Winsome Sacks Bank Nominee Director
Satya Prakash Tanwar had sought legal action against promoter Jatin Mehta, who left the country for Dubai a few years ago
Mumbai: Winsome group, India’s largest wilful defaulter after Kingfisher, has sacked the director nominated by the consortium of banks on the boards of its companies after the person asked Winsome to take legal action against promoter Jatin Mehta who left the country for Dubai few years ago. Winsome Diamonds and Jewellery — a listed company, and group firm Forever — owe .₹ 6,800 crore to 15 banks in India.
The director concerned, Satya Prakash Tanwar, a former State Bank of India officer, has said Mehta was “solely responsible” for the exports by the diamond and bullion house Winsome to its UAE buyers, a person familiar with the development told ET.
Tanwar has also put a question mark on a mystery Dubai subsidiary of the Winsome group company, Forever.
In an email on February 23, 2016, to the company secretary Forever, Tanwar said: “I was informed that the final accounts of Forever were drawn up by the statutory auditors without having received the accounts of the wholly-owned Dubai subsidiary of Forever. I was told that the accounts could not be obtained as no one knows where the subsidiary was located in Dubai, and who was or were the people to be contacted or any contact details whatsoever!!...In fact, Jatin Mehta had opened the subsidiaries there because he saw a huge potential for growth of business there and took over the entire responsibility of the international business of the company. How can Forever not be able to contact its own wholly-owned subsidiary defies understanding. But it is, according to me, a major compliance issue.”
Winsome, however, in its letter (March 28, 2016) to the banks, has complained that Tanwar has been raising “frivolous issues”, acting “against the interests of the companies”, and “making baseless allegations” at a time the group is trying to recover funds from its UAE buyers through legal proceedings in the Sharjah Federal Court. Winsome’s decision — seeking Tanwar’s resignation — has not gone down well among the members of the lenders’ consortium led by Standard Chartered Bank. “Tanwar is our nominee. He may continue to be as long as the banks want,” said a senior banker.
The local banks had issued standby letters of credit (SBLC in banking parlance) — similar to guarantees — in favour of international bullion banks like Standard of South Africa, Standard Chartered London and Scotiabank, which supplied gold to Winsome Group. The arrangement was if Winsome failed to pay the bullion banks, Indian banks would step in to pay for the gold consignment. The terms of SBLC were such that a single default allowed the bullions banks to encash the quasi-guarantees. Winsome’s default in March 2013, triggering a string of defaults, forced Indian banks to pay more than a billion dollar to the bullion banks. According to Winsome, the payments for exports were not received as its UAE buyers suffered massive losses on derivatives trading. The trades did not take place on any exchange but were over-the-counter (OTC) deals. While an audit firm in the Middle East gave a certificate that Winsome’s overseas buyers had booked losses, the names of the counterparties to these OTC transactions are not known.