The CBI has alleged that M Ramadoss, during his tenure as Oriental Insurance head, had entered into a criminal conspiracy with Paramount officials for providing credit insurance cover to the airline, which was in violation of the existing rules and regulations
New Delhi: United India Insurance chief, G Srinivasan, has taken up additional charge of chairman and managing director (CMD) of the country's largest PSU general insurance company, New India Assurance, reports PTI.
The appointment follows the suspension order issued by the government to New India Assurance CMD, M Ramadoss, over alleged irregularities in the grant of credit insurance cover to a private airline company during his tenure as Oriental Insurance head.
Mr Srinivasan has taken over the additional charge of Mumbai-based New India Assurance from today, sources added.
Mr Ramadoss has been put on suspension pending investigation of the allegations against by the CBI, official sources said.
A case is also pending against Mr Ramadoss with anti-corruption watchdog Central Vigilance Commission.
Last month, the Central Bureau of Investigation (CBI) raided the residence of Mr Ramadoss in connection with alleged irregularities in the credit insurance cover given to Paramount Airways by Oriental Insurance.
The case pertains to alleged irregularities in the grant of credit insurance amounting to Rs14-Rs25 crore by Oriental Insurance to Chennai-based Paramount Airways in 2008-09 towards multiple bank guarantees for covering fuel purchases.
Credit insurance, now banned by the Insurance Regulatory and Development Authority (IRDA), is taken by a company to cover its dues and in case it fails to repay them, banks recover it from the insurance companies.
Mr Ramadoss is the second chief of a state-owned insurer to face action this year. In May, the government removed Life Insurance Corporation (LIC) chairman, TS Vijayan following alleged irregularities in investment decisions taken by the insurer during his tenure. The CBI is looking into the matter.
The CBI has alleged that Mr Ramadoss entered into a criminal conspiracy with Paramount officials for providing credit insurance cover to the airline, which was in violation of the existing rules and regulations.
Paramount Airways had taken a loan of about Rs400 crore from five major banks to make payments for fuel to oil companies. However, it allegedly defaulted in repaying the amount.
These five banks had subsequently sent claims to Oriental Insurance, which had issued the credit insurance to the airline.
The planes of Paramount Airways were de-registered in 2010, following which they could not operate their flights.
Ronnie Screwvala’s sellout to Walt Disney has been hailed as a blazing exit. But he made much less money than the media thinks, points out an astute investor, because a lot of Screwvala’s shares were pledged
It is surprising as to why would Ronnie Screwvala, who founded UTV Software Communications in 1990 would like to sell off the business to Walt Disney after running it successfully for more than 20 years. Is he not able to manage UTV? Is he not seeing a future for the Indian media industry? Is Disney forcing him to exit? Is he bored of being an entrepreneur and wants to become an employee now? Amit Bagaria, an astute investor, has been digging into the financials of Mr Screwvala's holding and has come to an interesting conclusion as to what could have triggered Mr Screwvala's decision to completely exit from UTV.
But first, what does Mr Screwvala make out of the deal? It's much less than what the media is led to believe. Mr Bagaria points out that "to augment growth for his cash-guzzling media business Ronnie Screwvala placed a majority stake (93.52 lakh shares @ Rs860.79 per share in February 2008) to Disney and at the same time, issued warrants to himself, to be converted in the next 18 months (45.32 lakh shares @ Rs860.79 per share). The warrants would enable Ronnie to maintain his shareholding equal to Disney's shareholding of close to 40%. But then the financial crisis of 2008 deepened when Lehman Brothers went bust and UTV shares eventually plummeted to less than Rs200. In November 2009, at the time of conversion of shares, Ronnie Screwvala had to let his warrants lapse (because his conversion would happen @Rs860 against the prevailing price of Rs450). Thus Disney became the majority shareholder in UTV and Mr Screwvala had to forfeit the 10% of the warrant value paid during the allotment. Later on after mergers and amalgamations of several of UTV's subsidiaries with itself, Disney's stake came down to a little more than 50% thus making Disney the new promoter.
Toward the end of last month The Walt Disney Company Pte Ltd. announced its plans to acquire UTV Software Communications Ltd. The company plans to subsequently delist the equity shares of the company from the stock exchanges and on successful delisting, the company will acquire the 20% stake held by the promoters. Mr Screwvala currently holds 80,52,680 shares in the company and assuming an exit price of Rs1,000 (as indicated by Disney), his stake is valued at Rs800 crore. In early 2008 when he parted with a sizeable stake to Disney to fund his expansion plans, he was holding 80,83,680 shares in the company @Rs1,000 (the stock price at that point in time) which was worth Rs800 crore and he was the majority shareholder. Clearly, three-and-a-half years later Mr Screwvala has given away the control of UTV, and become an employee of Walt Disney and earned less for it. According to Mr Bagaria, this is "a classic case where the promoter puts in a great deal of hard work to create assets and to create a great brand but fails to capitalise on the same." The question is, why would Mr Screwvala do this?
According to the company's filings, Mr Screwvala currently holds 80,52,680 shares in the company and nearly 60% of the shares were pledged. Therefore after Disney pays him, he would have to repay the money he had raised against this pledge and would be left with a significantly lesser amount than what the media headlines suggest.
Since March 2009, the last quarter of FY2008-09, wherein the promoters pledged 81% of their shares, the percentage of pledged shares has never been below 70% until the past three quarters. The borrowings of the company also more than doubled in FY09-10 to Rs789 crore from Rs347 crore in FY08-09.
Is it that Mr Screwvala was forced to sell out because he is unable to repay the loan raised against the pledge? We tried contacting the company and Mr Screwvala but have received no reply from them as yet.
Mr Bagaria suspects that Mr Screwvala sold out to repay the money he had raised by pledging his shares and if you take that into account, he walked away with much less money than what the media tends to believe and broadcast. "He pledged his stake worth Rs470 crore with financial institutions and it seems was being pressured by them to pay up. As he was unable to manage funds from other sources, he was left with no choice but to sell his company."
If Mr Bagaria is right, Mr Screwvala would have pocketed a net Rs800 crore had he sold UTV completely in early 2008, (with control premium it would have been ever higher) while now all that he is left with is Rs800cr-Rs470cr=Rs330 crore. Seems like a case where shares pledged by the promoter ended up with him losing control of his entire business.
Based on his analysis, Mr Bagaria also raises wider issues of share pledging. He asks "how beneficial is share pledging for Indian promoters? Think of Great Offshore when you answer this. Are Indian entrepreneurs as dynamic and successful as they are projected to be? Think of Ronnie Screwvala when you answer this. Great Offshore promoters lost control over their company after they heavily pledged their shares to pursue growth. Mr Bagaria points out "Hopefully other young, growth-hungry, aggressive Indian promoters would learn something out of this episode." No chance of that happening.
A large section of the people’s representatives and some of the regulators are so steeped in corruption that we urgently need a strong, independent, effective Lokpal that can investigate and punish speedily. The Jan Lokpal proposed by Team Anna Hazare meets these requirements. Corruption may not vanish, but at least it will become a very risky business
It seems like the entire world is undergoing winds of change. First, the United States-the unchallenged superpower-was thrashed by the financial crisis in 2008 and the resultant economic downturn, and only recently lost its prestigious AAA global credit rating, triggering fresh shock waves through world economies. That situation is more than matched by India which has seen rising inflation, rampant corruption, inefficient administration, terrorism and a Maoist insurgency that is pushing people's patience to the limit. Thanks to the inroads made by telecom technology, the general awareness and aspirations among common people all over the world have expanded exponentially. People are now asserting themselves more vigorously, particularly in developing countries, to make governments responsive and people-friendly. The uprisings in North Africa and West Asia, where angry protests has seen corrupt and callous regimes toppled, must serve as a warning for us in India.
Ironically, India's healthy growth story in the private sector is in sharp contrast to the falling standards of probity and accountability in governance. In the 'Corruption Perception Index 2011', compiled by Transparency International, India scored a poor 2.7 out of 10, which is worse than the scores of even Honduras, Zimbabwe and Venezuela. In fact, the score is a huge dip from the 3.3 in the previous year. India not only tops the list of nations with tonnes of black money stashed in Swiss banks, but its cache of black money there ($1,546 billion) is far more than the combined total of the next four countries in the list of black money creators, namely Russia, the UK, Ukraine and China ($1,056 billion) as reported in The Times of India (Ahmedabad), on 8 June 2011.
Mahatma Gandhi wrote in Young India in 1928, "Corruption will be out one day, however much one may try to conceal it; and the public can, as its right and duty, in every case of justifiable suspicion, call its servants to strict account, dismiss them, sue them in a law court or appoint an arbitrator or inspector to scrutinise their conduct, as it likes.' Do our leaders think like this today?
Of late, there has been a qualitative decline in our political discourse and debate in and outside parliament. Whenever cornered by logic and fair argument, politicians lack the capacity to absorb criticism and accept a point; and what is worse, they do not hesitate in turning abusive and raking up irrelevant details from the past, in no-holds-barred mudslinging. The virtue of magnanimity and tolerance has disappeared from the political scene. There is an increasing breed of leaders today whom people know more for abusive language and arrogance, rather than their contribution to the public good in any sector. They are like the mischievous hockey coach who taught his players, "hit the opponent if you can't reach the ball".
The first batch of Indian parliamentarians considered the Lok Sabha subordinate to the People of India, for, it was "We, the people of India, having solemnly resolved … and do hereby adopt, enact and give to ourselves this Constitution." The Constitution of India subordinates the government (the executive) to the parliament, which in turn is and will always remain subordinate to the people of India on whose mandate it runs the affairs of the state. It is the people's aspirations that must be respected by their representatives-the members of parliament-while enacting laws in parliament. But having tasted blood in an increasingly corrupt environment where election to parliament too can be traded for cash, it is logical for politicians to behave in such an irresponsible and arrogant manner because they 'paid' to get elected and the people have no right to demand more from them! This drift in public morality has added to the malaise.
It is an insult to every proud Indian that nearly a third of our elected representatives in the Lok Sabha (162, plus latter additions A Raja, Kanimozhi, Suresh Kalmadi, and more to come) face criminal charges (ranging from trespassing to murder). This is a more than 27% increase over the record of the previous Lok Sabha. Nine ministers in the central cabinet face criminal charges, including one for 'theft'.
According to National Election Watch, 76 members of parliament (MPs) are involved in serious criminal cases. We are inching towards a situation when criminals will have the majority and form a government of their choice too! In times of coalition governments, if Madhu Koda could become chief minister of Jharkhand, on the strength of being a lone independent MLA at the time, this sitting MP who is attending the Lok Sabha session from Tihar Jail, could well become the prime minister too. Then why should they vote for a strong, independent and effective Lokpal?
The appearances that our leaders put on while answering questions on television, betray their insincerity and smugness towards issues vital to the nation. There is an obvious disconnect between the people and the government and the drift is taking them far apart. It is a dangerous trend and calls for immediate change in the way our political masters think.
Now, union ministers P Chidambaram and Kapil Sibal are redefining 'democracy', calling Anna Hazare's peaceful hunger protest "undemocratic". The Constitution, on the contrary, bestows upon every citizen a fundamental right "to freedom of speech and expression, assembly, association or union, movement…" The government's attitude towards Anna Hazare's peaceful hunger protest-cum-rally is ominously similar to how Hosni Mubarak chose to deal with the Egyptian people when they protested peacefully in Cairo's Tahrir Square in January.
Police brutalities range from uncalled for lathi-charge on crowds of sleeping women and children at Ramlila Maidan to trigger-happy cops shooting and killing unarmed, innocent kisans protesting peacefully against injustice in Bhatta Parsaul in Uttar Pradesh and over the Pune-Mumbai Expressway in Maharashtra. These incidents bear a grim resemblance to what Muammar Gaddafi's forces did in Tripoli when people rallied against a corrupt and callous regime. Activists and journalists who voiced public disgust and suffering were hounded, and either put in jail or killed, leading people to take to arms that turned into a bloody civil war.
While Anna Hazare's peaceful pleadings have been spurned and ridiculed by senior Congress functionaries, including cabinet ministers, there exists a plethora of evidence to show how our political parties have been holding unruly rallies, demonstrations and bandhs with scant regard for law and order and public convenience. In fact, almost always, the government has bowed readily to violent mobs on the rampage.
Many of India's political leaders have risen through riots and have no idea about Satyagraha, a higher, nobler form of protest. The message is clear: the government yields to threats and violence more readily. Shiv Sainiks have been deftly employing such tactics in Mumbai every now and then. In Delhi, even a Congress workers rally blocks traffic and causes a public nuisance, ignoring the rules and permits which Team Anna is being taught to seek today. Now, it is easy to understand how insurgencies are aided by governmental apathy and stubbornness.
Of course, there were differences while drafting a joint Lokpal Bill that could not be resolved in the joint drafting committee formed by the government. Both sides finally presented their own drafts. In all fairness, the government should have placed both the drafts on the table of the House for an open debate. Withholding the draft Jan Lokpal Bill and the deliberations of the joint drafting committee from parliament and the people, appears inappropriate and unjustified and makes a mockery of the decisions taken by the government at the highest level.
Law is above you
Former prime minister Rajiv Gandhi faced serious corruption allegations in the Bofors case, until then the worst in the scale of corruption. Prime minister Narasimha Rao also faced allegations of corruption in the JMM votes-for-cash case. Preventing the Lokpal from looking into such cases will in no way enhance the prestige of the high office of the prime minister. In fact placing himself for scrutiny by the Lokpal will only go to serve as the highest example of our faith in the basic principle of jurisprudence, "Be you ever-so high, the law is above you."
And why not bring the higher judiciary under the jurisdiction of the Lokpal too? On 17 August 2011, the Rajya Sabha is set to take up the case of the impeachment of a sitting High Court judge, Justice Saumitra Sen. Another judge in the higher judiciary, PD Dinakaran, chief justice of Sikkim High Court, has resigned after he failed to stymie the pre-impeachment inquiry by a duly constituted inquiry panel.
There have been allegations of impropriety on credible evidence involving judges in the lower as well as the higher judiciary, including chief justices of the honourable apex court. Former chief justice KG Balakrishnan's name is remembered for the wrong reasons rather than his uprightness as an honourable judge. The list of corrupt judges taking bribes, seeking undue favours and going to the extent of misappropriating provident fund deposits of junior employees is increasing by the day.
Failure of regulatory institutions
The various sectoral regulatory bodies have failed to deliver due to vested interests that have helped foster a fraternity between corrupt officials and investigators.
Even after the arrest of Dr. Ketan Desai, former president of the Medical Council of India (MCI), corruption at the MCI is continuing unabated. According to union health minister Ghulam Nabi Azad, 80 cases of corruption against officials of MCI and various medical institutions were being probed till May this year. No wonder human organs are being traded illegally and poor patients continue to suffer and die for want of medical care.
Similarly, people were shocked by the revelations about fake pilots (not one or two, but many) flying unsuspecting passengers, although the Directorate General of Civil Aviation (DGCA) monitors and controls the standards of flying safety and certification.
The appointment of persons with questionable integrity to head institutions like the Central Vigilance Commission (the PJ Thomas case) has seriously marred the credibility of such institutions in whatever their limited sphere of functioning. The Enforcement Directorate functions under the Department of Revenue in the Ministry of Finance and therefore remains a hand-held tool for undertaking only specific cases assigned to it by the ministry. States also have anti-corruption bureaus, but corruption in states is increasing with some highly-placed beneficiaries continuing to reap gains with fearless arrogance, like we have seen in Mumbai, Delhi and recently in Karnataka.
Thankfully, a few institutions like the Lok Ayuktas (in Karnataka and Delhi) and the Comptroller Auditor General of India (CAG) have performed laudably in their bid to instil some fear and caution against corruption. What does this prove? This is strong evidence that India is in dire need of a strong, independent and effective Lokpal with enough powers to investigate and punish speedily in a specified timeframe. The Jan Lokpal Bill proposed by Team Anna Hazare meets these requirements which, if enacted into law, will change the way government offices function. They will have to be responsive, efficient and people-friendly-an environment where the corrupt will have much to fear about. No doubt, corruption may not vanish-yet it could well become a very risky business. Why is the government scared? Is it the premonitions of losing a lucrative business?
(The writer is a military veteran who commanded an Infantry battalion with many successes in counter-terrorist operations. He was also actively involved in numerous high-risk operations as second in command of the elite 51 Special Action Group of the National Security Guard (NSG.) He conducts leadership training and is the author of two bestsellers on leadership development that have also been translated into foreign languages).