Aircel-Maxis probe: ED searches Sequoia Capital's premises

Enforcement Directorate (ED) has begun search for a company named Sequoia Capital in connection with the Aircel-Maxis scam, reports Ashish Mehrishi of CNN-News18, quoting sources. Sequoia Capital was allegedly roped in for misuse of the FDI policy, wherein they had bought 30,000 shares at Rs 7,500, violating foreign exchange norms. ED has also indicated that another company named Westbridge Capital is being searched is linked to Karti Chidambaram, son of former finance minister P Chidambaram. ED has found out a maze of companies from different jurisdictions both in and outside India, says Mehrishi, quoting ED. The issue has caught attention of TV Mohandas Pai of Aarin Capital Partners. In his exclusive interview to CNBC-TV18, Pai maintains his disspointement and says that ED should have given a notice to Sequoia Capital before raiding the company. Pai believes that the process of evidence gathering must be improved. Extracting data and other relevant information should be dealt in a proper way whereby no regulation is breached by the authorised agencies. Sanjay Mehta from Angel Investor believes the scam to be murky for Sequoia being involved in unjustified forex transactions. He adds that investigation will take time as the documents seized by ED are incriminating in nature. He also adds that the scam is bound to have a ripple effect and hurt sentiments of companies that are associated with the global investor Sequoia. Below is the transcript of TV Mohandas Pai's interview with CNBC-TV18's Ekta Batra. Q: Wanted your thoughts on the overall news that Sequoia Capital has in fact been searched by the Enforcement Directorate (ED)and this with relation to the Aircel Maxis scam, your thoughts first? A: My first thought is that may be ED should have issued a notice and asked for information from Sequoia instead of going for a raid. The word raid and going and searching basis whatever information you have, without asking for information I think is something that the government should relook at. While everybody applauds them for enforcing the law, I think there is a negative connotation to a raid. India is not land of crooks. India is not a land where everybody is a crooked business man and everybody is trying to cheat. There are lots of good honest businesses, lots of good honest businessmen in this country and we must respect their honesty. Respect them for what they are. If the government wants information for anything, they must ask them. I am sure all of them will give you information, they have got structures, they have got processes, they have got governance, they have built up their reputation, instead of going for a raid unless you have evidence that people will destroy evidence and they will not give you information etc. So, I feel a bit sad the way things are happening right now. I respect the governments right to enforce the law. Law enforcement agencies have to do it. However in this country we have this kind of a deep rooted tradition of people going for raids. Just the other day I was talking to a friend of mine who is a charted accountant in Bangalore and he told me of the raid by one particular department of the government where the people who are going on raid beat that businessman with a shoe. I was shocked. I have heard of so many raids where people go and make unnecessary demands and negotiate and do many things. So, we need a better process and the best process will be for a agency to go to a court, get a court order and go for a raid and do it in a proper manner as per the law. However first give notice to firms where you have reasonable proof that they are not going to burn evidence or destroy evidence or whatever it is. Q: Do you think that with recent examples with regards to how the whole Vijay Mallya case has been treated plus now with regards to Sequoia Capital and what we are hearing. There is just this fear which might have come in, in terms of foreign direct investment (FDI), foreign institutional investors (FII) investment to India and similarly even domestic investment, businessmen are scared of this kind of targeting and hence we might see some amount of curtailment of investment? A: In the last two-three months utterances by government, utterances by the opposition, political fights over who gave loan to Vijay Mallya, who did acquisitions on TV, the campaign by TV and media against the business is not good for this country. It is getting an atmosphere of fear and atmosphere of targeting. If somebody has done wrong, please proceed against it as per the process of law and the process of law is to issue notices, get information, have evidence and prosecute them under the law, everybody is not a criminal in this country; as I said India is not a land of crooked businessmen and in business there will be failure, we have to accept failure, banks have lent money, there will be failure and there might be a process. In Vijay Mallya's case the Debts Recovery Tribunal (DRT) has not given a decision since 2013. There is no court order attaching any assets. There is no court order determining that he must pay so much of money. The matter is before the court. Let the court decide. The court doesn't decide for six months, one year, two years, three years and then you have a media campaign. You go on TV and lambast everybody, say that money has been taken from the mouth of the poor, which is not. Banking is a business where you pull risk, bank lose money, they charge you a premium for the risk and the loss is against the risk; sometimes it goes higher. We need to understand banking; the money has not been taken from some poor person's deposits and somebody has run away. It is not correct. Therefore, I think we must be circumspect and we must create a very modern, mature way of handling these kinds of issues in a very dignified manner. We do not have reputation. Just yesterday the papers read about a six year case, where somebody was charged with some tax and the court threw it out. The person suffered for six years. Now will the person who made the charge, restore his reputation; people's reputations are lost, people's good will has lost, people's life are destroyed because there is no much evidence and in India we know that track record of many of these agencies goes on and on and on. We have to improve the process of information gathering, getting data, making proper cases, getting information. Unless you do all that, just making a raid and carryon and do this and all that, I don't know. I am feeling very disappointed at this kind of a trend.