Unsigned Diary Of Ex-Itc Global Official: The Lokman Connection

The break up of the dues is as follows:

EST 0.50

Sunny 2.25

Lokman 3.75

Total 6.50

May 13, 1995

Sriram (Khattar) called me based on a conversation with Devang Chitalia for a normal follow of dues from Sunny, EST and Lokman, Sriram was advised by Mr Devang Chitalia that Lokman had been wound up in January 1995 on account of pressure that he was under.

I spoke to Mr F R Vevaina, Mr R K Kutty and Mr B Mitter immediately over the telephone and advised them of the situation. The only solution was that Lokman would have to issue a letter transferring the amounts due from Lokman either to Sunny or EST.

 

May 22, 1995

I have sent a letter to Mr R K Kutty with copies to the Board of ITC Global regarding the winding up of Lokman .... This news has alarmed me in view of the serious consequences such a winding up will mean under Singapore law.

May 24, 1995

I received a fax from Mr B Mitter advising me that the ITC Board had decided to set up a large contingency provision in terms of receivables from the EST group. He also advised me to examine ITC Globals receivables with this Group.

May 25, 1995

Mr K L Chugh rang me after a long time to find out how the operations of the company were progressing. He also asked me on the position of dues with the EST group and I shared with him my anxiety regarding dues from Lokman. I also advised him that Sriram and I were flying out to meet Mr Kutty this evening.

May 26, 1995

Sriram and I met Mr Kutty ... Mr Kutty spoke to Mr S Sivakumar from my room and advised him to ensure that all cash floats with the EST Group should be used to clear ITC Global dues. We were advised that there were some additional shipments to the EST. Group in pipeline which would generate sufficient funds to clear our dues.

The clearance of dues would be as follows:

Total dues 6.50

Rice 7000MT @ 248.50 1.74 (documents through bank with nil due)

Rice 5000 mt @ 1.18 1.18 (documents direct, not through bank)

Proteins 0.55 (documents on 30 day DA)

Proteins 0.24 (documents on 30 day DA)

Net shortfall after the above 2.74

June 5, 1995

I met Mr David Yeow, partner of Allen and Gledhill and explained the exact situation to him. I sought a legal opinion... He advised me that the shareholder was in his right to write off any amount in the books of ITC Global provided:

1. ITC Global would continue to be solvent after the write off

2. ITC stated in writing that such write off would be in its best interest as the sole shareholder

3. The loan to EST did not constitute any wrongful act in India

I also requested David Yeow to start a search on Lokman

June 8, 1995

The COD meeting comprised of M/s K L Chugh, Y C Deveshwar, S Mishra, B Mitter, R K Kutty, A Bhatia, M Sitaraman, G K P Reddi, P K Sinha and K Vaidyanath. I made the presentation to the COD outlining the Singapore corporate law as well as the implications on ITC Global, the Board of ITC Global as well as ITC Ltd as the sole shareholder.

The view of Mr Kutty and Mr P K Sinha was that all the transactions should be reversed and that in the interest of ITC Ltd, all moneys must be paid back by ITC Global to EST. I advised the COD that I would be happy to send all funds back provided Mr R K Kutty, as the chairman of ITC Global would authorise this amount in writing. He was not agreeable to this and I was not ready to remit funds without approval. It was then decided that the funds already with us would be left with us to clear our dues.

June 9, 1995

Meeting was called in the office of K L Chugh to discuss the ITC Global issues as well as to discuss the letter to be sent to the Reserve Bank of India.

June 14, 1995

I spoke to Suresh Chitalia in Bombay . I raised the issue of Lokman and was advised by him that all papers have been handed over to his lawyer and that he would only be able to respond after his lawyer had cleared all the points for discussion. We tried to explain the seriousness under the Singapore laws, his only answer to me was that since he was in trouble in any case, why should he worry about someone else.

We decided to start an investigation on Lokman so as to get more details about this organisation and I briefed Mr Andrew Milne, partner of Zaiwalla & Co based in London with the following four objectives:

1. Can a company close its doors when it has a liabilities in its books and can ITC Global take them to court for fraudulent trading practices?

2. Who is the beneficial owner of this company?

3. What has happened to our funds that were remitted to them?

4. Can we get details of this account and a list of transactions in their account?

June 22, 1995

I decided in view of the sensitivities, I would not advise the Board till I had some concrete evidence.

l To be continued tomorrow