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ForbesLife India/Work | Dec 11, 2014 | 4002 views

Scandal’s president suits up in style

by Richard Nalley

For Tony Goldwyn— Scandal’s President Fitzgerald Grant—the soft power suit is just one more way to show who’s in charge

 Scandal's president suits up in style
Image: David Needleman; style director Joseph Deacetis
Two-button Italian wool suit by Daniel Cremieux ($1,100), Cotton shirt by Dior Homme ($600), Cotton socks by Brooks Brothers ($39) and Leather boots by Canali ($979)

Show business was either the best thing or the worst thing that happened to me as a young man,” says Tony Goldwyn. “It was very difficult for me to figure out my place in the Goldwyn constellation.” In Hollywood, his famous name  may exert a certain soft power of its own. Like President Fitzgerald “Fitz” Grant III, the compelling, morally challenged political scion he portrays on ABC’s Scandal, Goldwyn was born handsome, ambitious and with family in the  business. Goldwyn’s grandfather Samuel, the “G” in MGM, was a cornerstone figure in Hollywood’s golden age, dad Samuel Jr a prolific producer and brother,  John, a former president of Paramount Pictures. But Tony Goldwyn has proudly made his own path down the red carpet.

Now 54 and an actor-director-producer, Goldwyn was, he remembers, turned down for the first role he auditioned for, in a high school production of Inherit the Wind featuring brother John. In the end he nailed a one-line speaking part as little Timmy. “I yelled, ‘Pa, the train’s comin’ down the track!’ Somehow, that was enough for me. I was hooked.” Into the family business he went.

(Left) Plaid wool-and-silk suit ($2,195) and silk pocket square ($118) by John Varvatos Collection Cotton-and-silk shirt by Calvin Klein Collection ($395); (right) Grey kid mohair suit ($3,740) and black cashmere knit sweater ($620) by Prada Black loafers by Scarpe di Bianco ($1,195) Arceau chronograph with indigo leather strap by Hermès ($6,950)

But Goldwyn’s first major break didn’t come until years of striving later, when, at age 30, he was memorably—even indelibly—cast as Patrick Swayze’s double-crossing friend, Carl Bruner, in Ghost. It was a part that the actor, with his All-American, good-guy looks, had to think fast to talk his way into. “I couldn’t even get considered then for roles that had a darker edge. I had to argue with the director about how playing the character as sympathetic would make the audience feel even more betrayed.” It clicked, of course: Ghost chalked up the highest grosses of 1990, and Goldwyn became one of the industry’s go-to dubious characters. “I worked a lot,” he says, “and played some fun villains.”

Image: David Needleman; style director Joseph Deacetis
Scandal's president suits up in styleGrey check wool suit ($3,350), White Napoli formale shirt ($410) and bronze Club Fumé briefcase ($3,150) by Bottega Veneta and Black leather shoes by Santoni ($850)

He also poured energy into projects on the other side of the camera. Three years into a writing collaboration that became A Walk on the Moon, he realised he couldn’t bear to see anyone else direct the project. And so began his estimable career as a director—“kind of organically”. His 2010 film, Conviction, the true story of an innocent man imprisoned for murder, was a leap of faith that took eight years to get before the cameras. Some of its gritty social realism can be glimpsed in The Divide, co-created with Richard LaGravenese, which premiered this summer.

If there is a theme running through all of this, Goldwyn says, “It’s that I always want to tell a story without judgment of the characters, where I simply try to express our humanity in the dark and the light.” This might explain why he regards Fitz Grant as the role of a lifetime. “It is a dream for an actor who is kind of a leading man type to get to play a character who’s as powerful and charismatic as Fitz—because he’s the President of the United States—and at the same time is not a one-dimensional figure. He’s scheming and manipulative and selfish and generous and deeply wounded and idealistic.” And he gets up close and personal regularly with the show’s star, Kerry Washington, as political fixer Olivia Pope, who left the White House in the wake of an affair with Fitz that just…won’t…quite…go away.


(Left) Double-breasted velvet suit by Canali ($1,520), Cotton shirt by Tommy Hilfger ($99), Silk pocket square ($150) and Ebano Intrecciato belt ($680) by Bottega Veneta; (right) Stretch wool suit ($2,350) Cotton shirt ($420) and leather monkstrap shoes ($1,300) by Ferragamo and Calfskin belt ($95) by Torino Leather

“If I could play another role with Fitz’s dimensions in my career I’d be a very happy camper.” Well, mostly happy, with a Goldwyn twist or two.



(This article is excerpted from the latest ForbesLife India Nov-Dec 2014 issue which is now available at news stands and book stores)

This article appeared in the ForbesLife India magazine issue of Nov-Dec 2014

© Copyright 2014,     All Rights Reserved

Home | Friday, December 19, 2014 | 9:55:24 AM
FEATURES/Real Issue | Sep 1, 2014 | 29210 views

The Rise And Fall of Jignesh Shah

The 47-year-old entrepreneur, who had taken on institutional forces such as the National Stock Exchange with his commodity exchanges, became a victim of his own break-neck ambition, say close associates. This is his story, one year after the irregularity at NSEL was

The Rise And Fall of Jignesh Shah
Image: Dinesh Krishnan

Incarcerated, maligned and painted in every shade of grey: This is not how Jignesh Shah had envisaged his endgame as he plotted his rise and rise in the Indian markets over 15 years, touting the mantra “everything is fair in love and war, and that applies to business as well” to his closest associates with a determined frequency. The scrappy entrepreneur soared and fell by this ambition: In his pursuit of profit, a business associate says, “Jignesh did not see what was for the good of the shareholders and what was good for him. He could not rise to that level.”

The David who took on Goliaths such as the National Stock Exchange (NSE) started to come undone as serious irregularities at one of his two commodity exchanges—National Spot Exchange Limited (NSEL)—emerged over a year ago. Contracts sold, without the necessary collateral being in place, resulted in defaults and consequent losses of Rs 5,689.95 crore for investors. This led to his arrest on May 7, 2014. With that, Shah ceased to be the textbook iconic entrepreneur who had built an enviable empire and revolutionised commodities trading by taking it online. Instead, he started to make front-page headlines for all the wrong reasons.

Shah, 47, who set up Financial Technologies India Limited (FTIL) in 1988, launched a series of stock exchanges under its aegis in the previous decade, including MCX, a multi-commodity bourse which has become India’s only listed exchange. (It was set up in 2002 and listed on the Bombay Stock Exchange, or BSE, in 2012.)

As FTIL—the holding company which also provides financial markets software to brokers and other market participants—became successful, Shah’s ambitions took him beyond Indian shores. In the space of a few years, he set up exchanges in Singapore, Bahrain, Dubai (UAE), Mauritius and Botswana as well as a financial market content provider, TickerPlant.

“There was everything—the right space, the right vision, technological excellence. And you had Jignesh at the top, driving the group with his characteristic grit and determination,” says Ravi Sheth, managing director at GreatShip India, which has a small stake in FTIL.

The fall, in this context, came even harder. After months of interrogation by the Mumbai Police’s Economic Offences Wing (EOW)—based on criminal complaints filed by investors—Shah was arrested for “not cooperating” with the authorities in the investigation into the events at NSEL in July-August last year.

One year on, just over six percent of the Rs 5,689.95 crore owed to investors has been recovered from the defaulters. At least six different court cases, including a class action suit, have been filed in High Courts of Mumbai and Ahmedabad. And though there is hope that many of the 13,000 investors would get paid in the coming years, there is a strong possibility that the money trail might just go cold.

Either way, the Jignesh Shah story is likely to enter management books as a case study in ambition and potential gone horribly wrong. Repeated efforts—emails, phone calls, text messages—to reach the current management at FTIL and MCX met with no response, but many of Shah’s associates—brokers, friends, colleagues, former staffers—over the last decade-and-a-half spoke to Forbes India, saying that much like his success, his unravelling too was, perhaps, inevitable.

Where He Went Wrong: NSEL

Ironically, and maybe fittingly, among all of Shah’s successes, NSEL, India’s first electronic spot exchange for commodities which started trading in 2008, was foremost. It was a wholly-owned subsidiary of FTIL, whose entire income would be reflected in the parent firm’s consolidated earnings.

In FY13, according to a statement made by NSEL’s former CEO Anjani Sinha to the EOW in October 2013, over 50 percent of FTIL’s profits came from NSEL. The other 50 percent was accounted for by 14 other ventures floated by FTIL.

Shah liked to wear this triumph unabashedly on his sleeve.

In July 2013, a large private equity firm wanted to invest in MCX-SX, an equity exchange started by Shah in 2008, which was being touted as the next big thing in the Indian markets. Many believed it would do better than the BSE, the oldest stock exchange in Asia. It had started attracting investors, one of whom approached a consultant who knew Shah, for the possibility of a stake purchase in the exchange. But Shah was not interested in diluting his stake; instead, he was keen on discussing NSEL.

Infographic: Sameer Pawar

The consultant asked Shah how he maintained such high volumes on NSEL while NSPOT, the competitor spot exchange promoted by NSE, was stagnating on volumes. Shah smiled and said he simply understood the market very well. “I think we should be able to place our NSEL equity at a valuation of around $1 billion in a few months. I am very confident,” he told the consultant.

He spoke too soon. Within eight days, NSEL hit the headlines with a payment crisis. On July 12, 2013, a letter from the Department of Consumer Affairs (DCA) raised the question of validity regarding many of the contracts traded on the exchange; this led to a liquidity crunch as befuddled participants now refrained from trading.

The DCA had granted exemption to NSEL under Section 27 of the Forward Contracts (Regulation) Act and allowed it to trade in one-day forward contracts, provided members did not resort to short sales. “We found that NSEL was violating conditions under which the exemption was given, where several contracts went well beyond 11 days, when the contract cycles should have been a maximum of T+10 [for settlement],” says Forward Markets Commission (FMC) chairman Ramesh Abhishek. In some cases, NSEL also did not insist on ownership of goods in warehouses when sale orders were placed, resulting in ‘short-selling’, which it was not allowed to do, he adds.

On August 3 last year, NSEL informed members that, “in order to protect the interest of clients and public”, trades executed on July 29, July 30 and July 31 had been annulled and reversed. NSEL said it had refunded the pay-in received from members pertaining to these trades. Yet, banks withdrew their credit limits given to procurers on the exchange. It later became clear that there were no goods in the warehouses and that the procurers did not have the money to pay back the investors.

FMC—based on a forensic audit of NSEL by consultancy firm Grant Thornton—in its December 2013 report declared Shah “not fit and proper” to run an exchange and explained the events thus: “Investors simultaneously entered into a “short term buy contract” (e.g. T + 2, i.e. two-day settlement) and a “long-term sell contract” (e.g. T + 25, i.e. 25-day settlement). The contracts were taken by the same parties at a pre-determined price and always registered a profit on the long-term positions.” It had become a financing business where a fixed rate of return was guaranteed on investing in certain products on the NSEL, FMC said in its show cause notice last December.

“NSEL was getting used for a financing tool. That is the core,” says Harish HV, a partner with Grant Thornton.

The problem of regulation was also significant. In India, spot exchanges are to be regulated by state governments but there was ambiguity on which agency should have regulated NSEL. Till 2011, FMC could only seek information from the exchange and had no role in supervising it.

“NSEL operated in an environment of confusion, where it was unclear who had to regulate the exchange,” an associate of Shah told Forbes India. (There are now two national electronic spot exchanges surviving in India; one is the scandal-hit NSEL and the other is NSPOT, set up by NSE’s NCDEX, or National Commodity and Derivates Exchange, in October 2006.)

After the crisis started, the FTIL stock price slid from Rs 750 to Rs 102 on August 29 within 40 days. MCX saw its stock price go to Rs 238 from  Rs 800 during the same period.

FTIL has claimed that while it has a common promoter, Shah, it cannot be linked to the NSEL issue. FMC has rubbished this in its 2013 order, saying: “It cannot shy away from its role and duty as a parent company to take reasonable care and exercise prudence in management and governance of the subsidiary company.”

Shah and Sinha were named the main accused. The former has maintained his innocence, saying he was unaware of the events which had unfolded at NSEL. Sinha, on the other hand, first gave a statement that Shah was not in the know of the goings-on at NSEL. However, later, he put the blame squarely on him, saying Shah was getting a weekly update of the NSEL trades and was cognisant of the situation.

Sinha, who had seen similar defaults earlier when he worked with the Magadh and Ahmedabad stock exchanges, was jailed along with Shah, but is currently out on bail.

As for NSEL, it is now virtually defunct. “NSEL, perhaps, was the victim of Jignesh not paying attention while he focussed on the jewel in the crown, MCX, on the one hand, and battled with the system to get the stock exchange licence for MCX-SX on the other,” says one of Shah’s closest business associates.


How He Built The Business
A one-time software engineer who was project-in-charge of the BSE’s online trading system, Shah often called himself a “technology scientist”. He started his career in 1990, in the systems department of the exchange after completing his engineering in Mumbai. But Sinha claims much of his time at the BSE went into trading in stocks.

Shah was still given the opportunity by BSE to study stock exchange technology in London; a few other colleagues were sent to Tokyo and New York for the same purpose. When they returned in September 1993, two of them—Shah and Dewang Narella—submitted a plan to upgrade the technology at the exchange. Their proposal was rejected and the BSE board gave the contract to software firm CMC Limited.

Narella and Shah then moved out of BSE to start their own venture called JCS—which created back-office software for stock brokers—by breaking their three-year bond on January 1, 1995. The duo had to pay a combined Rs 15 lakh as penalty. Shah also invested his own money in JCS while Narella and Ghanshyam Rohira, another BSE associate, joined as working partners.

Shah’s focus was on understanding customers and the business, as well as networking. In terms of the products, he developed a front-end software called ODIN which initially gave them a foothold into—and later a firm grip on—the brokers.

JCS, through a series of mergers, later morphed into FTIL “without going through a public issue of offering its shares to investors”, Sinha says in his statement. ODIN remained the biggest revenue earner for Shah as he attempted to expand in the overseas markets.

FTIL went through a bad patch during the dotcom bust around 2002, but it bounced back after Shah got permission to set up a commodity exchange. With MCX, he decided to take on the NSE-promoted NCDEX, a competitor in the commodities space. He recruited Sinha and Joseph Massey in June 2003 from the Inter-connected Stock Exchange (ISE) promoted by 15 regional stock exchanges. In seven years, MCX became a leader in metals and energy while NCDEX decided to focus on agricultural commodities.

“MCX had tough competition in NCDEX. But due to very aggressive measures taken by Jignesh Shah which included distribution of cash incentives in crores of rupees by him and his brother Manjay among leading broking houses such as Dynamic, Advent and Adroit, it became successful,” says Sinha in his statement to the EOW.

For instance, Shah spotted the opportunity in launching commodity futures which had international prices much before NCDEX did. In fact, he launched his crude oil contracts in February 2005 when it was trading at Rs 2,128 per barrel, almost six months ahead of NCDEX. Oil prices had moved up to Rs 2,553 per barrel by the time NCDEX put up its own oil contracts for trading.

Exchanges offer sticky solutions, which means that once a trader starts on one exchange, he rarely moves on to another unless something goes particularly amiss. Shah had the technology and he was clear that he was going to launch all the trading products ahead of competition so that his traders do not have any reason to complain.

A rival exchange official recalls going to Bahrain to look for business opportunities and being surprised at seeing Shah do the same meetings much ahead of him.

“I do not know how he was able to stay ahead of us in almost every aspect of the game. At times it was frustrating,” he says.

Getting The Right People From The Right Places

‘Applying Population Dynamics Theory on Entrepreneurial Survival Strategy: Case of Financial Technologies and its Promoter’, a 2009 research paper by former Deutsche Bank group senior analyst Ankur Jain and Ram Kumar Kakani, a former professor at XLRI (Xavier School of Management, Jamshedpur), made an attempt to study why a middle-class entrepreneur like Shah was able to achieve what a high-powered and institutional organisation such as NCDEX could not.

“When he started the new venture, Jignesh Shah hired experienced human resources from the market. His top management [at MCX] comprised people who had previously worked with other exchanges. He even hired past officials of FMC, which helped him in establishing cordial relations with the regulator,” the research paper said.


Former FMC chairman Venkat Chary is now FTIL’s non-executive chairman while ex-Securities and Exchange Board of India (Sebi) chief GN Bajpai used to be an advisor to the FTIL group. Another former Sebi official, PR Ramesh, was an officer on special duty at NSEL while former State Bank of India chairman PG Kakodkar was on the FTIL advisory board at one point.

But over a period of time, NCDEX got its marketing strategy right. It started underscoring the fact that MCX was an individual-driven exchange as compared to NCDEX which had promoter shareholders like ICICI Bank when it was set up. Shah sensed that, for once, NCDEX could get an upper hand. He quickly responded by getting Industrial Finance Corporation of India (IFCI) and National Bank for Agriculture and Rural Development (NABARD) as shareholders accounting for around 10 percent of MCX.

Running parallel to this competition was NSEL, buttressing the group revenues. Shah wanted to show growth in his parent company and profits from NSEL kept the FTIL shareholders satisfied.

Significantly, Sinha told the EOW that while Shah always hired government employees or ex-bureaucrats for FTIL and MCX, he consciously avoided getting them on the NSEL board.

He was very careful that the NSEL dealings remained in the hands of very few people.

How He Beat The System
Shah was a long-time fan of vyaj badla, a mechanism that allowed an investor to undertake futures trading in the Indian market till it was banned after the introduction of derivatives trading. Vyaj badla allows investors to carry forward a trade as long as there is a financier who funds it for a profit.

Shah spoke openly about how this mechanism of forward trading was killed unnecessarily and he was looking for opportunities to revive it. It follows that after getting permission to start a spot exchange, he sought special permission to use one-day forwards. This, he felt, would help procurers finance themselves as long as they had a product as collateral. The procurers or the sellers would take their product to the warehouses and get them valued. The warehouse receipts, given to them by the custodians, could be traded on the spot exchanges where many buyers (in this case, investors) could bid for them.

Shah’s notion of operating a spot exchange like a forward exchange was a stroke of financial genius. For this, he needed procurers looking for financing and investors who would provide the financing against collateral. “The NSEL management knew that it needed to get small businesses looking for capital to fund this trade,” says Sanjay Kaul, managing director, National Collateral Management Services Ltd (NCML) which handles collateral management for banks and exchanges such as NCDEX and NSPOT. “This gave rise to ‘paired’ contracts (see page 54) which most investors did not fully grasp. They merely understood that they were diversifying their asset allocation into commodities. They were not aware that they were getting into a financing structure for needy procurers.” He adds that many investors did not appreciate the role a collateral management company plays in such a deal. “However,” he points out, “in this case, collateral management was hardly involved probably because there was no commodity that was warehoused or needed to be valued.”


In the case of NSEL, the collateral management was handled by National Bulk Handling Corporation (NBHC), also owned by FTIL.

“NBHC should have been engaged as a collateral management agency to verify the quantity and quality of the stocks,” he says.

“The NSEL as a spot market concept was brilliant, covering the entire ecosystem of commodities. Jignesh did not go wrong with the product, but NSEL taking up the business of managing finance was a fundamental mistake,” says Deven Choksey, managing director, KR Choksey.

Incidentally, NCDEX holds only 5 percent stake in NCML while NBHC, which has now been acquired by India Value Fund for Rs 242 crore, was completely owned by FTIL. “We don’t want to have any conflict of interest with NCDEX and that is the reason why we have such a small percentage holding by the exchange. We also have an exclusive tie-up with NCDEX where we will not offer our services to any other exchange,” says Kaul.

The Rise And Fall of Jignesh Shah
Image: Indian Express Archives / Pradeep Das
Financial Technologies India Limited chairperson Jignesh Shah was arrested on May 7 this year

The long road to recovery
In April 2013, a high-profile investment consultant was asked to put money into NSEL’s paired contracts. He recounts his tale of “desperate” brokers who were trying to lure investors. “They kept calling me, trying to influence me with names of close friends who had already invested money,” he tells Forbes India. “My point was, if there is any scheme which is so safe and secure, why are you following up with me? I should be queuing up to put my money in. I have no sympathy for well-off investors who have lost money. They did not do their due diligence.”

On the other hand, take investors such as this family from Mumbai who lost Rs 6.5 crore. Vijay Ganeriwala, a regular investor in equities, started investing in commodities in 2012 due to the higher returns. “We were told by brokers that this [NSEL’s contracts] would ensure higher returns. It would be the best thing for your children’s future, they told us,” says Ganeriwala’s son-in-law Satish Bangar. “My father-in-law had first invested Rs 50 lakh; we saw interest of 21 percent in the first 15 days. Then within the first month of investment, there was a first default and the cheques stopped coming. But my father-in-law broke all his fixed deposits to place orders here.”

Bangar claims his father-in-law passed away this year troubled by the financial losses. This case is among those that have been filed by the NSEL Investors Forum—the suit includes 2,600 members and a loss of Rs 2,000 crore. Several large and small companies also lost money, including state-run MMTC (Rs 220 crore) and IGL Finance (Rs 125 crore).

Though NSEL is not operational now, its managing director Saji Cherian is confident that investors’ funds will be recovered. “The complete money trail is available and agencies have attached defaulters’ assets to cover a large part of the investors’ money,” he told Forbes India. NSEL has now received a show cause notice from the government, asking why the exemption granted to it in 2007 should not be taken away. Cherian wants it to stay till the crisis is resolved. There are only 40 employees left on the rolls of NSEL apart from consultants involved in legal matters and recovery of funds.

Brokers who sold the product say they were not aware of the problems. “No broker will put his client’s money in a risky investment,” says the head of a leading brokerage firm whose clients lost money in the scam.

But, at the same time, many brokers had also purchased the NSEL product from their proprietary accounts. “Nobody thought Shah would get trapped,” says an investor.

What Next?
Last month, Kotak Mahindra Bank announced that it would buy 15 percent stake in MCX making it the  single largest stakeholder in the company; high-profile investor Rakesh Jhunjhunwala has also raised his stake to nearly 3.5 percent through the open market. Jhunjhunwala has probably taken note of the fact that MCX still commands an 85 percent trading market share amongst leading commodity exchanges.

After the Kotak deal, FTIL’s stake in MCX would stand at just five percent which, an exchange insider says, “significantly lowers” the risk the commodity exchange faces of not getting approval from FMC to launch new trading contracts beyond August and also for its 2015 calendar.

Shah’s own future remains even more uncertain. Like all conflicted stories, his too doesn’t have a clear ending. None of the money from the NSEL fraud has yet been traced to him and he has appealed against the FMC’s “not fit and proper” order in court. (Shah’s own scheduled appeal for bail did not take place on August 11.)

His fate still hangs in balance but one thing is clear: As and when he gets released, he will have to stay clear of all regulated businesses. And he knows that well. Before going to jail, Shah had indicated that FTIL would completely move out of exchange-related ventures and remain a pure technology company. “I will concentrate on something new,” he had said.

A close associate says that is the only way forward for him. “Jignesh should focus on his core competence of technology and not get into the running of exchanges. He needs to fix himself… although he has a sharp mind, he has faith in a lot of people. When you run large complex organisations, one has to know whom to trust, when to trust and how much to trust.” However, the question now for Shah is whether he can regain trust from the business community.

“Everybody has two opinions about Jignesh Shah, not just one, which is the most unfortunate part,” points out Anil Singhvi, chairman, iCAN Advisors, who is also an advisor to the FTIL board for its stake sale. But this duality in opinion can also prove to be his saviour as the jury, literally and figuratively, is still out on the man who dreamt too big.

Comments (2)
Lokesh Madan Oct 8, 2014
Each & every Investing companies you mention above know about How NSEL works. Everyone know that its very difficult to get fixed 18% or above return on funds value more then 100 – 1000 cr in size.. Where as when FT provide Fixed return by using their two Exchanges to their investors.. All are very much happy .. Most of them actually get High amount of annual yield from NSEL.I feel FT is responsible But investors brokers are equally responsible.
Gurbir Singh Khera Sep 2, 2014
How come everytime a new trikster is born after such a stringent & punitive ‘SEBI’.
It will, of course, make a great case-study in our finance & regulatory architecture.
Moreover, the greed & quick-rich psychology & knowing the loopholes of the systems, as being the professional & insider himself. He should be treated at par with Madoff in US & he should be given exemplry punishment in fast track courts. Moreover, we need to develop forensic accountants & the like parallelly to smell the rat fast. – Gurbir S Khera -Finance educator
This article appeared in the Forbes India magazine issue of 05 September, 2014



Forbes Embroiled In Billion-Dollar Ukrainian Corruption Scandal

Police say Sergey Kurchenko, a fugitive oligarch linked to ousted Ukrainian President Viktor Yanukovych and the owner of Ukrainian Forbes, stole over $1 billion. Forbes scion Miguel Forbes approved the deal and served as an adviser to Kurchenko.

Bags of shredded documents found outside the office of the VETEK company in Kiev after its director, Sergey Kurchenko, fled Ukraine. Facebook / Sevgil Musayeva

KIEV — Forbes magazine’s Ukrainian edition is embroiled in fresh controversy after Ukrainian police and the European Union moved against its fugitive owner on suspicion of stealing more than $1 billion from state coffers. The scandal around 28-year-old oligarch Sergey Kurchenko may stretch as far as the U.S. and Forbes family scion Miguel Forbes, who approved Kurchenko’s controversial purchase of the magazine’s Ukrainian edition last summer and signed on as an informal business adviser.

Arsen Avakov, Ukraine’s acting interior minister, announced 11 criminal investigations Thursday into the VETEK group and Kurchenko, its secretive owner, for importing and “re-exporting” oil in violation of tax and customs regulations. Two other investigations allege that VETEK defrauded state gas company Naftogaz, and charge a company owned by a former driver reportedly linked to Kurchenko with not paying for gas. The total sum that police accuse Kurchenko and his alleged affiliates of stealing totals about 10 billion hryvnias (more than $1 billion).

Kurchenko released a statement Thursday through VETEK expressing his “surprise” at the sanctions and denying the allegations against him.

“I am an honest Ukrainian businessman who has always invested in Ukraine and practically all my business is concentrated here,” Kurchenko said. He accused rival oligarchs and their political lackeys of concocting the corruption allegations against him and claimed that no criminal charges had ever been filed against him or his company, apparently unaware of Avakov’s allegations. “And I am certain that the misunderstanding that has arisen will be resettled.”

Kurchenko, considered a key member of the mafia-like “family” around ousted president Viktor Yanukovych, also appeared on an European Union sanctions list Thursday for “involvement in crimes in connection with the embezzlement of Ukrainian State funds and their illegal transfer outside Ukraine.” The sanctions also hit 16 other former senior officials including Yanukovych and former prime minister Mykola Azarov, as well as their respective sons.

Once so secretive nobody knew what he looked like, Kurchenko was dubbed “the multimillionaire from nowhere” after Ukrainian Forbes published a massive investigation chronicling his meteoric rise to control large stakes in Ukraine’s oil and gas market in November 2012. The investigation intimated that Kurchenko had close ties to Yanukovych and his son Oleksandr, whose own vast fortune tripled in the second half of last year, the central figures in a group known as the “Family” widely loathed in Ukraine for its perceived corruption. Forbes’ journalists published the story despite worries they were risking their lives. Kurchenko emissaries made apparent death threats against the reporters, something Kurchenko appeared to acknowledge in a later interview. Editor Vladimir Fedorin was so scared he hid a draft of the article in an empty bottle and sent his deputy a text message saying “Just in case: anything happens, it was Kurchenko :)”

The scandal deepened when Kurchenko moved in to buy Ukrainian Forbes’ parent company last June. Despite the perhaps obvious fears over an oligarch buying the magazine whose reporters he had allegedly threatened for investigating him, family scion and Forbes Media president for television and licensing Miguel Forbes allowed Kurchenko to buy the brand license. (Forbes’ international editions are licensed to local publishers, but expected to meet the editorial standards of the parent publication, not unlike restaurant franchises.)

At the time of the sale to Kurchenko, Forbes told the Ukrainian magazine’s concerned reporters that all accusations against the oligarch were groundless if he had not been convicted in a court of law, according to two people present at a meeting with him in Kiev. (Ukraine’s court system is particularly troubled even by post-Soviet standards, since the president can personally appoint judges.) After sealing the deal, Russia’s Interfax news agency cited Forbes as saying he was “very happy with the new opportunity for Forbes Ukraine,” and Forbes came on as an advissr to Kurchenko at VETEK. Forbes later told Fedorin in correspondence seen by BuzzFeed that the relationship was informal and in keeping with his business practices.

Forbes Media did not answer questions from BuzzFeed on Thursday about whether it would revoke UMH Group’s license or whether Miguel Forbes had ended his relationship advising Kurchenko.

“Forbes Media has been monitoring and will continue to monitor and evaluate the situation in the Ukraine, including those actions relating to our licensee as events continue to unfold,” company spokesperson Mia Carbonell said in a statement.

When a reporter for Ukrainian Forbes sent an inquiry about the deal to the parent company for an article last year, legal counsel responded by accusing her of writing the story “with the specific intent of tarnishing Forbes and the goodwill of our company and trademarks,” in a letter dated July 17, 2013, and seen by BuzzFeed. The letter went on to accuse the magazine of violating Forbes’ editorial standards, and to threaten that “in the event any individual involved in the writing of this story has an alternative agenda or is using this story as a means to settle a perceived wrong, we will take such breach of objectivity very seriously.”

Once the deal went through in November 2013, Kurchenko’s employees set about installing what reporters called a censorship regime forbidding them to write about figures linked to Yanukovych. Nearly half the editorial staff resigned immediately, following Fedorin and the reporters who wrote the Kurchenko investigation, Olexandr Akymenko and Sevgil Musayeva. Shortly afterward, Vitaly Sych, a legendary longtime editor of Korrespondent magazine, which is owned by the same company, UMH Group, quit in a similar scandal, stoking fears in Ukraine’s media community that Kurchenko was attempting to clear the field ahead of Yanukovych’s planned re-election bid in 2015.

Kurchenko is reported to have fled Ukraine after Yanukovych’s government was overthrown Feb. 22. His quickfire empire is literally in tatters: Musayeva found about 20 black plastic bags overflowing with shredded documents immediately after Kurchenko’s suspected flight. Most of its executives have also fled the country, according to Ukrainian media reports. The chairman of VETEK’s supervisory board said this week that employees have not been paid in the last three months, echoing claims by the manager of Kurchenko’s soccer team, Metalist Kharkiv.


Forbes Ukraine In Censorship Crisis After Oligarch Takeover

Miguel Forbes, the family scion responsible for the brand’s international expansion, hailed the sale of its Ukrainian magazine license to a mysterious oligarch with controversial links to the country’s president. Fourteen journalists resigned en masse less than a week after the deal went through in protest over what they said was censorship.

Forbes Ukraine staffers after signing a mass resignation letter late Tuesday. Katerina Shapoval / Via

KIEV, Ukraine — Forbes’ Ukrainian edition is engulfed in a censorship scandal after half the editorial staff resigned en masse almost immediately after it was sold to a mysterious oligarch the magazine had recently investigated.

Fourteen Forbes Ukraine journalists, including several masthead figures, signed a letter early Wednesday announcing their intention to quit the publication in protest at what they said were the new management’s attempts to introduce censorship.

The abrupt resignations have called into question the magazine’s decision to grant a license to Sergei Kurchenko, a 28-year-old oligarch known as the “multi-millionaire from nowhere.” (Forbes’ international editions are licensed to local publishers, but expected to meet the editorial standards of the parent publication, not unlike restaurant franchises.) Once so obscure that nobody even knew what he looked like, Kurchenko was the subject of a major Forbes investigation a year ago chronicling his meteoric rise to control large stakes in Ukraine’s petroleum gas market that intimated he had close ties to President Viktor Yanukovych. Kurchenko’s deal to buy 98% of Forbes Ukraine licensee UMH Group, which was announced in June and went through last week, was widely interpreted as an indirect attempt to clamp down on independent media before the next presidential election in 2015.

Senior editor Boris Davidenko said the chilling effect at Forbes Ukraine began the moment the new management came in last week and peaked Tuesday, when management told them “a tiny little list” of topics would be off limits. “They didn’t say which ones, but you could guess which group of people they were talking about from the pitch about deputy prime minister Sergei Arbuzov’s advisors,” which editor-in-chief Mikhail Kotov killed Tuesday a day after accepting it, Davidenko added.

“The reason [for leaving] was attempts to change [the magazine’s] editorial policy,” the journalists wrote.

"The reason [for leaving] was attempts to change [the magazine's] editorial policy," the journalists wrote.

Natalya Ligacheva / Via

In a statement, Kotov denied censoring any articles and claimed that the editorial staff was about to sign an agreement on editorial independence with management. (The journalists deny this.) Kotov blamed the conflict on his predecessors for “insufficiently high quality standards for the work of journalists, catering to inflated egos and ambitions of a number of some staff members, whose professionalism is in serious doubt.” Yuri Rovensky, director of Kurchenko’s VETEK-Media holding, likened the journalists’ resignation to “blackmail.”

Fears for Forbes Ukraine’s future began immediately after Kurchenko announced his takeover in June. Editor-in-chief Vladimir Fedorin immediately tendered his resignation, accusing Kurchenko of buying the magazine to launder his own personal reputation and pressure journalists. Family scion and company vice president for television and licensing Miguel Forbes — who had said Forbes Ukraine was one of the company’s top five global products only a few months before — said, however, that he was “very happy with the new opportunity for Forbes Ukraine” and “totally confident in the UMH management team.” VETEK then announced that Forbes had become an advisor to Kurchenko, although Forbes later told Fedorin in correspondence seen by BuzzFeed that the relationship was informal and in keeping with his business practices.

Kurchenko’s takeover particularly troubled Fedorin because of threats his reporters, Sevgil Musayeva and Alexander Akimenko, received while they were conducting the investigation, Fedorin told BuzzFeed. When they asked a Kurchenko representative what the chances were that their article would have bad consequences for their health, the representative wrote “2/3” on a piece of paper, Fedorin said. Fedorin became so paranoid himself that he hid the manuscript in a bottle and started fearing for his own physical safety.

Fedorin texted Forbes Ukraine’s web editor, “Just in case: if anything happens, it was Kurchenko :)”

Fedorin texted Forbes Ukraine's web editor, "Just in case: if anything happens, it was Kurchenko :)"

Vladimir Fedorin

Fedorin said he later told Miguel Forbes that publishing the article was his “Paul Khlebnikov moment,” referring to the Forbes Russia editor who was shot dead on the street in Moscow in 2004. Kurchenko all but admitted in a Forbes interview that his employees had threatened the journalists and said they would be “punished” if they had. (His press service later claimed that the threats had only involved lawsuits.)

When reached by BuzzFeed, Forbes Media declined to assess the resignations directly. “Events are evolving at Forbes Ukraine, and we’re staying close to the matter,” Forbes Media said in a statement. “All of our foreign licensees are required to adhere to the same high editorial standards and guidelines that Forbes embraces. Editorial independence is of the utmost importance to Forbes and is central to our mission,” the statement added.

© 2014 BuzzFeed, Inc


Canali shows Milan Men’s Fall/Winter 2014-15

By  | 

A true depiction of elegance, tradition and style was seen from the first second when a classical pianist walked out and started playing a soft melody that can only be appreciated by listening and immersing yourself in the movement. The runway collection was a testament to the classical styles and traditional looks much like the pianist, only these classical styles were updated for the modern times. Think of the band “Bond” who are a classically trained string quartet and put a modern tempo to their songs. The collection consisted of those ideas as well by including shawl collared double breasted overcoats with waist belts to give a relaxed at home feel of wearing a robe. A very luxurious robe style coat with a fur collar and a full length fur style was on display in various traditional brown and gray colors, and to modernize a traditional look Canali showed a mohair wool light gray and pink coat with duffle coat style loops that are fit for button and not toggles. The coats were worn over wool shawl collared sweaters as well with jacquard prints and scarves to give a relaxed feel to the traditional look. Because Canali was and is a traditional suit maker they did not stray away from their mainstays of fine tailored suits. Which included various two piece double breasted designs with jacquard patterns and prints.

Though as tradition moves forward new styles emerge and showing that was his collection of velvet blazers with trouser separates in various color combinations that included hunter green, pastel pink and navy blue double breasted blazers. Paired with complementing velvet trousers in a different shade of the prime color. The suits were set over shiny silk shirt and tie combinations to either show a professional version or a silk scarf under the blazer for a more casual look. All in all, Canali being a classical luxury outfitter showed exactly what was expected and then some. Ultra-fine tailored suits, coats, fine wool and fur fabrics while including velvet blazer-trouser combinations in non-classical modern colors. The pianist set the classical theme for the show and the collection exemplified what a traditional look and modern design can become.

“The clothes do make the man.” How you’re dressed is the first thing someone notices and you only get one first impression, so why not make it great always? My interests are men’s fashion and lifestyle.

News » National

Updated: June 9, 2013 03:17 IST

‘Forbes India’ editors sacked for demanding stock ownership

Meena Menon

Network 18 Group says it’s a case of disgruntled employees

The last thing Forbes India Editor Indrajit Gupta expected to hear was that he was redundant. But that is what he was told by two people from the editorial and management of the Network18 group on May 27 when they offered him a severance plan which he refused to accept without having a discussion with his lawyers. But that request was summarily rejected, and when Mr. Gupta refused to resign, he was dismissed without assigning any reasons.

Mr. Gupta told The Hindu on Saturday that after him, Managing Editor Charles Assisi was forced to quit and the next day two others, Executive Editor Shishir Prasad and Director (Photography) Dinesh Krishnan met with the same fate. Mr. Krishnan and Mr. Prasad were told to sign letters absolving the company of all its dues in the form of Employee Stock Ownership Plan (ESOP) and they would be offered a new value ESOP scheme, the details of which would be made available at a later date. Not willing to accept this opaque arrangement, both Mr. Prasad and Mr. Krishnan were forced to resign.

Mr. Assisi was told that his services would be terminated with immediate effect unless he signed on a pre-drafted resignation letter. Under duress, he was forced to sign on the resignation and full and final settlement letter. All four senior journalists have worked in Forbes since 2008 and have among them experience of more than 40 years. When they joined, their contracts specified fixed ESOPs which the company had underwritten and which they were entitled to after four years. However, after that period when the company showed no signs of paying up collectively an amount of roughly Rs. 2 crore, they took it up with the management. The human resources department followed up with the management for the first four years to no avail.

Mr. Gupta said the ESOPs were an integral part of the compensation plan and the company could not deny that. On May 27, when Mr. Gupta was called in to meet Editor-in-Chief R. Jagannathan and HR head Shampa Kochhar, he didn’t think that he would walk out without a job or a severance package. “It was a humiliating experience after having led the Forbes India team for over five years,” he said.

“This is absolutely unacceptable behaviour and this came as a complete shocker. When we started a conversation on ESOPs, we were told at one point that the Board had annulled it. We asked why we were not informed of it till we raised the issue,” he said.

How can the Board annul ESOPs unilaterally, asked Mr. Gupta. But it was caught out as there was an admission that ESOPs were promised at the time of employment. Since that had not been honoured, Mr. Gupta and the others had asked for monetary compensation in lieu of the ESOPs that would have vested in the four years of employment. On May 24 evening, the management sent them a nine-page document with a new ESOP scheme, which they had to sign by May 26 or it would lapse. Mr. Gupta said the new ESOPS were largely a dud scheme without any real value vested in them.

“We simply asked for commitments in our appointment letter made to us by the company to be honoured,” he pointed out. The termination move was arbitrary and high-handed, he added. Letters by the journalists to the company have gone unanswered and now the four are exploring legal options.

The Press Club, Mumbai, condemning the incident, said, “The method of ejecting them from the company was nothing short of shameful. Journalists are not only messengers of news and information, but are the collective voice of civil society. They have a special place in our democratic polity, especially in the current times of stress and confusion. Surely, this team of editors who has served Forbes India since 2008 deserved better.”

The statement added, “We don’t rule out changes in business plan the Forbes management may have wanted to make; but there is the way of discourse and negotiation. Editors with 15-25 years of experience cannot be forced out with a gun on their head. The episode has shocked journalists throughout the country and shown the Network18 Group in bad light. We will be writing to Mr. Mukesh Ambani, who has a special position of influence in the Media Group, as well as to Network18 Group’s chairman Raghav Bahl, to appeal to them to reverse this decision and to enter into discussion with the editors so that an amicable solution is found.”

In March, Network 18 group had appointed Mr. Jagannathan Editor-in-Chief of Print and Web publications which included Forbes India.

Ajay Chacko, chief operating officer, Network 18 group, told The Hindu on the phone that this story of ESOPs not being paid was circulated by people who were against the restructuring. For five years, no one talked about ESOPs. There was no question of not giving it to them. “All of this started popping up after the restructuring and integration of First Post and Forbes India and Mr. Jagannathan taking over as Editor-in-Chief. He is the head of the combined newsroom.”

Terming the allegations mudslinging, Mr. Chacko said three of the employees took their money and went home, only one of them (Mr. Gupta) did not. “I don’t understand the question of being unfair. I think it’s a case of disgruntled employees who didn’t take the restructuring well,” Mr. Chacko pointed out.

He said that if they want, they could take recourse to legal action. No one denied them ESOPs. “I am surprised at all these allegations. It’s primarily a case of an unhappy marriage. What is the point of all this? These are senior journalists, they have worked with Mr. Jagannathan in the past. They chose to leave,” he said.

News » National

Updated: June 12, 2013 03:41 IST

Editors Guild concerned at Forbes action

Special Correspondent

The Editors Guild of India has expressed deep concern at the abrupt termination of four senior editorial team members of Forbes India, including its Editor, Indrajit Gupta; Managing Editor Charles Assisi, Executive Editor Shishir Prasad and Director (Photography) Dinesh Krishnan.

These journalists had worked with the magazine since its inception as part of the launch team and their sudden removal without reasonable notice and even elementary courtesy cuts at the very root of editorial independence. Basic security and protection from arbitrary action were essential if senior journalists were to go about their task with courage and fairness, the Guild said in a statement.

Whether their termination was a reaction to their insistence on exercising their contractual rights to employee stock ownership plan (ESOP) or the result of an overall restructuring exercise undertaken by the company was a question to be settled in another forum, and preferably by way of negotiations leading to an agreed solution, the Guild pointed out. Considering that senior journalists were involved in this dispute with a media house, the Guild would reiterate at this stage that it was essential that all contracts should be honoured.

Source: Hindu

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