VG Siddhartha Suicide Case: Clean Chit to I-T Dept & PE Investors

CDEL, which was facing debt up to Rs 7,200 crore, has managed to bring down the amount to Rs 3,200 crore.

File image of VG Siddhartha.

(Photo: The Quint)

An investigation into the alleged suicide of the owner of the Cafe Coffee Day group (CDEL), VG Siddhartha, has taken a new turn as the investigating team on Friday, 24 July, gave a clean chit to the private equity investors and the income tax department, who had been accused of harassing Siddhartha.

According to news agency PTI, the investigation, led by the former deputy inspector general of the CBI, Ashok Kumar Malhotra, found that a private firm of Siddhartha – Mysore Amalgamated Coffee Estates Limited (MACEL) – owes a sum of Rs 3,535 crore to the subsidiaries of CDEL.

This amount was not accounted for in the financial statements of the company, the report added. CDEL has 49 subsidiaries.

"Steps are being taken by subsidiaries of CDEL for recovery of dues from MACEL," the company said in a regulatory filing that disclosed the findings of the investigation.

The report also said that CDEL had authorised its chairman to appoint an ex-judge of the Supreme Court or High Court to “suggest and oversee actions for recovery of the dues from MACEL.”

It also said that personal assets/shares of Siddhartha were pledged for loans of the company along with its subsidiaries.

CDEL’s board of directors had on 30 August last year appointed Malhotra to investigate the matter and to scrutinise the accounts of CDEL and its subsidiaries.

The report also stated that no evidence was provided “to draw an inference that there may have been any advertent or inadvertent harassment from the income tax department".

“MACEL, an entity on the personal business side of late V G Siddhartha had a continuing business relationship with subsidiary companies of CDEL. MACEL was paid advances by subsidiary companies of CDEL. The amounts were sent to MACEL through normal banking channels,” the investigation report said.

It also said that majority of the funds taken out of CDEL may have been spent on buying back equity from private investors, repay loans and pay interest.

Given certain mail exchanges and one-to-one discussions among the officers and key management of the company, it is not conclusive that the senior management and Siddhartha’s team were not aware of such transactions.

In a purported letter that Siddhartha left before his death, he said that “The law should hold me and only me accountable, as I have withheld the information from everybody, including my family.”

CDEL, which was facing debt up to Rs 7,200 crore, has managed to bring down the amount substantially to Rs 3,200 crore by selling assets and plan to bring it further down by disposing of more assets.

(With inputs from PTI.)