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No beating about the bush.
Pramod Mittal represents but one example of the quiet, high-stakes game of rich, influential bank defaulters that often misuse the CDR route without a slight change in their lavish lifestyle or spending
Pramod Mittal, the younger brother of steel tycoon Lakshmi Mittal, owes a lot of money to Indian banks. However, instead of repaying bank loans, both Pramod and his brother Vinod Mittal have managed to use the corporate debt restructuring (CDR) route repeatedly to escape unscathed. Surprisingly, despite being a bank defaulter, Pramod Mittal has reportedly spent 60 million Euros (about Rs505 crore) for his daughter’s lavish wedding in Barcelona.
According to a report from Vanitatis (Spanish news portal), the wedding of investment banker Gulraj Behl and Shristi Mittal, the 26-year old daughter of Pramod Mittal and exercise director of Global Resources of Europe, could become one of the five most expensive weddings in history, as per the figures. "One of the employees of the municipality that is well connected to high places told us that probably the figure among all parties, lodging, rental of premises, hotel rooms and other expenses to be determined, could exceed 60 million Euros. So, according to Forbes, this wedding would be located in the second, between Mohammed bin Zayed Al Nahyan, ruler of Abu Dhabi, and Princess Salama, where it cost 76.25 million Euros in 1981 and of the Prince of Wales, for which 53 million Euros was paid in that year also. For now, Lakshmi Mittal's daughter, Vanisha, holds third place when she married in 2004 with Amit Bhatia, the Indian billionaire and disbursed no more and no less than 46 million Euros," the report says.
Pramod Mittal wanted discretion for this wedding but his ostentation made news. Mumbai Mirror, using quotes from Spanish media had said politicians and prominent citizens trashed the whole affair (the Mittal wedding) as 'obscene display of wealth' for which 'the national pride was on sale'.
Coming back to Pramod Mittal's outstanding bank dues, as reported by Moneylife, during the end 2010, State Bank of India (SBI) gave a fresh loan worth Rs130 crore to Ispat Industries (it was controlled by the Mittals at that time) adjusting Rs30 crore against earlier dues.
So, why would the bank sanction a fresh loan if it has to take back part of the money? Apparently, SBI was indulging in what is called ‘evergreening’. By getting back part of the money, SBI has avoided classifying the loan as 'bad' which would have forced a series of actions. But SBI's action is in violation of the spirit of the Reserve Bank of India (RBI) guidelines. When Moneylife contacted them about this largesse, both SBI and Ispat Industries kept mum at that time.
Ispat Industries has failed to live up to every commitment it made as part of the corporate debt restructuring package so generously approved by lenders in 2003.
Pointing out that the credit appraisal committees of public sector banks (PSBs) had powers to sanction single loans up to Rs400 crore in the case of large banks and up to Rs250 crore in the case of small banks, Vishwas Utagi, general secretary, Maharashtra State Bank Employees Federation, an affiliate of All India Bank Employees' Association (AIBEA), alleged that promoters of large defaulting companies diverted bank loans into real estate and floated cricket outfits for competing in domestic league matches.
According to the bank employee union, over the past seven years, there are fresh bad loans worth Rs4.95 lakh crore only in PSBs, while during the same period, these lenders wrote off band debts worth Rs1.4 lakh crore. Top four defaulters of state-run banks constitute Rs23,000 crore of NPAs, the AIBEA said.
On 15 September 2010, Ispat shares soared in the foolish hope of a lender-blessed takeover, but fell immediately when the company denied as ‘baseless’ a report claiming that lending institutions had threatened to sell Ispat’s debt-converted-to-equity to rivals such as Arcelor Mittal or Tata Steel. The Mittals claimed in a statement that “the lenders have reposed tremendous faith in the company since its incorporation”—a fact that ought to trigger a full-fledged government investigation.
This was just repetition of earlier scene. In July 2006, when Ispat wasn’t repaying lenders, a media report said that ICICI Bank wanted to force Ispat’s merger with Jindal Steel. At that time, it was already clear that the Mittals had squandered an excellent opportunity to ride the commodity boom and take advantage of the massive write-offs granted to all steel companies under what was to be a one-time CDR exercise. Within hours, the Mittals denied the report and the lenders didn’t attempt to change the management either. Instead, they quietly cleared an unprecedented second CDR, which was officially disallowed under the Reserve Bank of India (RBI) rules unless it was accompanied by a change in management.
In the same year, the lenders watched silently as Ispat’s losses continued to mount but the Mittals splurged 14 million Euros to acquire a Bulgarian football club.
Quoting business analyst and author Alam Srinivas from Governance Now, the Hindustan Times, said, “Instead of trying to get back their money lent to Ispat, the banks helped the promoters to continue their unviable ways."
As on 30 June 2010, Ispat Industries owed over Rs7,200 crore to 15 lenders and had overdues exceeding Rs400 crore while its consolidated loss stood at Rs323 crore for a 15-month period.
However, both Pramod and Vinod Mittal ran out of their luck by the end of 2010. Three things sealed the fate of Ispat as it was taken over by Sajjan Jindal-led JSW Steel. Firstly, pressure from government agencies, especially the Income Tax department that conducted nationwide raids/searches on the company and its promoters. Secondly, lenders were under severe pressure because they would have to declare over Rs10,000 crore of outstanding borrowings as bad loans if some solution was not found before 31 March 2011. Also, with the loan-for-share scam having badly burned lenders such as Life Insurance Corp of India (LIC) and LIC Housing Finance, even the most sympathetic lenders were scared to bend the rules for the Mittal brothers once again. Finally, Ispat was unable to pay salaries and utility bills and it was clear that any delay in selling the plant would have led to vandalisation and reduced value.
Ispat Industries got their debt restructured in 2003 and 2009, with promises to complete unfinished parts of their steel projects and even sell expensive flats.
Samar Halarnkar wrote in his article in Hindustan Times, that "In small towns, we found angry workers and rusting factories, but the owners led unchanging, caviar lifestyles. We found heated swimming pools, rooftop helipads, foreign homes, fast cars — and humungous loans."
"It was only in 2010, when the Mittal brothers asked for another debt restructuring that banks — after more than a decade of throwing good money after bad — forced them to sell the company. A year later, in an Istanbul palace, Pramod organised for his daughter one of the biggest, fattest Indian weddings the Turks had ever seen," the report says.
In short, while lenders use all methods to recover dues from aam admi or the common man, when it comes to rich, influential and resourceful defaulters, there are different rules for extending the debt line and life.
For every sexual harassment cases like Tarun Tejpal, Phaneesh Murthy and David Davidar, there are others that have been quietly settled, allowing the perpetrator to move to high-paying jobs
Most of India has watched, and read with grim fascination, the two high-profile sexual assault complaints. One, against Tarun Tejpal, the controversial founder of Tehelka and another against a highly respected retired judge of the Supreme Court. But, in corporate corridors, the non-stop coverage has triggered a different sort of worry. Senior officials are worried about the systems and procedures that need to be put in place, while experts in gender law say that the duties and obligations of employers are not yet crystal clear. Consequently, there is a sense of panic about being dragged into unanticipated situations; precautions are often veering to the other extreme.
Dr Hemant Morparia’s cartoons on the Tehelka issue seem exaggerated to evoke laughter (see alongside); but consider what is happening in the corporate world today.
• A CEO pulls up a woman employee for walking away without completing an important presentation to be delivered the next day. The boss had to sit back and do it himself. When he pulls her up, she bursts into tears. His first reaction is to rush to open the cabin door so that the entire office is witness to the interaction.
• A corporate group, with profits in excess of Rs1,000 crore, which already has ‘open office’ plan, has decided to install cameras in the cabins of every CEO and top executive as well as in open areas to avoid problems. It is an excessive reaction, but the group says ‘better safe than sorry’.
• In another situation, when a company wanted to sack a top executive for sending lewd messages and pictures to an employee, it is the victim who pleaded against the sacking. “He has a family; I will never forgive myself for destroying their lives. All I wanted is for him to be reprimanded and told not to repeat the offence,” she said. But hysterical media coverage, following the Tehelka issue, suggests that there is little scope in the new rules for agreeing with the employee. What happens if the executive repeats the offence? Will it go against the employee for being ‘soft’ the first time? Will it make the employer culpable for failing to report the case? And worse, what happens if the employee resigns, joins another firm and repeats the offence?
• What happens when companies are forced to sack a CEO or a senior executive overnight? Tarun Tejpal’s arrest has, most probably, destroyed Tehelka, but the impact can be considerable even on larger companies. The head of law and secretarial practice at a top Indian company tells me about the ‘Phaneesh Murthy exclusion’ that nobody talks about openly. While no insurance company says so upfront, she says, re-insurers refuse to cover sex-pests in the directors’ liability cover.
All these are real situations that are happening everyday across the world, including in media organisations; but gender-law experts seem to suggest that the new rules provide no scope for such leniency. Will this encourage women to report harassment, or make it difficult for women to even confide to wary colleagues about being harassed? Activists and legal experts agree that the bold, gutsy women, like the law intern who dared to write about the retired Supreme Court judge and the Tehelka journalist, are truly brave in reporting harassment and pushing the envelope for better laws and safer workplaces for women. But will the sacrifice eventually be worth their careers?
Madhuri Shajhir (name changed), a chartered accountant who has fought a gruelling six-year battle with KPMG, a top accounting firm, is completely disillusioned. She was on the fast-track to a top post in the ‘big four’ firms; her career is finished, she has been mired in the most humiliating litigation and is battling a variety of dirty tricks unleashed by the firm and her ex-boss. That she is repeatedly praised for a dogged fight or that her boss was finally asked to leave the firm is cold comfort, when there is no sign of her case nearing any fair resolution. She asks: “Why did I join this company believing its global code of conduct and what it said on the website?”
Madhuri’s experience raises another important question: Is the media guilty of misleading women into believing that complaints work? The media discusses high-profile cases and moves on. For every Tarun Tejpal, Gopal Kanda, Phaneesh Murthy and David Davidar, there are others that have been quietly settled, allowing the perpetrator to move to high-paying jobs. In fact, even women journalists refuse to expose sex-pest editors and prefer to move on, because they are fully aware of the legal delays, the humiliation of having the victim’s stories doubted and her motives questioned, the utter apathy, and often bias, of the National Commission for Women (NCW) and the legal system.
Many senior executives wonder what their legal obligations are, if a colleague confides in them about being harassed by a senior. For instance, one reaction was: “It is okay for the journalists in the Tehelka case to support their colleague and corroborate her version; but wouldn’t I be jeopardising a really well-paying job by sticking my neck out? Would I be forced to risk a much needed income and successful career, if the police initiates suo moto action and I am forced to testify?” After all, the attention and sensitive dealing in a case that attracts enormous media attention is completely missing in thousands of routine complaints that are filed everyday.
Advocate Mini Mathew, a Mumbai-based expert on sexual harassment and gender-related laws, agrees that there are no easy answers and that it is an evolving situation. More than 16 years after the path-breaking Vishaka judgement and in the aftermath of national outrage over the brutal Delhi gang rape last year, we saw the The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 being passed by parliament and receiving presidential assent on 23 April 2013.
This Act has expanded the scope of sexual harassment, mandated the constitution of internal complaints committees (ICC) to look into complaints, spelt out the composition of ICCs and fixed a 90-day period for completion of inquiries and another 60 days to act on the ICC report. Employers who fail to comply with the Act will pay a fine of Rs50,000 for first-time offences and more in repeat cases. While this is extremely positive, there are also serious worries that some of the provisions are draconian and unworkable and will only be settled by test cases when there are actual complaints.
Meanwhile, HR and legal heads of companies are in a tizzy trying to find out what the new legislation mandate in terms of setting up an anti-sexual harassment committee, its composition and its terms of reference. They also want to know where to find experts who understand the various nuances of conducting such inquiries with sensitivity. Smaller companies that struggle to be profitable wonder if they can even afford such committees and whether they should hire women at all.
The good news is that companies are being forced to think about what is acceptable behaviour in the workplace and what is not. People come from different backgrounds in a male-dominated society; there is usually an effort required to sensitise employees and make them aware of the legal implications of their behaviour. The good news is that activists really believe that training and gender sensitisation works and organisations that are determined to provide a safe workplace for women do succeed in this objective by spelling out what constitutes appropriate and unacceptable behaviour and making it clear that there will be consequences of crossing the line, irrespective of who the person involved is.
Sucheta Dalal is the managing editor of Moneylife. She was awarded the Padma Shri in 2006 for her outstanding contribution to journalism. She can be reached at [email protected]
Only 50% of companies in the advertising and media world in Mumbai have a committee to address sexual harassment reveals a survey
Only half of the companies in the advertising and media fraternity in Mumbai have a committee to address sexual harassment. Over 60% of women feel their commitment to an organization would be questioned if they opted for flexible working hours. Inversely, 35% of men felt uncomfortable to opt for a flexible work schedule. These are some extremely relevant findings from a perception study of gender equality in the media and advertising industry in Mumbai.
The “Gender Equality in the Workplace Survey” was conducted among mid to senior level professionals, by Social Access Communications, a communication firm that works for social change on behalf of NGO Population First, which tackles population and health issues within the framework of women’s rights and social development. The survey was circulated among over 600 professionals, and received 130 responses.
The survey results were revealed as part of a larger agenda to sensitise advertising professionals to be more gender neutral, through a workshop ‘Men are from Venus, Women are from Mars’, hosted by Population First, on 29 November 2013. The workshop was supported by UNFPA, and designed and managed by Social Access Communications.
Gender stereotypes have firmly rooted themselves in the workplace over the past many decades, and gender-based perceptions subconsciously determine most responses to situations. Lately however, there are signs that things are changing.
Women’s empowerment is one of the foremost discussions in modern India, and not surprisingly the corporate world also has to deal with difficult questions. The reality is more and more women are joining the workforce today, and the equation will only increase. It is therefore imperative to bring the issue of gender equality into prominence at the workplace. It is necessary to undertake measures to change attitudes to be more gender neutral. With this in mind, the survey was designed to garner a better understanding of the ground situation, and to help employees be better prepared for change.
The survey details that 91% of employees ‘feel valued’, with 40% of the respondents from the 35-55 age group. Also, 88% of people say their employers genuinely support equality between men and women.
“By and large the advertising industry treats men and women fairly, and that is a heartening piece of news. However, there is significant scope for improvement as far as sensitivity towards sexual innuendo is concerned,” said Lynn de Souza, the founder of Social Access Communications, the knowledge partners for the workshop.
Interestingly enough, though, a closer look at the fine print reveals that while 68% of men ‘strongly agree’ that employers are unbiased, 67% of women ‘strongly disagree’. Further 23% of men and women feel organizations make assumptions about people’s capabilities based on gender, age, pregnancy and family commitments.
As far as flexibility of work is concerned 60% of women feel their commitment would be questioned if they opted for flexible work hours, while only 35% of men feel they can actively consider a flexible work option. 55% of people feel they have not been encouraged to apply for other positions in the organization.
“This stresses the fact that both men and women should benefit from greater flexibility in the work hours,” pointed out Lynn de Souza.
The most disturbing statistic that came out of this survey is, however, that only 50% of companies in the advertising and media world have a committee to address sexual harassment. Nine per cent of employees, both men and women, have faced inappropriate sexual contact at the workplace. Further still 17% of people have observed someone else in the organization being sexually harassed. Interestingly, men have responded that they are ‘uncertain’ about what construes as sexual harassment.
It can be concluded that while sexual harassment incidences are high, there is low reporting, and little or no knowledge on how to go about it.
Here are the survey results…