On Mumbai’s D Street – Dalal and Deal – three Ks or Kings, as they are called in local lingua franca, have dominated the show for many years. The Harshad Mehtas and Ketan Parekhs have come and gone, but Hemendra Kothari, Nimesh Kampani and Uday Kotak have survived the visccitudes of time and market upheavals. If there is a big ticket M&A deal in India Inc, one of the troika would have to be involved in it.
Iconic investment banks Merrill Lynch, Morgan Stanley and Goldman Sachs, whose names are now mud, first traveled to India, shepherded by Kothari, Kampani and Kotak. Two other famous names have also been poster boys of the stock market for the last 15-odd years. They were known as Ram and Lakhan by market movers, but sadly they aren’t together anymore. I am referring to Mukesh and Anil Ambani. But that is not the subject of this treatise.
Of the three Kings, Nimesh Kampani is the man who is dogged by trouble these days. Last week, a strange story popped up on the front page of Hindustan Times. Known for its shoddy business coverage, I was shocked to see an article titled ‘Who or what sent Kampani into hiding?’, and was curious to know what new development had taken place in the four-month old case to warrant a page one in HT suddenly. After reading the story, I was even more curious, for it told me nothing new. So, why do the story? The Kampani case is older than the Ramalinga Raju fraud in Satyam. If my memory serves me right, Kampani would have fled India round mid-December. For the uninitiated, let me provide a quick sequence of events.
JM Financial promoter Nimesh Kampani is wanted in a criminal case registered against Nagarjuna Finance Ltd under the Andhra Pradesh Depositors of Financial Establishments Act for failing to return money to the depositors. Approximately Rs 100 crore is involved in this case. Missives were sent to all international airports posting lookout notices against Kampani and the other accused in the case as far back as December 17, 2008. Despite that, Kampani reportedly fled India and is believed to be in Dubai. All known facts. Kampani was an independent director on the board of NFL and resigned in 1999. Despite that, he is being hunted. And nobody can do a damn thing about it. One of India’s top bankers is on the lam.
Now the question is why? At the very kernel is a subject that I am very familiar with. For I know some of the dramatis personae. Sometime in 2006, top notch American private equity giant Blackstone Capital made its first big bang investment in India. Target – Ushodaya Enterprises, owner of Ramoji Rao’s vast media and entertainment empire. The investment turned media and entertainment industry valuations on its head. People were running like headless chickens when they heard the astounding numbers. Twenty six per cent stake in Ushodaya, owner of ETV, Eenadu and Ramoji Film City, for $275 million was a large sum of money.
After the hype came the crisis. The deal hurtled from one crisis to another till it was scuppered for lack of regulatory clearance. Blackstone’s Akhil Gupta is a friend of mine and I remember how anxious he was those days when the guillotine hung over the deal. Word was also sent to me by Ramoji Rao’s close aides on what course of action was required next. I don’t know the media baron personally, but I know a thing or two about media and entertainment.
It all came to nought. The deal was scuttled as Ramoji Rao was in the crosshairs of the Andhra Pradesh government. Rao was close to NTR and later Chandrababu Naidu. In fact, many consider him to be the brain behind the formation of the Telugu Desam Party. At the kernel of the case was political patronage. In many ways, a reprise of the Satyam/Raju case. When Ushodaya and Ramoji Rao were being taken down a notch or two by political machinations, a white knight emerged to bail them out. That is when Nimesh Kampani stepped into a ring of fire. He ploughed in Rs 1,200 crore through Equator Trading Enterprises Pvt Ltd, a special purpose vehicle. And that is when his troubles began, no multiplied.
The day after HT carried the story on page one, Mail Today wrote a counter – ‘Police say Kampani must face the law’ – penned by their correspondent in Hyderabad. While the HT story quoted Nimeshbhai’s son Vishal as saying that they were likely to move Supreme Court shortly, the Mail Today story was tangentially different. It began by saying, “Kampani has no option but to surrender before the Andhra Pradesh police and face trial if he wants to come out clean and prove his innocence”. HT was serving to protect, Mail Today was bringing him down from the pedestal. Interestingly, Kampani’s anticipatory bail plea has also been rejected by the Andhra Pradesh High Court. The story stated, “And if he moves Supreme Court for bail, the state police is planning to oppose it.” Incidentally, Kampani is also an investor in Maytas Properties, sister company of the tainted Satyam Computers.
So, even as all this drama is unfolding and newspapers are reporting on events which took place four months ago as if they happened only yesterday, I still don’t understand why these stories appeared out of the blue. Was the independent director culpability angle involved in the HT story? Should they be prosecuted and harassed? Are they responsible for fraud committed by promoters? Yes, these are serious ethical issues that have no definitive answers as we have seen in the Satyam case. The independent directors on the board of Satyam – eminent personages TR Prasad, Krishna Palepu, Mendu Rammohan Rao and others – have all got away scott free. Ironically, the epicentre of Satyam is also the same Hyderabad, just as Global Trust Bank was a few years ago. What is it about Telugu biddas that a wave of scams has taken place in Hyderabad?
Now we come to the larger issue. If Ramalinga Raju and company are still lodged in jail and have not been prosecuted till date, isn’t there a fundamental flaw in the Andhra Pradesh prosecution system? On the one hand, a hunt is on for Kampani in a Rs 100-crore fraud. On the other hand, a Rs 7,600-crore fraud indicted, no self-confessed promoter is happily ensconced in jail. Justice was impeded repeatedly as first SEBI, then SFIO and finally CBI were not given custody of the errant Rajus. Isn’t the sense of proportion distinctly amiss? Till date, we are not aware of the extent of the malfeasance in Satyam. Yet, the company is being sold to the highest bidder by the government. There is no clarity on the width and depth of the fraud. There are reports of fudged bank accounts, fudged employee numbers, fudged contracts, spiked invoices, insider trading in shares and what have you. But do we have a case, are we in a position to throw the book at Raju, do we want to indict and prosecute him?
Public memory is short. People tend to live and let live. Raju is safe, while Kampani is a fugitive. Please understand that this is not a case for Kampani, but a denouement of the justice system. We know that India needs an efficient nodal agency and system to fight white collar crime. We don’t have it and we are not prepared to do anything about it. From stories about the Satyam fraud, our news hounds are writing and airing stories on Satyam’s sale process. We are spending more time on whether BK Modi will bid or not? BK Modi was making a $100 million magnum opus on Buddha. It was to be directed by Shekhar Kapur. Dr Modi was also buying the 30-odd per cent held by individual Indian shareholders in Multi Screen Media aka Sony Entertainment TV. I wouldn’t want to speculate on the locus standi of both. Modi was never a serious player for Satyam, and yet media was in la-la land chasing him for quotes, while the more serious players were busy examining the company’s nitty gritty.
Our journos don’t want to help in prosecuting Ramalinga Raju, they want to chase shadows like Modi. I rest my case even as I still wonder why the Kampani stories surfaced after three months. Was the HT story a command performance? But at whose behest?
(Sandeep Bamzai is a well-known journalist who started his career with The Statesman in Kolkata in 1984. He has held senior editorial positions in some of the biggest media houses in three different cities - Kolkata, Mumbai and New Delhi - with The Indian Express, Illustrated Weekly, Sunday Observer, Dalal Street Journal, Plus Channel where he ran India's first morning business show on Doordarshan, The Times of India Group, Business India, Hindustan Times and Reliance Big Entertainment. Starting his career as a cricket writer, he graduated to becoming a man for all seasons under Pritish Nandy, who he considers as the premier influence on his career. Since he studied economics at Calcutta University, Bamzai decided in 1993 to branch out into business and financial journalism. Familiar with all three media, he is the author of three different books on cricket and Kashmir. The views expressed here are of the writer’s and not necessarily those of the editors and publisher of exchange4media.com.)