Pawan Hans Sale: Cayman firm’s owners’ claims don’t add up - The Probe

Pawan Hans Sale: Cayman firm’s owners’ claims don’t add up

In an interview with The Probe, Amardeep Sharma, the owner of the Cayman Islands-registered Almas Global Opportunity Fund (AGOF), claimed that the entity was eligible to bid for the government-owned helicopter service provider Pawan Hans Limited. He also asserted that the fund had no connection to Kudakwashe Reginald Tagwirei – a controversial businessman from Zimbabwe who has been sanctioned by the governments of the United States and the United Kingdom. In our latest story on the privatisation of the government’s helicopter service provider, several questions about AGOF and how the Indian government is attempting to privatise Pawan Hans are raised.

Photo courtesy: www.planepictures.net

On 6 June, The Probe published an interview by these reporters with Amardeep Sharma, former Managing Director of Almas Global Opportunity Fund (AGOF), a Cayman Islands-registered entity. While Sharma claimed that everything about the “winning” bid by Star9 Mobility Solutions Private Limited – of which AGOF is an important part – to acquire a majority stake in the public sector undertaking Pawan Hans Limited (formerly Helicopter Corporation of India) is above board, several doubts and unanswered questions remain.

On 29 April, Star9 Mobility was declared the winning bidder for the government-owned helicopter service provider. AGOF holds the largest (49%) stake in Star9 Mobility that has bid Rs 211 crore for the Indian government’s 51% stake in Pawan Hans.

On 16 May, these reporters published an article in The Wire and NewsClick investigating the antecedents of the Star9 Mobility consortium, pointing out that there were questions about whether AGOF met the eligibility criteria laid out by the government to participate in the bidding and that an adverse order had been passed against it by the National Company Law Tribunal (NCLT) a week before Star9 Mobility’s selection as the winning bidder. On the same day, it was reported that the privatisation of Pawan Hans had been “put on hold.”

On 28 May, we wrote in The Probe a second article delving deeper into the antecedents of AGOF wherein we detailed the links between AGOF and Kudakwashe Reginald Tagwirei, a controversial businessman from Zimbabwe. Our report described how AGOF had allegedly acted as a front for Tagwirei to channel his funds and that the fund had continued its association with him even after he was sanctioned by the governments of the United States of America and the United Kingdom. The article further pointed out that two government documents suggested that allowing the sale of Pawan Hans to Star9 Mobility would constitute a violation of government rules – due to the adverse order by the NCLT against AGOF and due to the fund appearing to not have met the eligibility criteria to bid for the shares of the government company.

In his interview with the three of us, the video recording and transcripts of which were published on The Probe on 6 June, we raised several questions to AGOF’s self-proclaimed ultimate beneficial owner (UBO) and former Managing Director Amardeep Sharma. As we shall see in this article, several important questions remain unanswered.

Is Sharma the “Ultimate Beneficial Owner” of AGOF?

In an email to one of us sent after his interview, Sharma claimed he is the Ultimate Beneficial Owner (UBO) of AGOF but offered no proof for this claim. (A beneficial owner is a natural person(s) who ultimately owns, controls or influences a client and/or persons on whose behalf a transaction is being conducted; such a beneficial owner could also include those persons who exercise ultimate effective control over a legal person or arrangement. In 2016, the International Consortium of Investigative Journalists (ICIJ) published a huge volume of documents related to offshore companies. The files, named Panama Papers, leaked from the archives of the law firm Mossack Fonseca & Co, showed that many companies that operate from low tax jurisdictions hide their beneficial ownership for nefarious or illegal motives.)

If AGOF is registered with Securities and Exchange Board of India (SEBI), it should have submitted documentation stating that Sharma is its UBO. But as we shall see, Sharma claims, that AGOF does not need to be registered with SEBI or, for that matter, any other Indian regulator. So has AGOF submitted proof to any authority in India, including to the Department of Investment and Public Asset Management (DIPAM) during the bidding for Pawan Hans, that Sharma is its UBO?

We emailed a third questionnaire to the Dubai-based Sharma on Monday 13 June, and his responses were awaited at the time of publication.

Link to Kudakwashe Tagwirei

In our previous article on The Probe, we detailed how AGOF held Tagwirei’s stake in several mining companies in Zimbabwe through a Mauritius-registered trading company named Sotic International Limited before the governments of the US and the UK imposed sanctions on Tagwirei in August 2020. AGOF held a majority stake in Sotic “on behalf of” Tagwirei, according to reports in the Financial Times, Bloomberg and an American anti-corruption non-profit organisation, The Sentry.

After sanctions were imposed on Tagwirei, his mining assets were restructured into a company in Zimbabwe named Kuvimba Mining House Limited. While the government of Zimbabwe held 65% of Kuvimba, 35% was held by Ziwa Investments, a subsidiary of a Mauritius company named Quorus.

The relationship was complicated and convoluted. While The Sentry found no corporate entity named Ziwa Investments that existed in the Zimbabwe government’s official company records, another Mauritius-registered entity named Ziwa Resources established the link between AGOF and Tagwirei. While AGOF held 65% of Ziwa Resources, the remaining 35% was held by Pfimbi Resources, a Zimbabwe-registered company whose directors were Tagwirei and his wife. It also turned out that Quorus and Ziwa Resources had the same set of directors who were associated with Tagwirei.

Incomplete disclosures

In his interview with us, Sharma denied all the claims made by The Sentry, Financial Times, and Bloomberg. He provided various documents to us to support his contentions. We examined these documents as well as additional publicly-available documentary evidence. It appears that Sharma was economical in his disclosures to us in the interview and the subsequent documents he sent us.

Sharma denied that Sakunda Holdings Private Limited is Tagwirei’s holding company in Zimbabwe. However, we have with us an agreement signed in 2013 between Sakunda Holdings and Singapore-based commodities trading giant Trafigura Private Limited which distributes fuel in Zimbabwe. Tagwirei had signed this agreement on behalf of Sakunda Holdings as the company’s director.

Kudakwashe Tagwirie signed the shareholding agreement for Sakunda Group as its director with trading giant Trafigura for fuel retailing in Zimbabwe

In July 2020, the Sakunda Group authorised David Brown, former CEO of Kuvimba Mining House, to sue Christopher Fourie, the former director/shareholder of Pfimbi Limited, on behalf of Sakunda Group (note that this is Pfimbi Limited, a Mauritius registered entity, and not Pfimbi Resources, the Zimbabwe registered entity that was mentioned earlier). The suit was filed at the South African High Court’s Gauteng Division at its seat in Johannesburg – one of the nine provincial divisions of South Africa’s High Court (the country’s second-highest court, below the nationwide Supreme Court of Appeal), located in the country’s largest city in its wealthiest province.

A screenshot from David Brown’s lawsuit in South Africa against Christopher Fourie that shows it is filed on Behalf of Sakunda Group

Amardeep Sharma denied that there was a link between Tagwirei, the Sakunda Group and Brown. He told us that Kuvimba Mining House had issued a press release denying any association with Tagwirei and Sakunda Group. This press release, published in Zimbabwe’s largest newspaper, The Herald, states that Ziwa (Private) Limited is a shareholder in Kuvimba Mining House and that the mining assets owned by Kuvimba were originally held by Sotic International. Neither the government of Zimbabwe nor Kuvimba Mining House ever disclosed when Sotic transferred these assets to Kuvimba and for what consideration.

Kuvimba Mining House press release, published in The Herald, Zimbabwe

Sharma sent us the shareholding structure of Mauritius-registered Sotic International as it stood on 12 April 2021. Sotic had two shareholders at that time: AGOF held a 65% stake in the entity, and another Mauritius company, Pfimbi Limited, held the remaining 35%. These shares were transferred to AGOF and Pfimbi Limited by The Lighthouse Trust.

According to the Mauritius Revenue Authority, The Lighthouse Trust is registered as a charitable trust. The question naturally arises as to why a Mauritius-registered charitable trust was holding the assets of a Zimbabwean businessman and why 65% of its stake was transferred to AGOF.

Shareholding of Sotic International Ltd, shared by Amardeep Sharma

Sharma told us that Tagwirei has nothing to do with Pfimbi Limited. He sent us a document showing the shareholding structure of that company. As per the shareholders’ list of Pfimbi Limited provided by Sharma, its shareholders were Ronelle Sinclair, Christian Alexander Weber, Jozef Clifford Behr and Christopher Fourie. On 24 January 2020, all four transferred their stakes to Craig Gerald Meerholz and Simbarashe Chinyemba.

Shareholding pattern of Pfimbi Ltd, shared by Amardeep Sharma, to prove the company has no connection with Tagwirei

According to Wall Street Journal, Craig Gerald Meerholz is on board of Sotic International. He was also a non-executive director in Bindura Nickel Corporation, a mining company in Zimbabwe owned by Sotic International, along with Behr and Brown. Chinyemba is the current CEO of Kuvimba Mining House. The Sentry’s report on Tagwirei’s allegedly illegal deals stated that Brown and Chinyemba were closely associated with Tagwirei, and both were directors in some of his offshore companies. The affidavit filed by Brown in the High Court in Johannesburg listed the names of Sakunda Group companies, and Sotic International was among them.

David Brown’s affidavit clarified Sotic International is a Sakunda Group company, controlled by Kudakwashe Tagwirei

The same affidavit listed Sinclair, Weber, Behr and Christopher Fourie as part of the “management team” and “management group” of various Sakunda Group companies, and they were the same people who were the shareholders of Pfimbi Limited.

The court filings in SA show that the directors of Pfimbi Limited were the management group of various Sakunda group companies

Eligibility of AGOF to be a bidder for Pawan Hans

Going beyond AGOF’s association with Tagwirei and various companies in Zimbabwe, doubts remain as to whether the fund was eligible to be part of a consortium that was declared by the Indian government as the “winning bidder” for a majority stake in Pawan Hans.

The relevant document to consider is the Preliminary Information Memorandum on the disinvestment of Pawan Hans. Annexure 2 of this document states that if any member of the bidding consortium is “a foreign entity/overseas corporate body,” it must then “specify (the) list of statutory approvals from the Government of India/the Reserve Bank of India/the Foreign Investment Promotion Board/(the) relevant ministry/(or) any other Government agency.” Further, the consortium must specify whether these approvals have been applied for, or if they are to be obtained, or if they are awaited.

Annexure 5 of the document adds that only Limited Liability Partnerships (LLPs), companies and Alternative Investment Funds (AIFs) are eligible to participate in the bidding process.

Annexure 7 quotes guidelines issued by the Department of Investment and Public Asset Management (DIPAM) in the Finance Ministry issued in 2017 that state that “in regard to matters other than the security and integrity of the country, any conviction by a Court of Law or indictment/adverse order by a regulatory authority that casts doubt on the ability of the bidder to manage the public sector unit when it is disinvested, or which relates to a grave offence would constitute disqualification.”

As we have written in our earlier articles, the National Company Law Tribunal issued an adverse order against AGOF in April 2022 in a case relating to the fund attempting to acquire the Kolkata-based company EMC Limited. Should this not have led to AGOF being disqualified as a bidder under Annexure 7?

Amardeep Sharma claimed that AGOF was not an Alternative Investment Fund (AIF) nor a Foreign Portfolio Investor (FPI) and, therefore, did not need approvals from SEBI or the central bank and apex monetary authority, the Reserve Bank of India (RBI) as Annexure 2 specified. If this is true, in what category of bidders is AGOF if it is not an AIF or an FPI as per Annexure 5?

Is it true, as Sharma claims, that AGOF did not need any approvals at all to participate in the bid? If it is not, and there were some approvals required, what were these? Did the fund submit all these required approvals while participating in the bidding for shares of Pawan Hans? How did the Indian government allow a fund which is supposedly not registered with Indian regulators to participate in the bidding process for the sale of public assets?

More unanswered questions

In his interview with us, Sharma claimed that AGOF has invested in various sectors in different parts of the world, and that in India alone, its total investments stand at around Rs 1,500 crore. However, media reports quoting unnamed government sources suggest that AGOF’s net worth is only Rs 699.49 crore. The reports say that this is the figure for its net worth that AGOF stated to the government during the bidding process. It is not clear how an entity with a net worth of just under Rs 700 crore has investments in India worth Rs 1,500 crore?

For funds such as AGOF, net worth is calculated by its net asset value or NAV, Sharma argued in his interview with us. If, indeed, the market value of the fund’s investments has come down by more than half, does it speak highly of the managers of the investment fund?

In his interview, Sharma also contended that he still speaks on behalf of AGOF despite having left the fund as its managing director. He said that one Vishal Rana has been appointed as a director of AGOF, since he had to resign his directorship to fulfil regulatory requirements in Dubai because he set up Greenback Capital Ltd, the firm that he is presently a director of.

Still, Sharma insisted that he remains the authorised legal representative of AGOF in the Pawan Hans deal as it was initiated when he was the fund’s director. We have written to him asking him about Rana, who, like Sharma, is supposed to be Dubai based. When did Rana become a director of AGOF or its parent company Almas Capital? What are his professional qualifications? What will be his role in AGOF and Star9 Mobility should it become the major shareholder of Pawan Hans?

We await Sharma’s responses to our questionnaire.

Who’s really behind Star9 Mobility?

The Indian government’s actions in privatising Pawan Hans raise many questions about the Modi government’s policies. Should free-flowing global capital be allowed to acquire assets that belong to the people of India in the name of attracting foreign direct investment (FDI) to India? Who ensures that the money that comes into the country is not illicit or laundered funds that are being “round-tripped”? Who is responsible for doing the due diligence about the bidders? Is it DIPAM?

Even after several doubts have been raised about the credentials of the winning bidder for Pawan Hans, why has the deal been reportedly put on hold for “legal vetting” and not cancelled altogether?

The other two partners in the Star9 Mobility consortium do not paint a particularly pretty picture.

In his interview, Sharma told us that he chose the consortium partners based on their “expertise” and “experience” in aviation. The finances of the two other entities that are part of Star9 Mobility – Maharaja Aviation Private Limited and Big Charter Private Limited – do not exactly inspire confidence.

On 3 May, a Twitter handle called “flybig employees forum” Tweeted that the airline called “flybig” that is owned and operated by Big Charter (which, in turn, owns 26% of Star9 Mobility), did not pay salaries to its employees, many of whom have complained to the Union Ministry of Labour. (Big Charter was misspelt as “Big Chater” in the Tweet – see screenshot.) According to the Twitter handle, salaries were pending from April 2021, and the company was misusing the government’s “viability gap funding for regional connectivity” scheme under UDAN or Ude Desh Ka Aam Nagarik (to enable the country’s ordinary citizens to travel by air) – a scheme that aims at developing relatively small airports in different parts of India.

Screenshot of Big Charter Pvt Ltd’s employees complaining against their employer for non-payment of salaries for months

Maharaja Aviation, the second partner in the consortium, had negative reserves of Rs 12.59 crore at the end of March 2021. The company booked a loss of around Rs 75 lakh on a total revenue of Rs 1.63 crore that financial year.

Are there any other individuals and entities behind Star9 Mobility?

On the evening of Monday, 13 June, one of the authors emailed questionnaires to Amardeep Sharma of Greenback Capital, Tuhin Kanta Pandey, Secretary, DIPAM (the third of its kind to him) and to SK Arora, Senior Vice President, Project Advisory & Structured Finance Group at SBI Capital Markets (which advised the government on the Pawan Hans disinvestment proposal). This article will be updated with their responses when they are received.

The story about the privatisation of Pawan Hans is far from over.

(The authors are independent journalists)

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