Politics

Opposition Seeks Probe into Jay Shah’s Firm After The Wire’s Report

Congress held a press conference to ask whether Modi would order a probe into Jay Shah’s firm while Piyush Goyal said that Jay Shah would soon file a case against The Wire.

Prime Minister Narendra Modi with BJP president Amit Shah. Credit: PTI

Prime Minister Narendra Modi with BJP president Amit Shah. Credit: PTI

New Delhi: Hours after The Wire published a story about the financial growth of a company owned by BJP president Amit Shah’s son, Jay Amit Shah, immediately after the BJP came to power in 2014, the Congress and Aam Aadmi Party (AAP) launched a scathing attack on Prime Minister Narendra Modi. The BJP on its part has defended its party president’s son by terming the story as “absolutely false, baseless, malicious, derogatory, defamatory, and hollow article with absolutely no substance whatsoever.”

The main opposition party, Congress, held a press conference to ask whether Modi, in keeping with his image of a leader who had promised na khaoonga, na khaane doonga (Neither will I take bribes nor will I allow it), will order investigative agencies for a probe.

Addressing the media, senior Congress leader Kapil Sibal said:

“It appears that with change of power, the fortunes of people associated with the ruling party also changes. Just like an arid land turns green in monsoons, Jay Amitbhai Shah’s fortunes have changed with the BJP coming to power. Some journalists have told me that some media houses have been instructed to stay away from telecasting and publishing what the Congress is addressing today. Since media is one of the strongest pillars of democracy, it is the duty of journalists to raise such issues of what appears to be a classic case of crony capitalism.”

He added that Jay’s company Temple Enterprises Pvt. Ltd., which was making losses until 2014, saw an increase of 16,000 times in turnover after the Modi government came to power. Similarly, he asked why a stock trading company, Kusum Finserve, a limited liability partnership in which Jay holds 60% stake, was given big loans by a public sector enterprise, Indian Renewable Energy Development Agency (IREDA) and the Kalupur Commercial Cooperative Bank on a collateral of properties worth only Rs 7 crore.

“The most astonishing aspect of the allegation is that how a stock trading company got permission to set up a windmill project in Ratlam, Madhya Pradesh… It appears that the government was interested in spiking up the revenues of the company because it gave Rs 10.35 crore as a loan amount to a company which had no prior experience in the energy sector,” Sibal said, adding that the party is not alleging any criminality in the case but is merely stating facts from the story which indicate the possibility of crony capitalistic practices by the government.

“We urge the government to start a probe into Jay Shah’s firm,” said Sibal.


Also read: The Golden Touch of Jay Amit Shah


In an indirect reference to the BJP’s opposition campaign against Congress president’s son-in-law Robert Vadra alleged illegal land deals a few years ago, Sibal took a dig at the prime minister. “One may remember only on the basis of an allegation of an improper deal of Rs 10 lakh, the government has initiated ED, CBI enquiries against a private citizen. (The Congress leader and currently the chief minister of poll-bound Himachal Pradesh) Virbhadra Singh is also being hounded by CBI merely on the allegation of an illegal exchange of Rs 10 crore.”

Similarly, AAP re-iterated the facts presented in The Wire story and targeted the union government on the issue. AAP leader Ashutosh, in a press conference, went a step ahead and accused BJP president’s son of money-laundering.

“Out of the Rs 80 crore revenue that his firm declared in 2015-16, Rs 51 crore has come from foreign investments. The most shocking aspect is that such a good profit-making company stopped its business the next year. Why would a person shut such a great business? It is surprising that soon after the company got a loan, this company shut its shop. Is there a possibility that Jay Shah indulged in money laundering?”

He expressed his surprise over the fact that a small company like Temple Enterprises got such easy loans from state-funded institutions which are overseen by either people close to Amit Shah or are from the BJP. The party demanded an immediate enforcement directorate probe into Jay’s financial dealings. “Narendra Modi has been claiming that his government has not spared black marketers. If it is true, then he should order an independent and transparent probe into Amit Shah’s company. Otherwise, people will be forced to think otherwise.”

Alleging nepotism in handing out the windmill project’s contract to Jay’s Kusum Finserve, Ashutosh asked:

“How is it possible that a stock trading company got a government tender to establish a power generation company. Is it not necessary for a company to have prior technical experience and skills to receive such contracts? The allotment of the contract points out the nepotistic practices in the Modi government as it directly relates to the influence Amit Shah wields in the party.”

The BJP fielded former power minister Piyush Goyal – under whom the power-ministry controlled IREDA gave away a loan of Rs 10.35 crore to Kusum Finserve to set up a windmill project controlled by the power ministry, to do the firefighting.

In a terse statement, Goyal said, “We reject any allegations or imputations sought to be made against Mr. Jay Shah or any of our leaders. The article shows absolutely no impropriety whatsoever but imputes through malicious imputations. It is trying to damage the reputation of our leader Shri Amit Shah ji.”

He also took this opportunity to communicate what Jay’s future response would be. “Mr. Jay Shah has decided to file criminal defamation suit against the author, against the editors, and the owners of the news website, The Wire. They shall be prosecuted for criminal defamation, and they shall be sued for an amount of Rs 100 crore for defamation. Both these actions will be filed at Ahmedabad where Jay stays and carries on his business and where the cause of action has arisen. Mr. Jay Shah carries out fully legitimate and lawful business on commercial lines. It is all reflected in accounts books, through income tax returns and all transactions are through banks. All the loans have been taken strictly in accordance with law. Security have been provided. The loans taken have been fully paid after taking interest after deducting tax at source.”

However, he did not make it clear why a stock trading company was given a loan amount by the power ministry to set up a windmill project. While choosing to defend Jay, he also did not delve into the reasons as to why the Kalupur Commercial Cooperative Bank sanctioned a loan of Rs 25 crore to Kusum Finserve against a collateral worth only Rs 7 crore.

Meanwhile, political leaders have used Twitter to express their views on the issue.

The Rashtriya Janata Dal spokesperson, Manoj Jha, sent out this tweet.

Similarly, Rahul Gandhi also used the opportunity to hit out at demonetisation.

  • Ashok Akbar Gonsalves

    The Wire, you guys must be aware that there’s a rebuttal to your “Golden Touch” article thats been put up on the opindia website. For the benefit of all your devoted readers (myself included), I hope you shall respond to that and fast, before the rebuttal starts taking on more credibility than your original story. Thanks!

    • kujur bachchan

      Opindia appears to be more of an in-house propaganda portal of the RSS-BJP combine. Anyway, The Wire should come out with a credible and vigorous counter.

  • Anjan Basu

    The Wire should study the Opindia article, for whatever it is worth, and consider following up on Rohini’s Singh’s original story with a more detailed analysis of some of the issues. The areas which should engage our attention more than others are: (1) why did 2015-16 see a net loss of Rs 1.4 crore though the gross revenue jumped to over Rs 80 crore; and (2) if, as Shah’s lawyer says, Kusum Finserv’s annual net profit has also been of the order of only Rs 15k, what is the incentive for carrying on with a business with such measly profits? ( Especially at a time when the stock markets have been very buoyant.) I think the manipulation/ doctoring of data has to be sought more in the area of profitability than anywhere else. The losses/ poor profitability needs to be examined. AAP’s observation about how ‘such a profitable venture can fold up so suddenly’ is beside the point: for Jay Shah has NOT booked ( or shown) profits, but only losses — an unlikely eventuality, but not untenable from an accountant’s point of view. Also, Kusum Finserv’s IREDA loan may not be an aberration per se. If the company’s Memorandum and Articles of Association happen to have mentioned power generation as one of the proposed areas for the company’s activity, there is nothing bad in law about their foray into wind power. Again, a Letter of Credit facility ( presumably for import of agricultural produce for trading purposes) without the backing of 100% collateral is not uncommon. Typically, a margin of between 10 and 25%, bolstered by some collateral in the shape of mortgage of property ( of any amount, depending upon the lending bank’s level of comfort vis-a-vis the borrower’s business/ antecedents) is common banking practice. ( Whether the Cooperative Bank in question has import LCs as one of its permitted banking products is another matter altogether, and may need to be looked at.) But conflict of interest issues ( involving, say, KIFS and Kusum Finserv) can be very real. To sum up, a detailed scrutiny of the Memrandum and Articles ( as also the share-holding patterns) of both Kusum and KIFS, as also of the improbably low profitability of Jay Shah’s businesses should be focussed on. To worry about why the KIFS balance sheet does not specifically mention the loan made out to Temple/ Kusum may not be worthwhile. NBFCs are not required, or even expected, to list out every loan/ investment they make individually in their published/ final balance sheets. The schedules to the balance sheets may provide some clue, but that also is optional. Don’t let us get distracted from the main areas of concern ( and likely manipulation): losses and sudden winding- down of businesses in somewhat mysterious circumstances.