Insider trading cloud on firms linked to Anand Jain, Annu Tandon

It's not just India's largest company, Reliance Industries (RIL), that's under scrutiny for insider trading in Reliance Petroleum Ltd (RPL) in 2007.

Anand Jain's investment company, Vinamra Universal Traders Private Ltd, and MoTech Software, then led by Annu Tandon, now a Congress politician and a Member of Parliament (MP), are among a dozen entities facing regulatory action.

These 12 allegedly helped RIL offload about 4 per cent stake for Rs 4,023 crore (Rs 40.23 billion). To minimise impact on market prices, these entities are said to have first sold shares in the futures market and covered it later.

RPL shares were trading around Rs 295 each at the beginning of the operation. By the time the transaction was announced to the exchanges on November 24, 2007, RPL shares closed at Rs 209 each.

Last week, the Securities and Exchange Board of India (Sebi) said on its website that it had rejected the consent applications by RIL and these 12 entities.

Sebi's revelations came after Arun Agarwal, an activist, filed a suit in the Bombay High Court, seeking information on the RPL insider trading case under the Right to Information Act.

Vinamra Universal has invested in various listed and unlisted companies, including Gokaldas Exports, on behalf of Jain. According to its filings to the BSE, Vinamra acquired 6.6 per cent in Gokaldas in the quarter ending March 2008 and exited in September 2011.

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MoTech, which was in the software services business, is in the process of winding up, regulatory filings showed.

Jain heads listed company Jai Corp and also floated a real estate fund under Jai Corp, which is facing investors' ire over delay in project implementation.

Jain did not reply to several text messages and an email, seeking his version on the Sebi charges.

In 2008, Amar Singh, an MP, in a letter written to then-Sebi chairman C B Bhave, had alleged Vinamra short-sold 16.5 million RPL shares in the futures market and made gains of about Rs 45 crore (Rs 450 million). Vinamra was among the 10 entities named in Singh's complaint.

MoTech Software is one of the two entities that did not figure in Singh's complaint but appears on the Sebi list. In November 2012, Aam Aadmi Party leader Arvind Kejriwal had alleged the company had Rs 2,100 crore (Rs 21 billion) stashed in Swiss bank accounts.

Tandon "was the managing director of MoTech Software Pvt Ltd, a company promoted by the promoters of Reliance Industries Ltd. She also owns and runs Salonica Vasans, a textile export company," her profile on the website of Observer Research Foundation, where she is a trustee, said.

Tandon, a Congress MP from Unnao, Uttar Pradesh, told Business Standard: "I am no longer associated with the company. I have got involved in social work here (Lucknow). It was not possible to manage both. So, I resigned from the company long ago. I don't know anything about the proceedings with Sebi, nor have I written any letter to them."

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According to the Ministry of Corporate Affairs' (MCA) filings, Tandon resigned from MoTech on January 3, 2008, two months after the transactions in Reliance Petroleum shares. In her resignation letter, she wrote, "As I have shifted to Uttar Pradesh, I will not be able to devote any time to the company."

According to Tandon, she was not even in touch with employees of the company since then and many had quit. Therefore, she did not have any knowledge about its current status, she added.

MCA records showed the company, formed in 2000, is in the process of being struck off the records. The shares are held by 21 holding companies that own about 4.75 per cent each. Mumbai-based Kesavan Varadarajan and Kaushik Varjdas Ved are listed as the company's directors from January 2009.

Rejecting Kejriwal's allegations, RIL had in November 2012 said neither it nor its chairman, Mukesh Ambani, have or had any "illegitimate" accounts anywhere in the world.

"As part of normal business, international subsidiaries of RIL deal with several global banks, including HSBC. These accounts are fully compliant with all regulations and are disclosed in their appropriate jurisdictions and in India." The government of India has not replied to these charges yet.

"Annu Tandon's association with the print media dates back to 1996, when she started working as the executive director of the Observer Group of Publications, with major responsibilities in the areas of finance and marketing," her profile on Observer Research Foundation said.

Business Standard has reported how one of the companies mentioned by Sebi, Reliance Ports and Terminal Ltd, is part of an extremely complex merger and de-merger process initiated among Mukesh Ambani's personal companies. RIL has not replied to an email mail seeking comments on the Sebi charges or on the de-merger process.