A Special Whaleoil blog investigation
What is the problem?
Putting aside the local and continuous content issues, in statutory declarations to MBIE who oversee the licences, 5TUNZ must declare all funding received. Mr Lodhia paid $70,000 in cash through to the Prasad’s and it is alleged none of this was declared when it should have been. MBIE seem unconcerned to date with this.
I asked the obviously generous and wealthy Mr Lodhia if it would be normal for him to pay five figured loans to friends undocumented in cash. This was the only question the otherwise cheerful and friendly gentleman refused to answer and specifically asked me to move along. As a “decent journalist trained and skilled” it is only natural that I did not and looked even closer at the issues at hand.
Mr Lodhia’s cash didn’t go straight in the 5TUNZ bank account at all, all three installments were channeled into a family trust of the CFS CEO Kevin Algie and CFS itself, a company that finances second hand car purchases. It may not be unusual for people in the Indian community to carry large amounts of cash but the “all my peoples trade in cash” defence is known not to work in the year 2014 when explaining away the placement stage of allegations of money laundering or answering to MBIE or making statutory declarations.
I asked Mr Lodhia if he helped the otherwise green owners with actually how to run a radio station. I know from my time in the media that running a radio station does not look that easy. Mrs Prasad had only recently graduated from AUT and Mr Prasad is a used car salesman. Mr Lodhia commented that they had “someone” in the industry helping them. He did not name that person. This is obviously a fight Mr Lodhia does not much wish to get involved in, he claimed that he felt he was more obliged to help because it was his idea they front the radio station in the first place and “once their set up was done I moved away, I said it’s your baby now I wish you all the best”.
The baby however it seems required a bit of working for families that has yet to be reimbursed and required backdated documentation for.
Why was the cash paid into CFS and the CFS CEO’s family trust?
According to the Prasads lawyers in their letter to MBIE dated 18th October 2013, cash payments from Lodhia were banked for the Prasads to CFS and a trust associated with Mr Kevin Algie (then but no longer a senior Enterprise Motor Group employee). In the case of CFS, lawyers for the Prasads say that the payments were even reflected in the current account held by S&R (2005) Limited and onpaid through to 5TUNZ.
CFS remember is more commonly known as the place you go when you buy a second hand car from Enterprise Motor Group and you need finance.
It is owned indirectly by the Prasads through their company S&R (2005) Limited but the majority of shares are held indirectly by a party affiliated to Mr Fred Lewis who also owns Enterprise Motor Group, a major advertiser on the Radio Humm website.
The lawyers claim these payments “assisted in assuring Humm FM’s continued operation during the start-up phase when advertising revenues were low”. Yet in the same correspondence they claim the Prasads thought the payments “were in the nature of personal gifts, albeit as their circumstances permitted they would want to reciprocate the generosity”.
How would one seek to reciprocate generosity to a much wealthier party other than paying a loan back? This brings up the ownership question again. Was there expectation of receiving something over and above just repaying a loan?
Part III – The history of the proposed ownership of 5TUNZ
So what of MBIE?
Apparently all the facts in the first two parts of my series have been raised by Mr Khan with MBIE. They have not replied in any satisfactory way in monitoring radio licensing, which forced Radio Tarana to take costly legal action.
There are serious questions to answer as to why CFS and the Algie Family Trust were involved as intermediaries to cash transactions to shuffle facilitate money into 5TUNZ. Was it a loan? A gift? Financial assistance? Why was it not declared in statutory returns?
The cash from Lodhia could simply have been deposited into Mr and Mrs Prasads personal bank account (if it really was a personal gift or a loan for a private purpose) or directly into 5TUNZ (if it was a gift or a loan for the use of the business).
Was the money used to attempt to externally make 5TUNZ appear more solvent than it was? Or internally to make it look more indebted?
Let us go back to Mr Lodhia’s very concise confident comment to me:
“My only obligation and financial interest is in Radio Tarana”.
If that was really the case and $70,000 was the difference between Radio Humm succeeding and failing, why did he loan $70,000 to a competitor to Tarana to keep afloat the competition and to the detriment of where he had “obligation and financial interest”?
Who actually owns 5TUNZ?
In the letter to MBIE, the Prasads lawyers discussed Khan’s allegations that Mr Lodhia is in fact an ultimate beneficial owner of 5TUNZ. The Prasads and Mr Lodhia strenuously deny the allegations via the Prasads lawyers however admit that in a joint venture proposal proposed by Mr Lodhia’s accountant, documents were drafted that would see Mr & Mrs Prasad hold 50% of the shares in a declaration of trust for Lodhia. That would have had the effect of MBIE not knowing that Lodhia had an interest in 5TUNZ as the Companies Office records would show only 100% ownership by the Prasads.
Lawyers advised that this common ownership was against the local commercial licence restrictions.
They then even came up with a cunning alternative whereby shares would be divided into classes and a shareholders agreement was drafted. Mr Lodhia told me in an interview “we shelved the whole idea…we did not proceed”. If that was the case and legal advisors had red-flagged the issues you would think that the Prasads would be more prudent with disclosures and where they actually put the cash?
Is there a personal benefit to Mr Lodhia from Radio Humm?
In his discussions with me he downplayed this and made it clear that he is now just worried about getting his money back.
With the sort of lengths gone to by the Prasads to conceal the origins of $70,000 received by them in cold hard cash, the complex inter-related structuring and the trickiness since, so would I.