As for SHCIL Services Ltd (SSL), a board member tells us that they have decided to write to the company and raise their doubts about its CEO Ramanathan, although he remains fully in charge of operations. The SHCIL board, even with a 24 per cent shareholding, has not demanded an emergency meeting of SSL’s board. For one, it would have brought SSL’s anonymous private and foreign shareholders into the open.

As earlier reported, a majority of SSL’s shares are held by Vaishnav & Co of Ahmedabad (33 per cent) E-Ventures Capital of Singapore (33 per cent) and V Subramanian, a Hyderabad based individual who owns a distillery company 10 per cent).

The board’s indecisiveness is especially surprising because SSL is hugely dependent on SHCIL’s infrastructure for much of its business. Moreover, the central point in the transactions is a company called Unitech Value Solutions, which was set up as a wholly owned subsidiary of SSL registered in Singapore by the CEOs of SHCIL and SSL Services. When SHCIL bagged the prestigious E-Stamping contract from the government of India (ironically in the wake of the massive fake stamp paper scam), it created an insidious structure where payments to its technology partner CrimsonLogic Pte of Singapore would be routed through Unitech Value Solutions. Unitech Value Solutions is mainly owned by private and foreign companies without the board of SHCIL getting a whiff of what was happening.

There are many questions raised by the ineffectual actions of the SHCIL board, the foremost of them: were the institutional shareholders really ignorant of what was happening? After all, IFCI (which holds a 17 per cent stake in SHCIL) was a consultant to the government in finding alternatives to paper based stamp duty payments. The officer in charge of the project immediately became an advisor to SHCIL and SHCIL Services after they had bagged the contract.

... contd.