Lilavati Hospital caught in black money trail
alok agarwal
Between 2002-2010, nearly Rs 500 crore was spent to buy medicines and pharmaceuticals the hospital and of that, nearly half the money, Rs 250 crore was diverted via hawala in banks accounts in several tax havens.
And between 2002 and 2010, nearly Rs 125 crore was spent to buy medical instruments, and of that, nearly Rs 50 crore was diverted in foreign accounts.
CNN-IBN has found out Mehta brothers use to launder money are in six key foreign bank accounts - HSBC Private Bank in Bahamas; HSBC Private Bank in Mauritius; HSBC Private Bank in Singapore; ABN-AMRO Private Bank in Geneva; Credit Suisse in Dubai and UBS in Dubai.
A close scrutiny of the official list of the medical suppliers to the Lilavati Hospital revealed that since 2002, the hospital has not been buying medicines directly from any manufacturers or even distributors.
Without any tenders or requisite approvals from the board, Lilavati sources their medicine from 400 small individual medical stores and out of those, 250 are located in the slums of Dharavi.
And in the balance sheets of Lilalavati since 2005, Rs 35 crore is outstanding to Mayfair Realtors & Vesta Ltd, the firm which was contracted to deliver machinery to Lilavati.
But till 2011, the firm has not even delivered a screwdriver to the hospital.
Mayfair Realtors & Vesta Ltd is owned by Suresh Motwane, a declared absconder wanted in 40 cases of fraud and cheating by Mumbai police.
Prabodh, Rashmi, Chetan and Bhavin have also used crores of trust's money to fund their personal legal battles.
But that was just the tip of the iceberg. The CNN-IBN investigation has found that their foreign accounts are not just simple instruments of tax evasion, but of large scale money laundering.
The fascinating story of money laundering from India began in Belgium. More specifically, the city of Antwerp, the diamond capital of Europe, where Kirtilal Mehta, the man who set up Lilavati Hospital, started Gembel European Sales in 1932. In 1970, he handed over the global diamond trading company to his sons - Prabodh Kirtilal Mehta and Rashmi Kirtilal Mehta.
Gembel, owned by Prabodh, Rashmi, Chetan and Bhavin, buys rough stones and then works in partnership with jewellery designers and manufacturers to produce exquisite polished pieces for high-net-worth consumers.
In 2007, Gembel European Sales and it's main owner Prabodh Mehta was convicted of money laundering, fraud and forgery in diamond business in Belgium.
According to court documents available with CNN-IBN, they were implicated in laundering 26 million Euro, nearly Rs 170 crore. Prabodh was sentenced to 6 months imprisonment and a 3-year probation.
And Prabodh's son Chetan was convicted in Israel for the charges of trying to bribe government officials.
And yet, defying all rules of the Reserve Bank of India, they became shareholders and directors in ING Vysasa Bank and ING Investment Management.
ING Investment Management managed all the portfolios of the bank as well as individual schemes, handling nearly Rs 50,000 crore of public money.
Kirti Equities Private Limited is the third largest shareholder of ING Investment Managament (India) Limited with a 14.34 per cent stake. And that's where starts a complex shareholding puzzle created to fool the investigators, both at home and abroad.
The CNN-IBN investigation has decoded the cipher network and found out that Kirti Equities Private Limited is registered in the Mumbai residence of Rashmi Kirtilal Mehta. But it is held by Kirti Communication, a company owned by the Mehta brothers and their sons in Les Cascades in Port Louis, the capital of the tax haven of Mauritius.
CNN-IBN has also learnt that Vijay Choraria was the common link betwwen the Mehta brothers. He is a Director of Kirti Equities and a trustee at Lilavati hospital nominated by Prabodh and Rashmi Mehta.
Sources in the Enforcement Directorate said that they were also looking into De-Five (Mauritius) Holdings Ltd, which till 2010 held nearly 3 per cent in IndusInd Bank. Investigators suspect De-Five (Mauritius) Holdings Ltd is owned by the four Mehtas.
Therefore, the big question that India needs an answer - why the Government, when knew them as having illegal funds and being convicted money launderers, did not write to agencies to check their various investments in India, source of funds and ask for further investigation.
And why did the Government not tell SEBI, banks and RBI to remove them from their shareholding and investments in ING Vysya and IndusInd, and stop them from managing public funds and jeopardising the banking industry.
As hey are shareholders in private banks, another question arises is, where was the money coming from? Because the CNN-IBN investigation showed that their flagship business in Belgium was hardly making any profit.
In fact, Gembel European Sales in Belgium is an interesting company. It is the flagship company of Prabodh Kirtilal Mehta, Rashmi Kirtilal Mehta and their sons - Chetan and Bhavin - yet, these balance sheets of Gembel shows that the company made an overall profit of just Rs 2.5 crore over the past eight years, from 2001 to 2009.
According to the 2002-2005 balance sheets of Gembel, the company made net loss of 1.9 million Euro or Rs 12 crore.
In 2006, the company made a net profit of $300,000, but in 2007, it suffered a net loss of $600,000.
But the CNN-IBN investigation showed how they created multi-layered companies across the globe in various jurisdictions to hide the money laundering and all funds kept ending up in India.
Despite the parent company Gembel making a mini-profit, in 2003, Mehtas register a company in Singapore - Arpee Gems Private Limited, with a capital infusion of $18 million, that is nearly Rs 90 crore.
A close look at their shareholders revealed more interesting facts.
While B&C Manufacturing (Mauritius) is a shareholder in Arpee Gems, Burmaruby (Mauritius) is a shareholder in Arpee Gems. On the other hand HSBS Trustees Limited is a shareholder in Arpee Gems (Singapore) along with Bhavin and Chetan. Arpee Gems from Singapore pumps money into a Mumbai-based company Adesh International.
Balance sheet of Adesh International also revealed unsecured loans from Gembel Mauritius every year.
According to a high-level source in the Enforcement Directorate, the modus operandi was simple.
Laundered funds were brought into Adesh International as capital as a first step to make money kosher / black money white. Adesh then bought bogus bills in Indian market to purchase stock of diamonds and then exports diamonds to bogus parties overseas.
The bogus parties, which have tainted fund, sent them to India against the export, thus making the funds legitimate.
Adesh then apparently paid money to the party from whom it brought the bogus bill in the first place as it has an outstanding against that bill.
In reality, the money paid to the party in the end had the black money overseas but Adesh International was used to bring its funds down to India after making it white.
However, it was just the tip of the iceberg. Enforcement Directorate sources said that they faced lot of resistance from EOW of Mumbai Police while investigating the case.
It seems that the Mehta brothers and their sons have some powerful political friends, including ministers in power in Maharashtra right now. Ministers who are seen every week in Lilavati Hospital cosying up to the CEO and heads of departments – known allies of the Prabodh, Rashmi, Chetan and Bhavin.
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