Before his arrest in January 2016, Nirmal Singh Bhangoo, founder and chief of PACL gifted a lavish $2.5 million home in Melbourne to his daughter and son-in-law, reveals a report from The Australian
Days before his arrest by Indian authorities, Nirmal Singh Bhangoo, founder and chief of PACL Ltd, formerly known as Pearl Agrotech, involved in the Rs55,000 crore scam, transferred as a gift a $2.5 million inner-Melbourne house to his daughter and son-in-law just three weeks before he was jailed, reveals a report from The Australian.
"Land titles records show Bhangoo transferred the home on Mont Albert Road, Mont Albert, in Melbourne's inner east, to his daughter Sukhwinder Kaur and her husband Singh Gurpartap on December 18 last year. There is no listed price for the property transfer, with 'desire to make a gift' entered in the consideration field. Mr Bhangoo appears to have bought the salubrious home for $2.38 million in 2006," the report says.
According to the report, in 2011, a Sydney suburban lawyer conducting simple due diligence on PACL, and its Australian arm Pearls Australasia, warned that the group was likely "an illegal syndicate" and a "pyramid scheme". The report says, "Those facts were completely missed by federal government agency Austrade - funded by taxpayers to the tune of $200 million a year, and which introduced Pearls to Australia - and both the Queensland and NSW governments, with former premiers Anna Bligh and Barry O'Farrell heavily endorsing the Indian company."
In January this year, the Central Bureau of Investigation (CBI) arrested four officials of PACL, including Nirmal Singh Bhangoo, chairman and managing director (MD), Sukhdev Singh, MD and promoter-director and two executive directors Gurmeet Singh and Subrata Bhattacharya in the Rs55,000 crore collective investment scam.
Market regulator Securities and Exchange Board of India (SEBI), as part of its recovery proceedings, too had attached in December 2015 all bank and demat accounts, mutual fund portfolios of PACL and its eight directors and promoters. Besides PACL, its promoters and directors against whom SEBI initiated the proceedings, are Tarlochan Singh, Sukhdev Singh, Gurmeet Singh, Subrata Bhattacharya, Nirmal Singh Bhangoo, Tyger Joginder, Gurnam Singh, Anand Gurwant Singh and Uppal Devinder Kumar.
Lodha Committee Notice
Meanwhile, the Justice RM Lodha Committee, has asked investors of PACL not to hand over documents related with their investment to anyone till further notice. It also advised investors not to make any fresh investment in PACL.
SEBI has formed the three-member Committee headed by Justice Lodha as per directions from Supreme Court to dispose land purchased by PACL so that the sale proceeds can be paid to the investors, who have invested their funds in the Company for purchase of the land.
In a public notice published in newspapers on Saturday, the Justice Lodha Committee also asked buyers not to purchase properties owned by PACL or related entities, including its directors.
SEBI has told The Australian that it is aware of $133 million funnelled to Australia (by Bhangoo and PACL), but the total figure is likely significantly higher and could be as high as $500 million or more, if claims made by Pearls and its associates in recent years are to be believed.
According to the report, the $133 million figure represents money sent from Pearls to create the Gold Coast-based Pearls Australasia in September 2009 with struggling Queensland developers Paul Brinsmead and Peter Madrers.
"Pearls Australasia subsequently spent $62 million buying the Sheraton Mirage resort on the Gold Coast and $20 million on refurbishments. Its efforts were boosted by paying Indian cricketers Harbhajan and Yuvraj Singh, and Australian cricketer Brett Lee, large sums of the money to spruik the company," it added.
Earlier, The Australian, had revealed that Lee, via his then manager Neil Maxwell, was paid $300,000 to be a "brand ambassador" for Pearls. The report says, "It is not suggested that Mr Maxwell and Mr Lee were aware Pearls was a Ponzi scheme when they endorsed it. The Australian can reveal Mr Maxwell was also involved in a plan by Pearls Australasia to buy the Eastgardens Medical Centre at Pagewood in Sydney's east for $1.5 million from its owners, who included doctor Harry Harinath, who was at the time chairman of Cricket NSW."
"At that time, Pearls executives said the company had $660 million to invest in Australia, the medical centre owners were told. Owners of the medical centre located in the Eastgardens Shopping Centre, 9km south of the Sydney CBD, were concerned about the legitimacy of Pearls, and engaged Vaikom Rajeev lawyers of Homebush West to conduct due diligence on the company," it added.
According to the report, solicitor Sundar Rajeev, using publicly available information, determined that Pearls was most likely a scam and advised heavily against the sale of the medical centre. Quoting a note by Mr Rajeev, the newspaper said, "There is a reasonable likelihood that Pearls Australasia is being used as a vehicle for perpetuating a pyramid scheme or similar activity in Australia. It is highly risky to sell the medical centre to a company like Pearls Australasia, particularly given the negative credibility of its members."
"That advice was in large part based on then long-running legal action by Indian authorities against Pearls, the fact several of its key executives had in 2008 been found to have acted inappropriately, and that Mr Brinsmead and Mr Madrers had previously operated developer Resort Corp, which collapsed in March 2009," the newspaper says.
According to The Australian, each of those red flags occurred before Austrade introduced Pearls Group India to Mr Brinsmead and Mr Madrers in mid-2009, leading to the creation of Pearls Australasia. Mr Maxwell told The Australian he had facilitated the meeting between Pearls and the owners of the Eastgardens medical centre because he knew Dr Harinath and was aware Pearls was seeking to enter the healthcare market. "He said he played no other role in the proposed deal, which 'from all accounts didn't go well', " the report said.
It further pointed out that from 2008, as their Resort Corp group was floundering, Mr Brinsmead and Mr Madrers paid Austrade tens of thousands of dollars to introduce them to suitable Indian investors. It says, "In May 2009, after the Resort Corp collapse, then Austrade South Asia head Peter Linford introduced the pair to Pearls, leading to the creation of Pearls Australasia. Mr Linford subsequently boasted that he had helped Pearls invest $500 million in Queensland properties and the company was 'looking for more'."
PACL (earlier Pearls) is a Delhi-based company, proclaiming itself as a real estate company which has collected huge money for the last 13 years from almost six crore people from all the states in India.
After conducting inquiry, SEBI on 22 August 2014, issued an order directing PACL, its promoters and directors to wind up all the existing CIS and refund the monies collected by the company to investors as per the terms of offer within a period of three months from the date of the Order.
PACL filed an appeal before the Securities Appellate Tribunal (SAT), which was dismissed on 12 August 2015. The SAT directed PACL and its promoters-directors to refund the money within three months. Since the company and its promoters-directors failed to refund the money to the investors as per the directions of SEBI and SAT, the market regulator said it has initiated the recovery proceedings.
According to SEBI, the amount due to investors of PACL would be over Rs55,000 crore. This includes promised returns, further interest, all costs, charges and expenses incurred in respect of all the proceedings taken for recovery of Rs49,100 crore from PACL.
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