The Unreal Estate Of Robert Vadra

In 2007, Robert Vadra was a middle-of-the-road businessman with all the prospects of an exporter of brass who had not managed to export much, but had the contacts to grow at a pace that power can propel. He set up three companies, with mother Maureen as director. There was Blue Breeze Trading Pvt Ltd, whose state objective was "business of services and hiring of air charters", even though there was no evidence that it actually chartered any planes. Sky Light Hospitality Pvt Ltd was set up to "carry on business as hoteliers" and Sky Light Realty was incorporated to make an entry into real estate. His flagship company remained Artex, set up in 1997, the year he married Priyanka Gandhi.

It was a profitable business, but not extraordinary. Vadra wanted to grow far, and fast. An opportunity soon presented itself. In 2008, Sky Light Hospitality bought a 3.5-acre plot in Manesar close to DLF's recently launched residential apartment project, Primus, for Rs 15.38 crore. The funds for this purchase were raised largely from two sources: An overdraft from public sector Corporation Bank in 2007-08 worth Rs 7.94 crore and a Rs 4.45 crore loan from Vadra's own firm, Artex. The huge overdraft from Corporation Bank to Sky Light Hospitality which had a paid up equity capital of only Rs 5 lakh, and no income stream, deserves closer examination. The bank has been quoted in the media saying that it is in the process of probing the terms of the overdraft. The bank needs to answer whether, in the absence of significant paid up equity capital, any collateral was offered by Vadra in exchange for the Rs 7.94 crore overdraft.

In 2008-2009, within a year of purchasing the Manesar property, Vadra sold the land to DLF, India's largest property developer, in exchange for an advance of Rs 58 crore, paid in instalments over the next four years. Vadra made a tidy profit of Rs 42.61 crore. The appreciation of the value of the land by 300 per cent in a single year is unusual. In its response, DLF says that it is not out of the ordinary for property prices to appreciate by that much in Gurgaon. With this deal, Vadra entered the world of big boys; DLF, with a net worth of Rs 14,500 crore, was the biggest of them. That one sweet Manesar land deal in 2008-2009 set the ball rolling for Vadra's investments in a series of high-end apartments as well as a 50 per cent share for Rs 31.7 crore in Saket Courtyard Hospitality, which owns the 114-bed Hilton Garden Inn, built on DLF land in South Delhi.

Could Vadra have feasibly bought all the remaining properties in his portfolio with Rs 42.62 crore earned in a single deal? His companies' balance sheets show this sum as his only significant source of fund. Displaying a knack for purchasing land and property at particularly low prices, Congress President Sonia Gandhi's son-in-law bought a plot in South Delhi's upscale Greater Kailash II for Rs 1.2 crore. His Sky Light Realty bought seven 6,000 sq ft flats at the 600-flat complex, DLF Magnolias, in Gurgaon for Rs 5 crore, re-selling five to DLF within a year. His company also bought 15 1,000-1,400 sq ft flats for Rs 5 crore in DLF Estates' Capital Greens Complex in Delhi's Shivaji Nagar when the 2,856-flat project was launched in April 2009. He also bought the 10,000 sq ft exclusive Aralias flat, one of a 234-flat development in Gurgaon, for Rs 10.4 crore in 2008.

Vadra's real estate empire saw an unreal expansion. Within three years, he has amassed a property portfolio worth about Rs 200 crore. The intricate web of his five companies has done no other business since being incorporated in 2007-08 other than buying and selling property or giving and taking loans.

Going by Vadra's own company documents, he has either been extremely lucky or excessively intuitive. In 2007, DLF floated a subsidiary, DLF SEZ Holdings, with a paid-up capital of Rs 5 lakh. In October 2008, Vadra's company, North India IT Parks Pvt Ltd, set up that year itself, bought a 50 per cent share for Rs 2.5 lakh in DLF SEZ Holdings, though Vadra has no known expertise in it. A year later, the global market tanked, and Vadra re-sold his share, for the same price, says DLF. There was, claims DLF, no profit, no loss. In 2008, Vadra brought a 100-acre plot of land in Faridabad to DLF's attention. They gave him an advance of Rs 15 crore to purchase it, before calling a halt on it after due diligence, which discovered dubious title deeds. Vadra returned the money to DLF, averting a possible bum deal.

Why did DLF choose Vadra as a partner in its real estate dealings? Was it because Vadra's status as the country's 'first son-in-law' would benefit DLF? Or was it merely because, as he says, the Vadras and Singhs (owners of DLF) are family friends? When The Economic Times wrote about "Vadra's low-key entry into the real estate business" in March 2011, he was quoted as saying, "I have a good understanding with DLF. Our children are friends, we are friends. They are seasoned businessmen. They are not daft. They don't need me to enhance them. They've existed for years."

Activist-turned-politician Arvind Kejriwal, who revealed the extent of Vadra's entrepreneurial abilities on October 5 at a press conference at Constitution Club in Delhi, says Vadra and DLF were in a mutually beneficial partnership. According to him, Vadra got loans and property at very low rates, while DLF got favours from the Congress government in Haryana-which both have denied. Despite its denials, DLF's share price was punished by the stock markets, falling by 12 per cent in the three days after Kejriwal's revelations. For a company already saddled with a huge debt problem-it had liabilities of Rs 26,470 crore in March 2012 compared with a net worth of Rs 14,500 crore-this was a piece of bad news it could have done without.

The noise of Kejriwal's allegations was enough to break through the positive chatter that had begun to build around the Congress's new-found reform narrative. The party was blindsided. Its senior leaders were forced to declare loyalty to the first family to their last drop of blood on national television. Wearing a pained expression, Law Minister Salman Khurshid went on TV to say that "Sonia Gandhi is my leader and I would defend her till my last breath".

Khurshid now has to defend himself against the sordid revelations about the charity he heads: That it forged documents to siphon off money meant for physically disadvantaged children. His ministerial colleague, Jayanthi Natarajan, engaged in a war with the Prime Minister on the formation of the National Investment Board, was in a TV studio when Khurshid's mawkish soundbite was played out. Not to be left behind, she declared, "Sonia is our president and we are ready to give up our lives for her."

This show of competitive sycophancy was not enough. Kejriwal was in a mood to feed the frenzy. As he told india today on October 8 at his home in Kaushambi, Ghaziabad, "People had been talking about Vadra's questionable business but there was an unwritten understanding between the Congress and the main Opposition party that we should not target individuals. It was collusive corruption."

Are either Vadra or DLF culpable? No, says senior lawyer KTS Tulsi. "Legally, neither Vadra nor DLF have cheated anybody. There is no criminal breach of trust. These are private transactions between private parties. The Prevention of Corruption Act, 1988, can also not be applied since neither holds any public office," he says. As for an investigation under the Income Tax Act, Tulsi says that can happen only if it is proved that the properties and land Vadra bought were grossly undervalued. "For that, one has to go back to the date of booking of a flat and the offer price by the builder at the time. If any discrepancy is found only then a case can be made out," he explains.

On October 9, Kejriwal revealed even more details about Vadra's empire and his dealings with DLF, which controls 340 million sq ft of developable land across the country. He charged that the Haryana government in 2007 allowed DLF to build an SEZ on 30 acres of prime land in Gurgaon which had been initially acquired to build a hospital. When the decision was challenged in the Punjab and Haryana High Court, the court saw a nexus between DLF and the Haryana government. The state government, in a statement on October 10, claimed that the permission was granted after following "due process of law".

The matter is now pending in Supreme Court. In another instance of supposed favour to DLF where the realty firm got 350 acres of land in Gurgaon, Kejriwal alleged that rules were tweaked at the last minute to disqualify other bidders-Unitech and Country Heights-on technical grounds. A DLF spokesman said the land was allotted "through international bidding" and the matter was sub-judice before the Punjab and Haryana High Court.

The Haryana Government clarified that the entire bidding process was conducted in accordance with an advertisement published in the matter. Senior hsidc officials deny that changes were made to prequalify the tendering process in favour of DLF before the bids were opened. Officials also point out that neither Unitech nor Country Heights had earlier protested the allotment in favour of DLF.

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