Explainer: The GTL Saga: Forensic audit to CBI FIR | The Financial Express

Explainer: The GTL Saga: Forensic audit to CBI FIR

The company is promoted by Manoj Tirodkar and the Global Group’s holding company, the Global Holding Corporation (GHC).

Explainer The GTL SAGA Forensic audit to CBI FIR
Central Bureau of Intelligence (File)

The CBI recently filed a case against the directors of GTL, a telecom company, and the company’s bankers for allegedly siphoning off money through a network of shell companies. This is not the company’s first run-in with the law. Shashank Didmishe looks at GTL’s present and past legal issues  

A snapshot of GTL

Incorporated in December 1987, GTL provides a range of telecom network services, including operations and maintenance, network planning, design, and energy management to telecom operators and OEMs in India and abroad (Middle East, Africa, Canada). The company is promoted by Manoj Tirodkar and the Global Group’s holding company, the Global Holding Corporation (GHC).

Its subsidiary, GTL INfra, is in the mobile towers space. The GHC website features Airtel, Vodafone, Idea, Etisalat, among others in GHC’s operator client-list, and Huawei, Ericsson, Motorola, among others, in its OEM client-list. GTL Infra, on the other hand, “has a portfolio of about 28,000 towers located across India” and claims to  be the world’s largest independent tower company. 

What has put the company under the spotlight?

GTL had raised `1,400 crore via non-convertible debentures and `4,760 crore from a consortium of 24 lenders, led by IDBI Bank between 2009 and 2012. Other lenders include ICICI Bank, PNB, Bank of India, SBI and Yes Bank. A loan-fraud enquiry by the CBI showed that GTL and its promoters misappropriated the funds by routing it back through vendor entities.

IDBI Bank appointed an auditor to conduct a special audit of GTL over April-November 2011, and several instances of routing of funds were found. RBI, in 2016, directed banks to red flag the account and conduct a forensic account. The lenders were hesitant at first, fearing delays to loan recovery, but complied after RBI reiterated its directions. The audit showed that GTL made substantial payments for purchase of equipment, but the grade of equipment it received was of a much lower value.

The CBI case

The central investigative agency has based its case on the adverse findings of the forensic audit, which found that the company had `1,398 crore outstanding from the vendors as on March 31, 2012, of which `1,142 crore had been given as advance to the vendors in FY11, but no equipment was received against the payments. 

The CBI said that the company fraudulently received various credit facilities and diverted the bulk of the loan amount to itself, in a conspiracy with vendors and bank officers. The CBI has not named the directors or the bank officers involved in the alleged money laundering. The agency has booked the accused under cheating and Prevention of Corruption Act, 1988.

The CBI’s FIR shows there were mutiple issues with the lenders’ tracking of the end-use of the loans they sanctioned, and that there was a reluctance to take remedial action well in time. 

GTL at the National Company Law Tribunal

In 2019, Canara Bank, one of the lenders to the company, had filed an insolvency plea before the National Company Law Tribunal (NCLT) for non-payment of dues of up to `534 crore. Following this, the company requested other lenders to hold a consortium of creditors’ meeting. The company offered a one-time settlement (OTS) of `894 crore, which was significantly lower than the earlier OTS offer of`1,638 crore made by the company.

Meanwhile, the company also filed a petition before the Bombay high court challenging the maintainability of the insolvency plea. The HC directed that this matter was to be decided by NCLT itself. The company also revised its OTS once again to `694 crore citing depreciation of the value of its underlying assets. This OTS was also rejected.

Banks with majority voting rights decided to initiate Sarfaesi action against the company and recovered `780 crore. The tribunal rejected the Canara Bank’s plea to initiate insolvency proceedings, contrary to the decision of the majority of the secured creditors, holding that this would be counterproductive, though RBI had asked banks to red flag the account some years ago.

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First published on: 31-01-2023 at 04:40 IST