Corporate Affairs Ministry begins probe of Gadkari investor firms: Sources

New Delhi: Nitin Gadkari has cancelled a trip to Delhi amid reports that the Corporate Affairs Ministry has begun an initial inquiry or what is being called a "discreet probe" into companies that have invested in the BJP president's businesses.  He faces allegations of wrongdoing in business deals that have put a shadow on his unprecedented second term as BJP president.

Sources said the initial inquiry will be conducted by the registrar of companies in Mumbai and Nagpur, where Mr Gadkari's Purti group of companies is registered, to verify if these investor companies have suppressed facts. If any evidence of wrongdoing is found, the sources said, the inquiry will be handed over to the special frauds unit of the Ministry of Corporate Affairs.

Congress leader Digvijaya Singh had earlier this week written to the Prime Minister asking for an investigation by the Ministry of Corporate Affairs into who funds businesses of the Purti group, set up by Mr Gadkari in 2000. Veerappa Moily, who is in charge of the ministry, had indicated that an inquiry was likely.

Mr Gadkari has offered no reason for cancelling his trip to the capital, but there are reports that he could meet the top leadership of the BJP's parent body, the Rashtriya Swayamsevak Sangh today; he lives very close to the RSS headquarters in Nagpur and is also seen as being close to the sangh.

But while senior BJP leaders LK Advani and Sushma Swaraj spoke public words of support for their party chief, yesterday, the RSS, which handpicked Mr Gadkari to be BJP president and is said to have played an influential role in him getting the second term, was tight-lipped, distancing itself from the allegations against him. The RSS is reportedly worried that the many charges Mr Gadkari faces will dent the BJP's political image perilously close to elections in Gujarat and Himachal Pradesh and in the run-up to the general elections 2014.

RSS leader Dr Manmohan Vaidya was circumspect and would only say yesterday, "It seems like a media trial. The RSS is not in the picture. Let the BJP respond to it. We have not issued any ultimatum and have not sought any explanation. The fight against corruption will go on. Nothing will affect it."

A clearly shaken Mr Gadkari, who attended the RSS' Dussehra function in Nagpur in full sangh uniform of black cap, white shirt and khaki shorts, refused to speak yesterday. Last week, he was in an NDTV studio live to answer allegations against him; he had then denied allegations that a company that he had awarded hefty contracts to as a Maharashtra minister many years ago had later returned the favour by investing in his business, defending what he called his friendship with contractors and others who had invested in his ventures. He also refuted the suggestion that his Purti group used shell investors and said he was ready for any inquiry.

Mr Advani's statement in support of Mr Gadkari was nuanced and cautious. He lauded Mr Gadkari's offer to be investigated and hoped that the government would "not use its political hostility to the BJP to colour the inquiry."

Mr Advani alleged that Mr Gadkari was the victim of a conspiracy; a UPA strategy, he said, to "paint the entire political class with the same brush to minimise and escape its unpardonable sins... This is more to neutralise the unprecedented charges against the ruling UPA." Mr Advani pointed out that "the allegations are about standards of business and not misuse of power or corruption," and said nevertheless, the BJP president had "come clean asking for an inquiry by the Department of Company Affairs. It is a fair and proper response. This shows the difference in the BJP's attitude."

But the BJP's most senior leader, who has spearheaded his party's campaign against what he calls corruption in the ruling UPA, prefaced all that by saying, "I am of the view that the BJP should be different and should not claim immunity on either scale or nature of the allegations."

Sushma Swaraj said, "Mr Gadkari has categorically stated that there is no wrongdoing and has offered himself for a probe. It is unjust and unfair to accept these allegations as true without a probe. We, the members of BJP, trust our President and stand firmly behind him."

The BJP's predicament is that it just changed its rules to hand Mr Gadkari that unprecedented second term as BJP president. The party is believed to be split in two - there are those who reportedly believe that Mr Gadkari carrying on as party chief will be increasingly untenable. But others reportedly argue that finding a replacement now will be a messier task and the party should resolutely ride out the storm.

Digvijaya Singh's letter to the PM cites a recent and exclusive NDTV report, which highlighted that several of the 18 companies that have invested in Mr Gadkari's Purti Power and Sugar are steeped in mystery - their official addresses, for example, don't check out; many of them are headquartered at the same small room in Mumbai, pointing to the strong possibility of shell investors. In some cases, different investors share directors, and Mr Gadkari's driver, Manohar Panse, is shown as a director of a company that allegedly provides Purti with shares worth a little over three crores. Then there is an astrolger, Vishnu Sharma, who is listed as a Director in Ashwami Sales and marketing and Earnwell Traders, both of which have bought over Rs. 5.5 crore worth of shares in Mr Gadkari's Purti Group.

NDTV also reported that a company which was hired for enormous infrastructure projects during Mr Gadkari's term as minister of Maharashtra's Public Works Department went on later to invest in Purti. Mr Gadkari, when he spoke to NDTV last week, denied that the investment by Ideal Road Builders Group was a quid pro quo for the massive contracts it won when he was a Maharashtra minister, or that there was a blatant conflict of interest in accepting investment from the contractor. He described DP Mhaiskar, who owns Ideal Road Builders, as a good friend.

Mr Gadkari stepped down last year as Chairman of Purti.