Benami deals, as the name indicates, are 'no name' deals wherein the agreement between the parties is entirely verbal and secret, with no records showing who owes what to whom. Instead, an 'understanding' is made between trusted partners.
Usually, such deals are made to bypass financial regulations. They are nearly impossible to prove in a court of law. However, India does have an 'Anti-Benami' law, which prosecutes those whose deals can are established via the presence of quid-pro-quo.
This particular case begins in September 2015 when The New Indian Express exposed a connection between the firm Advantage Strategic Consulting Ltd (Advantage) and Vasan Eye Care.
As per records, Advantage acquired 90,000 shares out of the 1.5 Lakh Vasan Eye Care equity shares. Officially Advantage India paid ₹100 per share, but several allegations claim they paid a highly discounted price, though the precise amount as not been made public.
Later, as per a series of reports, Advantage sold 60,000 of those shares in two tranches to Sequoia Capital Investments, a Mauritius-based investment fund. The shares were sold at ₹7,500 per share, surging the value of Vasan Eye Care to about ₹112.5 Crore and apparently returning a massive profit for Advantage.
The move caught the eye of the Enforcement Directorate (ED) once The New Indian Express exposed the story. Since then, the ED has been raiding various offices connected to the deal and the web of inter-related entities seems to be ever-expanding.
For example, the offices of Advantage were raided in December of 2015. The firm's director Mohanan Rajesh told the ED that some of the documents they were looking for were present at the offices of Chess Global Advisory Services Pvt Ltd. The ED dutifully raided that office.
Karti Chidambaram is one of the directors of that firm and a host of related papers was discovered - once Karti came back from abroad and was forced to unlock his room. The offices of Sequoia Capital were raided in April of this year.
Incidentally, the Chidambarams are already under the radar of the ED over the Aircel-Maxis case, an entirely different financial knot which involves Karti taking advantage of the fact that his father was the Union Finance Minister. In comparison, this case is a smaller fish. However as The New Indian Express reports indicates, it is slowly getting larger.
Coming back to Advantage, the father-son duo has denied any links with it. According to the Chidambarams, Advantage does not belong to them but their friends.
However, financial reports make it clear that a 40% ownership stake in Advantage is being held by a company called Ausbridge. That firm used to be wholly owned by Karti Chidambaram from 2006-2011.
He later transferred ownership of the company (via the shares) to the current director Mohanan Rajesh. Mr Rajesh is Karti's neighbour in Chennai. Perhaps even more strangely, records indicate that the shares Karti gave to Rajesh in 2011 were gotten by Karti from Rajesh itself back in 2006.
This transfer was a generous offer indeed. Not only does Advantage India own large parts of Vasan Eye Care (now awash with value), but Advantage Singapore (a subsidiary of the primary firm) owns a variety of properties around the world - including Singapore, Dubai, the UK, Sri Lanka and many others.
This is where the allegations of 'Benami' come up. The New Indian Express report alleges that Karti has convinced the Benami owners of these properties and shares to create wills that leave the acquisitions to Karti's daughter Aditi Nalini Chidambaram, in the event of their death. As per the report, these wills were discovered during the raids mentioned above in Karti's offices.
The daily claims to have copies of these wills and if they are real, then they are truly odd. For one thing, they were all executed on the same day and each one of them (four in total) has two parts - one listing all the personal assets of the will writer and the other listing just the parts owned by Advantage. All the Advantage assets are invariably given to Aditi because each one of them has 'great respect' for her grandfather (on her mother's side).
Karti is listed as the Executor of the wills in all cases.
If the wills are real and if the case can be proven in court, these wills can be seen as clinching in such Benami cases, as it offers a firm evidence of quid-pro-quo.
Last Updated 31, Mar 2018, 6:55 PM IST