WHAT NRI businessman Manu Chhabria can do, his estranged brother Kishore Chhabria can apparently do even better. Facing the heat from Income Tax (IT) authorities after raids at his business premises revealed his alleged misdeeds recorded in his own hand, Kishore is now running from pillar to post to "undo the wrong being done to him". If only he could have learnt how to sit pretty in Dubai, like his elder brother has after facing damaging charges of foreign exchange violation, Kishore would have been much more at peace.
Manu is being hounded by the Enforcement Directorate after investigations against tyre major Dunlop and liquor firm Shaw Wallace revealed that funds had been siphoned out of the country from these firms. IT investigations against Kishore now, by strange coincidence, show that money has been spent overseas, the source of which Kishore has been unable to explain convincingly to the officials. Naturally, investigations for possible Foreign Exchange Regulation Act (FERA) violations by the Enforcement Directorate could be the next piece of bad news for him.
Following countrywide raids in August 1995 on the business premises of the lesser-known Chhabria, IT sleuths reached the conclusion that an income of over Rs 204 crore had been concealed by Kishore and his companies between 1985-86 and 1995-96. The amount allegedly concealed was later scaled down to Rs 36.63 crore and accordingly a claim notice of Rs 21.98 crore has been served on Kishore. In retaliation, he has lodged an appeal against the assessing officer's order.
From documents seized during the course of investigations, IT authorities have concluded that during 1990-91 and 1991-92, a period during which Kishore was director at Shaw Wallace, over Rs 19 crore was siphoned out through inflated and bogus bills for purchases and payments. For example, it was found that franchisees who bottled liquor for Shaw Wallace—Kedia Liquor, Amber, Rainbow and a few other companies—were being paid more money than was due to them. The balance was apparently collected by Shaw Wallace in cash.
The sleuths have also managed to identify the people—R.B. Raheja and Harish Raheja—who allegedly received the cash being generated illegally for Kishore, while he was working in Shaw Wallace.
Besides, several documents seized during the raids have in Kishore's own handwriting recorded details of expenses incurred overseas though when questioned Kishore could not convince the officials about the source of funds. One of these documents reveals Rorqual Limited, registered in the tax haven of Isle of Man and which paid $4.5 million to liquor baron Vijay Mallya, to be a front company of Kishore. IT inquiries revealed that Rorqual had a total share capital of £2 and went into liquidation in 1994.
Rorqual, it is now suspected, was probably used as a front company for clandestine payments to Mallya for a 26 per cent holding in Herbertsons Limited. In fact, papers seized by the IT sleuths from Kishore's Lamington Chambers office in Mumbai establish that $3 million had been paid overseas to Mallya while the rest was paid in Indian rupees—a modus operandi that the investigating agencies are only too familiar with.
Kishore has vehemently denied any connections with Rorqual Ltd during his interrogation. But IT sleuths, armed with documents in Kishore's own handwriting, have a different story to tell. Kishore is also said to have been operating a foreign exchange account through A.C. Kaura, a UK-based NRI. Handwritten notes on a piece of paper, seized during the August 1995 raids, show that he was to receive £1,709 from Kaura. Kishore, who was not able to explain the source of the foreign exchange, had shown his annual income to be Rs 93,630 during 1993-94 but, by his own admission, he spent over Rs 1 crore overseas. IT officials are now seeking to establish that the companies being controlled by Kishore were milked for personal gains.
Another set of documents seized from Kishore's residence during the raids show that he spent over Rs 54 lakh during a trip to England and Switzerland in 1995. He was accompanied by his wife Bina, two daughters, two servants and other family members. Again, it is recorded in Kishore's own handwriting that he collected £55,000 from NRI Jitu Shah and £2,350 from Kaura during this overseas trip. Strangely enough, the companies in which Kishore is a director picked up the tab for expenses incurred on his family members' overseas visit, which was not connected with the official business of the company.
As IT sleuths tightened the screws on him, Kishore approached the CBI last year to complain against the high-handedness and irregularities on the part of the IT team that carried out the raids. CBI officials, however, say that they cannot do anything since this is not a case of corruption. The revenue department has already transferred the case to the Directorate of Investigation (IT), Mumbai. After the two brothers fell out with each other, both the camps have been passing on information against each other to the media. And since both have been at the receiving end for quite some time now, who knows where the next gunshot may come from. Just wait and watch.
