AS THE 2G spectrum scam unfolded, senior DMK leaders were in for a shock. Till the raids by the Central Bureau of Investigation (CBI), they believed that Andimuthu Raja’s actions as Union telecom minister were dictated by his master, DMK supremo and Tamil Nadu Chief Minister M Karunanidhi, and that the protege was merely taking his ‘commission’, a well-understood practice in politics and business — and in the business of politics. But now they know Raja was aggressively building a parallel business empire that would have rivalled the K-family’s if he had continued in power. Which is ironic, for when Raja was preferred over family member Dayanidhi Maran for the telecom minister’s post, it was because he was considered so loyal that he could never be a threat.
No wonder, right from May 2010, when both Houses of Parliament were rocked by demands for Raja’s resignation over the 2G scam, Karunanidhi backed him, saying detractors were opposed to him because he is a Dalit. But after the December raids and subsequent disclosures, the DMK chief ended up saying that Raja would be punished if he was found guilty.
Raja’s modus operandi, say CBI sources, was not very sophisticated: he did what film folk do, floating companies in different names and channelling funds to them via two or three other front companies. He ran this empire through proxy and to ensure that the directors didn’t take their roles too seriously, he apparently asked them to give him advance undated resignations.
As the CBI puts the jigsaw puzzle together, it finds Raja had set up front companies well before the spectrum allocation: a mix of hawala channels, realty firms, NGOs, family trusts and export firms ensuring safe passage for the spoils of politics. For this, he established contact with NRIs, audit firms in Malaysia and local companies in Chennai, Perambalur, Trichy, and Coimbatore. With easy money flowing in, many became millionaires overnight.
One such man was Sadiq Batcha, who heads several real estate firms in Chennai. Twenty years ago, he was a salesman in Pallapatti village in Salem district, knocking at doors to sell sarees on 10 instalments. Later, he sold radios and tape recorders. Unable to make ends meet, he migrated to Perambalur, where he met AIADMK’s Varathur Arunachalam. This was his stroke of luck, his key to fame and fortune. Arunachalam introduced him to Raja, a small-time DMK politician. Both were ambitious and ready to take risks. It was Raja who told him to venture into real estate. With small investments on both sides, they grew together. Today Batcha’s real estate empire is worth more than Rs. 2,000 crore.
Batcha floated companies one after another with Raja’s close relatives on the board of directors. Chennai-based Green House Promoters, a private limited company set up in 2004 with a seed capital of Rs. 1 lakh, grew exponentially to record a turnover of several hundred crores in a short span. It opened an office in Singapore in 2006. Raja’s wife Parameshwari joined the board in 2007. The Enforcement Directorate issued a notice to the company for Foreign Exchange Management Act violations and the Singapore office was shut down in 2009.
| Raja ran his empire through proxy. To ensure his directors didn’t take their roles too seriously, he got advance undated resignations from them |
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It was clear from the transactions that the office had been set up to channel huge amounts of money to Chennai. For this, Batcha used his connections in Malaysia and Dubai. Later, Welcome Communications, a Malaysia-based telecom company, channelled the scam money to Chennai through its Indian arm Wellcom. The latter was in the news in March 2009, when there were reports that a company run by Raja’s associate, T Silvarajoo, was participating in the WiMax franchise allotment by BSNL. Subsequently, BSNL refrained from shortlisting Wellcom, also dropping Wipro and Cisco for good measure.
WHILE INTERROGATING RP Paramesh Kumar, the son of Raja’s sister Vijayammal, and joint managing director of Green House Promoters, the CBI has unearthed huge money transfers through export orders. The Enforcement Directorate is probing the possibility of the use of textile and vegetable exporters based in Chennai, Tirupur and Coimbatore to channel the money through hawala operations.
Paramesh Kumar is a common factor in all Raja companies, whose personal and company accounts show large-scale money transactions. But then, all the companies made huge profits within a short span of time — and this happened from 2008 onwards, right when the rest of the world was coping with the global meltdown.
The money seems to have flowed as follows: companies that were favoured with spectrum allocation sold it off at a huge profit, sent the money abroad, from where it flowed back to show up as profit in Raja’s business empire. Raja also depended on his family, friends and associates to park the money while others dumped their shares in Dubai, Singapore, Malyasia and Sri Lanka. The money involved was so huge that it could not be absorbed only in benami properties, which is the usual way to stash away ill-gotten wealth in India. Swiss bank accounts are no longer safe, as they were for earlier generations.
The CBI seems to have had good reason to raid the charity Tamil Maiyam run by Catholic priest Jegath Gasper Raj (Raiders of the Lost Loot, TEHELKA, 25 December). The NGO, which actively raised funds for rehabilitation of the 2004 tsunami victims, has links to Sri Lanka, the Philippines and Singapore, all of which is being probed. More damningly, from 2007 onwards, the NGO received large amounts of money from Green House India Promoters, Equaas Real Estates and Kovai Shelters. The ETA Ascon Star Group also made donations. If the CBI manages to establish that spectrum beneficiary companies gave large donations to Tamil Maiyam, the noose will tighten around Raja and his close friend Kanimozhi, Rajya Sabha MP and Karunanidhi’s daughter, who is on the non-profit’s board of directors.
Raja proved to be the man with the Midas touch not only for Batcha but also for S Saravanan, who started as a humble servant in Royal Enterprises, the furniture shop run by Rajathiammal, Karuna – nidhi’s third wife and Kanimozhi’s mother. Today, Saravanan is one of Chennai’s crorepatis. His road to riches was paved with shady transactions such as the Voltas land deal in Chennai, which figured in the Radia tapes. Voltas is a Tata concern. Though Rajathiammal issued a press release on 17 December distancing herself from the land deal, she had admitted the mediator in the land deal was her employee Saravanan, who holds power of attorney of the disputed land, which is owned by PN Shanmugham, PN Arumugham and 16 others.
Voltas had taken the 53,000 sq ft plot on a 30-year lease in 1975. In 2005, when the company asked for a renewal, the owners did not oblige and filed a case in the Madras High Court, which is still pending. The company kept depositing the rent but the plot was sold by Saravanan to Shangkalpam Industries Pvt Ltd, Coonoor, for a sum of Rs. 25 crore, much below the market price, which is estimated to be around Rs. 200 crore. The land deal was struck just before the 2009 Lok Sabha elections. But Voltas never pursued the case and the court never sent notices to the respondents. It’s clear that highlevel mediation silenced the company and prevented it from actively pursuing legal proceedings. Now it’s up to the CBI to find out how Saravanan was able to get the power of attorney of 18 persons and execute the land deal.
Shangkalpam Industries, which now owns the property, is run by Dr Shanmughanathan Vellanthurai, 45, a Malay – sian auditor and businessman. He is also director of Shan & Co, an audit firm which has close links with Raja and Ratnam, who is Rajathiammal’s auditor. Shanmugham is a tax expert who once worked with Ernst & Young. It’s a mystery why the Income Tax department didn’t bother to probe the prime land deal in Chennai — normally, its intelligence wing does routine checks on big land deals. Only after the Radia tapes were leaked did the CBI interrogate Ratnam and raid his residence. The CBI is exploring whether any spectrum money was used for the land deals.
According to a business associate, Dr Shanmughanathan has close contacts with Raja and is an influential businessman in Malayasia. He is also on the board of Kamdar Group (M) Berhad, an investment holding company, and engages in the import, export, retail and wholesale of textile and textile-based products globally. The Kamdar group has operations in South Africa too. It is said his close relatives are manning Shangkalpam Industries in India. Dr Shanmughanathan was introduced to A Raja by his relative, Dr Kumaraswamy Shanmughanathan, who heads the Colacumby tea estates in the Nilgiris and is a PhD in dairy science.
SHANGKALPAM LTD has an office in London, registered at the address 188 Royal College Street. The company was incorporated in 1993 and Shangkalpam Ltd owns a tea estate in Nilgiris, the constituency represented by Raja in the Lok Sabha. The company has operations in Singapore, Malaysia, Australia and Dubai, the countries to which Raja and his men travel most frequently.
Raja & Co’s real estate operations were never innocuous. His henchmen effectively used mafia, police and the district administration to wrest land from the poor. He didn’t shy away from squeezing poor Dalits in his hometown Perambalur.
Projecting a grand vision of making the town the industrial hub of Tamil Nadu, Raja contacted MRF and offered 400 acres to set up a new plant for manufacturing passenger and truck tyres and a trial track. Batcha signed an MoU with MRF for acquiring land in November 2007. Atter a month, while inaugurating the district police station in Perambalur, Raja announced a Rs. 900 crore MRF project, which was greeted with loud cheers by the poor farmers.
Raja’s men had already started buying farmland offering Rs. 65,000-80,000 per acre in Naranamangalam village. Within months, they acquired 250 acres of land from 130 villagers.
Some of the villagers, including Dalits, were not ready to sell their land at such a low price. Then Raja showed his true colours. First he threatened them that the land will be notified by the government and forcefully taken over. The poor villagers knew that litigation will swallow up the next 10-15 years, during which the politician could manipulate anything. A majority of them yielded to pressure and sold their land. Then Raja targeted the remaining villagers. Many of them were arrested and threatened by police, district administration and Raja’s men. A few non-Dalits were even arrested under the SC/ST Act and released abruptly once their land was transferred to Green House Promoters. Even women were not spared, being detained illegally in police stations and released only after the title documents were signed. The MRF plant is scheduled to start operations in April-May, 2011.
According to insider information, Green House Promoters sold the land to MRF for Rs. 15-18 lakh per acre. District Collector Anil Meshram and then Superintendent of Police Prem Anand Sinha were the people facilitating Raja’s dream to transform dry Perambalur. After Raja was raided by the CBI, around 160 villagers, including 80 Dalits, came forward to petition the National Human Rights Commission about the land grab.
| The front companies of Raja made huge profits in a short span, all of it from 2008 onwards, when the rest of the world was in a global meltdown |
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Thanks to his proximity with the K-family, Raja influenced the state government to announce a Ring Road at a cost of Rs. 25 crore and announced an SEZ at an investment of Rs. 5,000 crore. Green House Promoters acquired land nearby and is running a project on 50 acres.
All the directors of these real estate firms, whose total assets run into Rs 3,000 crore, hail from Perambalur. These firms were set up just after Raja became a Union minister of state for environment and forests in May 2004. A Kamaraj, associate editor of Nakeeran, is a sleeping partner in many of the companies and his wife was running the Chennai operations of Vaishnavi Com – mu nications. Their books are professionally managed. The bank accounts in State Bank of India branch at Thiru – vanaikoil indicate huge transactions in the name of Raja’s elder brother A Ramachandran, and his sister Saroja. Investigators are exploring whether officers in the chief minister’s office were involved, but their focus is not on the K-family, only on Raja & Co.
But the involvement of Raja’s family in these businesses doesn’t need any proving. His wife Parameshwari joined the board of directors of Green House and Equaas Estates Pvt Ltd in 2007 and resigned in 2008. While she was on board, the minister’s official residence was listed as her business address. His niece R Malarvizhi is a director in both firms. The company has 12 projects in posh areas of Chennai and another seven in Trichy. After resigning, Parameswari transferred her shares to Malarvizhi.
IN FACT, both Green House and Equaas Estates were floated by Raja’s close relatives soon after he became a minister. His nephew Paramesh Kumar was joint managing director. His brother A Kaliaperumal and his nephew R Ramganesh are directors. Within a year, the company showed a turnover of Rs. 755 crore.
Then there is Kovai Shelters and Promoters, Chennai. Its managing director Dr Krishnamoorthy is a close associate of Raja dating back to the time when Raja was a lawyer and had an office in Krishnamoorthy’s building in Perambalur. Dr R Sridhar, Raja’s nephew and a deputy director in the Ministry of Environment and Forests, holds 15 per cent shares of the company. Raja’s niece R Anandabhuvaneswari holds another 15 percent stake, as does another niece R Santhanalakshmi.
| Raja proved a good bet for Saravanan, who started as a servant in a furniture shop run by Karunanidhi’s third wife. Today, he is a crorepati in Chennai |
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Similarly, AGM Investment and Finance Pvt Ltd, Coimbatore, was promoted by Dr Krishnamoorthy and his brother C Sathyanarayanan soon after Raja became a Union minister.
If these companies were flush with cash, Raja’s charitable moves also paid off. He donated land for a governmental project via a trust he floated in the name of his late mother. Velur Andimuthu Chinnapillai Charitable Trust, headed by his brother Kaliaperumal, was set up in 2001. Raja and his close relatives offered to donate land for setting up educational institutions in Othium village. The trust donated 30.28 acres where the government has announced a medical college, 8.51 acres for an arts and science college at Karumbalur village and 4.5 acres for a technical school, all these institutions to be named after his father or mother.
Green House purchased large tracts of farmland nearby for a price of Rs. 35,000 to 3 lakh per acre. After announcing the projects, the land value of the area shot up to Rs. 50 lakh per acre. By that time, Green House Promoters had announced housing projects and commercial complexes in the area. Thus a huge profit was made on what looked like philanthropy.
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