Biggest billionaire controversies of 2013

Past one year has been a rollercoaster ride for India’s billionaires. While some were allegedly involved in scams, some got in a tussle with government.

Let’s look at the biggest controversies Indian billionaires courted in the past one year.

Vijay Mallya

Net Worth:  $750 million

All through the past one year, Vijay Mallya has been in controversy for letting Kingfisher Airlines fail.

Until December 2011, Kingfisher Airlines had the second largest share in India's domestic air travel market. The airline faced severe financial crisis at the beginning of 2012 and is dysfunctional as of now.

Many bread earners lost livelihood after Kingfisher Airlines was not able to repay the money it had borrowed from banks.

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The employees and lenders got even more agitated when Mallya sold stake in United Spirits to Diageo for $2.1 billion, and did not use the proceeds to revive the airline.

Mallya is now one of the biggest bank defaulters in India. The 14 banks, led by State Bank of India, which lent Rs 6,500 crore (Rs 65 billion) to the airline, are now involved in litigation over the money, as Mallya has sued them in multiple courts.

The employees, who have not been paid for the last 17 months, recently started an indefinite hunger strike at Jantar Mantar in New Delhi and have filed criminal complaint with the Delhi Police against its Mallya accusing him of "exploitation, false promises, fraud and breach of trust".

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Subash Chandra

Net worth: $2.35 billion

Naveen Jindal, a Member of Parliament and Chairman of Jindal Steel and Power, alleged that editors from Zee’s new channels tried to blackmailed him.

He released a CD that showed two editors - Sudhir Chaudhary, the head of Zee News, and Samir Ahluwalia, head of Zee Business - asking him to pay Rs 100 crore for not doing news report on coal scam linking his firm.

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Subhash Chandra and his son Punit Goenka, the managing director of the company, were called by the Delhi Police's Crime Branch for questioning in connection with the case. The police had even file chargesheet against the billionaire in July last year.

The matter was however settled when Subhash Chandra’s father intervened, according to a report in Caravan Magazine.

Chandra’s father Nand Kishore Goenka said that he ‘negotiated a truce between his son and Jindal’.

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Kumar Mangalam Birla

Net worth: $7.6 billion

In October last year, CBI lodged a case against industrialist Kumar Mangalam Birla and former coal secretary P C Parekh on charges of criminal conspiracy and corruption in connection with alleged irregularities in allocation of coal blocks eight years ago.

The agency had booked Birla as a representative of Aditya Birla Group and his group company, aluminium maker Hindalco, for alleged corruption in the allocation of Talabira two coal blocks in Odisha, which was allotted to it on November 10, 2005.

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Following his name appearing in the FIR, Birla met Finance Minister Chidambaram four times. The details of the meetings were not disclosed.

According to media reports, the CBI investigation against Aditya Birla Group Chairman is still on.

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Malvinder & Shivinder Singh

Net worth: $2.3 billion

Daiichi Sankyo accused billionaire brothers Malvinder and Shivinder Singh of hiding and misrepresenting facts from the company due to which it suffered loses and faced humiliation.

In 2008 Daiichi bought Ranbaxy from the brothers. Five years later, a former employee reported to US Food and Drug Administration (USFDA) a fraud Ranbaxy had committed in 2005.

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The whistleblower said that the drug maker faked test results for approval of a drug by the US drug regulator.

Consequently, Ranbaxy pleaded guilty to felony charges in May 2013 and agreed to pay a fine of $500 million.

The company accused that the brothers had not revealed this information during the acquisition despite being aware of it. The brothers, however, denied all charges or knowledge of this information.

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Anil Agarwal

Net worth: $3 billion

In December last year, CBI registered a preliminary enquiry against Vedanta Group Chairman Anil Agarwal in connection with alleged irregularities in the disinvestment of Hindustan Zinc (HZL) during the period of NDA government.

The agency believes that the loss caused to the exchequer due to the alleged irregularities runs into hundreds of crore.

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The preliminary enquiry is against Agarwal and unknown officials of HZL.

It is alleged in the inquiry that Sterlite Industries, part of Vedanta Resources, had picked up stake in the public sector undertaking at an undervalued price resulting in the estimated losses running into hundreds of crore to the exchequer.

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Gautam Adani

Net Worth: $2.65 billion

In May last year, WhartonSchool cancelled Narendra Modi’s keynote address he was supposed to deliver at an annual student-run India-centric conference. Following this, Adani too pulled out of another event called Wharton India Economic Forum.

There was uproar from a section of university professors and student at Wharton when Modi was selected for the keynote via video conference.

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Close to the heels of Wharton cancelling Modi as the keynote speaker, Adani Group said that its Chairman Gautam Adani is pulling out of Wharton India Economic Forum.

The Gujarat-based firm, however, denied that the cancellation was because Modi’s address was called off.

It said that Adani had taken himself out of the event almost a fortnight before the Modi incident.

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Niranjan Hiranandani

Net worth: $1.2 billion

Investment company Hirco Plc (Hiranandani Infrastructure & Real Estate Company) questioned Niranjan Hiranandani and his family on lack of transparency in disbursement of funds raised for projects in Panvel and Chennai.

In 2006, Hirco raised 350 million ponds with an initial public offering on the Alternative Investment Market (AIM) in London and invested the money in two projects managed by the Hiranandanis.

There has been an on-going feud between HIRCO and its shareholders since 2009, which even led Niranjan Hiranandani to resign from the chairmanship in 2010.

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In December last year the controversy gained momentum when the Bombay HC appointed a court receiver to manage the property of Hiranandani Palace Gardens, owner of the Chennai residential assets, after the company defaulted a loan of Rs 76 crore (Rs 760 million) from Tata Capital Financial Services.

Following the court orders, HIRCO threatened developer Niranjan Hiranandani that it will notify the law enforcement authorities about mismanagement of funds meant for projects in Panvel and Chennai.

HIRCO said that it has not received any returns on its investment on the two projects.

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"Hirco Plc has, therefore, written to the directors of the Indian project companies, demanding an explanation as to how and to whom the cash collections were disbursed and why the companies were unable to repay the debts," Hirco said in a statement.

Hirco also asked for a forensic accounting examination of the books and records of the Indian project companies.

"Hirco Plc will also continue to pursue redress against Niranjan Hiranandani and Priya Hiranandani for fraud and other wrongdoing through the ongoing litigation and arbitration proceedings,'' it said.

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Anil Ambani

Net worth: $6.2 billion

In July last year, a Delhi court issued fresh summons to Reliance ADA Group Chairman Anil Ambani and his wife Tina Ambani to appear as prosecution witnesses in the 2G spectrum allocation case.

The court allowed CBI's plea to make Anil and Tina Ambani prosecution witness in the case as their testimonies may throw light on alleged investment of over Rs 990 crore (Rs 9.9 billion) by his group companies in Swan Telecom, facing trial in the case along with its promoters Shahid Usman Balwa and Vinod Goenka.

RADAG's company, RTL, is an accused in the case. Three top Reliance ADAG executives Gautam Doshi, Surendra Pipara and Hari Nair are also facing trial in the case.

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In August Tina Ambani appeared as a witness in the 2G case in a Delhi court but said that she was not actively involved in the business and the company's affairs.

"I'm a social worker. I take care of the family and engage in social work. I'm not actively involved in the business and the company's affairs," she said.

Anil Ambani, who appeared in the court a day before his wife, frequently replied that he did "not recall" or "was not aware" when asked about various meetings.

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Subrata Roy

Net worth: NA

The boss of the unlisted Sahara conglomerate Subrata Roy claims that he had assets totalling roughly Rs 5 crore (Rs 50 million) only. Media reports, however, usually address him as a billionaire.

All through the past year, Roy is locked in a battle with the Securities and Exchange Board of India (SEBI) for raising money from public through two of his firms, which didn’t have permission to accept deposits.

Supreme Court has ordered Roy to return the amount of Rs 24,000 crore (Rs 240 billion) raised by two of his companies but he has failed to do so.

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Following the non-payment, the SC accused Sahara of "manipulating courts" by approaching different forums for relief.

The SC has also barred Roy of travelling out of the country until he submits title deeds of Rs 20,000 crore (Rs 200 billion) unencumbered properties to Sebi.

In the latest development, Roy was quoted in the media saying, “We want to submit the title deeds directly to the nationalised banks and not to Sebi for which the company would seek nod from the Supreme Court.”

Sahara India had earlier submitted title deeds of similar amount to the market regulator but the latter rejected them on grounds that they were overvalued.

Mukesh Ambani

Net worth: $21 billion

Mukesh Ambani controlled Reliance Industries, which was awarded the contract to supply gas to the government from KrishnaGodavariBasin, has been asking for revision of price at which it supplies gas to the government.

The government had contracted RIL to supply gas at $4.2 per million British thermal units. The company claimed that the production from the well had started falling due to sand and water ingress, and asked for a price hike.

This resulted in a controversy and a tussle between RIL and the government.

Former Principal Adviser of Power and Energy to the Government of India Surya P Sethi wrote an open letter to the Prime Minister.

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The letter said that ‘the pre-qualification norms were diluted to ensure RIL qualified’.

“Above all, RIL's commitments under the PSC and the field development plans were not enforced,” the letter said.

He also questioned how the government can hike the gas price as ‘the PSC (contract) has no provision for revising wellhead price of gas from fields already declared commercial’.

Several leaders of opposition and experts agreed with Surya Sethi’s views and felt that the price at which government buys gas from RIL should not be hiked.

Cabinet Committee on Economic Affairs (CCEA), however, allowed the company to sell KG-D6 block gas at a higher price (which is now doubled) with effect from April 2014.

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