CBI raids NDTV's Prannoy Roy for 2008 deals with ICICI Bank

Complaint by Quantum alleges Rs 48-cr loss caused to bank to benefit NDTV promoters

Officers of the Central Bureau of Investigation (CBI) on Monday raided the residence of senior journalist and co-founder of listed broadcaster New Delhi Television (NDTV) Prannoy Roy and other premises linked to the organisation.

The investigation agency has registered a case against Roy, his wife and NDTV co-promoter Radhika Roy, their private firm RRPR Holdings and NDTV India. The First Information Report (FIR) also mentions “unnamed ICICI Bank officials” among the suspects.

The FIR, which has alleged criminal conspiracy and invoked Prevention of Corruption Act, was based on a complaint by Quantum Securities, a firm run by Delhi-based stockbroker and NDTV shareholder Sanjay Dutt. Dutt, who once shared a close relationship with the Roys, had lodged several complaints against NDTV and its promoters with various agencies, including the Securities and Exchange Board of India and the income tax department.

In the latest complaint, dated April 28, Quantum alleged “pecuniary loss of over Rs 48 crore to ICICI Bank arising out of unlawful/undue favour and profit transferred to promoters of New Delhi Television— being Dr Prannoy Roy, Radhika Roy and RRPR Holding.” The complaint added that “ICICI Bank allegedly conniving, committing fraud and entering into a conspiracy with promoters of NDTV to facilitate transfer of ownership of a news broadcasting company to a khoka/shell company.”

Shares of NDTV tanked nearly 7 per cent intra-day. The stock plunged 6.74 per cent to Rs 58.10, a 52-week low, on the BSE during the day. Later, it trimmed some of the losses and ended at Rs 60.45, down 2.97 per cent.

NDTV said it would fight the “witch-hunt”. It called the CBI action an attempt to undermine democracy.

A statement from the company said: “It is shocking that the CBI conducted searches on NDTV offices and the residence of its promoters without even conducting a Preliminary Enquiry. This is a blatant political attack on the freedom of the press, as sources confirm that under pressure, the CBI has been compelled to file an FIR based on a shoddy complaint by a disgruntled former consultant at NDTV called Sanjay Dutt, who has been making false allegations and filing cases in courts of law with these false allegations. So far, he has not obtained a single order from any of these courts. Legal analysts are astounded that where courts have rejected giving any order in all these years, the CBI conducts raids based on what is a private complaint".

NDTV said, "The allegation appears to be for a loan which has been repaid by Prannoy Roy and Radhika Roy more than seven years ago. Even though lakhs and crores of rupees of dues have not been paid by several industrialists and no criminal case has yet been registered against any of them by the CBI, the CBI has chosen not only to register an FIR, but also conduct a search for a loan which has been duly repaid to ICICI Bank. Moreover, ICICI is a private bank. The allegation that no disclosure was made to SEBI and other regulatory authorities is not only incorrect and false but also does not cloth the CBI with any power to register cases and search, which further amplifies the fact that the search by the CBI is only a witch-hunt against independent media. NDTV and its promoters have never defaulted on any loan to ICICI or any other bank. We adhere to the highest levels of integrity and independence. It is clearly the independence and fearlessness of NDTV's team that the ruling party's politicians cannot stomach, and the CBI raid is merely another attempt at silencing the media. No matter how much the politicians attack us, we will not give up the fight for freedom and the independence of media in India.”

An ICICI Bank spokesperson declined to comment. However, private sector bankers said that it is a very common practice to settle loans in this manner. For example, bankers say that Standard Chartered is likely to take a haircut in case of Essar loans. "Private sector banks, unlike public sector banks, are willing to settle loans at a small loss of interest otherwise, it is almost impossible to go ahead and resolve the huge problem of non-performing assets," said a private sector banker. He also added that August 2009 was the post-Lehman period, when bankers were completely unsure about the economy and banks would have rushed to make settlements. "Filing FIRs against private sector bankers would discourage them from settling cases -- something that is already causing a huge problem in the public sector banks," he added.  

In February, Supreme Court judge Prafulla C Pant had cleared the air on applicability of Prevention of Corruption Act provisions over private bank executives, while hearing another case. “We are of the opinion that the courts below have erred in law in holding that accused Ramesh Gelli and Sridhar Subasri, who were chairman/managing director and executive director of GTB, respectively, were not public servants for the purposes of Prevention of Corruption Act, 1988,” Pant had said in his verdict.

Information and Broadcasting Minister M Venkaiah Naidu said there was no political interference in the CBI raids on NDTV founder Prannoy Roy's properties. He said the law was taking its course. "If somebody does something wrong, simply because they belong to media, you cannot expect the government to keep quiet," Naidu told reporters.

The transactions in the NDTV case date back to the time of collapse of Lehman Brothers and the financial market meltdown in September-October 2008.

NDTV promoters, who faced margin calls from Indiabulls Finance as the company’s stock price tumbled from Rs 400 levels to below Rs 100, had struck an arrangement with ICICI Bank. A loan was raised from Indiabulls for an open offer, which was triggered because of a buyback of a stake sold to private equity player General Atlantic.

Citing balance sheets and other filings of RRPR Holdings, Quantum said ICICI Bank had granted a loan of Rs 375 crore at 19 per cent interest on October 23, 2008. Of this, about Rs 350 crore had been drawn. The total dues, along with interest, stood at about Rs 396 crore. But in August 2009, the bank entered into a one-time settlement with NDTV at Rs 350 crore. This, along with certain other dues, resulted in a loss of Rs 48 crore for the bank, alleged Quantum, and ensured gains for NDTV promoters.

The complaint goes on to explain the transaction between RRPR Holdings and Vishwapradhan Commercial, which enabled the repayment to ICICI Bank. The CBI FIR is silent about Vishwapradhan or entities associated with it, though it has mentioned “other unnamed persons”, leaving scope for additions at a later stage.

Though the complaint was filed over a month ago, the FIR was registered at 3 pm on Friday.

On Thursday evening, NDTV’s senior anchor Nidhi Razdan had asked BJP spokesperson Sambit Patra to leave a debate mid-way after he alleged the channel was biased. The video of the interaction went viral.

Swaraj Abhiyan leader and prominent lawyer Prashant Bhushan said this was the immediate trigger for the CBI action. “Raids on NDTV take place three days after a BJP spokesman is asked to leave Razdan's show. The message is clear. Govt intimidating the media. Others who have swallowed lakhs of crores from public sector banks are cronies of the govt. Can't you see diff between a crony & Indep media?” he tweeted.

N Ram, former editor-in-chief of The Hindu Group of Publications, tweeted: "Those who value media freedom must speak out & act ’cause they know that while nothing will happen in the end the process is the punishment."

Leaders of Congress, Trinamool and the Aam Aadmi Party slammed the raids and dubbed the move as one to silent independent voices.

The Press Association President Jaishankar Gupt termed the raids "highly condemnable" and "a revengeful act".