For the past few days, front pages of all newspapers and headlines of all news channels have been full of Shashi Tharoor. Already famous, he is now more famous for two additional, exciting reasons. One, the news relates to the famous game of cricket and its even more famous T20 version, IPL. And two, the news centres round a gorgeous young lady Sunanda Pushkar, unknown till yesterday, now famous all over, again for two more reasons, not unrelated to Tharoor. One, she has been recently seen in many social functions with Shashi who has admitted that she is his close friend from Canada. And two she has been given — according to the IPL boss Lalit Modi, free shares and according to Pushkar, Sweat Equity — 25 per cent stake through Rendezvous Sports World Private Limited (Rendezvous Company) which is 26 per cent partner of the consortium (Rendezvous Consortium) that owns the Kochi IPL franchise. The franchise was awarded on March 21 last to the Rendezvous Consortium to get which it is Shashi, not Sunanda, who seems to have sweated quite a lot. A more exciting, but unconfirmed, news is that Shashi is waiting for divorce from his second wife to marry Sunanda. This is where the catch is for both Shashi and Sunanda in the Rendezvous affair.
A few facts are critical to know why Shashi and Sunanda are in the news. An Unincorporated Joint Venture (UJV), namely the Rendezvous Consortium, made a stunning bid of $ 333 million to get, and got, the Kochi franchise of IPL. How stunning the amount can be judged by comparing it with the bid of Mukesh Ambani. In 2008, Ambani won the Mumbai franchise for $112 million. The brand value of IPL has since shot up, according to London based Brand Finance Plc, from $2.1 billion in 2009 to $4.13 billion in 2010. So IPL is no cricket affair; it is a huge money spinning game. The person who lost the Kochi bid to the UJV was Gautam Adani, rated as the world’s 13th richest man. But, who is this UJV, which had made this gargantuan bid? The UJV is known by the name of Rendezvous (Rendezvous Company), which is the prime mover and 26 per cent stakeholder in the UJV. From the day the Rendezvous JV won the bid, the intriguing question was who were behind this faceless body. To add to the curiosity, the spokesperson of the UJV officially said that the names of its constituents were ‘confidential’.
Lalit Modi, who was obviously upset at some unknown entity, not his cronies, bagging the bid, announced in public that among others, Rendezvous Company was the main constituent of UJV, which got the Kochi franchise, and that UJV has given 25 per cent of its shares free to Rendezvous Company. That’s where the issue hit the ceiling.
Disclosure of the Shashi-Sunanda connection immediately brought in politics with the BJP and the CPI(M) asking for Tharoor’s head. So what started off as an issue of cricket and big — and bad money — has finally become an issue of corruption and politics, besides sleazy gossip about the personal lives of Shashi and Sunanda.
What I find silly and I vehemently object to the use of the word ‘sweat equity’ to describe the 25 per cent stake which Rendezvous Company got from the UJV. The UJV is an unincorporated body of which Rendezvous Company is a constituent. The UJV cannot issue shares. What it actually did was that it gave, without charging even a rupee, 25 per cent stake in the UJV to Rendezvous Company. Sunanda Pushkar is said to be an 18 per cent shareholder in Rendezvous Company. So she is entitled to 18 per cent of the 25 per cent free shares through her holding in Rendezvous Company. What Rendezvous Company has got is not sweat equity as Sunanda or her associates claim. The law says that sweat equity can be given by unlisted companies but subject only to the rules prescribed by the government.
The general rules are: the maximum sweat equity that can be issued in one year is 15 per cent of the capital; it can be issued not free of cost, but only at a fair value determined by independent valuation; the shares so issued are barred for sale for three years. There are more rules. But this much is adequate here. Being unincorporated, the UJV cannot issue equity first, and so there is no question of sweat equity being issued by the UJV.
What Rendezvous Company has got is a quarter of ownership free of cost and not shares or sweat equity in an incorporated company, which comes at a cost and has a totally different meaning and character in law. For Rendezvous Company to get the 25 per cent free shares (poorly morphed as sweat equity) from the UJV, the alibi given by its director Pooja Gulati is almost a joke. She says that it was “in exchange for the management services rendered by it”. But not a word on what management service it has so far rendered or is capable of rendering in future, or on what experience or expertise Rendezvous or any one behind it, had in the field of cricket or IPL franchising. No one associated with the UJV including Rendezvous claims or proclaims any prior experience of IPL or cricket management. One need not exert any further.
Obviously the UJV got the Kochi franchise because someone behind Rendezvous had ‘sweated’ to get it for them. This is where Shashi Tharoor’s name comes in. He is the self-acknowledged, and the proclaimed, mentor of the UJV. He is also the close friend of Sunanda, who gets through it 18 per cent of the free ownership and her share of the cake is said to be Rs 70 crore, all free. That she is the close friend of Shashi, the mentor of the Kochi franchise, and she gets shares worth Rs 70 crore free, make it a square. Then, is it Shashi’s sweat and Sunanda’s equity?
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