 Hello and welcome to NewsClick. Today we are going to discuss the scandal which has hit the Dutch press regarding kickbacks, fraudulent investments or transactions in which it seems reliance infrastructure limit is involved. They denied. They have denied it. But what the Dutch are saying is that it involves what is known route right now the east-west pipelines. Earlier it was the reliance gas infrastructure limited company. Reliance gas transportation infrastructure limited. And it seems to connect back to a biometrics marketing company which has been earlier accused of also in the KG Basin case and in fact has been named as one of the companies involved in what would be called transfer pricing if you will. So these are not statements that I am making or you are making. These are statements which are already there in public domain. This company is involved in some of the KG Basin shall be say charges of siphoning off of money by claiming high infrastructure costs and then recovering it as a part of their share of the revenues which had to go and to pay for this infrastructure. This time this has come regarding the pipeline company and this is also people have been charged. Okay let me go step by step. On Monday a Dutch court released three individuals who had been arrested for three days. These three individuals released been released on bail. No they have been released saying they are not required for interrogation any further. You see the prosecuting agency is the Netherlands Fiscal Intelligence and Investigation Service and the Economic Investigation Service. So if I owe these that's right. So the court has said since they are not required for questioning they can be released from prison. Now these three individuals who have been arrested were former employees of a Dutch pipeline firm which is called AHAC NL as in Netherlands. Now this particular Dutch company it's one of its associate companies were part of a consortium of independent contractors from India, from China, from Russia, from the Middle East etc etc etc who were engaged in building a 1400 kilometer long pipeline which starts at Kakinada in Andhra Pradesh and travels all the way up to Bharuch in Gujarat after traversing Telangana, Karnataka, Maharashtra. So from Andhra Pradesh to Gujarat. From east coast gas to the west coast. Now hear me out. This company which was a company which was set up by Reliance Industries Limited but eventually became a private company of the head of Reliance and not a part formally of Reliance Industries Limited it became Mukesh Ambani's company and was called Reliance Gas Transportation Infrastructure Limited. Now this company then has a new avatar. Can you tell us what happens if you make it from Reliance company, RIL company into a company in which only Mukesh Ambani was a because Reliance Industries Limited is a widely held public limited company it shares are quoted in the stock market it has to meet various regulatory it has to adhere to various regulations which are put out by the stock exchange authorities various securities and exchange board of India whereas if it is a company which is privately promoted and owned by Mr Mukesh Ambani then these the regulatory oversight is far far less and you also don't have to disclose as much correct as you would otherwise correct because there are shareholders there and shareholders means you have to have public information absolutely a lot more information has to be disclosed to the public at large but if it's a closely held private company then less information has to be disclosed so let's get back to the story. Reliance Gas Transportation Infrastructure became East-West Pipeline Limited and as we are talking a Canadian investor called Brookfield is reportedly going to be investing or has obtained the clearance to invest the equivalent of about two billion US dollars in purchasing the assets of this company which is a loss-making company because the company is making losses because not enough gas has been produced from the Krishna Gudavadi based it and therefore it is unable therefore it is incurring losses in fact the Reliance in one of his first companies or first cases of its kind it's not Reliance Industries Limited but Group they actually got the banks to roll over and we renegotiated the loans but wait let's go step by step these three persons who were arrested and then released they have been accused of over invoicing to the tune of about 1.2 billion dollars that's a huge amount now though this has been completely denied what the court what has been alleged is that the usual story this goes through all kinds of convoluted tax haven and finally it to use their language creamed off creamed off the public prosecutor of Netherlands according to the AFP their associated France press is alleging that biometrics marketing creamed off and they became what was called like a duplicator of invoices an invoice duplicator let's take a few steps back what it means is say X amount of equipment was bought for the pipeline and what was charged or services will ended for this is yes consultancy or other services instead of X which is the actual cost because it went through a series of transactions it ended up being 2x 3x or 4x whatever it might be and the difference between the X the cost and what because of the series of transactions it becomes that is the difference which over a period of time and through multiple transactions is supposed to be estimated by the Dutch investigating agency they have alleged 1.2 billion dollars that's what the allegation is that this money allegation this is what the Dutch investigative agencies saying claim claiming and then this is the alleged amount that has been skimmed off you can say this is therefore the next step that where who gets the money where is the money going according to them it's going to this entity in Singapore called biometrics marketing now now let me now let me try and go first I take a step back and then I take a few steps forward in the budget that was presented in 2009 the union budget the then finance minister which is Pranab Mukherjee had given what was described and I I mean I wrote an article in current news where it was described as the biggest tax break to the richest Indian it came to about 20,000 crores this was an income the income tax act was amended so that companies which set up gas pipelines set them up operating were exempt from payment of taxes now interestingly at that point of time the the CPI leader Mr. Reddy had had openly written against it and complained to the minister of finance of course nothing happened but then let's again see what happened thereafter and that's where biometrics comes in in 2013 the enforcement director actually wrote to the Reserve Bank of India and asked whether the loan that had been given by the Singapore branch of the ICICI bank to the tune of about 6,500 crores whether it was legal or not why did this happen because earlier G.T. Venkateshwar Rao he was an officer of the government of India in the Indian High Commission he had done a detailed investigation on this to suggest that there was more to it than met the high and in fact Anu Tandon who was a congress member of parliament she had been interrogated now the interesting part of the whole story is nothing of this I mean eventually nothing came out of these all these of all these investigations and though this matter had been raised by people like Prashant Bhushan, Arvind Kejriwal reliance completely denied it first they said yes yes they said we have nothing to do with biometrics and they also said that the investments that were made by biometrics by into various Indian entities including companies in the reliance group were investigated scrutinized found to be above board and they said they participated and fully cooperated in the investigation and the regulatory authorities have been a price of true and correct like this is what reliance has claimed but the question is and this is really we've never had a deep enough investigation is biometrics itself and and companies that control biometrics including a company called Strasburg holdings in which a person who is a legal advisor to reliance has a substantial investment and I must hear you know draw your attention to a letter that has been written by our friend Dr. E. S. Sharma who was former Secretary of Economic Affairs in the Ministry of Finance he's written a long letter to the Cabinet Secretary Mr. P. K. Sena saying that the Indian investigating agencies have not proceeded they proceeded in his words rather hesitantly despite the report given by the Indian High Commission's officer that this matter as we already discussed is in the Supreme Court of India and the question he asked is has this been disclosed to the Supreme Court of India and at the end of the day there is a report of the controller and auditor general of India which has accused the reliance industries limited which is a major contractor in the Krishna Kodawari gas basin the whole that whole project of having under over invoiced equipment now we had already even in news click where news click was in in actual existence at the time we had looked at the C.H.G. report and the very clearly certain items including the equipment the barges the what is it platforms platform drilling platforms they have they appear to be highly overpriced and the C.H.G. report does point that out okay so you've written on it we have written on it so this is on the record that and this is really on the record that C.H.G. has done this audit and found this a problem now but I want to come back there's one other angle and this is what Dr. Sarma has pointed out which is very interesting he's saying today the ICICI bank has come under the scrutiny of the CBI and the enforcement directorate and Mrs. Chanda Cocher is being interrogated so according to Dr. Sarma the government should investigate ICICI banks connection with biometrics and whether I mean he's made he's he's made a very interesting point he says in much smaller cases of alleged money laundering the central agencies conduct raids arrest people how come then they're not showing that much enthusiasm is it because it's the big fish are could be involved and the big fish and different rules the two things before we wind this up what I would like to also talk about is that very clearly the Dutch have evidence of some kind of over invoicing they are saying 1.2 billion dollars but they seem to have seen the web the trail that is there web of transactions through which this 1.2 billion surplus has gone now 1.2 surplus billion surplus going to biometric is one part but the other part that this was skimmed off a project which was an infrastructure project Lance claim is well this did not lead to any loss on the part of the people because this money this loss was never passed off to the consumers and I think that's a bit of a red herring I mean what they're saying is that look we have in this country a petroleum and natural gas regulatory board and they determine what should be the price of gas therefore the suggestion that by spending more on equipment in the pipeline we somehow the consumer has been cheated according to reliance is not an issue now the point is I think this diverts attention from the real part of the story yes we have officially administered prices of gas we have a regulatory body called the petroleum and natural gas regulatory board but this is good so this is got something else this is something else did was more money spent in building that pipeline than what was required or what was warranted and if in the authority which is building the pipeline knew about and if in the process of sourcing the equipment and paying for services from little companies across the world the Indian players ended up playing much more than what was should have paid and if indeed this money was skimmed off or or to use the the phrase of the Dutch public prosecutor creamed off this is something worth investigating and and I just say one last point as in the case of the Herb Falsiani expose I don't you shouldn't expect anything to happen in India if anything would happen it's going to happen over there in Netherlands yes is if more money has been paid and 1.2 billion dollars has been creamed off let's forget the biometrics reliance connection not having been proven if that is so let's leave that out point still remains 1.2 billion dollars was overpaid by reliance so they're either saying they were foolish they paid overpaid by 1.2 billion dollars which could therefore be creamed off or they have to say they're complicit so either or and the argument that you said there is a board which determines the legitimate price there are very few pipelines being built this is one of the biggest pipeline this is one of the longest pipelines that has been built in recent times besides you know the initial reports that were put out by the press trust of India didn't mention East West pipeline but I mean it didn't take too much to guess because there are only two companies that build pipelines one is Gail which is earlier called the gas authority of India limited and this company and the point again here is very simple that if you're building the major pipeline which you were at that point of time then obviously the cost of the pipeline you disclose to the regulatory authorities does get built into the cost that ultimately consumer will have to pay as transportation cost so to argue then how how you prove it is another story but what you can say without fear of any contradiction that if indeed these allegations have any basis if indeed and this is for the courts to judge at the end of the day who would be the loser the exchequer of this country thank you very much for trying to make this shall we say financial transactions and the consequences thereof clear to our viewers thank you very much for watching news click do keep watching this and other shows