Sudhir Choudhrie, India's biggest arms agent and lobbyist, who is being investigated by the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED), has made enough wealth through his deals and now have reportedly entered the real estate business.
Investigating agencies tracking his activities say he is constructing a network of cinema halls, lifestyle malls and luxury hotels.
These investigations are also providing telltale clues into how closely networked the world of defence contracts is—and that there are neither permanent friends nor permanent enemies among those in the defence business.
For instance, Alpha Design Technologies, a Bengaluru-based company with links to Mr Choudhrie, which was acquired by Adani Defence Systems and Technologies in December for Rs400 crore cash, has links to Russian and Israeli players and is promoted by Vasaka Promoters and Developers. Adani Defence Systems and Technologies is a wholly-owned unit of Adani Enterprises of the Gautam Adani-led group.
Alpha Design, which has got industrial licences to manufacture defence equipment in India, had the following shareholders on 31 March 2018: Vasaka Promoters and Developers (3.21 crore shares and 85.8% holding), Col HS Shankar (retd), who manages the company (no shares) and One Earth Capital Ltd of Mauritius, a foreign institutional investor or FII (0.53 crore shares, or 14.15% holding).
On 1 December 2018, Alpha Design Technologies allotted equity shares to the following entities: Elara India Opportunities Fund Ltd, an FII (0.03 crore shares, 0.79% holding for Rs8.24 crore), Astraea Fund Ltd, Cayman Islands (0.01 crore shares, 0.26% holding for Rs4.52 crore) and Cogent Global PCC, Mauritius (0.01 crore shares, 0.26% holding for Rs3.21 crore).
Following this, there was a change in shareholding status. Vasaka Promoters and Developers held 84.68% in Alpha Design and Technologies, One Earth Capital Ltd of Mauritius held 13.98% and Col Shankar (retd) held 0.03% while FIIs together held 1.31% of the company.
There are two interesting aspects of these deals—one, the transfer of 13.98% equity stake of Alpha Design from three companies linked to Mr Choudhrie and his associates to One Earth Capital, Mauritius and, two, the holding of Vasaka Promoters and Developers: the first because of the interlocking shareholding and, in the second case, the family relationships involved.
Vasaka Promoters is a special purpose vehicle (SPV) promoted by the Murugappa Group, Karvy Group and Amarjit Singh Bakshi and his company, Safdarjang Estates Pvt Ltd. The family connections build on from here.
Mr Bakshi is chairman and managing director of Bakshi group, which is involved in the automotive, infrastructure, defence, real estate and hospitality industries. Safdarjang Estates is a Bakshi group company and has on its board Amrita Bakshi, wife of Amarjit Singh Bakshi.
Continental Defence Solutions Pvt Ltd, another Bakshi Group company, has been granted industrial licences for defence manufacturing by the government's department of industrial policy and promotion (DIPP). Mr Bakshi's daughter, Simrin is married to Bhanu Choudhrie, Sudhir Choudhrie's son.
Now, to cut a long story short, all the companies mentioned above—the Bakshi Group companies, the Murugappa Group, the Karvy Group, Vasaka Promoters, One Earth Capital, Mauritius and Elara India Opportunities Fund Ltd -- have links with Alpha Design Technologies Pvt Ltd, a Sudhir Choudhrie front company, which has now been bought over by Adani Defence Systems and Technologies.
The rationale for the acquisition is obvious. It pitchforks the Adani Defence Systems into the big league where it can match the Tatas, Reliance Defence and the Mahindras.
Mr Choudhrie, whose name figures among the biggest account-holders in the infamous Panama Papers, has been one of the beneficiaries of the offset programme in defence.
The Panama Papers Link
On 17 October 2016, six months after the Panama Papers and days after the Indian Expressreported on several offshore firms linked to London-based arms agent Mr Choudhrie and his son Bhanu, a Mossack Fonseca employee had raised the red flag, new data from the law firm revealed.
According to the report, "The 'compliance note' pointed out that both father and son were arrested in 2014, as part of a SFO probe in London for allegedly helping Rolls-Royce pay bribe to secure contracts in China and Indonesia. In India, it noted, the Ministry of Defence also ordered a CBI inquiry into the purchase of aero engines by Hindustan Aeronautics Ltd (HAL) from Rolls-Royce."
On 27 October 2016, two entities from British Virgin Islands (BVI) - Anterna Ltd and Belinea Services Ltd, associated with the Choudhries were served a 90-day notice by Mossack Fonseca to change their registered agent.
"The latest data shows that Mossack Fonseca's UK office informed its BVI arm that Bhanu had resigned as director of Anterna on 27 January 2016, after all 50,000 shares were transferred in November 2015 from a Seychelles entity - Protype Services Inc - to Sumant Kapur, the son of Sudhir Choudhrie's uncle BK Kapur," the report from Indian Express says.
In February 2014, Mr Choudhrie was detained by the UK Serious Fraud Office (SFO) in a bribery investigation into Rolls-Royce Holdings. According to an investigation by BBC and The Guardian, Rolls-Royce had paid the money to companies linked to Mr Choudhrie, a known arms dealer.
A report from BBC said, "The joint investigation has also found evidence of a suspicious payment that was made in cash. It involves Mr Choudhrie's son, Bhanu, who accompanied an arms executive called Peter Ginger on a trip to Switzerland in 2007. During the trip, Mr Ginger made a cash payment amounting to hundreds of thousands of pounds into a secret bank account. The account was opened in the name of 'Portsmouth' and bank documents seen by Panorama later showed a balance of more than 1 million Swiss francs. Mr Ginger was a key negotiator on the sale of Hawk aircraft to the Indian government. All of the planes had Rolls-Royce engines and the deal was worth around 400 million pounds to the company."
Both Mr Choudhrie and his son Bhanu were arrested in February 2014.
Mr Choudhrie denied any wrongdoing, was never charged and was released on bail without conditions. The Sunday Times reported that the bail was completely lifted in July 2014.
The company, Europe's largest maker of commercial jet engines, agreed in January 2017 to pay about 670 million pound to settle US and UK investigations into allegations its representatives bribed foreign officials, says a report from UK Telegraph.
This report from October 2018 also stated that Bhanu Choudhrie was taking legal action against his wife Simrin to prevent her disclosing 'pillow talk' about his part in a Rolls-Royce corruption inquiry. Simrin Choudhrie had filed for divorce in May 217, but was living with her husband till November that year. The couple is going through divorce proceedings.
In UK, Mr Choudhrie is regarded as a long-term backer of the Liberal Democrats and has supported the party financially since 2004, making over £1.5million in donations, in personal capacity and from his company.
In 2015, Liberal Democrat leader Tim Farron had appointed Mr Choudhrie as his adviser on India, a role involving helping the party develop its relationship with the British-Indian community and providing advice on Britain's foreign and business relationships with India.
According to a report from Deccan Chronicle, Israel-based international defense electronics company Elbit Systems Ltd gave its first megabuck order for export of high technology jammer power amplifier to Alpha Design Technologies during the the Aero India 2019. These amplifiers would also be sold to Indian armed forces later.
Bezhalel Machlis, President & CEO, ELBIT Systems, said the company selected Alpha Design Technologies as their technology and production partner for manufacture of new generation jammer power amplifiers to meet requirements worldwide and would ensure that large export orders accrue to Indian manufacturers.
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