Chanda Kochhar Money Trail: When obfuscation becomes the signature move

What happens when you bring the fox to guard the henhouse? By structuring a convoluted and intricate matrix of entities - three of them actually - to obfuscate and throw the scent off for future investigators, the Kochhar brothers forgot one simple thing: that paper trails cannot be hidden anymore due to the data mining and compliance work done by ministry of corporate affairs (MCA). Fraud and shellcos or suitcase companies always leave a trail of paper. And so it was with the Kochhars.

The trace-back begins with Modern Fashions, which was one of the principal sha­reholders in the two Kochhar Brothers Credential twins, along with ABS Components Pvt Ltd and KG Computers Pvt Ltd which were the other two. ABS, like Modern a shellco, the last return for which was filed in 2005. Like Modern Fashions, it became a victim of DeMo and was struck off post the cash cull exercise by Registrar of Companies (RoC).

Credential Finance Ltd's or CFL 1, as IANS has been reporting as part of an investigative series on the Kochhar family, balance sheet on September 30, 2000 shows it made an investment of ₹1.25 crore in preference shares and ₹98.13 lakh in equity shares of CFL, which amounts to ₹2.23 crore invested in CFL. ABS was incorporated by Rajiv Gupta and Rajiv Garg in Delhi on May 19, 1998 with ₹1,000 as capital. Its registered office was shown like Modern Fashions as B 33, SFS Houses, Sheikh Sarai 1, New Delhi-17.

Sometime in 1994, the ownership changed hands to Kochhars. This incidentally is the same year that Chanda Kochhar was elevated to AGM of ICICI Ltd. Majority shareholding of ABS was held by Rajiv Kochhar, 275,100 equity shares of ₹10 each while balance 275,100 shares are shown as held by Kochhars family/relative.

The jiggery-pokery begins here. Form 20 B filed on April 13, 2006 with RoC for 2004-05 shows that authorised capital is ₹75 lakh and paid up capital is ₹55.01 lakh. In April 2006, the only time this company filed its return (online) for two successive years 2003-04 and 2004-05, it declared that its paid up capital was ₹91.61 lakh which was more than its authorised capital of ₹75 lakh. Post DeMo, it was struck off at serial number 366, out of a total of 24,945 companies that were knocked out by RoC Delhi on September 1, 2017.

Now, we come to the registered office address which again shows discrepancy and divergence. Physical scanned copy of Form 18 shows that with effect from March 20, 2006, ABS R.O. address was changed from 24, School Lane, Opposite Holiday Inn, Barakhamba Road, New Delhi-1, to UB 5 Arunachal Bhawan, Barakhamba Road, New Delhi-1 like Modern Fashions.

IANS visited the address and found that this address actually doesn't exist, UB 4 and 7 exist, but UB 5 doesn't, so it clearly means that this address is fictitious, making it a complete suitcase or shellco. Here again, Form 18 filled online gives Sheikh Sarai as the address.

KG Computers Pvt Ltd

This company, another shareholder/investor in CFL, was struck off post-DeMo. CFL balance sheet shows that KG Computers made an investment of ₹8.75 lakh in preference shares and ₹45.60 lakh in equity shares, making the total investment of ₹54.35 lakh. KG was incorporated by Rajinder Kumar Garg and Amit Gupta in Delhi on May 19, 1988 with ₹1,000 capital. Its registered office is shown as Sheikh Sarai, the same as Modern and ABS. The company changes hands in 1994 with the Kochhars stepping in.

Credential Holdings Pvt Ltd, a company incorporated by Rajiv and Deepak Kochhar on September 8, 1994 for ₹200, owns the majority shareholding in KG Computers.

If you think following this Byzantine paper trail is mind-boggling, actually the tent poles and DNA of each are very much similar. Modern, ABS and KG are all shellcos, created for the purpose of obfuscation. KG was struck off at serial number 10,450 out of a total of 24,945 companies that were pole axed by RoC, Delhi on September 1, 2017. KG Computers like its two companions also shows UB 5 Arunachal Bhawan Barakhamba Road, New Delhi-1 as its address. Something that doesn't exist and photographs don't lie.

Credential Holdings

Over and above CFL 1 and CFL 2, there is Credential Holdings Pvt Ltd (U67120MH1994PTC080991) with an authorised capital of ₹5 lakh and a paid up capital of about ₹1 lakh. The annual return of CFL shows that CHPL had invested ₹1.25 crore in preference shares and ₹84.97 lakh in equity shares. Which totals about ₹2.30 crore from Credential Holdings (CHPL) into CFL. CHPL was incorporated on September 8, 1994 by Deepak and Rajiv Kochhar again with an investment of ₹200.

Both have shown identical addresses and describe themselves as business executive. In the master data base of MCA, this company remains - active - with its registered office shown as G/8 Maker Chambers V, Mumbai-21.