Mumbai : The Indian state of Uttar Pradesh has a reputation as a rough place, with one of the highest levels of crime in the country. In May, a dozen local politicians received WhatsApp messages that threatened harm to their families unless they paid $14,000.
Yet even by local standards, an extortion plot that’s surfaced in recent weeks stands out for its sheer outlandishness. It’s the case of a celebrated startup founder, Vijay Shekhar Sharma, who allegedly was targeted by one of his most trusted lieutenants for millions in ransom. The billionaire entrepreneur created India’s most popular digital payments service called Paytm.
Local police have arrested Paytm vice president Sonia Dhawan, her husband and another Paytm employee for allegedly stealing Sharma’s personal data so they could extort money. The three are in custody at Luksar Jail in Noida, the New Delhi suburb where Paytm is headquartered. Authorities are hunting for a fourth person, who allegedly made ransom calls to Sharma. A lawyer for Dhawan and her husband denies they did anything wrong.
Key questions remain unanswered. Why would a nine-year veteran of Paytm turn against her boss when she had so much to lose? Were Dhawan and her suspected collaborators pressured to act against Sharma by the true culprits, as Sharma himself has suggested? What is the data the group allegedly stole? The investigation touches on one of India’s most successful entrepreneurs, whose backers include Masayoshi Son of SoftBank Group Corp. and Warren Buffett of Berkshire Hathaway Inc.
‘Everybody’s fascinated by this unraveling story,’ asked Sanchit Vir Gogia, founder and chief executive officer of Greyhound Research. ‘It involves a famous, very vocal person like Vijay Shekhar Sharma. Paytm’s done exceptionally well so there’s an emotional connection as well.’
Sharma, now 40, founded One97 Communications, the parent company of Paytm, in 2000 when fewer than 10 million Indians were online. He tried offering search services, ringtones and Bollywood movie songs before landing on the idea of digital payments. The business soared after the India government eliminated 500- and 1,000-rupee banknotes at the end of 2016, in a bid to end corruption. With the stroke of a pen, 80% of the country’s paper money disappeared.
“Overnight, we went from a new thing to a must-have,” he told Bloomberg News in a profile last year.
One97 is now worth $10 billion, according to CB Insights, making it the most valuable startup in India. Sharma’s empire also includes the online retailer Paytm E-Commerce Pvt, backed by China’s e-commerce giant Alibaba Group Holding Ltd.
Sonia Dhawan started working at One97 in January of 2010, according to her LinkedIn profile. Recently promoted to vice president of communications, she was well known in media circles in India, fielding press calls and arranging interviews for Sharma. She also liaised with government officials and overseas partners. Given her equity interest, Dhawan’s position would have likely grown increasingly lucrative as Paytm expands and heads for an inevitable an initial public offering.
“Hard work is glory, everything else is theory,” she wrote on her Twitter page.
According to police, she allegedly hatched the extortion plot with her husband, a property consultant named Rupak Jain; a colleague, Devendra Kumar; and a fourth person, Rohit Chomal.
The idea was allegedly to steal personal data from Sharma, with Dhawan’s access to his passwords and computers, and then use the data to get cash, according to local police. Dhawan, Jain, Kumar and Chomal couldn’t be reached for comment.
Sharma got the first call from his purported blackmailers in September. A man said he had Sharma’s personal financial information, and demanded the equivalent of about $2.7 million or it would be released to the public. The perpetrators had taken a hard disk containing the information, according to a four-page police document called a First Information Report.
“It’s a case of blackmail and extortion with stolen personal data and sensitive business plans,” said Manoj Kumar Pant, the police officer heading the investigation in Noida.
Still, these appear to be bumbling blackmailers. Sharma purposefully ducked the extortion calls four or five times as they tried to extract money and then insisted they deal with his brother because he was too busy. When Ajay Shekhar Sharma, who also works at Paytm, pressured the caller for details, the alleged extortionist simply blurted out the names of his three co-conspirators, according to local press.
Ajay Shekhar Sharma then filed a complaint with local police in October. They recovered a hard disk from Kumar, who confessed and implicated Dhawan and her husband, according to the police.
Sharma’s net worth is estimated to be close to $2 billion, making the extortion attempt more distraction than financial threat. A far bigger challenge for Paytm is holding off global rivals like Google Pay and WhatsApp Pay in a digital payments market forecast by Credit Suisse to grow to $1 trillion by 2023.
‘Paytm runs the risk of getting slightly maligned over its handling of data,” said Gogia.
Sharma didn’t respond to requests seeking comment for this article.
The case has fueled intense speculation about Dhawan’s purported motive, if she is guilty, and how she could have landed in jail with such speed. Prashant Tripathi, a lawyer representing the couple, said she hasn’t done anything wrong.
“She is absolutely innocent and has no connection with the theft of data or extortion,” he said in an interview, adding that she had been framed by professional rivals in the office. He wouldn’t explain why he hasn’t tried to get the couple out of jail ahead of any trial. “I await instructions from the Dhawan family,” he said.
The police and Paytm are at odds over what kind of data was stolen. While investigating officer Pant told Bloomberg News that the theft included the company’s business plans, Paytm insists personal data was nabbed. “Paytm would like to reiterate that all our consumer data is protected with the highest and most impenetrable levels of security,” it said in a statement.
Sharma has made it clear he doesn’t think the whole story of the blackmail attempt has been told. In a brief conversation with the Economic Times last week, Sharma said his lieutenant is probably innocent and a ‘conduit of someone else’s bigger plan.”
‘I don’t know how many more people were involved in this sad conspiracy,” he said. “I am shocked and surprised at things that happened and some claims or theories being pitched. I am sure with support of police and everyone involved we will uncover the details soon.’
Centre to snub RBI gov, empower board
New Delhi: In a move that could further widen the rift between the RBI and itself, the Narendra Modi government has proposed changing rules to allow closer supervision of central bank functions by its board.
The government has recommended that “the board of the Reserve Bank of India (RBI) draft regulations to enable setting up of panels to oversee functions including financial stability, monetary policy transmission and foreign exchange management”, said a foreign news agency on Friday quoting sources.
The move is meant to empower the regulator’s board, which includes government nominees, and give it a supervisory role.
The recommendations being considered include setting up several committees comprising two to three board members each. The body has the powers to frame rules under Section 58 of the Reserve Bank of India Act, 1934 and no legislative change is required.
The RBI’s board regularly advises and guides the regulator, leaving the decision-making to the governor and his colleagues.
However, Swaminathan Gurumurthy, a chartered accountant who was nominated by the government to the board, and government nominees Subhash Chandra Garg and Rajiv Kumar have been vocal about perceived shortcomings in banking supervision, flow of credit to industry and easier financial conditions to overcome a crisis in its NBFC sector.
The RBI board is scheduled to meet on Monday to consider contentious iss-ues including easing rules governing transfer of surplus funds to the government, liberalising norms for weak banks to boost lending.
It will also review rules on capital and risk weight for Indian banks which are considered more stringent than the Basel guidelines. Other proposals on the agenda include restr-ucturing of loans upto $3.5 million availed by micro, small and medium enterprises.
Former RBI governor Raghuram Rajan had recently said that board’s role historically has not been to take “operational decisions” but to focus on broader strategy as well as ensure good governance. He had said that RBI board during his tenure rarely tried to put themselves in the position of the professionals.
“So, they (board) are there to ensure that the government’s money is well spent in the RBI and also to serve as a sounding board which is why we have people from different walks of society, very eminent people,” he had said. “So, my sense is the objective of the board is to protect the institution, not to serve others’ interest,” Dr Rajan had said.
All telcos, except Jio, fail Trai’s call drop test on select highway, rail routes
New Delhi: All telecom operators, except Reliance Jio, failed to meet call drop benchmark in drive test conducted by sector regulator Trai on different highway and rail routes, says a report.
According to a Trai report published on Thursday, while network performance of telcos differed on highways, none of them, except RJio, could meet call drop benchmark on the three rail routes covered under the test.
“Only RJio is meeting quality of service benchmark of drop call rate …,” the report said.
According to the quality of service rules, not more than 2 per cent of total calls in a telecom circle on a network should automatically get disconnected.
The highways between Asansol to Gaya, Digha to Asansol, Gaya to Danapur, Bengaluru to Murdeshwar, Raipur to Jagdalpur, Dehradun to Nainital, Mount Abu to Jaipur and Sri Nagar to Leh were covered in the test. Railway routes between Allahabad to Gorakhpur, Delhi to Mumbai and Jabalpur to Singrauli were covered.
Either 3G or 2G network of Bharti Airtel, Vodafone Idea and state-run BSNL failed to meet call drop benchmark on four highway routes and all the three rail routes. Trai also named Tata Teleservices Ltd (TTL) network for not complying with service quality norms on select highways.
The report found that TTL, which is in the process of merging mobile business with Airtel, failed to even complete call connection as per benchmark betwen Bengaluru to Murdeshwar, Dehradun to Nainital and Gaya to Danapur and on the three rail routes.
Airtel could not meet call connection rate or call setup success rate (CSSR) on Gaya to Danapur highway and the three rail routes. Vodafone Idea network could not meet CSSR rate on Raipur to Jagdalpur highway and all the three rail routes.
Trai has mentioned Vodafone and Idea separately in the result as some tests were conducted before completion of their merger. Both the companies completed their merger on August 31 and now operate as Vodafone Idea Ltd.
No proposal yet for Jet airways takeover: Tatas
Mumbai : The Tata group said there have been preliminary discussions on the acquisition of struggling Jet Airways but it has not made any formal proposal for buying out the 51 per cent stake held by the Naresh Goyal family in the airline which has accumulated losses of over Rs 12,000 crore till the September 2018 quarter.
While the board of Tata Sons, the holding company of the group, discussed the acquisition of the airline, sources said both the parties are going slow as the broad contours of the deal, especially on the continuance of Goyal on Jet board after the takeover and other issues, have not been thrashed out.
Indicating that they are moving cautiously, Tata Sons issued a statement after the board meet, saying, “Over the last few days there has been growing speculation in the print and electronic media about Tata’s interest in Jet Airways. We would like to clarify that any such discussions have been preliminary. No proposal has been made.”
Jet Airways said in a stock exchange filing, “Reports (on merger of Vistara with Jet) is purely speculative in nature and that there are no discussions or decisions by the Board, which would require a disclosure.”
Sources said Tata Sons Chairman N Chandrasekaran had a preliminary discussion and an understanding over the broad contours of the deal with Jet Airways promoter Naresh Goyal for a possible share swap agreement between the Tata and its foreign joint venture partner Singapore International Airlines, Vistara, and also exit of Abu Dhabi based carrier Etihad that holds 24 per cent in Jet Airways.
Sources aware of the talks said that Tatas would definitely want a non-compete clause that bars Goyal and family from entering aviation business for a substantial period of time. However, sources say Goyal might have reservations over exiting the airline that he has created over 25 years and made it as a formidable brand in full service space and agree to a non-compete clause and complete exit.
The Tatas are looking at dilution of Goyal’s shareholding which is currently 51 per cent. A possible preferential allotment of shares might be looked at triggering an open offer as cash strapped Jet needs equity infusion on an immediate basis. “Liquidity continues to be worrisome, and Jet Airways earnings are most levered to oil prices and rupee depreciation. A potential entry of a strategic buyer would address the current liquidity crunch. Jet’s liquidity concerns are unlikely to dissuade a well-capitalised group like Tata, which has a track record of mega acquisitions. A prospective deal may involve a notable control premium,” said a report by Edelweiss equity research.
However, Jet Airways acquisition will not come cheap for the Tatas as the airline has accumulated losses of Rs 10,772 crore till FY18 with another reported loss of Rs 2,620.46 crore till the first half of FY18/19. Its other liabilities stack up to a staggering Rs 11,000 crore. It has immediate vendor payments that are stretched and lease rentals that are due. The airline has 16,000 employees .
Aviation analysts say it is the immediate scale that an acquisition of Jet Airways by Tatas will give to a fledgling Vistara that the Tatas are eyeing along with slots, that are at a premium for expanding Indian carriers as most of the metro airports are slot constrained restricting expansion of the airlines. “It is a billion dollar deal for the Tatas,” said an investment banker who has background in cutting out aviation deals in the Indian aviation market. Tatas have already accumulated losses of Rs 2,100 crore on account of both its airlines — Vistara and budget carrier AirAsia. It might not have the appetite to take over huge losses of Jet.
“It is all in the structuring of the deal. There are a lot of complications and also regulatory compliance issues in a deal such as Tata-Jet Airways. It will take time for the final proposal to be put on table,” said a person familiar with the ongoing discussions.
Jet’s share closed at Rs 346.85, up 8 per cent from its previous close of Thursday. The stock continued its four day rally, soaring 43.3 per cent over the past four days on the deal buzz with Tatas.
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