Chitalias Offered To Broker Quid Pro Quo Itc-Bat Deal

The deal envisaged that BAT would pay off ITCs dues to the Chitalias in return for Deveshwar accepting the post of non-executive chairman and pushing through a proposal to hike BATs stake in the company to 51 per cent, according to documents.

The documents give details of the meetings ITCs executive vice-president, audit, K

Vaidyanath and P K Sinha, vice-president (legal) and company solicitor, had with Devang Chitalia when they had visited the US in connection with the recovery suit filed by ITC.

However, Devang Chitalia when contacted by Business Standard in New Jersey denied any such deal. Devang said: Yes, I did meet Vaidyanath and told him that they should pay our dues. I never mentioned any deal with BAT or anything on Deveshwars stepping down. BAT is nowhere in the picture and it is ITC which owes the money to us.

 

The BAT nominee on the ITC board, Simon Smith, when contacted in London denied BATs involvement with the Chitalias. He said this was only a figment of imagination of some people who would like this to happen.

A letter written by P K Sinha dated September 4 says: While the depositions were going on, Devang Chitalia took me aside and advised me that he was willing to enter into a compromise on the following terms: ITC and ITC Global should withdraw their respective claims; ITC should pay a substantial part of his counter claim; though ITC will have problems about paying, this can be overcome by requesting BAT to pay up the Chitalias on ITCs behalf and, in return, the ITC management should be ready to surrender control of ITC Ltd to BAT.

Sinhas letter also says that Devang specifically mentioned that Deveshwar be kept advised of this offer and he would wait for an appropriate response.

On the letter and his talks with Devang Chitalia, Sinha said, The letter will speak for itself.

A similar point is reinforced by K Vaidyanath who detailed the discussions he allegedly had with Chitalia in August in a note purportedly written by him. The note says, ...the content of his (Devang) outburst thereafter was as follows: ...BAT is willing to settle this dispute...by making direct payment to the Chitalias.

YCD (Deveshwar) is coming in the way by not agreeing to BATs terms...YCD should help BAT to acquire 51 per cent stake in ITC at the lowest possible cost and assume the position of non-executive chairman, leaving the managing directorship to a BAT nominee... The note adds the Chitalias had asked for a large settlement to which he had said that it was impossible and that the best he could consider would be a deferred payment arrangement...over a period of time.

Tomorrow: How BAT routed exports through Singapore

THE DEAL CHITALIAS WANTED TO BROKER

Chitalias would get BAT to pay their dues from ITC directly to them.

In return, Y C Deveshwar would help BAT acquire 51% equity in ITC at the lowest possible cost.

Deveshwar would step down and assume position of non -executive chairman, leaving managing directorship to a BAT nominee

ITC and ITC Global would withdraw their claims against Chitalias.