Piyush Goyal Sold Pvt Firm at 1000 Times its Value in 2014: Report

Reacting to the report, the Congress questioned Goyal’s intentions and his alleged financial impropriety. 

Updated
India
4 min read
File photo of Railway Minister Piyush Goyal.
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BJP minister Piyush Goyal sold a company, jointly owned by him and his wife, at nearly “1,000 times the face value” to the privately-owned Piramal Group, shortly after he became part of PM Narendra Modi’s cabinet in 2014 – according a report by The Wire.

Earlier this month, The Wire had also reported on the minister’s link to Shirdi Industries alleging financial impropriety, to which Goyal had responded by saying that there was no conflict of interest. While Goyal has not responded to the fresh allegations leveled by The Wire, the Piramal Group released a statement in response.

Piramal Group Responds to The Wire’s Article

The Piramal Group on Saturday, 28 April, released a statement refuting the allegations leveled by The Wire in its article, stating that it had purchased Flashnet from the Goyals at a fair value.

The purchase consideration paid was the fair value of the underlying investments (movable and immovable assets) and the same was paid in July, 2014 itself. This was based on an independent chartered accountant valuation.

Further, the statement clarified that the Group was involved in providing loans to various entities across sectors, and has not invested in the power sector till date. The statement then said that the purchase of Goyal’s firm did not benefit the ‘existing business’ of the group in any manner.

What Exactly Are the Fresh Allegations Put Forth By The Wire?

The fresht report by The Wire raises questions on the propriety of the sale between Goyal and the Piramal Group, as the transaction reportedly finds no mention in the declaration filed by Goyal in the PM’s office in 2014, nor when took oath as a minister in 2015.

It is to be noted here that the Piramal Group has interests in new and renewable energy, as well as the power sector. At the time of the alleged sale, Goyal was a  minister of state with independent charge for power, coal and renewable energy.

The Wire reports that Goyal and his wife began Flashnet Info Solutions (India) Private Limited in 2000, and owned 99.9 percent of the stock. While Goyal did state the company in his ‘statutory listing of pecuniary interests’ with Rajya Sabha, after having become a member in 2010, he failed to declare his ownership of the firm in 2014, nor its sale in 2015.

Further, Goyal in 2014, mentioned the book value of his of his “unquoted securities” at Rs 1,01,300. His share in Flashnet, amounting to 53.95 percent, as well as his wife’s share of 43.95 percent were sold off to Primal in September 2014.

However, the report alleges that Goyal’s securities declared in 2015, stood the sam,e Rs 1,01,300, as in 2014.

Goyal’s Rajya Sabha nomination of 2016 too, stood bereft of the value of the shares sold, alleged The Wire.

Further, the year Piramal Group bought Goyal’s firm, it posted a loss of around Rs 119 crore, the report noted.

While neither Priamal nor Goyal disclosed the sale value of the shares to The Wire, the report quotes a board resolution of Piramal Enterprises, which “authorised the purchase of the entire stock of 50,070 shares for a consideration not exceeding Rs 10,000 per share.”

The Wire notes that this value was almost 1000 percent the face value of a share – which was valued at Rs 10 each.

The next year’s company filings listed by Piramal Group and accessed by The Wire suggested that a total of Rs 48 crore was placed on the Goyal family’s shares – translating to a cost of Rs 9,586 per share.

When Flashnet was sold, the company reportedly declared a profit of Rs 34 lakh. However, after it was purchased by Piramal Group, the company was renamed Aasan Info (Solutions) India Private Ltd, and listed its net value at only Rs 10.9 crore.

The Wire also alleges that Goyal was a director on the board from 25 November 2004 to 26 May 2014, which was when he took charge as Minister of Power. And while he stepped down as director, he and his wife continued to hold 99 percent of the company, the report alleged.

Further, the report notes that Rajya Sabha MPs are required to declare their monetary holdings 90 days after taking their oath, and notify any changes with regard the same. While Goyal reportedly did mention his stake in Flashnet in 2011 and the remuneration he drew as director in 2015, it is reportedly unknown if he declared the change in ownership after the sale.

Congress Hits Out at Goyal’s ‘Impropriety’, BJP Rubbishes Claims

Reacting to the allegations levelled by The Wire in its report, the Congress on Saturday, 28 April, questioned Goyal’s intentions of having sold his firm at “almost 1000 percent premium”.

Addressing a press conference, Congress spokesperson Pawan Khera said:

Piyush Goyal has not only concealed facts, but has also plays around with the truth. Why did Piramal Group, who had a clear business interest in Renewable Ministry, buy a company owned by Piyush Goyal and his wife?

Khera further questioned the Prime Minister to answer as to why the party’s former treasurer was “involved in a murky web of financial dealings.”

He also alleged that Flashnet’s name was immediately changed post-sale so as to hide any conflict of interest.

The BJP meanwhile released a statement in response to Congress’s press conference, rubbishing the claims laid forward by the opposition party. In its statement, the BJP said that Goyal was an “eminent chartered accountant”, who carried out his professional work through companies he owned prior to becoming a minister in 2014. The party said in its statement:

The sale of Flashnet shares took place in July 2014 before the declaration of assets and liabilities was submitted on 25 July 2014 and not on 29 September 2014 as falsely alleged by the Congress. This sale was made at full market value as per third party, independent, expert valuation and the entire sale value was received in the bank before submitting the declaration and was fully reflected in the value of assets submitted.

Meanwhile, several politicos took to Twitter to question Goyal on his perceived impropriety.

(This is a developing story and will be updated.)

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