G Square a firm which saw astronomical fortunes and whose fortunes are reaching abysmal depths following the Income Tax department’s searches in the third week of April 2023. G Square’s advertisements in Metro pillars in Chennai simply vanished and the advertisements moved to Facebook and FM radio.
Around 800 crore tax evasion has been discovered by Income Tax department and highly placed sources say the firm has agreed for a tax and penalty of 450 crores. How, a firm which is in debts and whose project in Hyderabad and Bellary has hit roadblocks will come up with 450 crores ?
TN Chief Minister Stalin is on a nine day trip to Japan and Singapore for attracting investments. On his first day of visit to Singapore, Stalin held talks with Dilhan Pillay Sandrasegara, Executive Director of CEO of Temasek, Kim Yin Wong of Sembcorp and Sanjeev Dasgupta of CapitaLand.
He also met Sanjeev Dasgupta of CapitaLand. CM’s official tweet says that “They expressed their keen interest in investing in our Tamil Nadu and partner us in our journey towards becoming a trillion dollar economy. We explored the possibilities of expanding the existing investments in renewable energy, industrial parks and logistics to new areas like food processing and fishing.”
Here the key area is “industrial park”. CapitaLand is a Singapore based firm. Ascendas and Capita Land India Private Limited were their subsidiaries. CapitaLand India and Ascendas together completed an IT park Chennai. It is called “Ascendas IT Park”. This is a 10 and odd acres IT park.
TEMASEK is a Singapore PSU working under Singapore’s Finance Ministry. The firms, Ascendas, Sembcorp, Capital Land India Private Limited, Capital Land Investment are all subsidiaries of Temasek.
For strategic purposes, Temasek merged Ascendas and Capital Land India and made them into one entity. Later the name Ascendas was dropped altogether. G Square and CapitaLand have a long history of business dealings.
Till 2021 the DMK came to power, G Square was doing only B2B model of business. They never sold land directly to customers but to industrial houses and business groups who are in need of large chunk of land. G Square acquired 250 acres of land for JK Tyres in Sriperumbudur. Similarly, it was G Square who acquired 10 acres for the Ascendas-CapitaLand IT park.
All major MNCs need an intermediary for a huge chunk of lands. Most of the time, bulk lands in one parcel will not be available and an MNC cannot run behind government offices or bribe the concerned to get the land. They always approach an intermediary who will acquire the land and sell it for a profit. This is the industry norm and nothing wrong with it.
But, why should Tamil Nadu government sign an MoU for developing an Industrial Park is the moot question. Tamil Nadu has several industrial parks developed during both DMK & ADMK regimes. Almost all the parks were either developed by TIDCO or SIPCOT both TN PSUs. None of these Industrial parks were given to any private person for development as IT park or Industrial Park. TN government developed all these parks.
The land is with the government. Or the government has the wherewithal to acquire lands and armed by law to do the same. The government can develop any amount of industrial parks with the huge resources at its disposal.
Why it is choosing Singapore-based firms to develop Industrial Parks is perplexing. G Square which rules the roost in Tamil Nadu realty industry, in April 2022, announced the development of 400 acre Industrial Park in Arakkonam. The firm’s CEO Eshwar told media “While the industrial park has several geographical and other advantages, the key differentiator is that it will be a freehold property as industries can own the land parcels. With G Square Industrial Estate at Arakkonam, the company intends to solve the challenge of readymade industrial lands being available,”
According to highly placed sources, none of the IT parks boasted by G Square were sold and the firm is facing a severe liquidity crisis. It has not honoured hundreds of sale agreements through which it acquired lands. G Square had entered into agreements with land owners by paying ten percent of the land cost, promising to pay the entire cost at the expiry of six months. Except for a few projects most of its projects never took off. The land owners who were waiting for more than 8 months but were scared to file complaint due to fear of G Square’s clout are slowly coming out.
The Income Tax searches on G Square for eight days has reduced the firm’s political capital and it has lost its protective sheen. It is as vulnerable as any other normal firm. To certain extent we can say, it is now more vulnerable.
If the firm has agreed to pay 450 crores as tax and penalty it means only one thing. The firm is assured of a sizeable business. Selling the Arakkonam parcel of land to CapitaLand for a hefty property and CapitaLand developing the IT park and selling the same to the government of Tamil Nadu is nothing but round-tripping of black money.
The stench of conspiracy from the Singapore CapitaLand deal is unbearable. And there is a pattern.
The Dubai investment visit by Stalin last year March is also a ‘round-tripping’ investment. CM on his return said, White House Textiles, Aster Healthcare, Lulu Mall and Noble Steels are about to invest 6500 crores in Tamil Nadu. One year and two months have lapsed and not a single paise has come to the state. Highly placed sources say the entire money promised as investment was taken to a tax haven through hawala and was supposed to be sent to the above firms for onward investment in Tamil Nadu. The transaction met a hitch and the amount is stagnated in some tax haven.
Now, the Singapore trip also appears to be a money laundering activity to save CM’s family firm G Square.
G Square’s CEO Eshwar said he has resigned.
Intelligence agencies are closely monitoring both the Dubai trip and the ongoing trip. A well-knit trap is being laid not only for Stalin and his family but also for the DMK.
Stalin is blissfully walking into the trap.