Everyone likes to eat basmati rice, why not. ‘India Gate Basmati, rice is a well-known brand in India. India Gate Basmati is the flagship basmati rice brand of KRBL Ltd. And KRBL Ltd is listed on a stock exchange.
One of the famous value investor Mohnish Pabrai tried to buy a stake in KRBL from the existing investor, but Enforcement Directorate (ED) stopped this transaction by writing to BSE.
Why? What was an issue behind that? And why ED entered into this transaction? Is taking a stake in any of the companies illegal?
No, buying a stake in any company is not illegal. . But first, let us understand about India’s VVIP Chopper scam.
India is an importer of weapons. From the last 10 years, India imported $100 billion worth of weapons according to the Stockholm International Peace Research Institute.
The story starts in 1999 while Atal Bihari Vajpayee was PM. BJP led NDA gov. approved VVIP chopper/ helicopter. The Indian government asked which can reach around 18000 ft. Then the requirement changed in terms of feet.
Congress and BJP government were blaming each other for changing this requirement cause one of them wanted to benefit one special company. And that company is Agusta Westland (makes chopper/ helicopter). The company doesn’t make choppers which can fly high and for that, they decreased the reach of feet.
(Agusta Westland is an Italian company, a subsidiary company of Finmeccanica (current name is Leonardo S.p.A.))
In that duration, in 2005 congress led UPA gov. changed a statement that earlier they planned to purchase 8 choppers then they increased to 12 choppers. Those additional 4 choppers were non-VVIP.
After all this, in 2010 deal made official worth of INR 3600 cr. In 2012 Indian & Italian media started publishing news that, in this deal, something wrong has happened.
According to Italian media, Agusta Westland hired one middle man. That middle man talked to Indian gov. & convinced them to make this deal happen. All these allegations happened in 2012 and next year in 2013 Finmeccanica’s chief Giuseppe Orsi was in jail, as media published in news, all corruption has happened through Orsi. Orsi sent some money to other countries and through those other countries, he gave money to that middle man.
Based on Italian media, the Indian CBI & Enforcement Directorate (ED) started probing about the chopper deal that what all these are happening? Through all searches, they applied allegation on Indian air force chief S.P. Tyagi. In march 2013 reports came from Indian express that many middlemen are involved in this deal, Christian Michel, Guido Hauschka, and banks from Dubai, Italy & Switzerland.
In April 2016 Italian court released info that this deal happened through all the corruption.
(In Dec 2016, Italy’s higher court said S.P. Tyagi was not corrupt. Until now Christian Michel is the main player)
Back to purchase of a stake in KRBL
On Feb 12, 2018, Mohnish Pabrai’s Pabrai Investment Fund II LP & Pabrai Investment Fund IV LP purchased 24 lakh & 40.18 lakh shares of KRBL. Purchased stake from Omar Ali Balsharaf & Abdullah Ali Balsharaf. Who are distributors of KRBL products in Saudi Arabia and had acquired a stake in KRBL in 2003.
According to ED, Omar Ali is involved in VVIP chopper scam and purchased stake through ‘crime money’ in KRBL. Gautam Khaitan was an independent director at KRBL from 2007 to 2013. He was named one of the accused in bribery allegations regarding VVIP scam.
That is why BSE stopped this transaction and ED wanted to investigate more.
Thanks for reading 🙂