The Unitech puzzle

SUNDAY GUARDIAN

Even as the Nira Radia phone tapping expose continues to dominate thepolitical and media mindspace, disturbing news concerning one ofIndia's top realtors forms one of the key components of the DG ITInvestigation Milap Jain's findings. In his report to Sudhir ChandraMember - Investigation, CBDT dated August 25, 2009, Jain cites thetapping on lobbyist Nira Radia's phone and lays bare the collusionbetween the realty firm Unitech and lobbyist Nira Radia. Thisconfluence of big business and a high profile lobbyist in salvagingthe group's image and financial health during a full blown corporatecrisis is shocking.
Interestingly these findings pulled out from raw conversations betweenvarious Radia associates come against the backdrop of the LehmanBrothers collapse in the US. Apparently, Unitech had sold shares inits Mumbai joint venture to Lehman Brothers before the dramaticcollapse of the iconic investment bank for Rs 750 crore.The firsttranche of Rs 740 crore was paid towards 50 per cent of Unitech'sholdings in Shivalik Ventures. The report suggests that a short termcapital gains of Rs 240 crore was realised on this sale which havebeen reported as a Capital Account adjustment rather than atransaction as income.
There is a suspicion on the part of DIT that the Group has taken bogusloan entries through entry operators. The entry operator, worried bythe then recession wanted to reverse the loan entries. Theconversations show the paranoia on the part of Unitech on the collapseof Lehman in the US. The concern is magnified due to the likelihood oftwo further tranches of investment which were to come from Lehmanthrough third party investors. Even more damaging are conversationspertaining to damage control measures including the bogus claim thatTelecom Italia is all set to invest in the Group's telecom venture.
In this hour of crisis, intercepted conversations show that Radia wasusing her influence to bail out Unitech by roping in Tata Realty withan advance, of which an outstanding of Rs 650 crore is spoken of. Evenmore damaging is the information that cheques given by Unitech have'bounced.' Radia is also shown as mediating on behalf of Unitech for atelecom license with Radia advising Unitech on bringing the Telenorinvestment into telecom venture in calibrated tranches in order togive a general impression to all and sundry that there is no windfallgain for Unitech's promoters, but that the investment is coming intothe body corporate. Incidentally Unitech which was in the throes of adeep rooted financial crisis turned itself around on the back of this22 circle license for which it forked out Rs 1651 crore. Subsequentlyit brought in Telenor as an investor with a corpus of Rs 6200 crorewhich helped retire some of the mountain of debt.