Bengaluru: As Café Coffee Day founder VG Siddhartha's bloated body washed ashore on the banks of the Netravati river at 4.30 am on Wednesday, so did controversies swirling around his financial dealings and suicide.
Like the tag line of CCD, which says 'a lot can happen over coffee,' a lot of things are unravelling after the suicide of the Coffee King.
What led to the final tipping point may be revealed soon; undoubtedly there is more to it than what meets the eye. This is why former Karnataka CM and Congress leader Siddaramaiah called the CCD owner's death “both disturbing and mysterious.”
“The reasons and the invisible hands that ended his life in this tragic way should be unearthed through impartial and fair investigation,” he said.
Whose was that invisible hand? The needle of suspicion points at a private equity partner who exerted tremendous pressure on Siddhartha, making his life miserable.
Sources say the pressure from the PE partner and recovery agents was such that the entrepreneur had gone into a shell and was depressed.
The PE firm also prevented Siddhartha from selling his stake in CCD to Coco-Cola. The CCD founder had pinned his hope on this deal to retire a major portion of his debts.
The publicly-listed company's latest annual report also bears testimony to its rising liabilities. CCD was struggling to repay its debt which was a startling Rs 4,500 crore.
Though the group had raised loans from banks, mutual funds and NBFCs, among others, Siddhartha's letter to the board made public on Tuesday points to the pressure from a private equity partner to buy back its holdings in Coffee Day Enterprises. The letter said the private equity partner was exerting pressure on him and his businesses.
The CCD founder also reportedly borrowed Rs 7500 crore from a private financial company in Mumbai on monthly interest. He had reportedly paid Rs 3000 crore, but then ran out of cash. The firm started sending recovery agents to him, adding to his distress.
In fact, hours before his disappearance, Siddhartha had called his personal staff at the Cafe Coffee Day head office in Bengaluru and informed them about a letter he had penned to be disseminated as early as possible.
The purported letter referred to the “tremendous pressure” he was under from lenders and “harassment” from Income Tax officials. And that he was “very sorry to let down all the people that put their trust in me”.
Police sources said that the July 27 letter that Siddhartha left behind and the final conversations he had with a few staff members suggested he was not his usual self.
“He told one staff member to look after the interests of the firm after clearing an outstanding loan. He seemed emotional. This was a bit out of character for the businessman,” sources said.
But why did Siddhartha suddenly run out of cash? His woes started two years ago when former minister and senior Congress leader DK Sivakumar's house and offices were raided by income tax and Enforcement Directorate officials. Sources said that soon after the raid, Sivakumar's financial manager was arrested. This led to a money trail to Siddhartha.
Incidentally, DKS and Siddhartha are from the same Vokkaliga community. On Wednesday, DKS said he did not want to comment on anything that happened in the past and pleaded for time from prying reporters on his financial links with Siddhartha.
The CCD boss had reportedly parked the money belonging to DKS. Then came the arrest of one Rajneesh Gopinath, a Singaporean national. His interrogation by the Income Tax and Enforcement Directorate officials led to his brother Munish Gopinath who is on the board of CCD.
Rajneesh reportedly revealed that Siddhartha had routed unaccounted money through hawala transactions. When the ED dug further, they found that Siddhartha had floated shell companies that showed losses even without an employee on its rolls or doing any business.
This led to the suspicion that unaccounted money was being siphoned away from the country for parking. Amidst all this financial mess, the IT raids also found nearly Rs 130 crore unaccounted cash in his house.
Reacting to Siddhartha's allegation of harassment by tax authorities in the letter, the department said it acted as per legal provisions. In a press statement, the Office of Principal Chief Commissioner of Income Tax, Karnataka and Goa, Bangalore (B.R. Balakrishnan) said the provisional attachment of shares was made to protect the interests of revenue out of the income admitted by him based on “credible evidence gathered during searches”.
By Shankar Raj
