NDTV Promoters Wanted To Camouflage The Monies, It’s Official Now, Says Gurumurthy

The law has finally caught up with the promoters of the news network New Delhi Television (NDTV), and there is no surprise here as their acts of fraudulence have been under probe in courts and watched by investigation authorities, says S Gurumurthy in his article in The New Indian Express.

A chartered accountant and journalist, Gurumurthy has alleged that there definitely is evidence of Radhika and Prannoy Roy’s intention to evade taxes, to camouflage huge monies received and to carry out money laundering.

According to Gurumurthy, NDTV had a huge cash loss of Rs 248 crore in 2004, which is incidentally when the Congress-led United Progressive Alliance came to power. Post 2004, however, the fortunes of NDTV, Gurumurthy alleges, started to soar ‘fed by shell companies floated by it’.

Between 2006 and 2010, he says, NDTV India floated some 20 wholly-owned subsidiaries in different parts of the world - seven in Mauritius, eight in India, two in the Netherlands, one in London, one in the UAE, and one in Sweden - and all of them were letter-box companies. These subsidiary companies raised $417 million. Of this, $310 million was raised through a wholly-owned subsidiary, NDTV Network PLC UK, and $117 million through the sale of the channel NDTV Imagine to GE Corporation controlled by Universal Studios - all through private negotiation and private placement. Out of the $417 million, $267 million was invested by GE Corporation directly or indirectly.

Gurumurthy cites a series of emails between NDTV’s promoters (Prannoy and Radhika Roy) and some consultants involved to bolster his case of there being enough evidence to investigate NDTV.

Here are the emails Gurumurthy quotes:

E-mail dated 22.05.2008 at 3.06 P.M. by Vivek Mehta from Price Waterhouse Coopers to Pronnoy Roy: “Subject: Re: FW: Pres Announcements etc “Dear Pronnoy, Here is a shot at it, based on your draft appreciate your problems but honestly the problem could become worse if we give a handle to the tax authorities. I am concurrently discussing with other partners now the draft below. Let’s get on a call ASAP, Regards Vivek”.

E-mail dated 21.05.2008 at 10.16 P.M. (by Vivek Mehta from Price Waterhouse Coopers to Pronnoy Roy): “Subject: Press Announcements etc. Dear Pronnoy & all above. Now that we are reaching the conclusion I wanted to remind everybody that all press releases… stock exchange releases etc etc both by NDTV & NBCU should be whetted by us. We must ensure that what is stated is that NBCU is subscribing for a sum of & 150 m in NDTV Networks group company Overseas for an effective 26 percent stake. We must not mention that NDTV is receiving the 150 m as dividend or otherwise. If asked a question what will the money be used for??? We need to decide how to answer this question carefully. Thanks Vivek”.

E-mail dated 22.05.2008 at 02.09 P.M. (by Pronnoy Roy to Vivek Mehta from Price Waterhouse Coopers): “Subject: Re: FW: Pres Announcements etc. For everyone …..this is very important…Could we please have a draft press release Vivek….which we can use & send to nbcu……If possible, it’s important that the press release should make clear that the money comes in to NDTV and does not stay in Networks”.

E-mail dated 22.05.2008 at 3.06 P.M. (by Vivek Mehta from Price Waterhouse Coopers to Pronnoy Roy). “Subject: Re: FW: Pres Announcements etc Pronnoy….I need to start with a base draft…can somebody give that to me. Your second requirement is something I would avoid saying…. let’s discuss after I have seen the base draft. BR Vivek”

E-mail dated 22.05.2008 at 05.30 P.M. (by Radhika Roy to KVL Narayan Rao). “Subject: Re: FW: Pres Announcements-Final? Dear Narayan, But this doesn’t really address prannoy’s concerns arising from our earlier communication and it would be a pity to miss this opportunity to correct any misconceptions. Just to remind you Prannoy’s four points below: 1. Everyone thought the money was to be put into Networks….As a result we got no shareholder value for the Rs. 600 crs in NDTV. 2. It’s very important to state that the money is not in Networks…. But in NDTV…. As this affects the valuation analysts give to the deal…. And it’s a big boost if they know it’s not in Networks and it is in NDTV…. I know we can’t say stake sale (which it is not anyway)… But we do need to clarify that the money is not in Networks”

These messages obtained by the income tax department, according to Gurumurthy, suggest that the promoters of NDTV did want to conceal the monies received.