 1. NDTV Shareholding pattern (45K is 45,000)
Figure 2. Trail of NDTV Shell companies (Graphic: PGurus.com)
Figure 3. Timeline of filings by Quantum Services Limited
Table 3. Abbreviations explained
Figure 4. Consolidated Financials of NDTV FY 2008-13
Table 1. Source: NDTV public issue prospectus filed with SEBI in 2004. 6
Table 2. Fraudulent trades/shares sales & purchase to hoodwink shareholders, tax authorities, SEBI and MIB 14
Figure 1. NDTV Shareholding pattern (45K is 45,000) 16
Figure 2. Trail of NDTV Shell companies (Graphic: PGurus.com) 18
Figure 3. Timeline of filings by Quantum Services Limited 21
Table 3. Abbreviations explained 21
Figure 4. Consolidated Financials of NDTV FY 2008-13 27
Promoters and companies
India’s private sector followed the British till 1947, when India became independent. Thereafter Socialism crept into the society with licenses and permits being required to manufacture even simple things. The License Raj in the name of Socialism ultimately created total corruption. Then in 1991 came the Liberalization policy of P V Narasimha Rao.
When the flood gates opened during the Narasimha Rao regime, a few found that there was a large land grab available and using guile and cunning, and with the right connections reaped huge rewards. Throughout India’s corporates, you can sense an underlying theme of a Promoter reaping all the rewards and letting his/ her corporate entities (mostly built on public shareholder or bank money) take all the risk. Rarely does one find a Promoter, the individual suing others for defamation; they tend to hide behind their corporate veils, letting the company spend for all expenses and if the verdict goes in their favor, claim victory. This feudal system of Promoter knows has also been encouraged by pliant Boards. It is common for Promoters to cheat Banks, Stock Exchanges and Minority shareholders as they run their companies like a fiefdom.
Add to that a bureaucracy which is only too willing to assist the Promoters in helping them to be in scenarios where the outcome is pre-defined - “Heads I win, Tails you lose”. Most of the bending of rules/ regulations happens because the Private Sector gets involved in the drafting of the specifications and thereby tailors them to ensure the outcome they want. In fact, in many such instances, the “powers that be” i.e. our perpetually ruling and non-elected bureaucracy are also appointed by their influence and patronage at key positions in government.
This is one such story.
Cheating from the beginning
My earliest memories of New Delhi Television (NDTV) was watching a foreign-returned Psephologist called Prannoy Roy, who used to stay up all night as counting (in those days, it was manual) went on round the clock and updated the eager population of India with trends, results and where the parties were headed. Poll projections were not in vogue yet. What amazed me was that Roy was a constant at the TV network, sometimes for 36 hours at a stretch while the rest of the panelists changed by the hour! As the results caused the fortunes of parties to ebb and flow, when one party surged ahead, its spokesperson turned up and claimed how he/ she saw it all along, only to be replaced by someone else from some other party saying the same things. How did this earnest looking man, with a sly smile ended up presiding over one of the most corrupt media houses in Indian history?
NDTV was built on public money from the very beginning when it started as a private production house and bagged programs from the public broadcaster Doordarshan in the mid-80s. In 1988, NDTV got a good contract from Doordarshan to produce a famous weekly show called The World This Week, which was anchored by the owner Prannoy Roy. As per records, Doordarshan granted Rs.2 lakhs ($6000[1]) per episode to NDTV, which was a princely sum in those days. Incidentally the head of Doordarshan at that time was Bhaskar Ghose and his son-in-law journalist Rajdeep Sardesai bec
ame the No. 2 in NDTV. The Congress Party was in power then and showed all possible support to NDTV and provided a red carpet welcome to the private media unit to enjoy the national resources of Doordarshan. Every resource and infrastructure of Doordarshan was used for NDTV’s growth. In fact, in the early days (1995-1997), it is this tax payer money (Doordarshan contract) that got him personal gains again when he did “sweet” private equity deals (for sale of personal stake belonging to him and his wife) to a few global private equity funds. Thus, he built a business from patronage (government money) and then created value and cashed some of it by selling to private equity investors such as Goldman Sachs, Morgan Stanley, Alliance Capital, Jardine Fleming etc.
Prannoy Roy was appointing sons, daughters, in-laws, nephews and nieces of top officials and politicians in NDTV as journalists. This show of nepotism in journalism changed the style of journalism as access to corridors of power became easy for media houses. Not only bureaucrats, several kith and kin and siblings of top police and military officials too became journalists in NDTV, as and when the organization needed largesse from the system. This unholy recruitment of journalists completely changed the character of India’s journalism. In those days the joke in Delhi was that all siblings of the powerful, not-so-good-in-academics can become journalists through NDTV. Still, when you look at the family details of many journalists in NDTV, you can see their links with IAS, IPS, IRS, Military top brass uncles, fathers, and in- laws.
Sandeep Bhushan, who worked with NDTV for almost a decade, told Caravan Magazine[2] that it seemed more than a mere coincidence that the channel should hire so many “babulog”—people with bureaucratic connections. Bhushan said that he applied to work with the channel around the year 2000, and gave a “damn good interview,” despite which he was rejected. “The next time, I went with clout,” he said. Armed with a reference from a bureaucrat, he reapplied for the same post soon after. He was hired.
It is clearly evident that unethical and corrupt practices were the bedrock of Prannoy Roy journalism. After getting the Doordarshan contract through patronage and a quid pro quo, he shrewdly cashed out over Rs. 23 crores (to his personal account in 1994-95) in a short span of few years (see Table 1 below) by selling shares at astronomical valuations to a foreign investor. Simply put, through political patronage he built a business and cashed out for personal profit.
Table 1. Source: NDTV public issue prospectus filed with SEBI in 2004.
Date of transfer
No. of Equity Shares (Face value of Rs. 10)
Cost per Shares (Rs.)
Price (Rs.)
Nature of payment
No. of Equity Shares (of Face Value of Rs. 4) post splitting
21 Oct 1994
48,140
10
675
Cash
120,350
16 May 1995
99,070
10
675
Cash
247,675
Jul 21 1995
121,625
10
675
Cash
304,063
Aug 22 1995
81,481
10
675
Cash
203,702
After inking favorable deals with Doordarshan, many people in Central Government in 1997 helped NDTV to clinch a magical figure deal with Rupert Murdoch’s Star TV[3] during the liberalization period. The Lutyens Delhi’s cozy club arm twisted Murdoch into an agreement with Prannoy Roy’s NDTV to launch the Star News channel. The message to Murdoch was clear; if you want business in India, you must ally with NDTV. A five-year contract was signed between Star and NDTV for a regal sum of 20 million dollars per year payment to let NDTV run Murdoch’s operations in India. The launch of the Star News channel happened at the then Prime Minister I K Gujral’s official residence in February 1998.
But during this time NDTV was rapped by the then Minister of Information and Broadcasting (MIB) C M Ibrahim. He was acting on the report of vigilance section of Doordarshan. The Vigilance Section of Doordarshan found that for the past 10 years, NDTV was sucking the blood of Doordarshan like a leech. The vigilance section’s report was totally ratified by the Parliament panel also, urging a Central Bureau of Investigation (CBI) probe. The panel found irregularities and financial bungling of over Rs.3.52 crores ($985,000) by NDTV in its contracts with the public broadcaster.
In 1998 the CBI registered a First Information Report (FIR) against Prannoy Roy and several officials in MIB and Doordarshan for conniving to siphon public money. The FIR found malpractice of around Rs.5 crores ($1.4 million) by Roy and others from Doordarshan’s exchequer. Apart from Rajdeep Sardesai’s father-in-law Bhaskar Ghose, another top official of Doordarshan that helped Prannoy Roy build his empire was Ratikanta Basu, who later joined Murdoch’s Star News. This was a clear case of quid-pro-quo and an apt example of corruption and conspiracy in looting public money.
But luck came Prannoy Roy’s way, when his longtime friend Arun Jaitley became the Information and Broadcasting Minister in October 1999 in the Vajpayee Government. All CBI moves to act against NDTV and Prannoy Roy for looting Doordarshan were put in the deep freezer. CBI could not move an inch because Jaitley as MIB totally blocked the actions of the investigating agency and it could not file a charge sheet in the case. And after 14 years, the CBI in 2013, during Sonia Gandhi led UPA regime filed closure report in trial court. The rest is history - The savior Jaitley continued to be present in NDTV screens with his off and on exclusive interviews.
This incident of tackling CBI, using the unholy relations with politicians by NDTV illustrates the kind of grip that NDTV had in influencing action against it by the investigating agencies. Even the Parliamentary Panels which suggested probes of NDTV were ignored. This is the collusion of a corrupt system and media houses, who are supposed to be watchdogs for the common man.
Beginning of hit jobs and unethical journalism
Escaping from CBI cases due to Jaitley’s blessings in 1999 gave Roy and his team the courage to do anything and a “license to bend”, abet and even be a “go between” in fixing ministerial berths in elected governments (lest we forget the infamous – Radia & Barkha conversations of 2G fame).
The first example was the anti-national reporting by Barkha Dutt during the Kargil war. Due to her closeness with Farooq Abdullah, the then Chief Minister of Jammu and Kashmir and corridors of power in Delhi, Barkha had access to all military installations in Kargil[4] during the war. Her unethical reporting caused harm to the Indian Army in the end. But nothing happened to Barkha or NDTV due to their clout in Delhi’s power circles even after alleged anti-national activities in reporting during the war.
By this time NDTV had become part and parcel of Lutyens cozy club of major politicians cutting across party lines. Congress and BJP heavy weights were at the disposal of the TV channel. Moreover Left parties were also silent and complicit on NDTV’s illegalities in wielding power as Prannoy Roy’s wife Radhika Roy was the sister of CPI (M) Politburo member Brinda Karat (wife of Prakash Karat). Till 2009, CPI (M) General Secretary Prakash Karat and wife Brinda Karat lived with Prannoy Roy and Radhika Roy. Simply, NDTV was basking in the aura of the political, intellectual who’s who in the luxurious Lutyens Delhi. Not to forget, by now they had many nephews, nieces, daughters, sons, daughter in laws et al of the powers that be / people at key places on their rolls as journalists or in other positions within NDTV.
After Kargil war reporting, another hit job that was done by NDTV was the venomous and hate mongering reporting of Gujarat riots of 2002[5]. The target was the rising star of BJP, Chief Minister Narendra Modi. This hit job was done at the instance of Delhi politicians in Congress and BJP to finish the political career of young Narendra Modi, who unlike his colleagues never went by media-advised political administration. Angry Hindu mobs rioting in vengeance of the burning of train by Muslims was portrayed as incidents directed by the newly selected Chief Minister
of the state by NDTV. Barkha Dutt and Rajdeep Sardesai did everything possible to malign Narendra Modi[6]. Under their leadership, NDTV hounded Modi for 12 years[7]. This was a classic example of Supari Journalism in India. But, an important question that remains a mystery till date is where was Narendra Modi’s friend and key ally of NDTV – Arun Jaitley all this while?
Though NDTV is known as a Congress supporting channel, the fact was that even many BJP leaders were supporters of NDTV. Even after casting aspersions on a BJP Chief Minister – Narendra Modi – in 2002, NDTV got its own TV channel running license in 2003, when Atal Behari Vajpayee was the Prime Minister. After eating out more than a $100 million from Star News partnership, in 2003, NDTV flipped the bird to media baron Rupert Murdoch. Knowing NDTV’s clout in Delhi, Murdoch did not file any case of cheating against them, as by that time Jaitley had become the Law Minister with hands in several other portfolios.
Another powerful Minister Pramod Mahajan and Deputy Prime Minister L K Advani were also the well-wishers of NDTV, while it was unceremoniously and unethically attacking their colleague Narendra Modi. Many Cabinet Ministers competed in sending or leaking Simple Messaging Service (SMS) about Cabinet Agenda and decisions to Barkha Dutt. Women journalists across the world have had this advantage over their male counterparts. Attraction to the opposite sex is natural, but it is unethical when state secrets are leaked.
The NDA regime led by Vajpayee granted two licenses to run news channels in India – NDTV 24x7 and NDTV India. These English and Hindi news channel licenses were granted to NDTV Group led by Prannoy Roy, when he and the company were facing CBI’s FIR for cheating and plundering public broadcaster Doordarshan! While in public the BJP leaders in Delhi expressed solidarity with their young CM of Gujarat, they were enjoying privately NDTV’s hit jobs on Narendra Modi, whose career graph was slowly rising due to his able administration in Gujarat. In a dog-eat-dog world of Politics it is not too farfetched to imagine that every Central leader of BJP wanted the collapse of the political career of Modi, whom they doubted as a potential threat to their own political ambitions. After all, at the end of the day there are many senior leaders in Congress and BJP who want to die after becoming either the Prime Minister or the President of India.