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INDIA
TODAY HINDI
CURRENT
ISSUE MARCH 03, 2003
THE NATION: BJP
Smoking Guns
Governments sloganeer about curbing corruption
but nothing changes on the ground. India Today looks at 14 major swindles
in the past 15 years that involve Rs 22,376 crore, 221 cases and 149 charge-sheets.
Till date there have been just 10 convictions
By Shankkar Aiyar
It's
a telling point. Demographically, over half of one billion Indians are
under 20 years of age. Ergo, almost half of India was not even born when
Rajiv Gandhi was engulfed in the Bofors scam. If they were born they would
have been too young in 1987 to understand the whys and hows of India's
first major political scandal. What they do know is that 15 years after
the expose, the Rs 64-crore scandal is still in the courts-there have
been no convictions as yet and the government has probably spent more
than Rs 64 crore in investigation and legal costs.
In a sense, the Bofors saga symbolises the infirmities
and impotency of the system when it comes to dealing with political and
financial scandals. It is not just Bofors either. The Bofors chronicle
simply symbolises a system that allows scamsters to cart and cash with
assured immunity for at least a decade. It is not as if these cases are
caught in the log-jam in courts. Many of the cases are being heard in
special courts. The fodder scam cases are being heard in seven special
courts in Ranchi and Patna while the 1992 stocks case is being heard in
special courts set up in Mumbai, Delhi, Alipore and Lucknow. But even
the setting up of these courts hasn't helped. True, in some cases the
delay is also a denial of justice to those accused. But the delays are
largely built-in advantages to scamsters.
Take the 1992 stocks scam. By the time Harshad
Mehta was finally convicted the first time-126 months after the fraud
was busted-he had been dead for a year. And over a dozen big and small
banks which were caught dancing to Mehta's tune are yet to get their monies
back. In fact the government has had to bail out some of these banks and
their affiliates using Rs 6,625 crore from the tax-payers' kitty. The
Income-Tax Department-which moved first, attaching properties of brokers
in the wake of the scam and stacking up claims of a staggering Rs 10,000
crore plus-is yet to collect its dues as the litigation drags in courts.
In the Bofors case itself, while the Hinduja brothers continue to take
the battle from one courtroom to another, two of the accused-S.K. Bhatnagar
and Win Chaddha-died in 2000 and 2001.
P.C. Sharma, director, CBI, characterises the
saga of delay as intrinsic to scams. Typically, the architect of swindles
is always someone in power or a person who has bought access to power.
Usually, defrauders are either politicians in power or those who generate
political power using public moolah. And the very access that allows swindlers
to script their scams also enables them to insure themselves from what
is famously called the law taking its own course. Says Sharma: "Even
when the law does take its own course, scamsters work the system using
a combination of illicitly created cushion of wealth and circle of influence
to try and evade the consequences." The surfeit of scams proves that
if a system cannot punish the guilty, it will but breed more scamsters.
BOFORS GUN
Rs
64 Cr
The Bofors Gun
Case filed: 22-01-1990
Charge-sheet filed: 22-10-1999 Convictions: None as yet
Recoveries: Nil
A conspiracy was hatched among executives of Bofors,
middlemen and officials of the government of India and a commission/bribe
of Rs 64 crore (SEK 319.40 million) was paid in the purchase of 410 FH-77
guns for Rs 1,437.72 crore (SEK 8410.66 million). Rajiv Gandhi denied
it but the Congress-which won the biggest majority ever in 1984-lost the
polls in 1989 as the prime minister and the Congress were tainted by charges
of corruption. Bofors continues to haunt the accused and the Congress
party. Among the accused: S.K. Bhatnagar, W.N. Chaddha, Octavio Quattrocchi,
Martin Ardbo, S.P. Hinduja, G.P. Hinduja and P.P. Hinduja. The scam resulted
in Congress' defeat in 1989, a probe by a Joint Parliamentary Committee
and has brought Parliament to a halt several times.
HDW SUBMARINE
Rs
32.55 Cr
Case filed: 05-03-1990
Charge-sheet filed: The CBI has asked for permission to close the
case Convictions: None as yet
Recoveries: Nil
In 1981, the government ordered four HDW submarines
from Germany at Rs 465 crore to be delivered by 1987. In 1987 only two
were delivered, leading the then defence minister V.P. Singh to order
a re-negotiation. The Germans refused, citing the payment of a 7 per cent
commission. Singh ordered a probe on April 9,1987, and resigned three
days later. Among others, the CBI charged S.S. Sidhu, former additional
secretary, Ministry of Defence (mod), S.K. Bhatnagar, secretary, mod,
G.C. Hinduja of M/s Sangam, London, and Howaldtswereke Deutsche Werft
(HDW) with conspiracy in signing the deal in return for a payment of DEM
101.3 million (Rs 32.55 crore). But letters rogatory sent to Switzerland
and Germany failed to yield any evidence.
STOCK MARKET
Rs
4,100 Cr
Harshad Mehta
Cases filed: 72, between 1992 and 1997
Charge-sheets filed: 47 Convictions: Four, including Mehta and Dalal
Recoveries: Nil
Using the fossilised regulatory structure of the government-securities
market, Harshad Mehta raised funds and rigged the stock market, pushing
shares like acc from Rs 500 to Rs 10,000. As Mehta emerged the Pied Piper
of Dalal Street, thousands of small investors followed him only to meet
their doom. As his game came unstuck, the markets came crashing-with the
Sensex falling from a peak of 4,467 on April 22, 1992 to 3,896 on April
28, 1992. Parliament was stalled; the RBI, the SEBI and a JPC probed the
scam. Plying this game with him were his brothers, Hiten Dalal and several
other market operators.
AIRBUS
Rs
120 Cr
Case filed: 23-03-1990
Charge-sheet: Not filed as yet Convictions: None as yet
Recoveries: Nil
A committee in 1984 chose Boeing 757 as the new aircraft for Indian
Airlines (IA) but following Rajiv Gandhi's visit to France it was Airbus
which got the order for 31 aircraft. It was only when an A-320 crashed
in Bangalore in 1990 that questions were raised. The V.P. Singh government
grounded the fleet and ordered a probe. The CBI's fir charged civil aviation
secretary S.S. Sidhu, K. Chadha, MD, IA, and other top IA officials with
receiving kickbacks from IAE of the us (which was to supply engines) and
Airbus Industrie, France. The file with damning evidence of payoffs was
found missing.
INDIAN BANK
Rs
762.92 Cr
Gopalakrishnan
Cases filed: 45 since 1992
Charge-sheets filed: 27 Convictions: None as yet
Recoveries: Nil. Government has pumped in Rs 2,675 crore to revive
the bank.
Helped by the main accused M. Gopalakrishnan, chairman and managing
director of Indian Bank, a series of borrowers-mostly small corporates
and exporters from the south-were lent huge sums of money which were not
repaid. Cases and charge-sheets were filed over five years from 1992 onwards.
The case saw the arrest, among others, of Gopalakrishnan-who has been
named in 35 of the cases-seven officials, and M. Varadarajalu, the biggest
borrower who was extradited from France in September 2001. The most time-consuming
probe after Bofors, it is yet to lead to any convictions.
HOUSING
Rs
65 Cr
Kaul and Thungon (right)
Cases filed: 11 in March and April 1996.
Charge-sheets filed: Three Convictions: Four junior officials in two cases
Recoveries: Nil
Jumping queues is an old Indian affliction. The Union Ministry of Urban
Affairs and Employment under Sheila Kaul and her junior P.K. Thungon found
that those afflicted were willing to pay to get houses allotted at chosen
locales much before their turn. So they devised a system of out-of-turn
allotments for government officials waiting for accommodation-on allegedly
compassionate grounds-for a price. Officials apparently paid between Rs
30,000 and Rs 80,000 depending on the size of the accommodation required.
It was then estimated that the scam which flourished between 1991 and
1994 was worth Rs 65 crore. Thwarted till date, the CBI is hopeful of
getting sanctions for the prosecution of Kaul and Thungon. It is also
expected to file charge-sheets in nine cases any time now.
FODDER
Rs
950 Cr
Yadav
Cases filed: 64 since March 1996
Charge-sheets filed: 63 Convictions: One (three officials)
Recoveries: Nil
In January 1996, the finance commissioner of Bihar asked district magistrates
and deputy commissioners to check the excess withdrawal of funds by the
Animal Husbandry Department following objections raised by the accountant
general. Raids revealed a Rs 950-crore racket patronised by politicians.
Among the accused are former chief ministers Laloo Prasad Yadav (jailed
six times), Jagannath Mishra and Rabri Devi.
PETROL PUMP
Sharma
Cases filed: 15 between Nov 1996 and 1997
Charge-sheet: None as yet Convictions: None
Recoveries: Nil
As Union minister for petroleum Satish Sharma favoured the chosen with
dealerships of cooking gas, kerosene and petrol pumps. Following a PIL,
the Supreme Court shot down 15 allotments and asked a committee to scrutinise
432 files relating to allocations between 1992 and 1996. Sharma was also
ordered to pay a fine but the order was reversed. In November 1996, the
CBI registered 15 cases, including one for possession of disproportionate
assets. It has since been waiting for sanction for Sharma's prosecution.
UREA
Rs
133 Cr
Case filed: 28-05-1996 Charge-sheet filed: 26-12-1997 Convictions: None as yet Recoveries: Nil
Typically Indian, the con was born of a shortage-of fertiliser-in the
market. C.S. Ramakrishnan, MD, National Fertiliser Limited, a group of
businessmen close to the P.V. Narasimha Rao regime (M. Sambasiva Rao,
Sai Impex) and Tuncay Alankus of M/s Karsan fleeced the government of
Rs 133 crore for the import of urea, which was never delivered.
CRB
Rs
1,031 Cr
Bhansali
Case filed: 20-05-1997 Charge-sheet filed: 02-09-97 Convictions: None Recoveries: Nil. Bhansali has petitioned the court for a revival
package.
Chain Roop Bhansali created a pyramid financial empire based on high-cost
financing. At its peak, his Rs 1,000-crore financial conglomerate comprised
a mutual fund, fixed-deposit collection, a merchant bank and a provisional
banking licence. Then his luck ran out. When the bubble burst in May 1997,
over one lakh depositors had lost Rs 1,031 crore. Bhansali was arrested
for a few weeks and later released on bail.
TELECOM
Rs
1,200 Cr
Sukh Ram
Cases filed: Four since August 1996 Charge-sheets filed: Four Convictions: One-all the accused have gone in appeal Recoveries:
Rs 5.36 crore seized
It was a scam that was transparent in its operation. If you were connected
with telecom, you knew it was happening. All purchases were routed through
the minister's office and a favoured few benefited. While the CBI found
evidence to file just one case against Union communications minister Sukh
Ram, dot official Runu Ghosh and businessman Paturu Rama Rao, the scam
that halted Parliament for weeks was believed to be worth over Rs 1,200
crore. Sukh Ram himself was caught with goods worth Rs 5.36 crore-including
Rs 3.61 crore in cash (Rs 2.45 crore at his Safdarjung Road residence
in Delhi and at his house in Mandi), a house in Ghaziabad worth Rs 1.2
crore, an orchard in Surath in Himachal Pradesh, jewellery worth Rs 10.
29 lakh and receipts of bank deposits worth Rs 4.92 lakh. By the cbi's
estimates, this was 631 per cent of his known sources of income.
UTI
Rs
9,500 Cr plus
Subramanyam (centre)
Case filed: One in July 2001 Charge-sheet: Not filed as yet Recoveries: Nil. Since then the government has sanctioned a Rs
6,000 crore bailout.
Deemed gilt, the units of UTI lost their sheen
as early as 1992 following the savage impact of the first scam. Thereafter
for several years the trust was used as a tool of political patronage
resulting in investments in dud PSU stocks and corporates. In 1997, the
government asked a committee to restructure UTI and bailed it out with
Rs 3,500 crore. Then UTI chief P.S. Subramanyam, though, had other ideas.
As trustees stayed somnolent and corporates encashed their connections,
UTI aped Ketan Parekh and invested recklessly through the boom. Allegations
of political manipulation triggered the formation of a JPC and a case
against Subramanyam for a Rs 32-crore investment in Lucknow-based Cyberspace.
KAYPEE
Rs
3,218 Cr
Parekh (left)
Cases filed: Three, in March and May 2001 Charge-sheets filed: Two Convictions: None as yet Recoveries: Nil
Ketan Parekh was a rookie when Harshad Mehta was calling the shots on
Dalal Street. If Mehta used bankers' receipts, Parekh used pay orders.
He funnelled crores of rupees into the K-10 stocks, which saw their prices
spurt. Parekh tripped finally when pay orders issued by the Madhavpura
Mercantile Cooperative Bank (MMCB) bounced, leading to a default with
the Bank of India. Even as the RBI reconciled accounts, it transpired
that the bigger hole was at the MMCB which lost Rs 1,030 crore.
HOME TRADE
Rs
1,200 Cr
Agarwal
Case filed: 10-05-2002 Charge-sheet: Not yet filed Convictions: None Recoveries: Nil
Even though the dotcom rage had died down, Home Trade managed to give
the impression of being the place which could manage your money. Unfortunately
for the investors, Sanjay Agarwal had simply reinvented the wheel-swindling
a series of cooperative banks and using their money in the stock market.
As the ripples spread, it transpired that more than 17 cooperative banks
in Maharashtra and Gujarat had been hit.
Back from the Brink
CURRENT
ISSUE MARCH 03, 2003
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