Fraud in America, Indian CEO on target
A company working in America’s telecommunication sector has suddenly come into limelight. And the reason is the alleged financial scam of 50 crore dollars i.e. about Rs 4,000 crore. At the center of this controversy is Indian-origin CEO Bankim Brahmbhatt, who owns companies named Broadband Telecom and Bridgevoice in America.
What is the matter?
According to the report of American newspaper Wall Street Journal (WSJ), BlackRock Inc., one of the world’s largest investment firms. An entity of and some other big lenders are now trying to get back their millions of dollars from Brahmbhatt. These creditors had filed a lawsuit in the court in August and claimed that Brahmbhatt’s companies owed them more than $500 million.
According to media reports, people associated with the case said that French bank BNP Paribas also played a role in this deal. It is being told that this bank had helped HPS Investment Partners, a subsidiary of BlackRock, in the debt financing of Bankim Brahmbhatt. However, BNP Paribas has not commented on this matter.
How did this controversy happen?
This entire matter is related to a special type of loan deal called Asset-Based Financing. In this system, companies take loans by keeping fixed revenue from their business, equipment or money received from customers as collateral.
This method is generally considered safe because the lending institution has the guarantee in the form of a real asset. But in recent years, there has been rapid growth in this sector and with it incidents of fraud and losses have also started coming to light.
What is Bankim Brahmbhatt saying?
Bankim Brahmbhatt has clearly denied all these allegations. His lawyer says that this case is only a business disagreement and not any kind of fraud or deliberate wrongdoing. At present the case is pending in the American court and investigation is going on.
Why is this case special?
This dispute is also in the news because it involves the world’s largest investment company BlackRock, France’s big bank BNP Paribas and an Indian-origin entrepreneur. The incident raises questions about a part of the US loan market that has, until now, largely remained outside regulatory oversight.