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The Pur(e)ti truth about Nitin Gadkari

Monday, 22 October 2012 - 10:30am IST | Agency: DNA
This week, we had an unusual television moment: BJP President Nitin Gadkari in our studios allowing himself to be grilled on questionable financial dealings and conflict of interest.

This week, we had an unusual television moment: BJP President Nitin Gadkari in our studios allowing himself to be grilled on questionable financial dealings and conflict of interest. 

The background to his appearance was straightforward. Since team Kejriwal had dropped enough hints that Mr Gadkari and his businesses was their next target, our Mumbai and Nagpur reporting teams began to revisit those areas. As it turned out, the IAC press conference was disappointing, a rehash of mainly old facts. But our team had stumbled upon some serious questions about how Mr Gadkari had financed his company.

Mr Gadkari likes to call himself a social entrepreneur, and his company, Purti Sugar Ltd. s sort of cooperative that is owned by the farmers it was meant to benefit.  It’s true that the list of shareholders is long, about 10,000  names, that carry the flavour of rural Maharashtra. But farmers (if they are, indeed, farmers) own only 10% of Purti. Mr Gadkari himself owns only 200 shares.

The bulk of Purti is owned by just 18 companies. These companies invested about Rs 2-4 crore each, to form the bulk of Purti’s paid up capital of Rs 68 crore. This, essentially, was Purti’s start up money. 

So who are these companies that financed Purti, and as a result, own it ? Their balance sheets on the website of the ministry of company affairs offer very little detail.  When our reporters paid them a visit at their registered addresses, they (surprise, surprise) hit a dead end.  Two of the firms — Swiftsol India and Earnwell Traders — are registered at a chawl in the Mumbai suburb of Malad, surprising for companies which have invested about Rs 4 crore in Purti. None of the residents at the given addresses had heard of Swiftsol or Earnwell. The same dead end at the addresses of Chariot Investrade, Regency Equifin, Leverage Fintrade, etc scattered across suburban Mumbai and Kolkata.

The Congress alleged that Mr Gadkari had used shell companies to “channel his ill-gotten wealth”. Mr Gadkari naturally denied this, but beyond that developed amnesia. He said he can’t remember all his 10,000 shareholders, a weak claim given that we were only asking him to reveal the identities of 18 entities that own his company. He said addresses change, an unconvincing claim, given that many of the people our team met had been living at those addresses for 20 years, much before Purti was formed. 

There is one investor whose identity is known. Ideal Road Builders purchased shares worth Rs 1.85 crore in Purti in 2001, just over a year after Mr Gadkari demitted office as Maharashtra’s public works department minister. During his tenure, Ideal was awarded a number of contracts by the PWD department, which eventually led to it becoming one of Maharashtra’s leading toll road companies.

DP Mhaiskar, founder of Ideal Road Builders, also bought shares worth about Rs 2 crore in Purti. Together, IRB and Mr Mhaiskar control about 8% of Purti Group. Should a toll road company, which has received contracts under Mr Gadkari’s tenure, invest in a venture set up by him, that too so soon after his demitting office? Even if the tendering process was above board? Why not, says Mr. Gadkari. Why can’t contractors and ex-PWD ministers be friends? Or business partners?

Why not, indeed. In 2010, Purti Group received a secure loan of Rs 165 crore from a company called Global Safety Vision, which has DP Mhaiskar as its director.  With this one loan, Purti was able to repay all its outstanding debt. Surprisingly, in its last regulatory filings, Global Safety Vision had only Rs 1 lakh paid up capital. Mr Mhaiskar refused to comment. But Mr Gadkari said he was happy to explain. He said Mr Mhaiskar and he are close friends. So close that Mr Mhaiskar and his family put up a large chunk of their shares as collateral to raise loans for a new power project. They gave about a fourth of that loan to Purti. Where is this power project coming up? Bang next to Purti’s factory. On the land sold to the Mhaiskars by Mr Gadkari.

It says something about Mr Gadkari that he sees no qualms in admitting to such intense proximity with contractors. Or feigning amnesia about the ownership of his company. On live television.

Whatever the motives that made him offer to come to our studio (confidence, anxiety, naiveté?) it was a sporting step by a politician of his seniority. But at a time when crony politics is under such intense scrutiny, and when his second term as BJP president is about to be clinched, just turning up on TV and trying to bluster one’s way out may not be enough.

Sreenivasan Jain is Managing Editor, NDTV. He anchors the ground reportage show, Truth vs Hype, on NDTV 24x7


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