GLITZKREIG: Agarwal spent Rs 20 crore on Home Trade's launch; (above) the sealed office

Sanjay Agarwal, the absconding CEO of the collapsed Home Trade, gave life a new definition. He sold the slogan "Life means more" to the public. Life for Agarwal definitely meant a lot more. He founded his dream, Home Trade, through an advertising blitz unparalleled in India when he brought together Sachin Tendulkar, Hrithik Roshan and Shah Rukh Khan in February last year to endorse a brand that seemed to have no underlying product. Starting as a financial services portal, Home Trade was to become so popular that its logo would be stamped on T-shirts, mutual fund applications, shares of companies, perhaps even toilet paper.

A year later, Agarwal presides over the debris of his dream, hiding to escape arrest for allegedly duping close to 20 cooperative banks. He is charged with taking Rs 400 crore from these banks to buy government securities on their behalf and failing to hand the gilts over to the banks.

The 100-odd employees of the Mumbai-based Home Trade are shell-shocked. "How could he do this?" is the standard response. Till less than a month ago, they had sworn by Agarwal. Some had given up successful careers to hitch a ride on to his dream wagon either as employees or to work in entities that provided support to the project. For several months, the gravy train chugged along fine. The staff could walk into Agarwal's room when they wanted, always finding there a boss who "welcomed" new ideas. They admired his Armani T-shirts, yet found it strange that this 35-year-old bachelor from Kolkata who loved the good things in life had not changed his white Opel Astra in over two years.

The first signs of trouble came towards the end of 2001 when salaries started coming late. The glitch was blamed on the bad market conditions, an excuse that worked fine at the time. The cash flow slowed down to a trickle when a Hong Kong-based NRI investor, Baluchan Rai, believed to have turned off the tap in January this year. Major funding for Home Trade came from a Mauritian firm, EDTV, which was owned by Agarwal's brother Dhananjay Agarwal. Finance Director N.K. Trivedi and Ketan Sheth, a broker, were also major shareholders in Home Trade. Both, along with another promoter Subodh Bhandari, are absconding.

Agarwal's public relations agency Adfactors walked out on him in March 2002 as did Scapevelocity, the company which was developing and maintaining the website. Almost all have some dues to claim from Agarwal. Hrithik Roshan has slapped a bill of Rs 65 lakh, though model Malaika Arora says she got her dues. A content provider for the Home Trade website is saddled with more than Rs 4 lakh in unpaid bills and has shut down his venture.

Otherwise a confident man, Agarwal was petrified of the media. A call from a newspaper would send him into a tizzy, recalls an employee. Obviously, he had lots to hide. A peep into his past and some recent interactions his company had with stock exchanges reveal his true story.

On January 16, 1997, when the Sensex oscillated by over 330 points (157 up and then 176 down) in the span of an hour, Agarwal, CEO of Lloyds Brokerage, and his team were punching in transactions at breakneck speed. A probe by SEBI found that Agarwal's firm was the biggest trader that day. It was suspected that prices had been rigged, and SEBI served a show-cause notice to Lloyds Brokerage. But even while the proceedings were on, EDTV bought out the management control of Lloyds for a piffling Rs 1.50 a share and renamed it Euro-Asian Securities. Surprisingly, SEBI gave its nod to the change in management, even though the firm was being probed for a serious charge. With the management having changed, SEBI could take little action against Lloyds Brokerage and let it off with a warning in October 1999.

Euro-Asian Securities then offered its shares to the public at a hefty Rs 50 per share, raising Rs 30 crore from the issue. A large chunk of the issue was mopped up by just a handful of people, with 42 shareholders holding more than 97 per cent of the company's equity. It could not get listed on the Bombay Stock Exchange (BSE) and opted for the Pune Stock Exchange (PSE). The company was then renamed Home Trade.

Though thinly traded, the company's share price remained strong. It was later discovered that a clutch of brokers were trading among themselves. No regulator bothered to check on whose behalf these brokers were transacting. The Home Trade share hit a high of Rs 890 in mid-2000.

Agarwal was desperate to get Home Trade listed on the BSE and the NSE for the alleged purpose of jacking the share price further, which he could have easily done given his control over 94 per cent of the company's shares. Perhaps he was on the lookout for an opportune time to offload a chunk of his stake in Home Trade and make a killing. But his plans went awry when both the exchanges rejected the listing. Intriguingly, BSE had cleared the listing on April 19 but revoked it a week later. One reason for this was that almost 99 per cent of Home Trade's Rs 67 crore revenue in 2000-1 came from inter-group share transfers.

What blew the lid off the scam simmering within Home Trade were its dealings on behalf of certain cooperative banks. Agarwal took money from nearly 20 banks to buy government securities for them and then allegedly sold the same securities to other banks. The banks were given only photocopies of the certificates so they never suspected anything. Investigators reveal that in September 2001, Agarwal bought government securities worth Rs 55 crore for Pune-based Sadguru Jangli Maharaj Cooperative Bank and gave it a photocopy of the certificates. These securities were then allegedly resold to the Nagpur District Central Cooperative Bank (NDCCB). Although government securities worth several hundred crores of rupees were ostensibly bought by Home Trade, only a fraction were delivered to the banks.

Another theory says that Agarwal bought the government securities but used them as collateral to take loans from banks. Some even say that he never bought the government securities and instead gave forged contract notes, while deploying the money elsewhere and keeping the cooperative banks happy by giving them a fixed rate of return.

Having turned into a cooperative bank scam rather than just a failure of Home Trade, it is likely that investigations will expose a vicious broker-banker-politician nexus running across several cooperative banks and brokerage firms. NDCCB Chairman and Nationalist Congress Party leader Sunil Kedar, who is also a former state minister, has already been arrested for alleged collusion with Agarwal. More heads will roll. "This is just the tip of the iceberg. Where this scam will end no one knows," says BJP MP Kirit Somaiya.

For the enforcement agencies, the first task is to nab Agarwal. For the RBI and SEBI, it is time to scrutinise all banking and stock market transactions of Agarwal and his associates. All those who have burnt their fingers in this scam can find solace in Agarwal's mantra-life means more.