REPORT ON RESEARCH PROJECT

OF

FINANCIAL SCAMS IN INDIASubmitted in partial fulfilment of the requirement of the

Masters in Business Administration ProgrammeOffered by Jain University during the year 2013-14

BY

MOHAMMED MAAZ3rd Semester MBA

UNDER THE GUIDANCE OFPROF.SHRUTI AGARWAL

# 319, 17th Cross, 25th Main, JP Nagar 6th Phase Bangalore – 560 078Phone : 080-43430400, Fax : 080-26532730

E-mail : mba@cms.ac.in, Website : www.bschool.cms.ac.in

Declaration

I, hereby declare that this Lab Hours / Project (Research Project) on FINANCIAL SCAMS IN INDIA is prepared by me during the academic year 2014-15 under the guidance of prof. Shruti Agarwal.

I also declare that this project which is the partial

fulfillment of the requirement for MBA programme Offered

by Jain University, it is the result of my own efforts with the

help of experts.

Name : MOHAMMED MAAZSem : 3rd Sec : “C”Reg.No : 13MBA63049

Date :

Place :

Signature

ACKNOWLEDGEMENT

It gives me immense pleasure in presenting the project

report on Financial Scams in India

Firstly, I take the opportunity in thanking almightily and my

parents without whose continuous blessings, I would not

have been able to complete this project.

I would like to thank my project guide Prof. Shruti Agarwal

for her great help, valuable opinions, advice and suggestions

in fulfillment of this project.

I am also grateful to Prof. Durga Praveena for encouraging

me to select the project topic.

I am thankful to our college for all the possible assistance

and support, by making available the required books and

the internet room which have proved useful to me in

successfully completing my project.

I hope that I have succeeded in presenting this project to the

best of my abilities.

CONTENTS:

SR.NO PARTICULARS PG.NO

1. Abstract

2. Introduction on financial scams

3. Scam 1 – 2g spectrum

4. Scam 2- CWG Scam

5. Scam 3- SATYAM Scam

6. Scam 4- Part 1: HARSHAD MEHTA Scam Part 2: KETAN PAREKH Scam

7. Scam 5- CRB Scam

8. Conclusion

9.Refrences

ABSTRACT

EXECUTIVE SUMMARY:

The findings are based on a comprehensive survey, cutting across several

industrial sectors, both public and private. 'Strikes, Closures and Unrest'

emerged as the number one risk in the survey report. In the year 2012, it

did not surface among the top five risks in the 'Overall Risk Rating'. The

risk of 'Political and Governance Instability' has significantly changed

position from number eight last year to number two this year.

'Information and Cyber Insecurity', 'Fire' and 'Crime' have been rated at

number three, five and six respectively. They have maintained their

position among the top six risks from the India Risk Survey 2012

onwards. The risk of 'Corruption, Bribery and Corporate Frauds' has

been acknowledged as risk number four. In 2012, India was ranked 94

among 176 countries on the Corruption Perception Index and the

Financial Stability Report of the Reserve Bank of India revealed that

losses of INR 4,448 crores (approx. USD 8.2 billion) to Indian banks

from financial frauds in 2012 were the highest ever.

RESEARCH OBJECTIVE:

An attempt is made to examine and analyze in-depth about various

“Financial” scandals, which brings the limelight to the importance of

‘ethics’ and corporate ‘governance’. The fraud committed is a testament

to the fact that “the science of conduct is swayed in large by human

greed, ambition, and hunger for power, money, fame and glory.”

Scandals from India have, time and again proved, that “there is an urgent

need for good conduct based on strong corporate governance, ethics and

accounting & auditing standards.” Unlike Enron, which sank due to

‘agency’ problem, Satyam was brought to its knee due to ‘tunneling’

effect. The Satyam scandal highlights the importance of securities laws

and CG in emerging markets. Indeed, Satyam fraud “spurred the

government of India to tighten the CG norms to prevent recurrence of

similar frauds in future.” Thus, major financial reporting frauds need to

be studied for ‘lessons-learned’ and ‘strategies-to-follow’ to reduce the

incidents of such frauds in the future.

INTRODUCTION ON FINANCIAL SCAMS:

What are scams?

A fraudulent scheme performed by a dishonest individual, group,

or company in an attempt obtain money or something else of value.

Scams traditionally resided in confidence tricks, where an individual

would misrepresent themselves as someone with skill or authority, i.e. a

doctor, lawyer, investor. After the internet became widely used,

new forms of scams emerged such as lottery scams; scam

baiting, email spoofing, phishing, or request for helps. These are

considered to be email fraud. Also see phishing, scheme.

A scam is a dishonest attempt to trap you into parting with your money.

A 'scammer' may make a personal approach, with an offer too good to be

true. Someone may email you, phone, text-message or post an offer that

they press you to take up. Scams can reach their target audience in many

ways, ranging from a one-person door-stepping operation, through to

multinational highly sophisticated telemarketing scams. Advertisements,

direct mail, text messaging, phone calls and e-mail are all widely used.

However SCAM means when a person tries to deceptively cheat you by

first giving you a very good offer about something but later on you would

be shocked to know that the person was simply bluffing and you have lost

your money. An example of this can be the lottery scam. For example a

person calls or emails you and tells you that you have won a lottery prize

but to get the money there is a small processing fee, you have to pay that

fee and then the money would be sent to you.

The top ten financial scams in India:

1) 2G Spectrum Scam

2) Commonwealth Games Scam

3) Satyam Scam

4) Telgi Scam

5) Bofors Scam

6) The Fodder Scam

7) The Hawala Scandal

l8) IPL Scam

9 )Harshad Mehta Stock Market Scam

10 )Ketan Parekh Stock Market Scam.

SCAM 1

2G Spectrum scam

Introduction to 2G

2G is short term for second-generation wireless telephone technology.

Second generation 2G cellular telecom networks were commercially

launched on the GSM standard in Finland by Radiolinjain 1991.

Three primary benefits of 2G networks over their predecessors were that

phone conversations were digitally encrypted; 2G systems were

significantly more efficient on the spectrum allowing for far greater

mobile phone penetration levels; and 2G introduced data services for

mobile, starting with SMS text messages.

After 2G was launched, the previous mobile telephone systems were

retrospectively dubbed 1G. While radio signals on 1G networks are

analog, radio signals on 2G networks are digital.

2G has been superseded by newer technologies such as 2.5G, 2.75G, 3G,

and 4G.

2G SPECTRUM SCAM

The 2G spectrum scam involved officials from the government of India illegally undercharging mobile telephony companies for frequency allocation licenses, which they would use to create 2G subscriptions for cell phones. The shortfall between the money collected and the money which the law mandated to be collected is estimated to be 1, 76,379 crore (1.763 trillion) rupees (roughly

equivalent to 39 billion US dollars) based on 3G auction prices. The issuing of licenses occurred in 2008, but the scam came to public notice when the Indian Income Tax Department was investigating about the political lobbyist Nira Radia.

The government's investigation and the government's reactions to the findings in the investigation was the subject of debate, as were the nature of the Indian media's reactions.

Much of the credit of bringing this whole scam into public light and pursuing it in the court of law goes to Subramanian Swamy who is the chief petitioner for this case in the court of law.

2G licenses issued to private telecom players at throwaway prices in 2008.

This scam has cost the government total loss of Rs. 1.76 lakh crores.

Rules and procedures floated while issuing licenses.

Main accused behind the scam:

He is A. RAJA one of the main person behind India’s largest corporate fraud.

Andimuthu Raja born on May

10, 1963, Tamil Nadu, India, is

an Indian politician from

theDMK political party. He was

a member of the 15th Lok

Sabha representing

the Nilgiris constituency of Tamil Nadu.In 2007, he became cabinet

minister for communication and information technology. On being re-

elected in 2009 he was again appointed cabinet minister for

communication and information technology until being tainted in the

2G spectrum scam and resigning in 2010.

HIS INVOLVEMENT IN 2G SCAM

The 2G spectrum financial scandal in the Telecommunications and IT

Ministry under A. Raja is noteworthy as the largest political corruption

case in modern Indian history, amounting to a record $40 billion loss

from under pricing to the Government of India. The alleged modus

operandi was telecom bandwidth being grossly undervalued and offered

to a chosen few with vested interests, on a dubious 'First-Come-First-

Served' basis. It is alleged that it should have been put under a transparent

auction system, purportedly advised by higher office.

An FIR filed by the CBI claims that the allocation was not done as per

market prices, resulting in a scam worth 200 crore (US$40.56

million).However it had been alleged by Arun Jaitley of Bhartiya Janata

Party (BJP) that the scam is worth around  176,000 crore (US$35.69

billion). The Comptroller and Auditor General holds Raja personally

responsible for the sale of 2G spectrum at 2001 rates in 2008, resulting

the previously mentioned loss of up to Rs. 1.76 lakh crores (US$40

billion) to the national exchequer.

In August, 2010, evidence was submitted by the CAG showing that Raja

had personally signed and approved the majority of the questionable

allocations. Although the political opposition was demanding his

resignation over the 2G spectrum scam, Raja initially refused to resign

stating his innocence, and this view was backed by his party

president M.Karunanidhi.

The financial scam eventually led to Raja's resignationon the 14th of

November, 2010. There will be further criminal investigation and action

on Raja with reports being filed by the CAG and the Central Bureau of

Investigation (CBI).

In 2011, the results of an investigation by retired judge Shivraj Patil, who

was appointed by current telecom minister Kapil Sibal, has also found

Raja to have been directly responsible for "procedural lapses" regarding

the spectrum scandal.The CBI and Enforcement Directorate estimate that

Raja could have made as much as Rs 3,000 crore from the alleged bribes.

In January and February 2011, Raja's homes and offices were raided by

the CBI. Raja and two former associates were arrested on February 2,

2011. After the end of his custody with CBI, Raja was sent to Tihar

Jail for judicial custody until March 3, 2011.His stay in the Tihar Jail was

then extended, first to March 17and then to March 31.under judicial

custody.

He was later backed by his party DMK after his arrest and in general

meeting in Chennai party passed a resolution in favor of Raja stating that

until charges are proven he is not guilty.

CHARGES ON FORMER TELECOM MINISTER A.RAJA

CHEAP TELECOM LICENSES

 Entry fee for spectrum licenses in 2008 pegged at 2001 prices.

Mobile subscriber base had shot up to 350 million in 2008 from

4million in 2001.

NO PROCEDURES FOLLOWED

• Rules changed after the game had begun.

• Cut-off date for applications advanced by a week.

• Licenses issued on a first-come-first-served basis.

• No proper auction process followed, no bids invited.

• Raja ignored advice of TRAI, Law Ministry,and Finance Ministry.

• TRAI had recommended auctioning of spectrum at market rates.

Parties accused of involvement

The selling of the licenses brought attention to three groups of entities -

politicians and bureaucrats who had the authority to sell licenses,

corporations who were buying the licenses and media professionals

who mediated between the politicians and the corporations.

Politicians involved A. Raja - the Minister of Communications and Information

Technology who sold the licenses

M. K. Kanimozhi - Rajya Sabha MP

Bureaucrats involved Siddharth Behura - Former Telecom Secretary

RK Chandolia - Raja's private secretary

Corporate Executives involved

Gautam Doshi - Managing Director of Reliance Anil Dhirubhai

Ambani Group

Surendra Pipara - senior vice- President of Anil Dhirubhai Ambani

Group and Reliance Telecom

Hari Nair - senior vice-president of Anil Dhirubhai Ambani Group

Sanjay Chandra - Managing Director of Unitech Wireless (Tamil

Nadu) Ltd

Shahid Balwa - DB Realty promoter

Vinod Goenka - DB Realty promoter

Sharath Kumar - Managing Director of Kalaignar TV

Rajiv Aggarwal and Asif Balwa- chief executives of Kusegaon

Fruits and Vegetables

Film and Entertainment persons involved Karim Morani - Cineyug Media and Entertainment Ltd’s Director

Corporations accused Unitech Group a real estate company entering the telecom industry

with its 2G bid; sold 60% of its company stake at huge profit

toTelenor after buying licensing.

Swan Telecom sold 45% of its company stake at huge profit

to Emirates Telecommunications Corporation (Etisalat) after

buying licensing.

Loop Mobile

Videocon Telecommunications Limited

S Tel

Reliance Communications

Media persons accused

Nira Radia, corporate lobbyists whose conversations with

politicians and corporate entities were recorded by the government

and leaked creating the Nira Radia tapes controversy.

Barkha Dutt, an NDTV journalist alleged to have lobbied for A.

Raja's appointment as minister.

Vir Sanghvi, a Hindustan Times editor alleged to have edited

articles to reduce blame in the Nira Radia tapes

RESPONSE TO SCAM

A government of India takes some important steps looking forward in this Scan:

Set up a special branch of CBI to look into this matter.

Telecom Minister resigns his post after Scan.

A Raja also arrested by the Police.

CBI is also interacting with the brothers of A Raja and also some business men.

In early November 2010 Jayalalithaa accused the state chief minister M

Karunanidhi of protecting A. Raja from corruption charges and called

for A. Raja's resignation. By mid November A. Raja resigned.

In mid November the comptroller Vinod Rai issued show-cause notices to

Unitech, S Tel, Loop Mobile, Datacom (Videocon), and Etisalat to

respond to his assertion that all of the 85 licenses granted to these

companies did not have the up-front capital required at the time of the

application and were in other ways illegal. Some media sources have

speculated that these companies will receive large fines but not have their

licenses revoked, as they are currently providing some consumer service.

SCAM 2Common wealth games scam

The Commonwealth Games is an international, multi-sport event that involves athletes from the Commonwealth of Nations. It was first held in 1930 and has been taking place every four years, except the 1950 British Empire Games, which took place after a 12-year gap from the 3rd edition of the games. The Games are the third largest multi-sport event in the world just after the Olympic Games and the Asian Games

The 2010 Commonwealth Games were held in New Delhi, India from 3rd to 14th October, 2010. Officially known as XIX Commonwealth Games, the event saw a huge participation of 6081 athletes from across 71 Commonwealth nations and dependencies, competing against each other in 21 sports and 272 events, making it the largest Commonwealth Games till date. They were also recognised as the first Green Commonwealth Games.

The Games were used by India to showcase its potential as a strong emerging economy in front of the world and was considered as a stepping stone to the next destination of hosting the Olympic Games. The event grabbed lot of international media attention, prior to the advent of the games also. Hosting an event of this magnanimity, led the Central and New Delhi government to undertake a lot of infrastructural development in and around the city. From four lanes flyway to expansion and modernization of Indira Gandhi International Airport, from teaching English to bus drivers to streamlining the power distribution process, the government undertook various measures.

The initial cost of the Games, as estimated by India Olympic Association in 2003, was 1,620 crore (US$294.84 million) which escalated to 11,500 crore (US$2.09 billion) as the official total budget for the Games in 2010.However, delays in deadline of infrastructure development etc. has rocketed the cost to be somewhere near 70,000 crore, making it the most expensive Commonwealth Games ever. Various scams and scandals started circulating the Games even before they started and it involved business units both from public and private sector and politicians, bureaucrats and corporates.

Queen Baton RelayThe first major scam that hit the Games was in July, 2010, when the British government raised questions over a substantial amount of money that was transferred to a little known UK company A M Films company from the Games Organizing committee(OC) for the Queen Baton Relay held in London. The entire deal came under scanner when the OC asked for VAT refund of £ 14,000 in March 2010 but there was no written contract between CWG and A M Films. Also the cars, vans etc. were rented at exorbitant prices, no tendering procedure was followed and even relevant paper work for the contract was absent. About £ 4.50 lakh was transferred to this firm, with no concrete deal to back it. The OC said it made payment of nearly £2.5 lakh for video equipment purchase while the opposite party claimed of providing services of car hire, makeshift toilets, barriers and electricity.

Pulling out of sponsors

This was followed by two state run firms- NTPC and Power Grid Corp of India withdrawing their sponsorship of the CWG due to the negative publicity stemming from various allegation of mismanagement of funds by the OC. Just a week before that, Premier brands- the merchandising partner of CWG pulled out of the event.

EMAAR MGF

Inspection of the CWG Village built by EMAAR-MGF in September showed the poor state of the entire preparation. The infrastructure was of poor quality, with leakages, water clogging, collapse of a footbridge etc. thus making the entire village filthy and uninhabitable. The company was penalised for 183 crore for the structural defects and inadequate amenities like power and waste supply which resulted in major irregularities in the construction of CWG Village.

Timing, Scoring and Results system

An illegal contract was awarded to Swiss firm , Swiss Timing Omega, to install Timing, Scoring and Results (TSR) system for the 2010 CWG at an exorbitant rate of 90 crore, by the OC of the games. The OC had rejected the lowest bid quoted by Spanish firm MSL of 62 crore and

granted the contract to Swiss timing Omega, causing a loss of over 90 crore to the exchequer. Charges related to forgery, cheating and conspiracy have been already filed against members of OC Suresh Kalmadi, Lalit Bhanot, V K Verma, Surjit Lal, ASV Prasad, M Jayachandran, promoters of two construction companies P D Arya and A K Madan of Faridabad-based Gem International and A K Reddy of Hyderabad-based AKR Constructions, Swiss timing Omega.

Irregularities in tendering of contracts

The status in the society gave the organizing committee full freedom to exercise its own rules as noted by CAG. The organizing committee gave contracts worth 310 crores purely on the basis of nomination and no tender was floated for the same, which included the much debated aerostat contract. K-Events, an Italian firm was appointed by OC on the basis of nomination of the company Wizcraft.

28 contracts to the tune of 356.14 were awarded on the basis of single contract. In some cases the other tenders were disqualified on the basis of questionable grounds. One such example was the Village catering and the Games Management system.

CBI booked Suresh Kalmadi and in its charge sheet has given details of how he bent the rules and overlooked objections raised by government officials to grant the contract to a Swiss form for TSR causing a loss of 95 cr to the exchequer.

Contracts for overlays, waste management , image look (14 contracts) worth Rs 1253 crores were awarded to vendors who didn’t fulfill the eligibility criteria stipulated in the tender contract.

Impact on the infrastructure

The Commonwealth games related infrastructure projects left the capital city like a war zone . Practically all the roads were dug up and the building materials lying everywhere. Pedestrians had to jump over the cables and rocks as the pavements resembled like craters. With the amount to the tune of 50,000 cr invested the people of the country expected a better output.

The below mentioned are the highlights,

The newly built shooting range at the Siri Fort area collapsed after one heavy shower.

The foot over bridge adjacent to the main venue of the Commonwealth Games collapsed while being erected, injuring 27 workers who were dumped into a tow away truck to a municipal hospital and dished out a compensation of measly Rs 50,000 ($1097) for broken skulls and multiple fractures.

Many of the games venues leaked during the monsoon and roofs of some collapsed.

The Commonwealth Games village, the place where athletes from participating countries were put up was infested with dog poo, snakes, clogged toilets, and unfinished work.

Quality Compromised

The CVC scrutinized several games related stadia up gradation and civil works projects including construction of roads, pavements, road grade separators, street lighting etc., which cumulatively added to 2,477 crore. During the course of its investigation the CVC zeroed in on role of the third party quality assurance agency appointed by civic agencies to

monitor the quality of work and materials. The CVC concluded that all the certificates issued were without any ground verification or technical examination and were all fake or forged.

Funds from the SC/ST development were diverted in the CWG games expenditures.

The equipment for the CWG was hired by the OC at a rate of atleast 14 times the actual price. The committee had hired equipment at an inflated rate of Rs. 42.34 crore (over Rs 1400 higher) against the actual cost of Rs. 2.80 crore , thus giving undue benefits to the companies . Medical equipment including treadmills had been bought or rented at atleast 6-7 times higher than their original price. Simple things like liquid soap dispensers were rented at a price of Rs 9,379.

Apart from the financial irregularities there were many other implications such as displacement of over one lakh families due to infrastructure projects , locking up homeless citizens & beggars , exploitation of workers and child labor and the list continues.

Suresh Kalmadi’s bail, A surprise ?

Though Mr Kalmadi was arrested under sections of 120 B and 420 (criminal conspiracy and cheating) and jailed for over 10 months, he was granted bail on January 18, 2012.

The investigation for the report declared: Even though, his name had figured in the FIR lodged by the police, in the charge sheet filed by Central Bureau of Investigation (CBI), his name wasn’t mentioned at all !!

Justice Gupta gave his verdict in favour of Mr Kalmadi stating that there was no allegation of money trail to him (and Mr Verma) and also all the allegations of him threatening the witnesses and tampering with evidences were incorrect. The bench also upheld stating that there was no allegation that the accused will flee from law and trial and hence could be granted bail.

So, Mr Kalmadi was allowed to walk scot-free with a bail amount of Rs 5 lakhs.

The other pointers of the funds mis-management included:

After having won the bid to host CWG, the initial budget that was quoted was around Rs. 200 crore. Then considering the other aspects, it was escalated to Rs. 800 crore citing reasons for the beautification of the city etc. And finally they approached the Cabinet with a proposal of over Rs. 1600 crores. To add to the fury, Organizing Committee rarely met and endorsed post-facto decisions, which were taken in a centralized system.

As against the originally approved 36 member panel who were to travel to London for the Queen’s baton, 52 people had gone to London (including Mrs Suresh Kalmadi), thereby leading to an extra Rs. 14 lakh expenditure, which had to be borne entirely by the Organizing Committee (OC).

There have been signing up of documents and agreements by Mr Harish Sharma who had booked 102 hotel rooms for the OC officials. Two brazen things that unfolded were: the rooms were “null and void”, although money was paid for the same. Secondly, the post of Mr Sharma as “Joint Secretary”, did not exist. Also, several gift items were purchased, an entry of which was never made in the accounting books.

Mr Kalmadi had also caused a huge loss of over Rs 90 crore, when he awarded the contract to install the Timing, Scoring and Result systems (TSR) to a Swiss firm at an exorbitant price. Also, there were cases of the gym equipment - imported from China, were not only of sub-standard quality but also heavily priced.

CWG : A potpourri of mishaps

It glorified national shame rather than the national pride. When more than a third of the nation is reeling under poverty, there was no need for such an extravaganza, wherein the funds could have been actually used appropriately for building up the nation. It was completely “irrelevant to the common man”, whose daily concern is to feed the family rather than the commonwealth games. This was reiterated by the facts like the streets of Delhi were deserted during the cycling competition and also most of the stadia were unoccupied during the games. Also, the volunteers (10000 out of 22000) had quit less than a week before the event.

There had been usage of the child labor on a very large scale for the construction activities. The wages that were paid were below the market price that has been set for the Labourers. Also the construction activities did not provide a proper rehabilitation to the dislodged residents (especially the slum dwellers).Their houses simply paved the way towards the construction of the swanky footpaths, malls and roads and these poor people were neither compensated for their land, nor rehabilitated properly.

Also, there were instances of racism that were reported, wherein the athletes from Africa were not given an accommodation on par with their Australian or New Zealander peers. The racism also penetrated into the actual games, wherein there was a display of racial bias towards the African athletes.

Also the safety of the athletes was not taken into consideration. There were heavy boycotts by the athletes citing various reasons for pull-out at the last moment - ranging from safety to dengue fever and improper accommodation.

To add another feather to the cap of sham, Indian athletes who had won in competitions had been tested positive for the intake of the performance enhancing drugs. Also, in certain cases, when India did not win a medal, there were many hoot calls by the Indian audience - instances of various ethnic and racial slurs at the foreign athletes

Also, there were lot of financial irregularities in the payments and many cooked up transactions for which there were no deliveries or excess payment.These set of events have definitely given an indication to the globe about the “chalta hai” attitude of the Indians and is a clear interpretation that India is unable to host any major international sports meet.

It was truly a “Common-wealth” Games, where the management had clearly mismanaged the common-man’s money in the name of the Organization of the games. It was simply a drain of the public funds.

SCAM 3

SATYAM SCAM

Introduction on satyam computer services .ltd:

Satyam Computer Services Ltd.

Is a consulting and information technology services company based in

Hyderabad, India .It was found in 1987 by B.Ramalinga Raju.

The company offers information technology (IT) services spanning

various sectors, and is listed on the New York Stock Exchange and Euro

next. It is considered as an icon among the IT companies and at one point

had over billion dollar revenue. Sat yam’s network covers 67 countries

across six continents. The company employs 40,000 IT professionals

across development centers in India, the United States, the United

Kingdom, the UAE, Canada, Hungary, Singapore, Malaysia,

China, Japan, Egypt and Australia. It serves over 654 global companies,

185 of which are Fortune 500 corporations.

Satyam has strategic technology and marketing alliances with over 50

companies’ .Apart from Hyderabad; it has development centers in India

at Bangalore, Chennai, Pune, Mumbai, Nagpur, Delhi, Kolkata,

Bhubaneswar, and Visakhapatnam.

Satyam Maytas Fiasco:

Satyam Computers had on December 16, 2008, announced that it will

acquire two group firms - Maytas properties and Maytas Infra. The BOD

of Satyam had approved the founder’s proposal to buy 51 per cent stake

in Maytas Infrastructure and 100 % in Maytas Properties. The total

outflow for both the acquisitions was expected to t be US$ 1.6 bn

comprising of US$1.3 bn for the 100% stake in Maytas Properties and

US$ 0.3 bn for the 51% stake in Maytas Infra.This is the move that

sparked a row over alleged violation of corporate governance laws. This

deal is not profitable for investor’s .So after this announcement they

started to raise their voices against the deal.

Maytas infrastructure:

The company is run by the sons of Ramalinga Raju .It was started in the

late 1980’s by Ramalinga Raju. The main reason for the debacle of

Maytas Infra is due to the debacle of Satyam.

Maytas properties:

One of the reasons for the debacle of Maytas properties is the ongoing

economic slowdown. The company has huge land banks and the prices

have dropped down in the real estate significantly.

ANALYSIS:

The truth is as old as the hills" opined Mahatma Gandhi, So a company

named "Satyam" (Truth, in Sanskrit) inspired trust,

Satyam Computer’s is a multinational company established in 1987 by

B.Ramlinga Raju in Hyderabad, India. Company offered information

technology (IT) services spanning various sectors all over the world &

was very well known in Stock Exchange with an increasing price of the

shares of company. Satyam network covered around 67 countries across

six continents with 40,000 IT Professionals working in India, US, UK,

UAE, Canada, Hungary, Singapore, Malaysia, China, Japan, Egypt and

Australia. It even serves 654 global companies. Within no time, business

was booming. Andhra Pradesh, of which Hyderabad is the capital, has

one of the largest pools of skilled manpower in India. Satyam would

prove a doughty competitor to its rivals, pricing its services so

aggressively that some thought it was prepared to go with minimum

profits in order to gain customers. And it expanded aggressively overseas.

When he opened his Sydney office a few years ago, he occupied premises

vacated by a top global IT firm. In China , provincial leaders vied to

invite Satyam to set up operations in their areas. But once Mr. Raju sold

shares to the Indian public in 1992 and later, went for a New York listing

in 2001, pressure grew on him to improve the company’s performance.

Ever competitive, he was also in rush to catch the market leaders, Tata

Consultancy Services, Infosys Technologies and Wipro. Raju was

obsessed with getting past the billion-dollar sales mark. When he got

there, he wanted to post US$2 billion .Satyam posted US$2.1 billion

(S$3.1 billion) sales in the year to March 31; 2008.With the ever-rising

pressure to perform, Satyam began doctoring the books to show bigger

profits by manipulating the balance sheet, process that began several

years back. For Satyam, the recent developments are a direct leftover of

the past. In fact, the story is about a decade old. In late 1999, India World

— a largely unknown internet firm — was acquired by Satyam group

company, Satyam Info way, for an eye-popping Rs 500 crore. The

consternation that accompanied this deal was not hard to comprehend.

India World had a top line of just Rs 1 crore and a net profit of an

insignificant Rs 25 lakh. At Rs 500crore, Satyam Info way, later renamed

Sify, was paying this astronomical sum not just for India World but for a

number of sites that came with it — among them weresamachar.com,

khel.com and khoj.com. The argument dished out was based on the

potential of the internet business and the logic of eyeballs was driving

this valuation story. One was not sure about the source of funds and how

much money went back to RamalingaRaju.A few months later in 2000,

shareholders of Satyam were an irate lot. At the annual general meeting

(AGM) of thecompany in Hyderabad in May 2000, shareholders accused

Satyam of withholding facts and claimed they were defrauded. This was

after the merger of three subsidiaries — Satyam Enterprise Solutions

(SESL), Satyam Renaissance Consulting and Satyam Spark Solutions —

with Satyam Computer Services. Post merger, 8 lakh shares of Satyam

Computers were allotted to C Srinivasa Raju, who was then Satyam

Computers ‘executive director. Shareholders contended that SESL had

made a rights issue of 12 lakh shares at par just before this merger. A

third of this was bought by Satyam Computer while the remaining 8 lakh

shares went Srinivasa Raju’s way after they were renounced. Once

shareholders of SESL were given shares in Satyam Computers in a 1:1

proportion, Mr. Raju got 8 lakh shares at just Rs 10 each, when the shares

were trading at a whopping Rs 1,600. The management of Satyam

Computers, however, maintained that things were above board, though

shareholders thought otherwise. The seeds of accounting manipulation in

Satyam were sown several quarters before Ramalinga Raju’s

communiqué to the board on Wednesday, 7th Jan-09. In 2002, the

department of company affairs (DCA) was in receipt of a slew of

complaints from Satyam’s shareholders that there were accounting

irregularities in the company. Here, it was stated that Satyam’s directors

invested unwisely in subsidiaries that were underperformers. This merely

facilitated the process of tax evasion and employing methods such as

writing off large amounts on depreciation. At first blush, Raju’s statement

to the board (Raja’s letter to the board Appended as Annexure I) in which

he confesses to inflating profits appears a act of contrition by a man who

was willing to stand up and face the music for his transgressions. If Raju

was dressing up the bottom-line, it was only to boost the company’s

valuation and ensure that it stayed in the big league of IT services. A

higher valuation also enabled Raju to borrow more money against his

shareholding.

QUERIES:

Why Mr. Raju Ramalinga manipulated the balance sheet?

Mr. Raju started doctoring the sheet simply to show superior performance

and to be in competition with the market leaders.

Why satyam announced that it will acquire maytas infra and maytas

properties?

Company announced Acquisition of 51% stake in Maytas Infra and 100%

stake in Maytas Properties on 16th Dec 2008 to hide the irregularities in

the accounts which were lasting from last few years.

What management could do?

A) Restore the Management of the company & appoint some reputed

people as BOD.

B) Try building confidence in clients to get back the lost projects.

C) It could also be merged with any other software company.

How much was the actual fraud recorded?

His sheets recorded the following:

Sundry Debtors 2651.6 CR Actual Debt was 2161;

Over stated 490 CR .

Cash & Bank Balance 5312.62 CR

Actual cash in bank was 321C.

Interest on fixed deposits 376 CR.

No accured interest exists.

L i a b i l i t y : Mr. Raju arranged Liability himself 1230 CR

A t o t a l o f 7 1 3 6 C R .

.

If satyam was fudging funds, where were the funds for all cash

acquisition coming from?

Sr. No Year Acquired Firm Profession Funding(Amount in $)1) Apr-05

UK based Citisoft PLC Business Consulting Firm 38Mn(Paid in

tranches)2) July-05 Singapore based Knowledge Dynamics Consulting

Solution Provider 3.3 Mn (All cash deal)3) Oct-07 UK based Nikor

Global Solutions Infrastructure based management services and

consultancy group 5.5 Mn (All cash deal)4) Jan-08 Chicago based Bridge

Strategy Group Management consulting firm 35.00 Mn (All cash deal)5)

Apr-08 Caterpillar Inc Market research and customer analytics operations

95.5 Mn for both deals (all cash purchase)S& V Management Consultants

Supply chain management firm.

Satyam Scam who is to blame?

Who is guilty in this sordid state of events? MR. Raju is by far the father

of this fraud. But there were others who are also culpable.

1. The auditors:

What were the auditing company, Price waterhouse Coopers, doing?

PwC has written a letter to the BOD of Satyam that its audit may be

rendered "inaccurate and unreliable" due to the disclosures made by

Satyam's (ex) Chairman. Since the Auditors do bank reconciliation to

check whether the money has indeed come or not. They check

bank statements and certificates. So was this a total lapse in supervision

or were the bank statements forged? No one knows yet. The company

officials said they relied on data from the reputed auditors.

2. The promoters:

Since the promoters, in this case, held only about 8 percent shares, their

idea to push through the Maytas acquisition deal was defeated by an

angry lot of shareholders.

3. The Sebi:

The Sebi had in December given a clean chit to Satyam in the probe on

violation of corporate governance law.

4. The bankers:

If the auditors were conned, it means that either the bank statement or

certificates were forged Satyam’s banks – ICICI Bank, HDFC Bank,

Bank of Baroda, etc.

5. The directors and independent directors:

Despite the shareholders not being taken into confidence, the directors

went ahead with the management’s decision.

6. The government:

The government too is equally guilty in not having managed to save the

shareholders, the employees and some clients of the company from

losing heavily.

SCAM 4

SECURITIES SCAM

PART 1: HARSHAD MEHTA

Introduction on securities scam by Harshad Mehta :

History of Harshad Mehta:

Harshad Mehta was born n 29thy July in a Guajarati Jain family. Moved

from small town Raipur to find his future in Mumbai. First job as

dispatch clerk in new India assurance. Worked with stock brokers and

soon managed to get a broker’s card. Soon started his own ventures grow

more research and assets management company ltd. He became a dream

seller and celebrity of the financial world. People started to address him

as the” Big Bull of Market”. On April 23, 1992 journalist Suchita Dalal in

a column in the Times of India exposed the dubious ways of harshad

Mehta. He was later charged with 72 criminal offences and 600 civil

actions were filed against him. He died in 2002 due to a massive heart

attack in a jail in thane, with much litigation still pending against him.

Overview of the scam:

This scam can be categorized as a Ca p ital market scam in which

it is done by manipulating the facts I n order to attain enormous

profits. There were 4 different aspects of this scam: Diversion of funds

Diversion of funds from the banking system to brokers for financing

their operations in the stock market.

Intra-day trading-the modus operand mainly included investing

heavily in certain shares at the start of the day which led to a sharp

increase in the price of the stock and then cashing in at the end of the

day to reap huge benefits.

Following two aspects shall be explained in detail later .Use of

Ready Forward (RF) to maintain SLR Fake Bank receipts (BR).

Taking advantages of the loopholes in the banking system, Harshad and

his associates triggered a securities scam diverting funds to the tune of Rs

4000 Cr. from the banks to stockbrokers from April1991 to May 1992.

He caused the steep rise in the Stock market index in the year 1992 by

bidding at a premium for many shares.

Some of the stocks which were highly invested in by Harshad Mehta

were:

ACC Apollo Tyres.

Reliance

Tata Iron and Steel Co. (TISCO)

BPL

Sterlite

Videocon

TABLE: 1

The graph shows the rise in the Sensex during the period when Harshad

Mehta was operational and putting in loads of money in the stock

exchange increasing the liquidity and thus arbitrary increase in the prices

of some shares.:

R E A D Y F O R W A R D ( R F )

 –

Disappearance of money:

It is becoming increasingly clear that despite the intensive efforts by

several investigating agencies, it would be impossible to trace all the

money swindled from the banks. At this stage we can only conjecture

about where the money has gone and what part of the misappropriated

amount would be recovered. Based on the result of investigations and

reporting so far, the following appear to be the possibilities.

A large amount of the money was perhaps invested in shares.

However, since the share prices have dropped steeply from the

peak they reached towards end of March 1992, the important

question is what are the shares worth today? Till February 1992,

the Bombay Sensitive Index was below 2000; thereafter, it rose

sharply to peak at 4500 by end of March 1992. In the aftermath of

the scam it fell to about 2500 before recovering to around 3000 by

August 1992.Going by newspaper reports, it appears likely that the

bulk of Harshad Mehta's purchases were made at low prices, so

that the average cost of his portfolio corresponds to an index well

below 2500 or perhaps even below 2000. Therefore, Mehta's claim

that he can clear all his dues if he were allowed to do so cannot be

dismissed without a serious consideration. Whether these shares

are in fact traceable is another question.

It is well known that while Harshad Mehta was the "big bull" in

the stock market, there was an equally powerful "bear cartel",

represented by Hiten Dalal, A.D. Narottam and others, operating

in the market with money cheated out of the banks. Since the stock

prices rose steeply during the period of the scam, it is likely that a

considerable part of the money swindled by this group would have

been spent on financing the losses in the stock markets.

It is rumored that a part of the money was sent out of India through

the Havala racket, converted into dollars/pounds, and brought back

as India Development Bonds. These bonds are redeemable in

dollars/pounds and the holders cannot be asked to disclose the

source of their holdings. Thus, this money is beyond the reach of

any of the investigating agencies.

A part of the money must have been spent as bribes and kickbacks

to the various accomplices in the banks and possibly in the

bureaucracy and in the political system.

A part of the money might have been used to finance the losses

taken by the brokers to window-dress various banks' balance

sheets. In other words, part of the money that went out of the

banking system came back to it. In sum, it appears that only a

small fraction of the funds swindled is recoverable.

After the scandal:

Immediate impact :

After the Harshad Mehta scandal was exposed, April, 1992, the situation

in share market was that of utter chaos. The first impact of the scam was a

steep fall in the share prices. The index fell from 4500to 2500

representing a loss of Rs. 100,000 crores in market capitalization.

However, the major damage to the stock market did not stop here. Since

the accused were active brokers in the stock markets, they had traded a

large number of shares during the previous year. All these shares became

tainted and worthless and could not be used in the market. This was a

great loss to the innocent investor who had bought these shares much

before the scandal was exposed.

Impact on Indian economy :

There was a lot of media coverage on the scam and the political parties

left no opportunity in criticizing the government for it. The government

was under immense pressure and its liberalization policies were severely

criticized. It was also believed that Harshad Mehta and his accomplices

were behind framing of these policies. In the end the government had to

put the liberalization plans on hold. SEBI had to postpone the sanctioning

of private sector mutual funds. Implementation of some aspects of the

Narasimham Committee recommendations on the banking system had to

be delayed. The much talked about entry of foreign pension funds and

mutual funds became more remote than ever. The Euro-issues planned by

several Indian companies were delayed since the ability of Indian

companies to raise equity capital in world markets was severely

compromised.

Impact on the banks:

Fake bank receipts (BR) which were an integral part of the execution of

the whole scam landed the banks involved in a tight spot. These BR were

declared void and public money was at stake. At least ten prominent

banks were involved in this; some of them being SBI, Standard Chartered

and a subsidiary of RBI. The scam could have been checked in time with

proper policies and verifications. The government, the RBI and the

commercial banks are as much accountable as the brokers for the scam.

The brokers were encouraged by the banks to divert funds from the

banking system to the stock market. The RBI too stood indicted because

despite knowledge about banks over-stepping the boundaries demarcating

their arena of operations, it failed to check them. Some of the prominent

individuals who were penalized were K. M. Margabandhu, CMD of the

UCO Bank (Arrested and sacked) and V. Mahadevan, one of the MD the

State Bank of India (Suspended).

SECURITIES SCAM

PART 2 - KETAN PAREKH

Introduction on securities scam by Ketan Parekh

History of Ketan Parikh:

Ketan Parikh is a former stock broker from Mumbai, India. He was

convicted in 2008, for involvement in the Indian stock market

manipulation scam in late 1999-2001. Currently he has been debarred

from trading in the Indian stock exchanges till 2017. He was trainee of

Harshad Mehta. Ketan Parikh can be best described as the pied piper of

Dalal Street. Parekh came from a family of brokers which helped him to

create a trading ring of his own. A Mumbai based stock broker chartered

accountant by profession. Ketan Parikh took advantage in certain stocks

which later came to be known as ‘K-10’ STOCKS. He held significant

stakes in the K-10 companies the buoyant stock markets from January

1999 helped the K-10 stocks increase in value substantially, as a result

other brokers and fund managers started investing heavily in these stocks.

The K-10 Stocks:

Aftek Infosys

DSQ Software

Global Telesystems

Himachal Futuristic communications

Pentamedia Graphics

Satyam computers

Silver line technology

SSI

ZEE Telefilms

Pritish Nandy communications

Development leading to Ketan Parekh scam:

On March 1st, 2001 a fall about 176 points was seen in the sensex. Prior

day union budget tabled prompted 177 sensex points increase. SEBI

launched immediate investigation on the notice of the current situations in

the market. SEBI inspected the books of several brokers suspected of

triggering the crash. RBI ordered some banks to furnish data of capital

market exposure. BSE President Anand Rathi’s resignation added to

continued downfall of sensex. The situations opened debate over banks

financial capital markets operations, lending f funds against collateral

security, dual control of co-operative banks. Ketan parekh was arrested

by CBI on 30th march 2001. He was charged defrauding Bank of India by

almost 20$ million. Then there was another sensex fall of 147 points.

Factors that helped Ketan Parekh:

Though Ketan Parekh was a successful broker, he did not have money to

buy large stakes as he held the stakes of more than RS.750 million in

july1999, according to a report. Analyst claimed that he had borrowed

from various companies and banks for this purpose. His financing

method was fairly simple. He bought shares when they were trading at

low prices and saw the rise in the bull market while continuously trading.

When the prices were high enough he pledged the shares with banks as

collateral for funds, and also borrowed from the companies like HFCL.

It could not have been possible without the involvement of banks. A

small Ahmadabad based bank, Madhavapura Mercantile Cooperative

Bank (MMCB) Was KP’s main ally in the scam. KP and his associates

started tapping the MMCB for funds in early 2000. In December 2000,

when Ketan Parikh faced liquidity problem in settlement he used MMCB

in two different ways:

First was the pay order route, where Ketan Parikh issued cheques

drawn on bank of India (BOI) TO MMCB, again which MMCB

issued pay orders, the pay order discounted at BOI.

The second route was borrowing from MMCB branch at Mandvi

(Mumbai) where different companies owned by Ketan Parikh and his

associates had accounts. Ketan Parikh used 16 such accounts, either

directly or indirectly through other broker firms and obtains funds.

Impact on Calcutta Stock Exchange:

Lack of regulations and surveillance on the bourse allowed a highly

illegal and volatile Badla business. Calcutta Stock Exchange had the third

largest volumes in the country after NSE & BSE. Calcutta stock exchange

helped Ketan Parikh to cover his operations from his rivals in Mumbai.

Brokers at CSE used to buy shares at Ketan Parikh behest. These brokers

had to keep shares in their name and they were paid 2.5% weekly interest.

By February 2001, CSE were reduced to estimated Rs. 6-7 billion from

their initial worth of Rs.12 billion. Ketan Parikh’s Badla payments were

not honored on time for the settlement and about 70 CSE brokers

defaulted on their payments. By mid-march, the value of stocks went

down further to around rs.2.5 -3 billion.

Impact of the scam on financial institutions:

Ketan Parikh was threatening to sue the bank of India for defamation

because it complained of bouncing of 1.3 billion pay orders issued to the

broker by Madhavpura mercantile cooperative bank. Investigations by

SEBI & CBI reveal that sheer magnitude of money by Parikh was a

staggering 64 billion.

Working of Badla System:

The stock exchange acts as an intermediary between you and the actual

lender. You will be changed on interest rate for borrowing, which will be

determined by the demand for that stock under badla trading. Thus,

higher the demand for Wipro under badla trading higher will be the

interest rate. You can keep your borrowing unpaid for a maximum of 70

days, after which you will have to repay the badla financer through the

exchange.

SEBI’s role after scam:

An additional 10% deposit margin was imposed on outstanding net sales

in the stock markets. The limit of application of the additional volatility

margins was lowered from 80% to 60%. To revive the markets SEBI

imposed restriction on short sales and ordered. It suspended all the broker

member directors of BSE’s governing board. SEBI also banned trading

by all stock exchange presidents, vice presidents and treasures. SEBI

allowed banks for collateralized lending only through BSE & NSE.

Conclusion:

RS.2000 billion lost.

Ketan Parikh was released on bail on May 2001.

the retail investors were the worst hit

SBI, BOI & PNB had to suffer huge losses

MMCB also suffered huge losses around 400 crores.

SCAM 5

CRB SCAM

Introduction on the scam:

History of C.R.Bhansali:

Born in a jute trader's house in Calcutta, Bhansali was a studious person.

After obtaining a degree in commerce, Bhansali completed Chartered

Accountancy in 1980. In the same year, he started a financial consultancy

firm, CRB Consultancy. Through Bhansali's personal contacts, CRB

Consultancy soon managed to secure the business of providing issue

management services to a few well-known companies in Calcutta. Over

the years, Bhansali acquired other degrees as well including ACS, Ph.D.,

MIIA (US) and a diploma in Journalism. Though he made a lot of money,

Bhansali found it difficult to find recognition in Calcutta. He then moved

to New Delhi to join one of the country's leading registrars of companies.

However when Bhansali was caught short-charging the registrar's clients,

he had to leave. Bhansali then established 'CRB Consultants,' a private

limited company in New Delhi in 1985. In 1992, the name of the

company was changed to CRB Capital Markets (CRB Caps) and it was

converted into a public limited company. The company offered various

services including merchant banking, leasing and hire purchase, bill

discounting and corporate funds management, fixed deposit and resources

mobilization, mutual funds and asset management, international finance

and forex operations. CRB Caps was also very active in stock-broking

having a card both on the BSE and the NSE. The company raised over Rs

176 crore from the public by January 1995. The A+ rating given by

CARE and upfront cash incentives of 7-10% attracted investors in hordes

to Bhansali's schemes.

Table: 2

CRB CAPITAL MARKETS –KEY FINANCIALS:

Overview of the scam:

Bhansali was reported to have specialized in setting up dummy

investment companies. He used to sell these dummy companies to

buyers. He capitalized on the 1985 boom in leasing companies to become

cash rich.

He had established good contacts in the Registrar of Companies and the

Controller of Capital Issues offices. He registered companies with

practically no equity and then stage-managed the dummy company's

maiden public issue with a few hundred investors, largely from Calcutta's

close knit Marwari Jain community. Having had a company listed on the

stock exchange, Bhansali then sold it for a profit to businessmen who

needed dummy public limited companies in a hurry. Bhansali used his

own money to rig share prices in order to raise more money from the

markets in two ways. Firstly, he bought his own stock through private

finance companies owned by him. Secondly, he used his other public

companies to buy into each other as cross-holdings.

Defrauding the SBI:

In May 1996, CRB Caps opened a current account in SBI's main Mumbai

branch, for payment of interest, dividend and redemption cheques. The

payment warrants could be presented at any of the 4,000 SBI branches for

payment. However, Bhansali was granted only a current account facility

and did not enjoy any overdraft facility. He was expected to deposit cash

upfront into the current account, along with a list of payments that had to

be honored. Claiming that the logistics of payment were very complex

and that it was not possible for every branch to check with the head office

before honoring a dividend warrant, the branches gradually began treating

these instruments just like a demand draft. For about nine months, the

setup worked very well. However, in March 1997, SBI realized that the

account had been overdrawn to the extent of a few crores. Bhansali was

called to the SBI office and asked to remit the difference immediately,

which he promptly did.

The systemic rot:

The collapse of the CRB group seemed to be a fraud allowed by

supervisors despite the regulations in place. The lack of clear

communication channels between the banks, RBI and the government

seemed to have worked to Bhansali's advantage to a great extent.

Frequent clashes occurred between RBI and SEBI in the media, with both

of them trying to prove how the other was responsible for not acting early

enough. The RBI claimed that it had no powers to examine the asset

quality of the CRB group and thereby was not in a position to pass any

judgment on the character of asset generation or deployment of the funds

raised by the group. The bank further claimed that the powers were

granted only in March 1997, when the RBI Act of 1934 was amended to

include specific provisions for the purpose. The bank also stated that it

had begun to examine the liabilities and not the assets. However, media

reports were quick to refute RBI's claims.

The Doomed Depositors:

May 18, 1997 - hundreds of angry, frustrated and scared people stood

outside the Reserve Bank of India's (RBI) Mumbai headquarters under

the scorching sun. They were waiting for Chain Roop Bhansali

(Bhansali), the head of the CRB Group of companies to arrive.

Three days earlier the RBI had given Bhansali 72 hours to come up with a

plan to repay his liabilities following over 400 complaints from

depositors in his company's financial schemes. Most top officials of CRB

were untraceable from the second week of May itself. The Central Bureau

of Investigation (CBI) locked and sealed the offices of the CRB Group

and arrested six persons, including four directors (two from Bikaner and

two from Mumbai) of the satellite companies of the group, a financial

controller in Mumbai and a relative and close associate of Bhansali in

Delhi. The CBI also conducted simultaneous searches at 16 places in

Mumbai, three in New Delhi, one each in Chennai and Ahmadabad and

two places each in Calcutta, Jhunjunu, Sujangarh and Bikaner. The CBI

froze the bank accounts of the group companies and seized incriminating

files and other documents from the residence of the vice-president of the

CRB group in Mumbai. Following rumors that Bhansali had fled India

and was hiding in Hong Kong or Canada, the CBI sought Interpol's

assistance to trace his whereabouts. RBI filed a winding-up petition

claiming that the continuance of the CRB Group was not in the interest of

the public and depositors. The order prohibited CRB from selling,

transferring, mortgaging or dealing in any manner with its assets and

from accepting public deposits. In response, Bhansali sent a letter to the

RBI. Though it was not signed by him, the letter said that the RBI order

had led to the deterioration of the company's financial position. It added

that the company was facing tremendous problems with payments to

fixed depositors. The letter further said that 'we have, also expressed that

in view of the precarious situation which is fast going out of our control,

before it becomes unmanageable, our case should be considered

sympathetically.' This letter led the investors to believe that Bhansali

would come out of hiding and work out a way to get out of the mess.

Impact of the scam:

The CRB scam took the whole nation by storm. At one point, the Union

finance ministry held a meeting everyday to get to the bras stacks of the

CRB fiasco. In a meeting with SEBI, the finance minister criticized the

regulator severely. The government asked the RBI to prepare a panel of

auditors asking to explore the possibility of making auditing of NBFCs a

prerequisite to registration. In October 1998, the SEBI appointed an

administrator for CRB's Arihant scheme finalized a scheme for payment

to the unit holders under the scheme; the investors were prematurely paid

Rs 4.95 per unit, which was its NAV as of 31 March 1998. When the

administrator had taken over, the assets of the scheme comprised the

fund's frozen bank accounts worth Rs 81 lakh, plus some dividends from

investments. Besides, there were a large number of listed (but thinly

traded) and unlisted shares amounting to Rs 17.5 crore.

CONCLUSION:

So this concludes the list of Indian scams of all times. According to the

compilation, the total amount of money involved in various scams over

the last 12 years alone, since 1992, is estimated to be over Rs 80 lakh

crore (Rs 80 trillion) or $1.80 trillion!• To many people abroad, India is

seen sentimentally as Mahatma Gandhi’s country of khadi cloth, good

ethics, and care for the poor. To some it is an economic miracle and a

future super power, while to others it is an unkind cruel place of caste,

ethnic and rich-poor divisions and violence. Above all however, and not

far below the surface, India is a maze of unethical, unlawful and illegal

swindles that link most politicians, many bureaucrats, and a large number

of businessmen and others.

REFRENCES

Articles.timesofindia.indiatimes.com

http://www.timesnow.tv/articleshow/4362965.cms http://indiatoday.intoday.in/story/cwg-scam-ms-gill-sunil-dutt-warned-pm-on-suresh-kalmadi/1/143659.html http://en.wikipedia.org/wiki/Suresh_Kalmadi http://www.ndtv.com/article/india/kalmadi-granted-bail-may-return-as-head-of-indian-olympic-association-168617 http://www.dailypioneer.com/nation/36571-suresh-kalmadi-granted-bail.html http://en.wikipedia.org/wiki/List_of_scandals_in_India

http://en.wikipedia.org/wiki/2G_spectrum_scam

www. case place.org

www.icmrindia.org

Case-study-on-ketan-scam.pdf

http://www.slideshare.net/akshayvirkar/harshad-mehta-scam

http://cbi.nic.in/fromarchives/satyam/satyam.php

2011/01/02/indias-biggest-scams-since-1992-worth-over-rs-80-lakh-

crore/