Unemployment and farmer suicides are key issues in Karnataka: Yeddyurappa

Feb 19: Bavaguthu Raghuram Shetty was once a typical billionaire with a taste for the high-life.

He splurged on a private jet, vintage cars and two entire floors of the Burj Khalifa, the world’s tallest skyscraper. His website shows him hobnobbing with politicians, Bill Gates and Bollywood royalty.

“The thrill of speed and freedom makes me love cars,” Shetty, 77, told local reporters last year.

Shetty had more than enough money -- at least on paper -- to afford such a lifestyle from companies he helped found, including hospital operator NMC Health Plc and financial services firm Finablr Plc. On Dec. 10, his stakes in the public companies were valued at $2.4 billion, making up the bulk of a fortune spanning education, hospitality and one of the world’s oldest tea companies.

Then, a week later, Carson Block came along.

Block’s investment firm, Muddy Waters, issued a report criticizing NMC’s accounts and disclosing a short position. Since then, Muddy Waters’s scrutiny has snowballed into a troubling scenario for Shetty that sheds light on his complex share arrangements and casts doubts about his net worth. His holdings in Finablr and NMC are worth $885 million, but Shetty’s fortune may now be just a fraction of that, depending on the size of his borrowings.

Filings this month show that Shetty pledged a quarter of his NMC stake against loans with First Abu Dhabi Bank and Zurich-based Falcon Private Bank. Two other shareholders may own half of his reported stake. Another lender -- Al Salam Bank Bahrain -- has already sold some of those shares to enforce security over a loan for Shetty, and NMC said Tuesday that First Abu Dhabi Bank sold another chunk earlier this month.

The situation “seems to have gone beyond some of the issues that Muddy Waters focused on initially,“ said Gavin Launder, a fund manager at Legal & General Investment Management, who owned shares in NMC until October. “The increased scrutiny has unearthed other issues.”

Law firm Herbert Smith Freehills has launched a review of Shetty’s holdings at his request, a spokesperson for the Indian-born businessman said, declining to comment further until the analysis is completed. Shetty resigned Sunday as NMC’s chairman.

In its Dec. 17 report on NMC, Muddy Waters hinted at potential overpayment for assets, inflated cash balances and understated debt. Shares of the United Arab Emirates’ biggest private health-care provider have since plunged 67%, and the firm is now the focus of takeover speculation. The sell-off also spread to Finablr, whose stock has tumbled 64% in that span.

NMC has disputed Muddy Waters’s claims, and the company hired former FBI Director Louis Freeh to conduct an independent review of the short seller’s allegations. Meanwhile, local regulators “are making inquiries with the relevant parties,” a spokesperson for the U.K.’s Financial Conduct Authority said.

Shetty is hardly the only ultra-wealthy person to leverage his assets. Elon Musk has used his shares in Tesla Inc. to obtain personal loans, while Oracle Corp. Chairman Larry Ellison has put up millions of the company’s shares to fund a lavish lifestyle that includes trophy properties, America’s Cup teams and the Indian Wells tennis facility in California.

But such deals can also sour, as demonstrated by Shetty’s lenders selling shares his investment firm pledged. He and his advisers are investigating details of the sales as part of their legal review, according to filings.

To complicate matters, Shetty pledged another batch of NMC stock in 2018 as part of a so-called equity collar arrangement with Goldman Sachs Group Inc. that uses options to limit the impact from share moves. Last month, he also pledged most of his stake in Finablr to refinance a loan from the company’s takeover of foreign-exchange firm Travelex for about $1.2 billion.

BRS Ventures Investment, the UAE-based holding company for most of Shetty’s assets, doesn’t report consolidated financials, preventing a complete analysis of his net worth. His other assets include a catering company, a waste-management firm and pharmaceutical business Neopharma, which four months ago was in the early stages of planning for an initial public offering.

Block, 43, earned his reputation as a short seller a decade ago through targeting U.S.-listed Chinese companies that he claimed were frauds. More recently, his San Francisco-based firm focused on British litigation-finance firm Burford Capital Ltd. and Japanese biotech stock PeptiDream Inc. Short sellers seek to benefit from a decline in a company’s share price.

Shetty founded NMC in 1975 after moving to Abu Dhabi from his native India. He created Finablr two years ago to consolidate his financial brands before listing it on the London Stock Exchange in 2019.

Block said he didn’t anticipate NMC’s shareholding drama.

“I wouldn’t have been able to predict that we’d get these bizarre disclosures about unclear share ownership coming out of the company,” he said in a Feb. 13 phone interview. “This has been obviously a more dramatic unraveling than we usually see.”

Bengaluru, Mar 11: The move by rebel ruling Congress MLAs in Madhya Pradesh to trigger the crisis for the party's government in the state appears to have been in the making for at least close to a month as Karnataka BJP leaders were sounded about hosting them in Bengaluru in advance, sources said.

They also indicated that the 19 rebel MLAs would stay in the city for at least two weeks till an alternative government takes charge in Madhya Pradesh.

A senior Karnataka BJP leader, in charge of the Madhya Pradesh legislators' stay in Bengaluru, received a communication from the party's central leaders about the move nearly 15-20 days ago, the sources involved in the development said on condition of anonymity on Tuesday.

The leader had even gone to New Delhi in the third week of February to meet BJP's central leaders in this regard, they said.

In a massive setback for the Congress, its prominent youth leader Jyotiradtya Scindia quit the party and in a coordinated rebellion on Tuesday 21 MLAs loyal to him resigned in Madhya Pradesh, pushing the 15-month-old Kamal Nath government to the brink of collapse.

As many as 19 Madhya Pradesh MLAs, including six ministers, said to be loyalists of Mr Scindia who appeared set to join BJP, are camping at a resort in Bengaluru. Two of them are women, the sources said.

The MLAs on Tuesday sent their resignation letters via e-mail to Raj Bhavan in Bhopal from Bengaluru.

According to the sources, eight legislators, including an independent, have been staying in the city for about a week now. Of them two - one from Congress and the other an independent MLA - had gone back.

The six were joined by 13 legislators, who landed in the city by a chartered flight on Monday, and all of them are put up in a villa.

The senior Karnataka BJP leader, also an MLA, is looking after their stay and related arrangements on the directions of the party high command, the sources said. Their stay here may be for a couple of weeks.

"There will be a no-confidence motion, and then there will be a trust vote of the new alternative government that will be formed. So they may have to stay here for some time. They may be moved out of their current location," they said.

The Madhya Pradesh legislature session is expected to begin on March 16.

The sources also said the six legislators staying in the city since last week were shifted a couple of times within the city.

Congress in Madhya Pradesh, under the leadership of Kamal Nath, had come to power in December 2018 by ousting the BJP by a narrow margin.

Mysuru, May 1: Four people who brought a dead man’s body from Mumbai for cremation in his native place in Mandya district in Karnataka have tested positive for Covid-19 virus, and now the administration is trying to find out if the man himself had been an undetected positive.

According to Mandya district deputy commissioner M V Venkatesh, the deceased man was a 53-year-old native of B Kodagalli of Pandavapura taluk, Melkote hobli in Mandya district. He died after suffering a heart attack at the U N Desai government hospital in Mumbai on April 23.

The cremation took place outside the man's native village after the local administration refused to allow it inside the village.

Wanting the final rites performed in his native place, the man’s family got the body embalmed and procured all the medical records and certificates from the hospital and brought it in an ambulance belonging to the Desai government hospital.

When they reached Pandavapura taluk in Karnataka on the evening of April 24, the local administration did not allow the body to enter the village but allowed the relatives to cremate it outside the village.

And since the family had come from Mumbai, the district administration quarantined all seven of the man’s relatives, and their samples were sent for testing on 28 April.

The results showed that the deceased man’s 25-year-old son, daughter-in-law, daughter, and two-year-old grandchild are positive for Covid 19. All of them have been admitted at the Mandya Institute of Medical Sciences although they have no symptoms.

Deputy commissioner Venkatesh said that in the Desai hospital records in Mumbai there was no mention whether or not the man had been tested for Covid-19. “We are writing to Desai hospital to clarify if the deceased person was tested for Covid 19. It is also possible that the family got infected by the man’s son who works in the loan department of ICICI Bank in Mumbai and visits several offices in different areas of Mumbai,” he said.

The man’s ancestral B Kodagalli village now has been sealed off. Though tests done on other members of the family have come back negative, the Mandya administartions plans to repeat their tests.

So far 26 people have tested positive for Covid 19 in Mandya district.