United States based CEO Mark Walter, known for his Wall Street prowess, is under scrutiny for his involvement in a troubled investment in India. The Gurugram police are investigating Infrastructure India Plc (IIP), which has received $320 million from entities linked to Walter and his firm Guggenheim Partners since 2011. According to a Bloomberg Businessweek investigation, these funds, intended to develop a logistics network, were mismanaged on dubious land deals and excessive management fees.
A whistleblower complaint has prompted the Gurugram police to scrutinize Rahul “Sonny” Lulla, Walter’s former partner, for allegedly embezzling millions. Lulla denies these allegations, attributing them to a disgruntled ex-employee. Walter, through his lawyer Dan Webb, stated he hasn’t been involved with IIP or its Cayman Islands holding company, GGIC Ltd., since 2013, though records suggest ongoing financial ties.
Despite red flags, including an auditor’s refusal to approve IIP’s accounts, Walter’s entity, IIP Bridge Facility LLC, lent $121.5 million to IIP. Today, $110 million of that debt risks losses for Walter’s insurers, though Webb assured that individual policyholders are unaffected.
Peter Collery, a hedge fund manager who lost $6 million on IIP, voiced his frustration: “It’s hard to imagine more of a disaster than Infrastructure India. The question is what the hell was Guggenheim doing?”
In February 2011, Tribone and Lulla proposed a reverse takeover to IIP’s directors. Existing shareholders invested £25.5 million, while GGIC added £7.5 million, a power operator, and a logistics business renamed Distribution Logistics Infrastructure (DLI). GGIC received a $1.5 million incentive and became IIP’s largest shareholder, controlling the board. Tribone and Lulla, as new chairman and CEO, introduced Franklin Park Management to oversee assets for a 2% annual fee of their net asset value, inflating IIP’s asset worth and fees. IIP, funding DLI’s expansion, incurred costly debts from GGIC and its affiliates. Franklin Park defended the loans as market rate and independently approved.
Bloomberg reports that Walter, along with Tribone and Lulla, established Guggenheim Global Infrastructure Co. (GGIC) in 2007 to acquire ports and power stations. By February 2011, Tribone and Lulla had positioned GGIC as IIP’s largest shareholder. Franklin Park Management, introduced by Tribone and Lulla, charged 2% of IIP’s net asset value annually, significantly increasing fees. IIP-related debt entered the portfolios of several insurance companies tied to Walter and his partners, exposing them to substantial financial risks.
In 2014, IIP sold $102 million in shares to Barnet Holdings Ltd., making it IIP’s largest shareholder. Despite Barnet’s description as a GGIC affiliate and shared directors with Guggenheim entities, its ownership remains unclear. Webb stated it isn’t affiliated with Guggenheim, while Tribone and Lulla claimed no knowledge of its backers.
After the 2008 financial crisis, Guggenheim Partners began buying insurance companies, providing access to vast capital pools. This enabled investments in diverse assets, including the Dodgers. In 2013, Guggenheim formed an in-house infrastructure group, restructuring GGIC and severing exclusive rights to its name for Tribone and Lulla. Walter maintained ties, with Guggenheim retaining a 10% stake in GGIC. Loans from Walter-affiliated companies kept IIP afloat. GGIC, owning about 25% of IIP, acts solely as a financing vehicle, claims Webb, with Tribone and Lulla running both GGIC and IIP, creating a complex financial web.
By mid-2018, IIP faced a financial crisis, with debts nearing $100 million each from GGIC and Indian lenders. A $30 million raised by selling a toll road was quickly consumed. Creditors agreed to a moratorium on interest payments, but debts continued to grow. A potential buyout by Singaporean investors fell through after due diligence. Walter’s IIP Bridge Facility provided a $121.5 million emergency loan at 15% interest, preserving Franklin Park’s management deal amid a PR crisis following a $20 million SEC fine over conflicts of interest involving Boehly and Milken. A whistleblower later alleged undisclosed links in deals and potential conflicts.
As DLI struggled, IIP’s secretary acknowledged high management fees to Collery, citing Guggenheim’s conditional support on Franklin Park’s involvement. Collery received emails alleging misappropriation of funds through related-party transactions. An investigation found no evidence of corruption but highlighted $100 million in transactions with entities managed by DLI’s directors.
Last September, IIP attempted to sell DLI to Sical Logistics Ltd. for $10 million plus a stake in the combined entity, but the deal fell through. Former DLI managing director Karunakaran Sathianathan filed a police complaint against Lulla and others, alleging financial misconduct. Franklin Park denied the accusations, claiming Sathianathan was fired for poor performance and misconduct.
Collery’s fund lost over $6 million, while insurance companies controlled by Walter and associates face significant losses. Walter’s lawyer insisted that any IIP default wouldn’t harm policyholders due to the relative size of the IIP loans. Despite billing IIP £5.5 million annually until September 2021, Tribone and Lulla haven’t received payments since the end of 2021. As of April 13, Indian lenders issued a loan recall notice to DLI, and a last-minute buyer for DLI is being pursued, though its success remains uncertain.