Did Economic Times Ignore PNB Scam Story to Protect Times Group's Treasury?

Negative coverage would have hurt Gitanjali shares – and in turn BCCL's investments.

New Delhi: Could the Punjab National Bank scam, involving celebrity diamantaire Nirav Modi, his uncle Mehul Choksi and others, have come to light a lot sooner than it did?

According to whistleblower Hari Prasad, the Bangalore-based businessman whose own dealings with Choksi made him ring the alarm bell, it wasn’t the lack of information that was holding certain media houses back. The Newslaundry website reports that Prasad has said that he approached the Times group with the information he had – and was told that they were not interested in investigating or publishing it.

In 2016, Prasad had sent a letter to the prime minister’s office, saying that Choksi had “siphoned off thousands of crores out of India”. He also questioned how the businessman was able to get such large loans. In the same letter, Prasad said, “They [The Times Group] refused to cover the story as they have financial interest in that company…General perception of the public is that media companies get the info on a case and then they start negotiating deals with the accused and so on.”

Prasad has told Newslaundry that he approached a senior journalist from the Times group’s financial paper, Economic Times,but was told that “We cannot cover this”. He also says that he emailed CNBC-TV18, but received no response.

Prasad told the website that his faith in journalism reduced after the incident. He believed there would be interest, “But none of the media [organisations] supported me when it was the right time to support.” Now, of course, everyone is covering it. Now it is in the public domain, it is exposed, it is super hot so everybody wants to meet me. Now everybody wants to cover it. It is a TRP game. This is not fair…If they had woken up then, maybe we could have avoided this problem. Maybe I could have recovered my money, maybe Choksi could not have escaped from the country.”

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Why would Economic Times not be interested in what they had to say? The financial interests of its owner, Bennett Coleman and Company Ltd (BCCL)  could probably have something to do with it.

A report in the Indian Express has detailed how BCCL invested in the Choksi-promoted Gitanjali Group. “According to the documents, BCCL, which runs the Times of India and the Economic Times, has been allotted five convertible warrants of Rs 32.5 crore in each of the two subsidiaries of Gitanjali Gems Ltd, Nakshatra Brands Ltd and Gili India Ltd, according to board resolutions of these firms of August 2017 and October 2017 respectively,” the newspaper reported.

Convertible warrants are a form of long-term securities that allow the investor to purchase shares at a fixed price for a pre-determined amount of time.

Documents show that the Gitanjali Group might have joined BCCL’s Brand Capital program in 2011. According to the company’s 2012-13 annual report, “The company allotted 943,396 equity shares of Rs 10 each upon conversion of 943,396 warrants issued in previous year to Bennett Coleman and Company Limited (BCCL) on preferential basis at the price of Rs 424 per warrant. Consequently, paid up capital of the company increased from Rs 911,220,950 consisting of 91,122,095 equity shares of Rs 10 each to Rs 920,654,910 consisting of 92,065,491 equity shares of Rs 10 each.”

Negative coverage would have hurt the companies shares – and in turn BCCL’s investments. Ever since the alleged scam went public, Gitanjali Gems’ shares have fallen by 19.98%, Newslaundry reported.

The Wire has sent a questionnaire to the Economic Times executive editor Bodhisatva Ganguli and the article will be updated as and when he responds.

According to the Indian Express, HT Media Ltd – which runs Hindustan Times, Hindustan and Mint – was also in talks to invest in the Gitanjali Group. The jewellery company’s shareholders approved the allotment of debentures to the media firm but HT Media Ltd chief financial officer Piyush Goyal said the investment was not done even though the company had “evaluated” and “regulatory filings were done” for the allotment.

Private investments and media treaties

The Times Group’s ‘private treaty’ model – whereby BCCL picks up shares in companies in exchange for long-term advertising and publicity deals– has been sharply questioned in the past, with critics alleging that the deals that are signed also inevitably affect the media house’s editorial coverage .

In 2010, market regulator SEBI (Securities and Exchange board of India) warned of possible negative outcomes of private treaties, noting it could lead to “commercialisation of news reports” and “biased and imbalanced reporting”.