The Tale of Two Investigations.

 

 

The Adani group was hit by allegations of serious fraud and account manipulation on 24th January 2023.

The international research group that investigates such frauds and goes short on companies that are perpetrating such frauds released a report and went short on Adani shares.

They predicted an 87% downside to the Adani shares and their word came almost true. Many of the Adani Group companies valuations fell between 50% to 85% before knights in shining armor, like the LIC and SBI came for the resuce, both prompted by the Government of India, led by Narendra Modi.

As is the pattern adopted by Narendra Modi and his colleagues, they went in to damage control. To do this, they somehow got the Supreme Court to take suo-moto cognizance of this fall in share prices. The SC has no business to take such notices as there is an independent authority, the SEBI, which is the market regulator. The SC, led by DY Chandrachud, decided in its own wisdom to come to the ‘rescue’ of Indian Investors. It is pertinent to note that almost 75% to 85% shares were held by Adani and his front companies. So, the biggest impact was on Adani.

This is the Modus Operandi of Narendra Modi Government. When ever it is faced with a problem, it gets the SC to intervene. It did this during the controversy that erupted in the Judge Loya case, it did this in the Zakia Jafri review petition and it did this in the case of crash of Adani Shares. What it does is that it gets the SC to institute an inquiry into the case and then manages to get a favorable verdict. In the Judge Loya case, then CJI Dipak Misra, took over all cases filed anywhere in the country and decided to hear the case himself. He later accepted the oral testimony of four judges who were present with Judge Loya on the night of his death and disregarded all other information that was available in public domain.

In the Adani case too, the SC appointed a six member investigation team, comprising of a retired judge and five prominent businessmen.

This inquiry returned a clean chit for Adani. SEBI, which was also part of the case, then issued a clean chit on its own and said that Adani had not done anything wrong.

It would be interesting to get the transcripts and details of both these investigations.

As Adani had accessed funds from the US Stock Markets, the SEC (Securities and Exchange Commission) started a parallel investigation based on the allegations of Hindenburg Research’s report.

Along with FBI, it raided the director of Adani Green Energy, Sagar Adani, the nephew of Gautam Adani and confiscated damning evidence that suggested that the company that had raised money in the US had paid almost 250 Million US Dollars to government officials in India as bribes for getting Power Purchase Agreements signed. These PPA would have given the group bumper profits of 2 Billion USD over the agreement period.

The four governments named are the Government of Andhra Pradesh, then led by Jagan Mohan Reddy of YRS Congress, Government of Odisha, then led by Naveen Patnaik, the Government of Tamil Nadu, led by DMK, the Government of Chattisgarh, led by Bhupen Bhagel of Congress and J&K, led by the Governor, who was an appointee of the BJP.

In a press conference, Sambit Patra, the BJP Spokesperson pointed this out and said that no BJP State Government was paid.

What people need to understand is that when Adani is Modi’s man and when no CM in any BJP ruled state is an independent CM, all are puppets of Modi, there was no need to pay anyone in those states. The money would have been already paid to BJP anyway.

The US Department of Justice has now indicted seven people, including Gautam Adani and Sagar Adani and issued arrest warrants for all of them. If prosecuted, everyone faces a 20 year jail term for wire fraud and corruption charges.

There is an option available for the Adani group to accept the wrong doing and settle the mater with SEC. Many companies have done this in the past. I am sure that Adani will take that route rather than face jail. The SEC will impose penalties and give guidelines that can’t be violated. The amount of penalty is usually made public.

If Adani takes that route, then one thing will become clear, that he has accepted his guilt.

What the US DOJ investigation done along with FBI shows is that the investigation done in India was a sham. That the special team was completely compromised, that the SEBI, led by Madhabi Puri Buch was totally compromised and the SC accepted the reports at face value, thus it can’t escape blame for allowing such a fraud from going undetected.

This is the tale of two investigations, one done as a sham and the other done diligently.

The members of the expert committee included former chairman of the State Bank of India O.P. Bhatt, retired Bombay High Court judge Justice J.P. Devadhar, former chief of the New Development Bank of BRIC countries K.V. Kamath, co-founder of Infosys Nandan Nilekani and securities expert and lawyer Somasekhar Sundaresan.

The members of this expert committee should be questioned as to why they were not able to find anything amiss? Madhabi Puri Buch needs to be sacked right away and the records of SEBI investigation should be sought and made public.

Finally, this is another blot of the legacy of former CJI D.Y. Chandrachaud. Not the first, neither the last. As time goes by, more such blots will appear on his legacy.

How do the crooks launder their money?

The easiest way to move money from one place to another, is to move it using the banking channels.

With an account anywhere in the world, money can be moved to any account across the world by doing a transfer.

For example, let us examine the working of a drug cartel.

The drugs are sourced from someone and he has to be paid, probably in cash. If, for example, the drugs are originating from Afghanistan and are being purchased by a syndicate in the US, they have to make payment in cash in Afghanistan while they have to collect the payment from their distributors spread over the entire country.

The distributors in turn have to collect payment from those who sell the stuff on their behalf. Most of the sale happens in cash. 

Thus, the cash has to be collected and sent to the organization.

For this purpose, the agents who sell the drugs set up a business account which is supposedly doing a legitimate business, like a restaurant or a coffee shop. Only thing is that these businesses do not really do the amount of sale that gets deposited in their accounts. So, a restaurant may be just a dummy front which deposits 10,000 USD every day into the account and then makes payment to others from these deposits. That is how cash gets introduced into the legitimate system. Once the cash has entered the banking system, it gets transferred to others, supposedly vendors, who too are fake front accounts.

A gang of distributors used Spotify stream to recently collect money from users and direct it to their bank accounts. Goes without saying that those users were all fake and all payments were received in cash or small payments that go under the radar of any money laundering detection system.

Banks are now using smart software to flag such operations. They detect unusual cash deposits and flag them to the authorities.

I am sure the crooks are already two step ahead of the detecting authorities.

In a way, cash transactions can help detect money laundering better than bank transactions. Thus, for the authorities cash transactions are a necessary evil.

 

The parcel scam and digital arrest.

 

You will receive a call from someone whose display picture shows a man in police uniform. The person calling will talk to you and tell you that they have intercepted a parcel which has your name, address and phone number and it contains contraband. The person will tell you that five passports were found in the parcel along with some foreign currency and a packet of white powder, which after testing has been confirmed to be drugs.

The person will ask you whether this is your parcel.

As it is not your parcel, you will tell him accordingly, he will be sympathetic to your statement but will tell you that as the parcel carries your name, address and phone number, he will now be filing a case against you. Yet, he will say that as he had suspected that you are an innocent victim, he can save you.

For saving you, he will tell you that a certain amount of money needs to be deposited into a designated bank account, which is an official account and then he can release the parcel without any further investigation and till such time he is placing you under 'digital-arrest'. He will tell you that your phone is being monitored and your home and office is being monitored too. He might even do a video call and you will see him standing in a room that looks like it is a police station.

In panic, you will agree to give him the money he is asking for. He might come back and ask you for more until you plead that you have no more to give.

Then he will disappear, without a trace.

This has been happening across the country. Educated people are falling into this trap.

I wonder why Government does not issue a full page advertisement in all language papers about this and warn people about this scam?

Also, I wonder why a single unified number is not being advertised where anyone can call and get clarification in case they are approached by scammers?

It is said that prevention is better than cure, no?

For some people it takes forever to realize that they have been fooled.

 

It has been eight years since 8th November 2016, the day our 'great' leader came on television and 'abolished' 500/1000 Rupee notes.

The reason he gave was that these notes were causing corruption and black money.

When the 5000/ 10,000 rupee notes were demonetized, they were never reintroduced.

It was the Atal Bihari Vajpayee Government that introduced the 500 Rupee notes and later the 1000 Rupee notes.

Normally, when a note is demonetized, it goes out of circulation for ever.

But in our case, our 'great' leader introduced a scheme of 'note-exchange' and his ministers now say that the scheme was not a demonetization scheme but a note-exchange scheme.

And we also saw the sorry spectacle of introduction of a 2000 Rupee note.

The whole exercise was so badly planned that after the demonetization RBI realized that it would take 2 years to replace all 500 Rupee notes even if all the printing presses worked 24/7. Imagine how much time it would have taken had only 100 Rupee note remained as the highest note.

Thus, RBI was forced to issue 2000 Rupee note, which cut down the requirement to 1/4th as four 500 Rupee notes could be replaced with just one 2000 Rupee note.

With its work done, RBI has now withdrawn the 2000 Rupee note in a planned systematic manner.

Can you see the stupidity in the decision itself? If 500/1000 Rupee notes were creating corruption, why 500 Rupee note was reintroduced? And why was a 2000 Rupee note introduced, which was of a higher value than 1000 Rupee note? And then TV anchors told us about the 'hidden' GPS nano-chip that allowed the detection of 2000 Rupee notes via direct communication with satellites! Like Indians are all idiots and fools.

Going back to my original question, how much time does it take people to realize that they have been fooled?

The answer is, Forever. Eight years later and I am sure 20 years later too, there will be many who will continue to believe that demonetization was a grand success and only those with black money suffered, even in the face of evidence that 99.3% of all notes were successfully exchanged, so where is the black money?

They will continue to believe that only those with black money are opposing it, were opposing it, not realizing that only 10% of all money is printed money in circulation.

They will continue to believe that it destroyed Pakistan without understanding the fact that Indian Rupee works only in India and is now useless in almost all countries as it is no longer being even exchanged at airports abroad.

They will continue to believe that terrorism has been reduced in Kashmir, without bothering to see reports of soldiers, civilians and policemen killed in Kashmir since then.

They will continue to believe that corruption has ended, while the truth is that it has become worst.

They will continue to believe that Modi is a great leader while actually he is a charlatan.