Will the Zee Group get away this time too?

Zee and Subhash Chandra have always managed to escape from punishments in the past even when irregularities have been proven. However, this time they are facing a Congress MP and a powerful corporate who has right connections in place. Can Zee and Subhash Chandra escape this time?

Subhash Chandra and his Zee group have always got away lightly from all kind of troubles so far possibly due to the “right connections” in the government. In fact, it is easy to forget that the Zee group was one of the three or four that were closest to scamster Ketan Parekh of the stock market scam of 2000. The Zee stock was among the K-10. The ten scrips—Zee Telefilms, Himachal Futuristic, Satyam Computers, Global Telesystems, DSQ Software, Ranbaxy, Silverline, SSI, Aftek Infosys, and Pentamedia—were openly ramped up by Ketan Parekh, while the regulator, and the finance minister (Yashwant Sinha) watched indulgently. 
When the investigation into the scam started, it was found that Global Trust Bank (GTB) had rapidly routed money through a couple of Zee accounts in a single day in an unsuccessful bid to bail out Ketan Parekh. All this was documented by the Securities & Exchange Board of India (SEBI) and was on record with the Joint Parliamentary Committee (JPC). Even those days, the group and its media empire hit back at anyone who dared to write about the issue. A lackadaisical investigation was conducted by SEBI, which dragged for years and was to have been settled through a consent order. But suddenly, in the first week after CB Bhave was appointed chairman, in 2008, a whole-time member of SEBI passed a strange order allowing the group to get away with a mere warning. Not a single rupee was paid was as a fine. 
This time around, things are different. The Congress itself is under pressure over innumerable corruption scandals and the victim of alleged extortion by the Zee group is a powerful industrialist and Congress Member of Parliament (MP) Naveen Jindal. The chairman of Jindal Steel & Power is one of the most aggressive players in the steel sector and has hit back with a sting operation that has led to a couple of investigations. Jindal has alleged that Zee News and its senior journalists (who also double up as business heads) demanded Rs100 crore in advertising to suppress negative reports about his involvement in the coal mining scam. Although the charges made by Naveen Jindal are of a serious nature, it is not clear if he would take his legal action to its logical conclusion—after all he is a businessman and needs the media. However, a suo moto investigation has been ordered by justice JR Verma, chairman of the News Broadcasting Standards Authority (NBSA) and this will not be as easy to manage as a pliant and easy to pressure SEBI. 
It is worth going back in time to Zee’s involvement with Ketan Parekh. The share price of Zee Telefilms’ was ramped up almost 25 times from just Rs21 in March 1999 to around Rs490 in February 2000.  The Essel group (promoters of Zee) even gave an advance of Rs706.4 crore to Parekh, a part of which was later returned. Doesn’t this unexplained advance sound familiar to what several politician-‘entrepreneurs’ and famous sons-in-law have received in recent times?  
SEBI dragged on the investigation ordered by the JPC for eight long years after the scam. Then, to the shock of market observers, SEBI, under CB Bhave, allowed the company to walk away with a mere warning, after concluding that if found no nexus between the company and Ketan Parekh! 
The whole-time member, TC Nair, who passed on the order, concluded that “the promoters of Zee Telefilms had by their conduct and actions given an impression that they aided and abetted Ketan Parekh (KP) entities in large-scale market manipulation of various scrips, including Zee, during 1999-2001 period.” There was copious evidence of Zee Telefilms’ extraordinary fund transfers through accounts in GTB. 
This same member, was also guilty of earning a rent for hiring his flat to the Stock Holding Corporation of India (SHCIL)—a regulated entity—at Coimbatore where SHCIL had absolutely no business or operations. There was no action against Mr Nair, who in fact was expecting an extension when he passed the Zee Telefilms order. What was more shocking was that Zee Telefilms had been negotiating a consent penalty of Rs5 crore when Mr Nair let it get away with a warning.
Coming back to Jindal-Zee episode, earlier the Congress MP filed a first information report (FIR) against Subhash Chandra, chairman of Zee group, Punit Goenka, managing director of Zee, Sameer Ahluwalia and Sudhir Chaudhary, both editors and business heads of Zee Business channel.
The complaint also blames Zee group’s head Subhash Chandra. It says, “Aforesaid Sameer and Sudhir further informed us that a vilification campaign against our company is under instruction, consent and full knowledge of aforesaid Subhash Chandra and other officials of their top management. They further informed that Subhash Chandra Goyal was fully aware of this. In fact this whole thing was his plan and each step had his concurrence”.
The Zee group, however, denied the allegations made by Jindal. According to a PTI report, Punit Goenka, managing director and chief executive, Zee Entertainment Enterprises has said, “This kind of allegation has happened in the past and may happen in the future. It doesn’t make any difference to us and we will stick to the truth. These are all pressure tactics.”
Coming back to Global Trust Bank, it played the role of a ‘buddy’ lender to Ketan Parekh. However, after the exposure of its role in the Ketan Parekh scam, GTB was about to collapse before the Reserve Bank of India (RBI) arranged its shotgun marriage with Oriental Bank of Commerce (OBC). At that time OBC was among the best banks in India with the lowest percentage of bad loans or non-performing assets (NPAs). After GTB’s merger, OBC declared a loss during the fourth quarter ending March 2008 and 39% fall in net profit because of crippling Rs242 crore write-offs for amortisation of losses due to the merger. OBC’s total loss due to GTB was estimated to be around Rs1,220 crore.
OBC reported a net profit of Rs302 crore during the second quarter ended September 2012 mainly due to strong recovery of assets that had gone bad in the past. During the second quarter, OBC’s total recovery was Rs449 crore compared with Rs303 crore in the year-ago period.
So far, Subhash Chandra and Zee have escaped from any punishment. This underlines one simple fact—no matter what regulations the government puts in place, powerful corporates with excellent media and political connections are never punished. Instead, their mess is distributed across a few million small and tiny shareholders or depositors.
It would be interesting to see if Jindal, the powerful corporate and Congress MP would take this case to its right conclusion or Subhash Chandra and Zee again manage to get away. 
  • Like this story? Get our top stories by email.



    240p FLV

    7 years ago

    Excellent angle about the sordid Zee group and very relevant in today's context

    Ravi Saboo

    7 years ago

    The article is bizzare, I could not understand what was the actual meaning of the T C Nair episode. What does it imply?

    I presume that moneylife will have all the details regarding Mr.Naveen Jindal also about how he without the environment clearance still managed to erect the structure of the factory and win around 25% of the total coal blocks.

    It would be better if you stick to the current scam then rather bring out the year 2000 scam as this will only raise and create doubts about your intention.


    Sucheta Dalal

    In Reply to Ravi Saboo 7 years ago

    Dear Mr Saboo... do read moneylife regularly. You will see that we cover everybody. No regular reader has any doubts about our intention.
    And please believe that our readers are quite happy with ALL the scams that we cover... not just Zee, or Jindal, or Essar, or Ispat, or Reliance, or MLM schemes, or insurance shenanigans or regulatory lapses or banking quality issues.
    Many thanks for discovering Moneylife. We hope you will be a regular.

    Ravi Saboo

    In Reply to Sucheta Dalal 7 years ago

    Thank you for replying so promptly. I have been following your stories regularly, I am one of your followers on twitter.

    Anyhow the main story about Zee being involved in a scam earlier was very confusing to say the least. The comment about T C Nair, about OBC merger and the fall in net profit were totally out of context.

    Moreover I hope you will agree that it takes a lot of guts for anyone to take on Naveen Jindal who is in the central government in which all the top people are involved.

    Please do not rake up old issues and mix it up with this.


    240p FLV

    In Reply to Ravi Saboo 7 years ago

    Take on Jindal? Hello, are living in a different planet or working for Zee? Look up the word extortion in dictionary since you don't seem to know what it means

    Ravi Saboo

    In Reply to 240p FLV 7 years ago

    I don't work for ZEE or for anyone and please now let the court decide wheather there was any extortion and also if Mr.Naveen Jindal is as clean as he shows to be.

    Coalgate will not be investigated to its logical end for sure because of his reach...


    7 years ago

    Excellent with Full Details Exposing , for all of us.

    Revival plan to be funded by internal resources: Kingfisher

    When DGCA expressed concern about the airline's financial health as it was not going to get any money either from its lenders or its banks, Kingfisher officials informed the regulator that they would be arranging funds for operations through internal resources

    New Delhi: Beleaguered Kingfisher Airlines, which has resolved a 26-day deadlock over salary dues with its employees, today told aviation regulator Directorate General of Civil Aviation (DGCA) that it would use its own resources to fund its revival, reports PTI.


    At a meeting with DGCA chief Arun Mishra, Kingfisher Airlines CEO Sanjay Aggarwal informed him that "at present, the source of funding for the airline will be through their own resources," official sources said after the 30-minute meeting.


    The assurance came a day after Kingfisher promised to pay four months' pending salary to its employees by December, who immediately called off their strike and the management lifted the 25-day lockout.


    While there is no tangible information about any fresh investments coming in the near future, the sources said Kingfisher would have to spend its own resources for revival.


    It has been shelling out an average of about Rs20 crore a month on payment of salaries to about 4,000 employees.


    The airline's top brass are likely to discuss the revival plan with UB Group chief and Kingfisher promoter Vijay Mallya very soon, officials said.


    At the meeting, the DGCA chief asked the management to take on board all its stakeholders like Airports Authority of India, other airport operators, oil companies and Maintenance, Repairing and Overhaul operators to support the airline's revival plan, the sources said.


    They said the liquor baron Vijay Mallya-owned airlines has been asked to start meetings with officials in the DGCA headquarters here and regional offices on operational and airworthiness issues.


    During the meeting, Mishra also directed the airline to prepare its winter schedule and file the same considering the number of aircraft available with them for operations.


    The regulator said it would also be consulting these stakeholders before it took any decision to revoke suspension of the airline's flying license imposed on 5th October.


    The DGCA also asked the debt-ridden airline to prepare and submit its winter schedule, depending on the number of aircraft it had in its fleet.


    Before the airline was grounded on 30th September, Kingfisher had 10 operational aircraft -- seven Airbus A-320s and three ATR turboprops, and is likely to get one more soon after it completes the mandatory and elaborate 'C-checks'.


    The carrier, which last year had a fleet of 66 aircraft, now has ten -- seven Airbus A-320s and three ATR turbo-props.


    One more aircraft would join the fleet soon after it completes the mandatory engineering check.


    Kingfisher is saddled with a loss of Rs8,000 crore and a debt burden of another over Rs7,524 crore, a large part of which has not been serviced for several months.

  • User

    Telenor partners with Sudhir Valia's Lakshdeep for new telecom venture

    Valia, the brother-in-law of Dilip Shanghvi of Sun Pharma, is the new partner for Telenor in India after ending its telecom joint venture with Unitech

    New Delhi: After ending its telecom joint venture Uninor with Unitech, Norway's Telenor on Friday said it has signed Lakshdeep Investments and Finance as the partner for its newly formed Indian entity Telewings Communications, reports PTI.
    Lakshdeep, controlled by Sudhir Valia, will contribute an agreed amount of equity into Telewings. Valia is the brother in law of Dilip Shanghvi, who is the promoter of Sun Pharmaceutical Industries. 
    "This is a financial investment by Valia in his personal capacity", Telenor said in a statement.
    "Upon successful participation in the upcoming spectrum auctions and post all required government approvals, Telenor Group will eventually own 74% of the joint venture," the statement said.
    All assets of Unitech Wireless will be transferred to this company after attaining the approvals.
    "Telenor Group will maintain operational control and upon necessary approvals all assets of Unitech Wireless (Uninor) will be transferred to this company for seamless continuity of operations," the statement added.
    Telewings has already applied for prequalification procedure to participate in the upcoming spectrum auction.
    However, a final decision on whether to participate or not will be made before the auction starts, it added.
    Earlier this month, realty major Unitech has said it will exit from the telecom joint venture with Telenor by selling its entire 32.75% stake to the Norwegian firm.
    Telenor and Unitech had been at loggerheads ever since the Supreme court in February cancelled Uninor's 22 telecom permits. Telenor wanted to scrap the JV and transfer the business to a new firm and get fresh licence, whereas Unitech was opposing it.
    However, earlier this month, both Unitech and Telenor agreed to transfer the business in Uninor to a new entity controlled by the latter.
  • User

    We are listening!

    Solve the equation and enter in the Captcha field.

    To continue

    Sign Up or Sign In


    To continue

    Sign Up or Sign In



    online financial advisory
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 3 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)