NDTV: CBI registers FIR against Prannoy, Radhika

NDTV promoters Prannoy Roy and Radhika Roy and its CEO Vikramaditya Chandra have landed in further trouble with the CBI registering the case against them on charges of "bringing tainted money belonging to unknown public servants" into India by violating foreign direct investment rules.

The agency registered a case on August 19 after CBI Deputy Superintendent of Police Lalit Phular filed a complaint based on a preliminary inquiry into allegations of wrongdoings.

Those named in the FIR on charges of criminal conspiracy, cheating and criminal misconduct of public servants are NDTV Ltd, its Directors Prannoy and Radhika, CEO Chandra and other unknown government officials. Another promoter KVL Naryanan Rao, who was a retired IRS officer, was also investigated but as he passed away, his name was not included in the FIR.

The CBI FIR claimed Prannoy, Radhika, Rao and Chandra "entered into a criminal conspiracy with unknown public servants with the object of bringing tainted money of unknown public servants through a web of complex transactions through the FDI route".

Prannoy and his wife Radhika were prevented from flying out of India earlier this month on the basis of a "preventive" lookout circular (LOC) issued by the CBI.

It is claimed that the M/s Network PLC (NNPLC), which was incorporated in London on November 2006, got approval from the Foreign Investment Promotion Board for foreign investment worth USD 130-160 million in violation of rules.

Subsequently, the FIR said, M/s NNPLC London received total FDI worth USD 163.43 million till September 2009 and it was invested in various subsidiaries of NDTV “through a web of complex transaction”.

The preliminary inquiry had found that NDTV Ltd, which was incorporated in September 1988, floated around 32 subsidiary firms across the globe between May 2004 and May 2010, "mostly in tax havens viz. Holland, UK, Dubai, Malaysia, Mauritius, etc."

Majority of these companies had no business transaction and were meant only for financial transactions to bring funds from abroad.

"It is alleged that these transactions are sham transactions and the aforementioned funds are invested by unknown public servants through NDTV Ltd and later laundered back to India through multiple layers of complex transactions and shell companies. Proceeds of corruption of unknown public servants were invested through NDTV Ltd," the FIR quoted the complaint based on preliminary enquiry.

It claimed that NDTV incorporated Network PLC (NNPLC) in London in November 2006 and it received an investment of USD 20 million through the issue of 25,575 convertible preference shares along with 2,558 warrants from Fuse Media Holding LP next March for 4.5-5% effective stake.

Two months later, NNPLC raised USD 100 million through M/s Jefferies International and for this, the latter was given a commission of USD 5.5 million. NNPLC then transferred Rs 193.98 crore to various NDTV subsidiaries.

In 2008 April, NDTV incorporate another company NDTV International Holding BV in the Netherlands to raise USD 150 million from a General Motors subsidiary M/s NBCU. By investing this amount through its subsidiary Universal Studios, NBCU acquired 26% indirect shareholding in NNPLC. This amount was also transferred to various NDTV subsidiaries.

NNPLC's funds of USD 100 million raised through Jeffries International against step up convertible bonds were repaid to respective investors by making a payment of USD 72.40 million. Similarly, the investment of USD 150 million by NBCU was settled by buying back the share at a payment of USD 12.47 million.

CBI officials claimed that several transactions were in violation of the rules and regulations set for foreign investment.