The Rs 2.2 crore bus was made to the Gadkari family's specifications and delivered for their use in Nagpur through the use of two front companies. But when the arrangement unravelled, Scania ended up out of pocket for the full amount and now faces the prospect of a criminal investigation.
Union minister Nitin Gadkari with Scania AB CEO Henrik Henriksson (left) and his successor Christian Levin (right) during a visit the Union transport minister paid to Sweden in 2017. Photo: Indian Embassy, Stockholm.
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New Delhi/Berlin/Stockholm:
Within two months of Swedish bus and truck maker Scania opening its
plant in Narsapura, Karnataka in March 2015, Union transport minister
Nitin Gadkari’s sons – Nikhil Gadkari and Sarang Gadkari – started
conversations with a company official to get a luxury bus ready in time
for a family event, according to leaked documents. An internal inquiry
conducted subsequently by Scania in Sweden called the bus transaction a “financial benefit” for the minister. And the money trail raises questions about the involvement of the family of the minister in the deal.
On March 9, 2021, when an investigation by Swedish Television (SVT), Germany’s Zweites Deutsches Fernsehan (ZDF) and India’s Confluence Media claimed that Union minister of road transport and highways Nitin Gadkari received a luxury bus from Scania for his personal use, the denial was immediate and definite.
The minister called theallegations against him and his family “malicious, fabricated and baseless”. A few days later, in an interview with The Print, Gadkari accused reporters of not doing due diligence, while noting that Scania had itself denied gifting any bus to him.The minister’s claims are misleading, if not an outright lie. There is now irrefutable proof in the form of email conversations, mobile chats, contracts, receipts and unsecured loan transfers which establish the Gadkari family’s active role in accessing the luxury bus from Scania.
Confluence Media, ZDF and SVT are in possession of (1) an internal investigation report commissioned by Scania that analysed the money trail and calls the bus a financial benefit for Gadkari; (2) email and WhatsApp communications over three years between Gadkari’s sons, companies linked to them and Scania India officials. All the communications referred to for this story have been verified by forensic experts in India and Sweden.
Scania’s internal report clearly states that according to the company’s findings, “the actual acquirers of the bus were Messrs. Nitin, Sarang and Nikhil Gadkari.”
And though the financial arrangements put together to pay for the Rs 2.2 crore bus fell apart, triggering an internal audit, sackings and the possibility of a criminal probe too, Scania’s report notes in black and white that its investigators were told by sources from the finance arm of its parent company that “they will not be repossessing the vehicle from the Minister.” (emphasis added)
The company’s investigation has established that Sarang and Nikhil Gadkari were in direct and constant touch with a top executive of Scania’s Indian subsidiary – Scania Commercial Vehicles India Private Limited (Scania India) – at every step of the bus deal. The bus in question, a top-of-the-line Scania Metrolink, was allegedly used in the lavish wedding of Ketki Gadkari, daughter of Nitin Gadkari and sister of Sarang and Nikhil Gadkari, which was held in Nagpur in December 2016.
Multiple sources within Scania AB’s offices in Sweden – including the CEO – have confirmed that the bus was meant for Ketki Gadkari’s wedding and that top Scania India employees were well aware of the real intentions behind the deal.
Internal communication between Scania India officials show that the deal of the “bus for the minister” was discussed by the highest officials within Scania. It was even put on the table in multiple meetings in the Scania India office.
While both Scania and the Gadkari brothers sealed the deal by hiding behind small, unknown private companies, there is enough evidence to indicate that the bus was actually meant for the minister and his family.
In the course of 18 months, from the time when the discussions on the deal started and the bus was actually delivered to Nagpur, Sarang Gadkari visited the Scania factory in Bengaluru allegedly to “inspect the bus”. He also visited a Pune-based private design firm, Dilip Chhabria Design Private Limited (DC Design), which modified the interiors of the bus as per the brothers’ wishes. He was accompanied by a Scania official on all the visits.
While Sarang Gadkari was regularly informed of the progress being made with the bus, Nikhil Gadkari was in direct communication with Scania executives at the beginning and the end of the deal. In fact, the requests for clearing payments for the bus also went to the Gadkari brothers, instead of to the company that actually rented the bus. And in the end, Scania was left scrambling to cover the costs of the bus.
“The evidence supports the allegation that a customized luxury bus was provided to the family of the Transport Minister of the Republic of India and that the bus, to date, is not fully paid,” notes the Scania internal investigation.
In damage control mode after the story first broke on ZDF and Swedish national television, a Scania spokesperson made three points in response to queries from the Indian Express and The Hindu:
“Scania India has not gifted any bus to Minister Gadkari. There is nothing in our investigation showing that the Transport Minister personally has been involved in Scania’s sales of the bus you are referring to…Scania India sold the bus to one of its private dealers, which in its turn rented it (or sold) to a bus transport company.”
Nitin Gadkari has cited these statements by the Scania spokesperson and his office has gone one step further denied any link between his family and the firm that had the bus. “Shri Gadkari and his family members have absolutely nothing to do with the purchase or sale of the bus,” his office told The Wire on March 10. “Nor do they have anything to do with any firm or individual who might be linked with the purchase or sale of the bus.”
This claim is completely false.
Apart from emails about the bus between Gadkari’s sons and Scania officials, documents show that a company run by Sarang Gadkari, Manas Agro, where Nikhil Gadkari also holds an important position, gave an unsecured loan to the Sudarshan Hospitality, the company which took the bus on lease. The timing of this loan suggests it was presumably extended to cover a part of the security deposit for the bus, which was overdue and which Scania was pressing the Gadkari brothers to take care of.
The flow chart below shows the connection between Nitin Gadkari and his sons, on the one hand, and the two companies formally handing the luxury bus.
Flow chart showing the connections between Nitin Gadkari and the luxury bus that Scania’s internal investigation claims was gifted by the company to the minister.
Scania’s internal investigation does not give a clean chit even to the company that financed the bus – Volkswagen Finance Private Limited (Volkswagen Finance). It notes that Volkswagen knew the bus was for the minister and that it deliberately did not check the backgrounds and the financial stability of the companies involved in the transaction before sanctioning the loan that was used to pay for the bus. Volkswagen Finance is part of the Germany-based auto company, Volkswagen AG. And Volkswagen AG is the parent company of Scania AB.
Once the bus was delivered to Nagpur, the full security deposit and rent which became due was never paid either by the front company or by the Gadkari family. As a result, the company which had purchased the bus from Scania started defaulting on the loan it had taken from Volkswagen Finance. And eventually, the entire burden of the bus, its expensive modifications and the piling interest on the loan, fell on Scania, which had provided a 100 percent guarantee for the loan amount.
In the end, Scania covered the cost of the luxury bus from its own pocket and, despite strong evidence, never reported the unusual and improper transaction to the authorities either in Sweden or in India.
The denial and the lies
The allegation of corruption linked to the sale of the customised Scania Metrolink K410 bus with reclining red leather seats, pantry, vinyl flooring, changing room, music systems and television sets among many other luxuries, was first brought to the notice of the Scania Group Internal Audit (GIA) team in November 2017.
The team, with its members in Sweden and Germany, concluded in November 2018 that the bus constitutes a financial benefit to the minister and his family.
“GIA finds that the bus constitutes a financial benefit, which was provided to Mr. Nitin Gadkari and/or his family members. The extent and value of the financial benefit should be subject to a legal assessment,” it notes.
The audit reached this conclusion after unpacking the complicated purchase and lease arrangements that were put in place by Scania India in order to mask the ultimate beneficiary of the transaction.
The bus was sold by Scania to a Bengaluru-based transport company called Transpro Motors Private Limited in 2015. It was then modified by two private Indian companies, one of which is DC Design, and given on rent to a hospitality firm based in Nagpur called Sudarshan Hospitality Management Services Private Limited in November 2016.
The GIA states, “Transpro Motors was merely a front for the deal. His details appear on the paper work but he had no actual connection to the bus. Similarly, Sudarshan was merely a front for the rental agreement with Transpro Motors.”
The bus was funded by Volkswagen AG, through a loan from its Indian subsidiary, Volkswagen Finance Private Limited. The deal happened through Scania Commercial Vehicles India Private Limited, which gave a 100 percent guarantee for the loan.
The full instalments for the bus remained unpaid till the end of the lease period. As a result, the burden of the entire deal, which amounted to Rs 2.2 crore, fell on the Scania India office.
Volkswagen Finance says it has reclaimed the bus and recovered the cost. Though it has recovered the cost from Scania, it has not been able to produce any evidence to support the claim that it reclaimed the bus. Scania, on its part, is silent on whether it has been able to recover the money it had to fork out to cover the loan guarantee it extended to Transpro.
Scania
India Managing Director Mikael Benje, Scania AB executive vice
president, sales and marketing Christian Levin and Union transport
minister Nitin Gadkari, at the Scania office in Sweden on June 15, 2017.
Photo: Embassy of India, Stockholm.
Two days after the story about the Scania luxury bus and how it exchanged hands to reach the alleged actual beneficiary was released by ZDF, SVT and Confluence Media, a lawyer representing Nitin Gatkari sent a letter to SVT asking that the story be taken down. SVT refused.
Back in India, Nitin Gadkari’s office called this an “internal matter of Scania” and said that the minister and his family members have nothing to do with either the purchase or sale of any Scania bus, or any firm or individual who might be linked with its purchase or sale.
While the minister has washed his hands off the deal, Scania, on the other hand, tried to mislead the media by claiming it had taken action against all senior employees involved in the transaction.
However, a deeper dive into the claims made by Scania AB confirms that the company not only suppressed the internal investigation report on the alleged corruption for two-and-a half years after it was submitted with supporting evidence, but also retained some of the indicted employees.
Even now, Scania AB and Volkswagen AG – the companies which sourced and financed the sale, respectively – are giving conflicting accounts of where the luxury bus is now and who its owner is.
How the bus deal was set up
Scania AB incorporated its Indian office in 2011 in Bengaluru, Karnataka. Eyeing India’s large market for heavy vehicles, in March 2015, the company inaugurated its bus and truck manufacturing factory in Narsapura, on the outskirts of Bengaluru, with an investment of Rs. 300 crore.
It was flagged as one of the big successes of Prime Minister Narendra Modi’s Make in India campaign launched in his first year in office in 2014.
enior BJP leader Nitin Gadkari, took charge as the minister for road transport and highways in Modi’s cabinet the same year.
The conversation about the luxury bus started in the first week of June 2015 – two months after the Scania bus manufacturing unit in India was launched – between the director of sales in the Scania India office, V Sivakumar, and ‘Nikhil’ from the Purti Group.
Sivakumar emailed Nikhil on his official email ID on June 6, 2015, attaching pictures of a Scania 7 Star Luxury Camping Coach, asking if Nikhil requires any specific preferences or modifications.
“I will meet you personally to finalise the same. We will give you specially crafted graphics as per your choice along with interior colour themes as per your choice,” wrote Sivakumar, a seasoned salesman who had moved to Scania in 2012 from a competitor firm.
First email conversation between Scania and Nitin Gadkari’s son, Nikhil Gadkari, in June 2015.
The GIA established that ‘Nikhil’ in the email is the son of Union transport minister Nitin Gadkari and that Nikhil and his brother Sarang were at that time running the Purti Group, which Nitin Gadkari founded in 1995.
Sivakumar, who played a key role in ensuring that the deal goes through smoothly, then took the bus conversation to DC Design, a private design firm based in Pune, Maharashtra.
On July 30, he wrote to a senior representative of the Pune firm informing him that Sarang Gadkari will visit him on August 2, 2015 to discuss the layout and design for the Scania bus.
“Reference to my telecom with you, me and Mr. Sarang Gadkari will be in Pune this Sunday (2nd August’15) to discuss on layout and design for Scania Metrolink Camper Coach on Scania buss shell of 14.5 M. ….Kindly keep the draft layouts and design ready….We will meet you at 11 am at your factory in Pune,” Sivakumar wrote, attaching an illustration of the camper coach layout.
Email from Scania to DC Design about the August 2015 visit of Nitin Gadkari’s son, Sarang Gadkari.
By then, discussions were in full swing within the Scania India office on how the deal is an important milestone for the company. On November 17, 2015, Scania’s sales strategy executive at the time looped-in 10 people, including the then director, production buses and coaches Helmut Schwartz, Scania India CFO Ulf Fromholz and Sivakumar in an email thread called ‘Metrolink for Mr. Gadkari’. Others on the mail were the then order manager, director bus and coach and head of project office.
The
executive wrote: “The chassis allocated for Scania 14.5m Metrolink bus
for Mr Gadkari bus is 1890275. Request to kindly the start the
activities so that we can deliver best quality bus by
mid-December’15…..Mr Gadkari wants the bus to be delivered by mid
December’15.”
Schwartz objected as the bus being demanded was in the final stages of production and its specifications could not be changed. To this, Arun Rengasamy, then manager of sales, strategy and rentals, replied that if Scania needs to deliver the bus by 15th December, they need it immediately. This, according to Rengasamy, was decided in the management meeting.
Sivakumar supported Rengasamy and replied on the email thread, “This is a very important milestone for us. The transport minister has been waiting for this Bus of ours. December mid is very crucial since he wants to have this bus during a very important family event…..I have to be ready with the proposal by 23rd Nov for discussions with them.”
Six minutes later, Scania India’s order manager (whose name we are withholding as we have not managed to contact her for this story) replied, “If The Transport Minisiter [sic] has been waiting for this Bus, how come we have not seen the order until now??? Where have this order been waiting?”
“This is a rental there will be no order from him”, Sivakumar explained in response, adding, “We have been discussing on this bus for the last one month and raised in every PMM (product management meeting),” he wrote.
Email of internal discussions within Scania India where the bus for the minister is described as a ‘rental’. Note: Some of the names of junior employees and those who could not be contacted have been redacted. Highlights added.
One week later, on November 26, 2015, Sarang Gadkari visited the Scania India factory. A day before the visit, Sivakumar emailed six Scania India staff to make arrangements. “Tomorrow Sarang Gadkari Son of Nitin Gadkari Union Minister will visit our factory. He will spend time till lunch with us then I will be accompanying him to Excon venue,” he wrote.
He added Gadkari’s agenda for the visit: “Visit to factory Truck and Bus. Inspection of Shell Bus of theirs. Richard and Helmut to support”. Richard Wardemark was then director, service operations. Both of them were marked on the mail.
Internal Scania email detailing the factory visit of Sarang Gadkari. Highlights added.
We emailed Schwartz, Wardemark and Rengasamy but received no response.
Bus for a ‘very big man’
The bus was clearly not ready to be delivered by mid-December, 2015. But Scania India had definitely made progress in not just getting the shell bus reserved for the special deal, but also found a buyer for the bus.
A day after Sarang Gadkari’s visit to the Scania factory, Nikhil Gadkari visited the Bangalore International Exhibition Centre along with Sivakumar. There, the duo met M.K. Lakshminarayan, owner and director of a private transport company based in Karnataka called Transpro Motors Private Limited. Scania had appointed Transpro Motors as its agent for bus sales just two months earlier, on October 1, 2015.
At the exhibition, Sivakumar and Nikhil Gadkari wanted to discuss an “opportunity” for Transpro Motors to buy a bus which would be used by a “very big man”.
“Lakshminarayan was reluctant to mention the name of the supposed user, but informed GIA that it concerned a Minister,” notes the Scania GIA.
In no time, Transpro Motors, a firm which was just a year old (incorporated in FY 2013-2014), came on board. On November 30, 2015 – four days after Sarang Gadkari visited the Scania factory – Transpro Motors issued a purchase order for the shell bus from Scania for Rs. 1.2 crore (Rs 1,20,13,133), on the insistence of Sivakumar, notes the GIA.
In its records, Scania made it appear like a regular sale deal. It was registered as sale made to a private dealer at a profit of approximately Rs. 4 lakh. Hence, from that day on, the bus ceased to be Scania’s property.
But according to the GIA, the payment for this sale is reflected in Scania’s books on September 21, 2016 – more than 10 months after the bus was sold. And the amount paid to Scania was only Rs 1,19,61,505, and not Rs 1,20,13,133.
No written sales agreement between Scania India and Transpro Motors was found by the GIA till the end of their investigation.
The GIA notes that Sivakumar, at the time of getting the purchase order from Lakshminarayan, also told him that Volkswagen Finance has agreed to fund the shell bus and interior modifications.
“We will support you with the necessary brand guarantee for the same,” Sivakumar wrote in an email to Lakshminarayan. And a month later, Lakshminarayan received the list of documents from Scania’s regional manager for bus sales to be submitted to Volkswagen Finance for the application of a loan.
On December 24, 2015 a final version of the bus layout called ‘Scania Proposal 8’ was sent to Sarang Gadkari on his personal email id by Sivakumar and he was assured that the bus would be ready by mid-January 2016.
Email from Scania to Sarang Gadkari detailing the final options for the bus. Highlights added.
The proposed bus, the mail attachments suggested, would be fitted with an Asus media player, three TV sets – 40-inch Sony, 29-inch Sony and Carbon TV, Electrolux refrigerator, IFB microwave oven, Café Coffee Day coffee maker, Asus or Sony amplifier, wash basin, cordless mic, call bell switch, mobile charging points, inverters, CCTV cameras, Wifi system, pantry, wardrobe with full length mirror and chemical toilet among other fittings. The cost of the toilet cubicle alone was quoted as more than Rs 14 lakh.
In February and March 2016, Sivakumar sent Sarang Gadkari pictures of the options for the interiors of the bus. The interior and exterior work on the bus was given to two companies, one of which Sarang Gadkari visited in August 2015.
It is worth noting that the head of sales of Scania India was making promises of bus delivery to a person who, on paper, had no link to the bus, which was no longer Scania’s property. But clearly these technicalities were bypassed by both parties.
Erasing the paper trail
On May 11, 2016 Scania released a fresh invoice in the name of Transpro Motors for Rs 1.8 crore, which had the cost of modifications included. The bus worth Rs 1.2 crore now required additional modifications worth Rs. 68 lakh, and Transpro Motors would bear this cost as well.
Scania’s internal audit noted, “It appears from the communication that the invoice was issued as per the recommendation and direction by the then Managing Director of Scania India, Mr. Anders Grundströmer. It is also clear from the communication that the bus was “to be used for Nagpur”,” it says. (emphasis added)
But even though the invoice was in the name of Transpro Motors, the Gadkari brothers were deeply involved in the conversations about the bus.
On May 14, 2016, Sivakumar forwarded a quote sent to him by DC Design to Sarang Gadkari, asking for his advice. And by the first week of June, discussions started within the Scania India office about completing the work on the bus.
Sivakumar wrote to Ulf Fromholz and Grundstromer’s successor Mikael Benje, among others, explaining how this deal is important for the company and that the top management is very much in the know of the deal. He added that the transaction is routed through a dealer.
Scania internal email: The bus is going to “a very important stake holder”. Highlights added.
He wrote, “This is going to be a very important stake holder the details of which are known to Mikael Benje. For ease of handling this transaction as decided in meetings is routed through our dealer. The conversion work which is in final stages is going on for last few months which is in final stages now. Mikael we discussed on this. The bus has to move on priority to DC Design for final work.”
Fromholz replied that they need to support Transpro Motors in this deal. To this Sivakumar agreed and said that the bus will go to Nagpur as a “one off proposal”.
We reached out to Grundstromer, Fromholz and Benje. All of them refused to comment.
The bus with chassis number 1890275 and with invoice no 2015-16/CEI/NF/0427 then moved to DC Design’s workshop.
Eight days later, on June 18, 2016 Sivakumar informed the representative from the Pune firm that Sarang Gadkari wants to visit Pune. This was Sarang Gadkari’s second visit to the DC Design factory. Phone chats between Sivakumar and Sarang Gadkari reviewed by the GIA confirm that Sivakumar was constantly updating the Transport Minister’s son about the work done by the design firm. Sarang Gadkari was also regularly asking Sivakumar for updates.
Chats between Scania official and Sarang Gadkari on the outfitting of the interiors of the bus.
On July 9, 2016, the representative from DC Design sent a final quote for the customisation of the bus to Sarang Gadkari on his personal email ID and not to the real owners of the bus – Transpro Motors.
He wrote: “Please find attached herewith revised final quote towards interior customisation of Scania bus as per the interaction had with you and Mr Sivakumar today morning. We would request you to kindly treat this offer as an exception rather than a precedent.”
Though Sarang Gadkari or anyone else from the Gadkari family was not the official owner of the bus, the final cost of the interiors was sent to him for approval by DC Design, Pune.
The quote was for more than Rs. 67 lakh. Sivakumar was copied on the email and Transpro Motors was kept out of these negotiations.
In less than 24 hours, Sivakumar replied to the DC Design representative that he can go ahead and start the work as per the specifications he had discussed with Sarang Gadkari. Gadkari was copied on the email.
The purchase order would be issued by the buyer/operating company (i.e. Transpro Motors) which Scania would finalise within a week, Sivakumar added. On July 15, 2016, as smoothly as everything else was flowing, Lakshminarayan gave his written approval to DC Design’s final quote.
With the bus in the garage for a makeover, it was now time for a final contract to hand over the bus to the Gadkari brothers.
On August 3, 2016, Volkswagen Finance sanctioned the loan for the shell bus, body fabrications and interior designs to Transpro Motors. The total loan amount sanctioned was Rs. 2.18 crore (Rs. 2,18,91,299) (Rs 1,20,13,134 for the shell bus + Rs. 22,19,849 for body fabrications + Rs. 76,58,316 for interior designs).
Let us rewind a bit before going further: The sale of the bus happened in November 2015. The loan went to Transpro Motors in August 2016. And the GIA notes that Scania shows in its books that it received payment for the bus in September 2016. So it all adds up: Transpro Motors could pay Scania only after it received money from Volkswagen Finance.
On September 19, 2016, Sivakumar informed Sarang Gadkari via an iMessage that the payment transfer (by Volkswagen Finance) would be completed during the day. For reasons that are not clear, Sarang Gadkari asked for the RTGS number.
On October 27, 2016, Lakshminarayan sent a draft rental agreement to Sarang Gadkari and on November 11, 2016, Transpro Motors officially entered into a bus rental contract for three years – from November 11, 2016 to November 10, 2019 – with a Nagpur-based customer.
This Nagpur-based customer, however, was neither Sarang nor Nikhil Gadkari. It was a private company working in accommodation and food service work called Sudarshan Hospitality Management Services Private Limited. On paper, both Nikhil and Sarang Gadkari have no link to the company.
Sudarshan Hospitality, or its owners or directors, till date had not appeared in even a single conversation related to the Scania Metrolink bus. But one of the two directors of Sudarshan Hospitality, Priyadarshan Vivek Pande, came forward to sign the contract papers. Sivakumar signed the document as a witness.
Sudarshan Hospitality and the Gadkaris
Sudarshan Hospitality opened for business on June 9, 2015 – less than a week after the first discussion about the luxury bus started between Scania and the Gadkari brothers. By the end of that financial year, the company’s profit and loss account was absolutely clean.
Sudarshan had no sales and hence, no income. The firm’s bank balance was less than a lakh (Rs. 98,892) and its turnover, zero. The net worth of the company was negative (Rs. -2,01,108) when it signed to rent a luxury bus for a hefty sum.
According to the rental contract, Sudarshan Hospitality had to pay Transpro Motors a security deposit of Rs. 1.2 crore which would be an interest free refundable security deposit. Transpro Motors would have to return the deposit at the end of the lease period of 36 months. The GIA notes that according to Lakshminarayan of Transpro, this amount was to be paid in three instalments of Rs 40 lakh each, starting November 2016.
In addition to that, Sudarshan Hospitality had to pay a monthly rent of Rs. 20,000 to Transpro Motors. For the entire lease period, this amount was Rs. 7.2 lakh. If the rent was overdue for more than 60 days, the bus’s owner (Transpro) could take legal recourse and repossess the vehicle.
Coincidentally, in the same year that Sudarshan Hospitality signed the bus rental deal, it received an influx of funds from a company run by the Gadkari brothers in the form of an unsecured loan of Rs. 35 lakh from Manas Agro Industries and Infrastructure Limited.
Sarang Gadkari became Manas Agro’s wholetime director on June 15, 2016.
The firm falls under the larger group of companies called Manas Group. Nikhil Gadkari is an advisor and a member of the management council of Manas Group. His role in the company is described as the overall in-charge of running the affairs of the company.
Screenshot from Manas group website.
On January 26, 2018, in an attempt to justify possessing and using the bus, Sudarshan Hospitality posted four photographs of the luxury bus on its Facebook page, without any description or even pitching an offer to customers for the bus hiring services. These are the only photographs on its Facebook page.
This photo is from Sudarshan Hospitality’s Facebook page. It has just one photo of Nitin Gadkari sitting in a luxury bus whose interiors look like the one described in the Scania emails but it is not known if this is the same bus. Photo: Facebook/Sudarshan Hospitality
By the end of FY 2017-18, Sudharshan Hospitality was spending more than it was earning. It suffered a loss of Rs. 82,132. It had also not paid back any money for the loan taken from Manas Agro Industries.
In the next two financial years, Sudarshan Hospitality’s auditors flagged in their reports that the unsecured loan of Rs. 35 lakh availed from Manas Agro Industries is not within the ambit of the law. The auditors could also not verify if the lenders of the loan had abided by the law.
The report noted, “Declaration regarding the unsecured loan is obtained from the directors and related parties. The same has been accepted in good faith. There is no other alternative to verify the relationship as well as compliance of section 185 & 186 (of The Companies Act, 2013) for the lender party.”
Section 185 of the Companies Act, 2013 prohibits companies from advancing any loan or giving any guarantee or any security in connection with a loan taken by the directors of such company or any other person in whom the directors are interested. Section 186 says that a company which has defaulted in repayment of any deposits accepted by it or in payment of interest on deposits, shall not make any loan, guarantee, investments or security till such default is subsisting.
Sudarshan Hospitality’s auditor made other observations as well. It said in March 2019 that the company owns a bus which generates negligible revenue. But the firm keeps claiming depreciation on it. The explanation provided to the auditors was unsatisfactory. “The transaction draws suspicion regarding the authenticity and validity of the transaction,” say the auditors.
The reporters reached out to Sudarshan Hospitality and sent a detailed questionnaire regarding their role in the Scania luxury bus deal and their links with the Gadkari family but received no response.
The flow of money… Or the lack of it
As soon as the contract for the bus was signed, the money had to start flowing. First, from Sudarshan Hospitality to Transpro Motors and second, from Transpro Motors to Volkswagen Finance.
While Sudarshan Hospitality had to pay Rs. 20,000 as rent to Transpro Motors every month, Transpro Motors’ monthly instalment to Volkswagen Finance was of Rs. 3,71,828 lakh. This is 18 times the rental fee they had to receive from Sudarshan Hospitality.
We spoke to two private transport operators about how the rental contracts for luxury buses are designed. In a regular rental deal for a customised, brand new premium category bus, the rent would be in lakhs, they said. This includes the running cost, cost of hiring a driver and a helper, maintenance and a profit margin. Under no circumstance will the owner of the bus quote a rental rate for the bus that is lower than the EMI he or she is paying for the vehicle.
A monthly rent of Rs. 20,000 for a bus costing more than Rs. 1.8 crore is impossible, said one of the dealers.
Despite this glaring gap in the transfer of funds, the contract, signed between two private parties, could have easily masked the real purpose behind the deal had the money owed actually been transferred as promised. But with the bus now effectively handed over to Nagpur, Transpro Motors’ book entries remained blank.
Eleven days after the bus lease contract was signed, a message was sent to Sarang Gadkari asking for Rs. 30 lakh, presumably for the first instalment of the bus. The sender of the message is unknown according to the records with the GIA.
The next day, i.e. November 22, 2016, Sarang Gadkari replied, “100 % that will make done tomorrow.”
But when the money was not transferred as promised, Sivakumar nudged him, “Sir payment not received in credit of Transpro he is quite struggling since his instalment is also due to financier kindly oblige.”
Transpro Motors received the first instalment from Sudarshan Hospitality on November 23, 2016. But instead of Rs. 40 lakh, the amount sent was only Rs. 25 lakh. A day later a message is sent to Sarang Gadkari by an unknown number thanking him and confirming that the payment is received by Transpro.
As Transpro struggled to meet its debt servicing obligation, Scania pushed Sarang Gadkari to make a payment of Rs 30 lakhs.
By the next month, the amount due to Transpro’s Lakshminarayan was Rs. 55 lakh (i.e. 80 – 25) for the security of the bus and Rs. 40,000 for two months’ rent. He waited patiently till the end of December 2016. But his account’s balance was stagnant at Rs. 25 lakh.
His frustration with the deal was now evident. He wrote an angry email to Sivakumar, who had steered the entire process and had brought Transpro Motors on board.
“If Pandey [of Sudarshan Hospitality, who had signed the rental contract] not paid second instalment by tomorrow, ,,I want to discontinue that agreement by serving notice, I will take back that bus,, and I run myself,, ,, This is breach of contract which was signed,, ready to face any consequence,, Please tell him, he is not kind enough to take my call or reply my message,,I am serious,,till 4th January 2017 , I will wait , then I will go with legal,,” wrote Lakshminarayan to Sivakumar on December 30, 2016.
Email in which a Scania official says he will raise the issue of non-payment with the Gadkari brothers in an attempt to pacify Lakshminarayanan of Transpro Motors, who realises he is being strung out to dry.
Sivakumar asked him to write an email to Sarang Gadkari, copying him. He assured Lakshminarayan that he will pursue the matter with both the Gadkari brothers.
“I will forward this mail also to Sarang so that he knows the situation. Let’s take him on call today morning,” Sivakumar wrote.
Immediately after this email exchange, Sivakumar aggressively followed-up with the Gadkari brothers to get Transpro Motors’ payments cleared. He had frequent chats with Sarang and Nikhil Gadkari, notes the GIA.
On Jan 2, 2017 Sivakumar sent an SMS to Sarang Gadkari: “Dear sir LAKSHMI NARAYAN is under tremendous stress on payment to financier since he has also invested on margin money payments to financier. Request your kind support for transfer of payment to his account Kindly help,” he wrote. Sarang Gadkari did not respond.
On February 17, 2017, Transpro Motors received another Rs. 10 lakh from Sudarshan Hospitality. The amount due to Transpro Motors now was Rs. 85 lakh (Rs 1.20 crore minus Rs 35 lakh) for the security deposit and Rs. 80,000 for four month’s rent.
In March 2017, Sivakumar sent at least four reminders via Nikhil Gadkari’s Apple iMessage and one SMS to Sarang Gadkari requesting them to settle Transpro Motors’ payments. He even attached a photo of the terms and conditions of the contract.
On March 20, 2017 he wrote to Nikhil: “Sir tried calling you request your kind consideration on the payment due to Lakshminarayan. He is under tremendous pressure from financier who has sent a repossession notice kindly oblige sir with a transfer of the instalment due.”
On March 24, 2017 he again wrote to Nikhil: “Sir request your help financier has issued notice to lakshminarayan kindly help him with payment by tomorrow.”
On March 28, 2017 he messaged both Nikhil and Sarang Gadkari: “Dear sir very humble request please sir please sir the financier has sent a legal notice to lakshminarayan kindly help him with transfer today sir Else he will be in problem sir inspite of helping us.”
Scania official sends a series of messages to Nikhil and Sarang Gadkari pleading for payment to be made to Transpro.
Three days later, Laxminarayan received another Rs. 25 lakh from Sudarshan Hospitality. The latter still owed Rs. 60 lakh for the security deposit and the rent for the bus had now mounted to Rs. 1 lakh. Despite being set so low, the rent for the bus had not been paid even once.
The culprit in this whole game now became Lakshminarayan – the loan defaulter. For a month from April 10, 2017, Laksminarayan and Sivakumar exchanged a thread of emails about the loan money Transpro Motors was not able to repay.
Lakshminarayan explained that as of April 2017, he had only received Rs. 60 lakh from Nagpur when he should have received Rs. 1.2 crore by January 2017. He had also not received Rs. 7.2 lakh in 12 instalments as some sort of commission from Scania. He felt that he was being taken for granted. Sivakumar assured him that they can meet and discuss the matter.
The same day, Sivakumar messaged Nikhil Gadkari and asked for his intervention in releasing Rs. 25 lakh. “Sirji request your intervention still 25 laks out of last months amount indicated by Amithji is pending kindly oblige sir Lakshminarayan is tremendous financial stress since he has borrowed for the bus,” he texted.
The GIA notes that on June 30, 2017 Scania inquired with Volkswagen Finance whether the loan for the bus could be transferred to a company called Travel Time Car Rental Private Limited (Travel Time) as Transpro Motors was “not cooperating”. This request of transferring the loan was declined by Volkswagen Finance.
Travel Time is a private transport company based in Pune, Maharashtra and it had taken the dealership of Scania’s buses in the state, just like Transpro Motors was Scania’s dealer in Karnataka.
On March 20 and 24, 2017, two instalments of Rs. 12 lakh and Rs. 3 lakh, respectively, were transferred to Transpro Motors by Travel Time. Lakshminarayan told the GIA that this money was financial support for the bus. But in Transpro Motors’ books, the GIA notes, it is recorded as payment for services, and has no link to the payment for the bus.
We contacted Travel Time regarding the money they paid to Transpro Motors. Vivek Kalkar, one of the two directors of the company replied, “We are rather surprised to see that Scania has involved our name in their wrongdoings (if any). We have never benefitted anything from of any kind of relationship with any Minister that you have mentioned. We outright reject all the allegations levelled against us which we find defaming and slanderous.”
On December 1, 2017, Nikhil Gadkari informed Sivakumar on SMS that in 15 days, final balance amount would be paid. But when by December 26 no money reached Transpro Motors, Sivakumar was back to him with his begging bowl.
“The dealer is under tremendous stress and not settled three instalments to VW finance. You were kind enough to ensure that the payments will be settled before 15th December 2017. Kindly help in this sir since dealer Transpro is mentally and health wise affected on this please please sir kindly oblige,” Sivakumar wrote.
The pleadings fell on deaf ears.
By now it was clear to both Transpro Motors and Volkswagen Finance that they will not receive any further payments for the bus.
Meanwhile, Transpro Motors had been repaying Volkswagen Finance the loan EMIs since October 2016 and it could only scramble to pay Rs. 44.91 lakh (Rs. 44,91,936) till November 2017. This was only a fraction of the amount it had borrowed and 75 per cent of what was paid to them by Sudarshan Hospitality.
On October 12, 2018, the head of department for credit assessment of Volkswagen Finance wrote to the senior manager of retail finance and credit control in the Scania India office that Rs. 2.21 crore is the outstanding amount against Transpro Motors. Since Scania India had offered brand guarantee for this loan, and the borrower has failed to pay instalments, Scania should pay that amount.
In Volkswagen Finance’s books, Transpro Motors was declared a non-performing asset (or a bad debt) as on September 30, 2018. As on October 4, 2018, the outstanding debt was of Rs. 2.22 crore (Rs. 2,22,07,299).
Even from the beginning of the deal, which was tilted in the favour of Sudarshan Hospitality, what did Transpro Motors hope to gain from it? Why did it enter into the deal in the first place? Was Transpro Motors also promised future gains for helping this deal with a ‘very big man’ get through?
A journey full of deceipt
When the story about the Scania luxury bus for the minister’s family first appeared, Nitin Gadkari’s office tweeted a quote from Scania’s spokesperson Hans-Ake Danielsson on the deal. Danielsson had said: “No, this particular bus was purchased from Scania India in 2016 by one of the company’s private dealers who delivered it to one of its customers (an Indian bus operator).”
The Indian Express quoted Danielsson as saying, “ I have no information about the current status of the bus” and added that Scania (through Danielsson) “also denied engaging in any business deal with any [person/company] connected with Gadkari’s sons.”
In a subsequent interview to Shekhar Gupta of The Print, Nitin Gadkari referred to this news report and the quote to absolve himself and his family from the improper deal. He called it an internal matter of Scania.
File photo of Prime Minister Narendra Modi and transport minister Nitin Gadkari. Photo: PTI
Asked to confirm the statements he was quoted as making, Danielsson admitted that though his quote was fine, the other statement used in the Indian news reports was misleading.
He said, “I recognise and stand for the quote. However, the interpretation of what the family’s representative does appear to be slightly misleading, since both you and I know that the bus company that rented the bus from Transpro was run by a close relative.” (translated from Swedish)
He reiterated in the email thread that Sudarshan Hospitality is the company connected to the transport minister’s son and that Scania has been able to establish that the bus was “rented” by the minister’s son.
“We also know that the Minister has used the bus for private use, as at the daughter’s wedding, but the explanation for this may be that the Minister hired a bus company (his son) to handle the transport at the party,” he added, “We have not be able to prove that the minister received the bus as a gift.”
He added: “Do you really think that a likely well-to-do Indian minister would receive a bus as a gift, especially if he could get help with bus transportation at buddy price from a son who runs a bus company?”
We have the same question – if Nitin Gadkari or his sons needed a luxury bus for the wedding, why didn’t they just buy or rent it directly? After all, the Union minister has assets according to his submission to the Election Commission in 2019, worth Rs 24 crore. His sons’ companies had a turnover of Rs 1,100 crore, which the minister himself announced in a public speech in 2018. Then why put Sudarshan Hospitality in front to rent a Rs 2 crore bus?
A possible answer to this – which came to us from two sources, one in Scania’s Sweden office and the other in the transport business in Nagpur – is that perhaps the minister and his sons wanted the bus for their personal use and the wedding was just one of the occasions where the family wanted to use the luxury vehicle. Both the sources chose to be anonymous.
But
even then, if Nitin Gadkari and his family wanted a bus for their
personal use, why didn’t they just buy or rent it directly instead of
striking an opaque deal with a multinational company whose line of
business would obviously raise questions of conflict of interest for
someone who happens to be India’s transport minister?
Danielsson is not the only one from Scania who has spoken about the minister’s link to the bus.
On February 26, 2021, before the investigative story was aired, Scania CEO Henrik Henriksson gave a video interview to SVT in Sweden and said that the company has information that the bus was used at a wedding for one of the minister’s daughters.
He added that the senior Scania employees in India wanted to hide this deal from the higher management abroad.
“So this was a deal that should never been done. And it is a deal where we have sold a bus to one of our private dealers, and they in their turn then sold it to a transport company that has personal connections, family connections to a minister in India. And this our system should have picked up, and warning bells should have signalled to us. But it did not do so, because the system was bypassed by Scania employees, senior people in India, because they did not want to show that this transaction was completed,” said Henriksson.
“They evaded our rules that we had set up, documentation was missing and they had tried to avoid informing us,” he added, putting the blame of the deal on the Scania India office.
Henriksson explained in the interview that as soon as Scania in Sweden found out about the corrupt deals, it cleaned the system and terminated those who were found guilty. He added that Scania, in fact, shut down the bus manufacturing unit in Narsapura which affected thousands of jobs, because of corruption.
The truth is, when in June 2018 Scania halted its bus manufacturing unit in India, it was due to poor sales and not because of corruption as claimed by Henriksson. This was reported by the media then and two of Scania’s bus agents in India confirmed this to the reporters.
And if we believe Henriksson, then did Scania show poor sales as a cover-up for the corruption in its India office?
A former Scania employee who was laid off citing the closing of the bus plant as a reason, says that the required paperwork to close the plant officially was never submitted by Scania to the Karnataka labour department.
Henriksson also mentioned that people found guilty of corrupt deals in the India office were terminated. But the timelines of the top Scania India officials leaving the company don’t match with the time GIA submitted its findings. Some others were promoted to higher positions or other countries, and are still employees of Scania.
Sivakumar, the alleged kingpin behind the bus deal, left Scania in March 2018, more than six months before the GIA report. He joined a company which had a contract with Scania to produce bus coaches.
We could also confirm from two former Scania India employees, one of whom was in the HR department, that Sivakumar was not terminated over corruption charges. He resigned, with a fat sign-off package. The sources add that right before Sivakumar left Scania he was allegedly called to the Volkswagen AG office in Germany twice.
Multiple efforts were made to contact Sivakumar. We requested a meeting in person, which he declined. When contacted on phone, he said that he left Scania many years ago and would not like to comment on the matter. He did not respond to the detailed questionnaires sent multiple times.
Helmut Schwartz and the sales strategy executive who had circulated the email titled ‘Metrolink for Mr. Gadkari’ in 2015, left Scania in July 2017. Anders Grundstromer left Scania India in September 2016 and stayed in the Sweden office till July 2017. The three of them quit Scania more than a year before the GIA findings came out. (As per their LinkedIn profiles)
Richard Wardemark left the Scania India office in October 2018, but he is now the managing director of Scania’s Finland office – SOE Busproduction Finland Oy, as per his LinkedIn profile.
Ulf Fromholz, who was CFO Scania India, was informed on January 11, 2018 that he will be fired as per the information with the SVT reporters. But till June 2018, he was working at the Scania Production Zwolle in Netherlands.
Mikael Benje became the Managing Director of the Scania India office in January 2016 and in March 2018, he took over as the team leader, defence, in the Sweden head office of Scania. Volkswagen AG informed us that he no longer works for the Scania group.
Jimmy Renström, who took over as the CFO of Scania India on July 1, 2017, moved to Scania China two years later. When approached by the reporters, Renstrom declined to comment.
Arun Rengasamy rose rapidly in the Scania India office and is now the general manager, sales operations, as per his LinkedIn profile.
Did Scania retain a few employees who allegedly knew of the corruption within the India office? And did it remove those accused of the corrupt deal even before the GIA investigation was complete? Does this imply that Scania Sweden knew of the corruption? If the involvement of the top management in the Scania India office in the corrupt deal was the reason for their termination, why was the matter not reported to the police or any other investigating agencies either in India or in Sweden?
We also met Lakshminarayan in Bengaluru, but he refused to comment. He said that Transpro Motors is folding its business in Hobli, Karnataka, handing over its factory to Scania and leaving Bengaluru for good.
Nitin Gadkari and personal secretaries at the ministry of road transport and highways were contacted four times between February 11 and 26, 2021 for this story. An interview was requested and detailed questionnaires sent. There was no response from Gadkari’s office.
Detailed questionnaires were also sent twice to both Sarang and Nikhil Gadkari. But no response was received.
Questions were also sent to DC Design, but we received no response.
Where is the bus now?
Technically, with Transpro Motors defaulting on the loan, the bus should have been repossessed by the loaning company, i.e. Volkswagen Finance Private Limited.
Even before that, according to the contract, as soon as Sudarshan Hospitality started defaulting on its payments, Transpro Motors could have taken the bus back. But Transpro never went to court against their Nagpur renter.
Danielsson told SVT that after Transpro Motors defaulted on its payments, Scania reimbursed Volkswagen Finance and the bus was repossessed by the finance company in October 2019 and then sold.
Volkswagen also confirmed to us that it had repossessed the bus. But, in March 2019, not in October 2019.
Scania bus photo on SudarshanHospitality’s Facebook page as on Jan 26, 2018.
Why did Volkswagen Finance, which declared Transpro Motors a bad debt in October 2018, recover the bus a whole year later, in October 2019, which is also almost the end of rental contract period (November 2019)? The finance firm also did not specify what it did with the bus after repossessing it.
The auditors of Sudarshan Hospitality note that the bus was with the company till the end of March 2019. It was taken over by the financial institution some time before March 2020.
So, when exactly did Volkswagen Finance repossess the bus? And what did it do with it?
Asked for its current status, sources in Volkswagen, Germany told us that the company does not know where the bus is.
Even during the GIA investigation, sources within Volkswagen Finance disclosed to the investigators that they do not even intend to act on the bad loan as they know that “the bus was a gift by Scania India to a high politician, who is currently a minister, with the main purpose to get approvals for deals in India,” notes the GIA.
“Sources at VW FS have revealed to GIA that they will not be repossessing the vehicle from the Minister,” the GIA adds.
And that is the reason why allegedly the finance company did not conduct any deeper due diligence of the Transpro Motors’ loan as they would normally do, notes the GIA.
“Due to the brand guarantee by Scania, VW FS did not conduct any deeper due diligence of Transpro Motors (other than credit rating) and did not check if a security deposit of 12 M INR had been paid by Transpro Motors’ end customer. These actions would have been necessary checks for any standard deal,” the GIA observes in its report.
Scania CEO Henrik Henriksson also tried to skirt questions about the status of the bus. But Scania’s spokesperson, Hans-Ake Danielsson, stated in a written reply to us that they have information that the bus has been sold by Transpro Motors to a new private company in Nagpur called Ayodhya Commerce Private Limited (Ayodhya Commerce) and claimed that even this company has links to the ‘minister’. Scania could not independently verify this information.
“The dealer Transpro Motors sold the bus to Ayoda (Ayodhya) Commerce Private Ltd, a company that is also connected to the Minister. There are allegations that Transpro sold the bus to Ayoda at the request of Scania India. On the other hand, we have not been able to find evidence for this in our own surveys,” wrote Danielsson. (translated)
“According to official Indian registration statistics, as recently as last week (last week of February 2021), Transpro Motors was still the owner of the bus,” he added. The location of ownership has shifted from Bengaluru to Nagpur.
The Scania spokesperson added that since ownership of the bus has not shifted hands, there is a possibility that the bus has been given by Transpro Motors to Ayodhya on rent.
Earlier this month, Caravan magazine reported that in 2018 a Scania Metrolink bus with license number MH31 EM 1530 was found parked in an abandoned plot belonging to Purti Solar Systems Private Limited, a company linked with Nitin Gadkari and his sons.
We contacted Ayodhya Commerce but did not receive any response. We have thus not been able to independently verify the claims made by the Scania spokesperson on the ownership of the bus and the role of Ayodhya Commerce in the bus sale or rental.
Does this mean that the bus was repossessed by Transpro Motors, and not by Volkswagen Finance? Did Volkswagen ever repossess the bus? Or has it remained in Nagpur, at the disposal of the Gadkari family and associated companies? If not, then did VW lie on record?
While the giant global auto companies figure out who has their luxury bus, the authorities in Sweden are preparing for action. Sources in Stockholm informed SVT that the police and a prosecutor at the national anti-corruption unit have started an investigation against Scania. While the state prosecutor in Braunschweig, Germany, is still weighing if he should start an enquiry.
But the larger questions remain – Why did Scania pay for a bus which had links to an Indian minister? And what, if anything, did Scania receive for this evident favour to Union transport minister Nitin Gadkari?
Sonal Matharu is with Confluence Media, Joe Sperling and Hans Koberstein are with ZDF. This story was reported in collaboration with SVT, Swedish National Television.
source ; thewire
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