The 'Streamcast Group' scam and Rolta: Was it deceitful collusion?
- Rommel Rodrigues
- May 28, 2021
MUMBAI: Information technology company Rolta India Ltd (RIL) which was once considered among leading names in the sector, now along with its subsidiaries, both in India as well internationally are facing insolvency proceedings for having not paid back more than Rs 10,000 crore to banks, institutional investors, bondholders even for unpaid wages of current and former employees.
The company which was doing relatively well in the past few decades, by 2017, having borrowed heavily to invest in high-value defence technology project (now sunken) and to scale up its existing IT business in the enterprise integration space which has slowed down considerably, landed in dire financial straits.
With losses mounting year-on-year, the company's attempts of reclaiming its businesses failed miserably, even attempts to divest its global products and business solutions botched up due to unrealistic valuations and stonewalled by lenders. One senior banker who was tracking RIL's debt in his bank said, "No banker dealing with Rolta has an iota of trust in its promoters. Having been already cheated they strongly feel they will cheat them again, thus they will be wary of any of his move to clandestinely sell off its proprietary products."
Having burnt their fingers, indeed the creditors had little faith left in the promoters led by founder, chairman and managing director, Kamal K Singh. Troubles escalated beyond control when the bonds it had issued in the international market worth US$ 500 million were maturing for payment and Indian banks began approaching insolvency courts for recovery. Although the pressure was unrelenting, and to an extent, RIL and Singh tried their best to wade off the numerous cases, but perhaps he needed a diversion to assuage the creditors.
It was during these desperate times, the company which had considerably eroded its businesses announced an unbelievable deal. In a stock exchange filing, on May 11, 2019, RIL announced an investment of Rs 5,500 crore by 'The Streamcast Group' supposedly an international group.
Shortly in conjunction with this, RIL announced that it had executed a Definitive Restructuring Services Agreement (RSA) with 'The Streamcast Group' on August 6, 2019, under the terms of which, 'Streamcast Group' will (was to) assist Rolta India Ltd in repayment and restructuring its liabilities (including providing financial assistance) commencing with immediate effect.
Although the deal sounded very dubious for a variety of reasons, the stakeholders gave it a benefit of doubt for that moment of time and waited for further developments.
Two years - a period of 24 months have passed since to date, and while the company continues to repeatedly copy-paste the above statement in all its financial statements and communications, not a single penny has come from the international 'The Streamcast Group'.
The interesting thing as we find out, the deal was indeed dubious, nothing was ever going to come in reality, since there was (and is) no international 'Streamcast Group' and the whole thing was clearly a farce or call it a scam called off by two promoters for reasons best known to both of them.
Although we have a couple of leads into understanding the whole plan behind this move, and the many versions to how RIL's Singh and the two promoters of the 'Streamcast Group' came together to pull off this sham, however since none could be verified or substantiated we do not wish to speculate. Not as yet.
However, in the interest of the creditors of RIL (including hundreds of former employees) who were badly affected due to this absurd and farcical deal, we will present what we found out about this 'Streamcast Group' compiled after researching and communicating with several people across the globe. Turns out 'Streamcast Group' is a scam.
The first thing that came up after researching on the 'Streamcast Group' was that it was merely a group of shell paper companies registered in Valletta the capital city of Malta, a small island country in the Meditarian sea just like the archipelago of Lakshadweep with a population of about a five lakhs. Although it has a traditional tax-based system it is considered a tax haven, especially for foreign investors, much like the British Virgin Island or Samoa.
The so-called international ‘Streamcast Group’ was incorporated in Malta as three companies, Streamcast Limited, Streamcast Studios Limited and Streamcast Technologies Limited by two promoters of Indian origin between September 2017 to December 2017.
One a relatively young, (said to be Chartered Accountant) hailing from Pune Harshawardhan Sabale (living in Mellieha, Malta at that time) and another one being Dharmesh Pandya, from Florida, USA an associate and one of the three brothers of a senior practising advocate from Mumbai, Nimish Pandya running a successful traditional family-based law firm Pandya Juris LLP in Mumbai).
All these companies had been formed with a bare minimum capital requirement as per Malta's laws of just EUROS 1200 and had a common address (belonging to the law firm which incorporated them).
As per an investigation by The International Consortium of Investigative Journalists (ICIJ) the said address of 'Streamcast Group' companies also happens to a hotbed for dozens of other companies known to be involved in money laundering with their names figuring among the 785,000 offshore companies, foundations and trusts from the Panama Papers, the Offshore Leaks, the Bahamas Leaks and the Paradise Papers investigations.
So the companies of the 'Streamcast Group' were without any credible operational history, management details or organisational capabilities, even its website (created during its time in Malta, later shut down) was just a one-pager flashy site, very vague without any credible or meaning full information whatsoever. It did not carry any details of the promoters background, past business, not even an address or phone number.
Both Sabale and Pandya were splashed all over in the Maltese media making their announcements to invest millions of Euros in the country. Malta being a very small country such news becomes national headlines, apparently, the Prime Minister of that time Joseph Muscat even said that this investment by the Streamcast Group 're-confirms the progress made through the past few years and is 'yet a seal of approval. for the country under his leadership.
On the back of their announcements, Streamcast Group forged alliances and signed agreements with several vendors from Malta including internet service provider Melita Ltd and public owned power company Enemalta Plc.
In their big-ticket investment announcements and agreements, the Streamcast Group also signed a promise of sale signed with another private Malta company P&C Limited for the purchase of a block of offices in Marsa, Malta for to be sold to Streamcast for Euro 7.2 million.
Part of the media however smelt something amiss. Nobody was able to verify the so-called 'major' international group's credentials as there were no details available anywhere, and the only introduction people got were from the promoters business cards which said they were based out of the state of Delaware in USA.
A search of companies in Delaware did show half a dozen companies with the name Streamcast that were promoted from 2016 onwards, but beyond that there was nothing. A matter of information is, companies in states of the US can be formed online by anyone from any part of the world through an agent with a bare minimum capital of US $ 100.
In a short span of time, it came to be known that the claims of millions of euros of investment by Sabale and company were bogus ones, since not a penny was forthcoming. Things changed very rapidly and by the end of 2019 both Melita and Enmalta came out and said the 'Streamcast Group' had cheated them in unpaid due of using their infrastructure facilities, services and premises.
Melita said it will sue Streamcast as it has not made any payments since it was first provided with a fibre optic internet connection in 2018, with arrears reaching a staggering Euros 300,000 until its service was terminated. Almost immediately Enmalta also came out publicly saying Streamcast, the company that was meant to deliver a Euros 75 million investment, owed it Euros 500,000 in rent arrears, electricity bills and other costs. Shortly after that in early 2020, P&C Limited too joined Melita and Enemalta in trying to recover over Euro 8 million in debts from Streamcast.
All these companies filed cases in the civil court to initiate recovery and served notices, however, the 'Streamcast Group' promoters had by than vanished from Malta. They had reappeared in Mumbai setting up the 'Streamcast Group' again.
An investigation by investigative journalist Caroline Muscat of Malta-based The Shift News and her team has relentlessly since then pursued the dubious deals by the promoters of the 'Streamcast Group' and have over the months have come up with several articles exposing them and the political elements who supported and thrived on them.
In an article dated 15 February 2020 in The Shift News titled, 'Streamcast never paid rent or electricity, Enemalta owed €500,000' the report said, "An investigation by The Shift stripped the Streamcast deal of the hype and showed a company that came from nowhere, without a data centre, infrastructure, funds, a track record or even a proper website." (Read here)
In this article, there is a picture of Enemalta officials in black suits, and the Streamcast Group's chairman Nimish Pandya who alone is in a blue suit. The gullible Enemalta would have never thought they would be eventually left black and blue with unpaid debts in millions.
Back in Mumbai, the two promoters, having already registered over half a dozen companies with the name 'Streamcast' between September 2017 to February 2018, were preparing to launch the international 'Streamcast Group' again.
In July 2018, the 'Streamcast Group' had announced that it will invest Rs 2,200 crore to set up data centre in Sawantwadi, Maharashtra, and they roped in Deepak Kesarkar who is an MLA from Sawantwadi since 2009 and also guardian minister of Sindhudurg district. He belongs to the Shiv Sena.
Kesarkar along with others of his party colleagues like Vinayak Raut Member of Parliament for Ratnagiri and Sindhudurg were invited to the groundbreaking ceremony in presence of Chairman Nimish Pandya and Mark Aldridge from Malta, the engineer who was now the Chief Operating Officer of the 'Streamcast Group'.
In October 2018 Streamcast announced a partnership with BSNL Maharashtra wherein it said it would be investing over Rs 5,500 crore and it will provide free educational content to anyone using a BSNL SIM Card. Not only that Streamcast further mooted the partnership by committing to distribute 500,000 free set-top boxes (STBs) across Maharashtra in the launch phase.
During the BSNL mega announcement they managed to rope in Uddhav Thackeray, then Sena Chief as the Chief Guest along with many Sena ministers. The company even unveiled the name of the project in Sawantwadi as a Human Resource Development (HRD) Centre named ‘Bal Saheb Thackeray Gyaan Prabodhini.'
In September 2017 they already set up a one-page website for the company in India, https://scst.tech which said the company had 50 Million plus subscribers, in 4 countries serving 25 terabytes of data every day through 1,04,000 servers. However in all, it was a big white lie, they had zero business in this space and the Malta facility was since defunct. The site was eventually shut down soon as was done with the website in Malta.
Out of the investment announcements worth over Rs 8,000 crores in India (Just like they did in Malta) made till the end of 2018, practically not a single rupee worth of it was invested. To understand more of this, we spoke to all those who were involved in the various stages during the announcements and non of them had any knowledge of the Streamcast Group and if they had heard it they had no idea of any work done.
When we exclusively spoke to Kesarkar, he did agree that he was at the groundbreaking ceremony but said he was not aware of any further development of the project that he had been called to inaugurate. He said he gave support to the project since the 'Streamcast' group announced a non-polluting and ecological friendly project in his constituency which was to generate jobs for the people in that area.
During the lengthy conversation, Kesarkar said he did not verify the credentials of 'Streamcast' since he knew about Nimish Pandya from the Sri Sathya Sai Trust and as a well-known advocate. He further said that some people from the company were in touch with him till about a year ago or so with some agritech initiatives, but he hasn't heard from them since then.
Sources from Shiv Sena who are close to the now Chief Minister Uddhav Thackeray also say while they do remember a foreign company announcing investments of Rs 2,000 to Rs 3,000 crores in Sawantwadi in 2018 but they never heard of them again.
Senior officials from BSNL Mumbai said they had also not heard from 'Streamcast' ever since the announcement and had no idea if they had placed an order for any set-top boxes out of the 5 lakhs they had promised to distribute among students. On the deal they said, there was no binding clause and they had offered to provide their network of users for any content program that would be provided by the partner which would be beneficial for the users. "However they never presented any plans and nor have we ever heard from them," one official said.
In just five months time since they first announced investments of Rs 2,200 crore in Sawantwadi and over Rs 5,500 crore with BSNL Maharashtra, by end of December 2018 after one of its events, Malta India Film Festival got totally washed out the 'Streamcast' guys decided to quietly shut shop just like they wound up in Malta.
They had already started discussing with the promoters of a BSE listed company, Iris Mediaworks Limited for a total sell-out of its group companies, 7 with the name 'Streamcast' plus two more companies, Beatnik Hospitality Private Limited and FNGR Lifestyle Private Limited.
After some quick wheeling and dealing in January 2019, in early February 2019 Iris Mediaworks announced the acquisition of the lOO% control of all the 9 'Streamcast Group' for cash consideration of Rs. 13.95 crores.
For a group that talked of investing millions of euros in Malta and thousands of crores in India, and as per its (shut website) had 50 Million plus subscribers, in 4 countries, this valuation looked like a donation to a charitable institution. Moreover, we found out that apparently Sable was only partly paid a nominal sum as an advance.
Matter of fact, a look at valuation computation that Iris Mediaworks presented for these shell paper companies (Adopted in its board meeting of 8 February 2019) proves that even that was a total sham, yet it decided to shell out nearly Rs 14 crores in cash to the owners of the 'Streamcast Group'.
What kind of company was Iris Mediaworks? How many times has Iris Mediaworks changed its name? (Read here)
In the first week of March 2019, Iris Mediaworks Ltd (which was a few years ago called Channel Guide India Limited) changed its name to Jump Networks Limited and a new company website, tttp://jump.tech was launched.
It was during troubled times, on May 11, 2019, Rolta India Ltd announced the unbelievable deal with 'The Streamcast Group' supposedly an international group that would be investing Rs 5,500 crore to restructure its debt. It is proved beyond doubt that, right from the very beginning this was a sham, a sort of a scam to fool the creditors, and it continues to be.
Meanwhile, on 13 February 2020, the managing director of Jump Networks, Yogendra Bagree resigned and Sabale was made the managing director however it does not end here. Exactly a year later in March 2021, he resigns. In his resignation letter, Sabale says the agreement for the sale of 9 'Streamcast Group' companies is revoked and the advance he got will be converted into technology licensing fees, he has also asked the company to change its name again.
By the way the website tttp://jump.tech is already shut.
In pics, from left Deepak Kesarkar, Uddhav Thackeray, Harshawardhan Sabale, Nimish Pandya and on right Ashima Chhalill of Edmission Education