The Oriental Bank of Commerce (OBC) chairman said last week that he hopes to recover a cool Rs 1,200 crore from Global Trust Bank’s (GTB) borrowers. OBC has already recovered Rs 100 crore, filed cases against five borrowers, entered into a few compromise settlements and re-classified several non-performing loans to standard assets. This is indeed excellent news. It shows that a diligent GTB and tougher Reserve Bank of India (RBI) could probably have saved the bank after the Ketan Parekh scam. But the recovery raises some interesting issues. A savvy reader asks why the RBI is still choosing to make a scapegoat out of PriceWaterHouse (which had heavily qualified the accounts) instead of prosecuting the erstwhile GTB management? Although GTB shareholders have lost their entire investment, the former GTB management continues to be spared by the regulators. Meanwhile, if OBC, which took over GTB at zero value, is set to recover Rs 1,200 crore, isn’t there a case for GTB shareholders to demand some compensation? After all, many of them have objected to the merger of GTB and OBC, but the Reserve Bank (having called for any written objections to the marriage) ignored them and rammed through the merger proposal.
Indian enforcement agencies and the Serious Frauds Office cannot seem to find Dinesh Dalmia, but one of his outfits seems to be thriving through a series of merger deals. In 2002, this newspaper reported that Dinesh Dalmia was renaming DSQ Software to Total Solutions when he ran into regulatory trouble. He had also spun off DSQ’s US and UK operations and already renamed them Total Solutions with appropriate suffixes. For various reasons, the Indian regulators have not even begun to check these actions as yet. In November 2003, an American journalist Christopher Byron wrote that AllServe Systems Plc, registered in America, that was on the verge of buying a high-profile BPO called Aegis Communication Group actually belonged to Dinesh Dalmia. Consequently, the AllServe-Aegis deal fell through and the Essar Group later acquired Aegis. AllServe lists A.K. Sen, a trusted lieutenant of Dinesh Dalmia, as it ‘founder’. In January 2005, an international web-based listing of 100 hot IT companies reported that AllServe had acquired US-based Total Solutions in 2002. This is another connection with Dalmia, if the investigation agencies are interested. In 2004, AllServe (which runs BPOs in Delhi and Bangalore) merged with Vanguard Info Solutions Corporation, a top American IT solutions company employing over 2000 people. On January 24, 2005 Business Wire India reported: ‘‘The A Consulting Team, Inc (“TACT”) an IT and Business Process Outsourcing (BPO) services provider to Fortune 1000 companies, announced that it has agreed to combine (in a share exchange transaction) with Vanguard Info-Solutions Corporation (“Vanguard”), a private global business process outsourcing, call center and IT services company with operations in the US and India.’’ As TACT is a NASDAQ listed company, it would take Dalmia’s AllServe into the global big league in a much-mutated form.
Not just Priyamvada
Priyamvada Birla, the late widow of M.P. Birla stunned the world by leaving assets estimated at anywhere between Rs 3,000 to Rs 5,000 crore to her trusted accountant R.S. Lodha. Apparently, the late Mrs Birla wasn’t the only one to leave her assets to trusted employees and retainers rather than blood relatives. The Mangalore-based Mrs T.A. Pai is also understood to have left all her assets to a set of people who worked for her and looked after her till the very end. Although much smaller than Mrs Birla’s legacy, the Pai bequest is still in the region of Rs 20 to 30 crore. Mrs Pai, however, is understood to have left a fairly unassailable will and has named trustees to ensure that her wishes are carried out without dispute.
If IDBI Chairman M. Damodaran is among those short-listed to head the capital market watchdog, it is mainly on account of his spectacular performance at UTI Mutual Fund (UTIMF). Is it mere happenstance that UTIMF and his last decisions there have been under attack exactly when the regulator’s post is about to be decided? Market watchers think not. For instance, Bajaj Auto’s lawsuit over what is essentially a capital gains liability resulting from the premature winding-up of certain schemes was blown out of proportion. UTIMF neither had a choice in the matter nor could it time the winding-up decision. Earlier last week, a long overdue compensation policy change to provide performance-based payment and incentives to fund managers was portrayed by a leading newspaper as an ethically dubious act of favouritism by former Chairman M. Damodaran. UTIMF has backed Damodaran’s actions and posted a strong rejoinder to the news report on its website giving an entirely different perspective of the matter. We learn that the allegedly favoured Fund Managers all had fabulously offers from rival mutual funds but had been persuaded by Damodaran to give the new compensation policy a chance. If they stay on at UTIMF, they will still be making a monetary sacrifice.