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Kota Neelima is the Political Editor of the Sunday Guardian.

Balwa routed money via 3 firms to DMK

DB Realty promoter Shahid Balwa being produced in a court in Mumbai on Wednesday in connection with the 2G spectrum scam (PTI)

B Realty, whose telecom company was favoured for the allocation of 2G spectrum licences by the then minister A. Raja of the DMK, used its partnership firm, Dynamix Realty, to transfer over Rs 200 cr to a television channel owned by DMK chief M. Karunanidhi's wife and daughter in Tamil Nadu.

The money transfer was routed through three companies as "unsecured loans" and is reflected in their audited balance-sheets and annual returns, copies of which are with The Sunday Guardian.

The paper trail, being investigated by the CBI and the Enforcement Directorate, shows that the DMK-backed Kalaignar TV Pvt Ltd received Rs 214 cr in "unsecured loans" in 2009-2010, a year ahead of the crucial Assembly elections in the state this year.

Annexures to the annual returns of Kalaignar TV show that 60% shareholding of the company is with Karunanidhi's wife M.K. Dayalu and 20% with Karunanidhi's daughter Kanimozhi.

According to documents, this series of "unsecured loans" can be traced back to Dynamix Realty, a partnership firm, of which 99% is owned by DB Realty, a real estate company based in Mumbai. It was DB Realty's Swan Telecom that was allotted 2G spectrum licences for 15 circles, and which later partnered with UAE's telecom company, Etisalat.

DB Realty's director Shahid Balwa was arrested this week for his links with the 2G scam. Shahid Balwa's brother Asif Balwa, along with Rajiv Agarwal, owns Kusegaon Realty Pvt Ltd, according to its annual return for the last two years.

The 2010 annual audited accounts of Kusegaon Realty (formerly known as Kusegaon Fruits and Vegetables Pvt Ltd) show Rs 209,25,10,000 in "unsecured loan" as an "inter-corporate deposit".

Under "Loan and Advances", the Kusegaon Realty balance-sheet shows that Rs 200,00,00,000 was lent to Cineyug Films Pvt Ltd "in share application money"; Rs 6,24,75,000 in "8 percent debenture application money"; and Rs 3,00,00,000 in "equity share application money".

The total amount of the loan from Kusegaon Realty to Cineyug Films Pvt Ltd, a company owned by Morani Brothers and Kusegaon Realty, was about Rs 212 cr.

It was DB Realty's Swan Telecom that was allotted 2G spectrum licences for 15 circles, and which later partnered with UAE's telecom company, Etisalat.

The 2010 annual return of Cineyug, shows that the then Kusegaon Fruits and Vegetables held 122,500 shares in Cineyug. The Cineyug balance-sheet of assessment year 2009-2010 shows among the source of funds Rs 212,00,89,041 in "unsecured loans".

The money trail travels further as evident from the balance-sheet, which shows in "advances to the concerns where directors are interested", Cineyug had paid Kalaignar TV Pvt Ltd Rs 214,86,54,109.

The 2010 balance-sheet of Kalaignar TV Pvt Ltd reflects this exact amount as "unsecured loans" of Rs 214,86,54,109.

Though the companies are now claiming that the funds have been returned, it is yet to reflect in their balance-sheets, pointing to the possibility that the funds were returned only after the investigating agencies began probing the telecom companies involved in the 2G allocation.Image 2nd

In response to queries by this newspaper, a spokesperson of DB Realty Ltd said, "DB Realty Ltd has not advanced any monies to Kalaignar TV.

"Dynamix Realty, a partnership firm in which DB Realty owns 99% gave an interest bearing loan of Rs. 214 crores to Kusegaon Realty Pvt Ltd. The company in question being an investment and operating company had based on commercial intent, given a loan to Cineyug Films Pvt Ltd for them to explore an investment in entertainment channel."

"Cineyug had a proposal to acquire some stake in Kalaignar TV. However we are given to understand that on account of valuation differences, this acquisition of shares could not be completed and the deal fell through," the statement added.

"Post this, Kalaignar TV, returned the monies to Cineyug. Kusegaon Realty Pvt Ltd asked for its loan to be returned and the same was paid by Cineyug in 2010-11. Subsequently Kusegaon Realty Pvt Ltd returned the loan it had taken from Dynamix Realty with interest. Thus there is no loss of principal or interest on the loan given by Dynamix Realty in this transaction," the statement clarified.

On Friday, Kalaignar TV's managing director Sharad Kumar in a statement said, "There is no link between the 2G spectrum allocation done in 2007-08 and the loan transaction that took place between Kalaignar TV and Cineyug Films private limited in 2009."

The statement said that Cineyug in 2009 gave some money as advance towards the acquisition of stakes in Kalaignar TV. "Owing to the differences in valuation of the shares of two companies, a sum of Rs 200 crore received till August 2009 was considered as a loan and was paid back by Kalaignar TV alongwith an interest of Rs 31 crore," Kumar stated.

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