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1 List and Details of Scams in India on Thu 1 Sep 2011 - 11:30


CSoC Smart User
CSoC Smart User
The Republic of Scams
Jeep purchase (1948)
The history of corruption in post-Independence India starts with the Jeep scandal in 1948. VK Krishna Menon, the then High Commissioner for India in London signed a deal with a foreign firm worth Rs 80 lakh for jeeps for the Indian Army in Kashmir without observing normal procedure.
The then Government announced on September 30, 1955 that the Jeep scandal case was closed, despite the demand of the opposition for judicial inquiry as suggested by the Inquiry Committee led by Ananthsayanam Ayyangar.
Union Minister GB Pant said "that as far as Government was concerned it has made up its mind to close the matter. If the opposition is not satisfied they can make it an election issue."
Soon after, on February 3, 1956 VK Krishna Menon was inducted into the Nehru cabinet as minister without portfolio.

Mundhra Scandal (1957)
It was the media that first hinted there might be a scam involving the sale of shares to LIC.
Feroz Gandhi sourced the confidential correspondence between the then Finance Minister T.T. Krishnamachari and his principal finance secretary, and raised a question in Parliament on the sale of 'fraudulent' shares to LIC by a Calcutta-based Marwari businessman named Haridas Mundhra.
The then Prime Minister, Jawaharlal Nehru, set up a one-man commission headed by Justice MC Chagla to investigate the matter when it became evident that there was a prima facie case. Chagla concluded that Mundhra had sold fictitious shares to LIC, thereby defrauding the insurance behemoth to the tune of Rs. 1.25 crore.
Mundhra was sentenced to 22 years in prison. The scam also forced the resignation of T.T.Krishnamachari.

Antulay Trust (1981)

AR Antulay had garnered Rs 30 crore from businesses dependent on state resources like cement, and kept the money in a private trust.
He was forced to resign as Chief Minister of Maharashtra after the Bombay High Court convicted him of extortion on January 13, 1982. The court ruled that Antulay had illegally required Bombay area builders to make donations to Indira Gandhi Pristhan trust, one of several trust funds he had established and controlled, in exchange for receiving more cement than the quota allotted to them by the Government.

Bofors Scandal (1987)

Then the Prime Minister Rajiv Gandhi and several others were accused of receiving kickbacks from Bofors AB for winning a bid to supply India's 155 mm field howitzer. The scale of the corruption was far worse than any that India had seen before, and directly led to the defeat of Gandhi's ruling Indian National Congress party in the November 1989 general elections.
It has been speculated that the scale of the scandal was to the tune of Rs. 40 crore.
On February 5, 2004, the Delhi High Court quashed the charges of bribery against Rajiv Gandhi and others. On May 31, 2005, the court dismissed the Bofors case allegations against the British business brothers, Shrichand, Gopichand and Prakash Hinduja.
On March 4, 2011, Ottavio Quattrocchi, acccused as the middleman in the scandal because of his intimacy with Rajiv and his Italian-born wife Sonia Gandhi, was from the case by a Delhi court as there was no credible evidence against him.

Harshad Mehta (1992)
Mehta gradually rose to become a stock broker on the Bombay Stock Exchange and had an expensive lifestyle. He lived in a 15,000 sq. ft. apartment, which had a swimming pool as well as a golf patch. By 1990, Mehta had risen to prominence in the stock market. He was buying shares heavily.
Through the second half of 1991, Mehta had earned the sobriquet of the 'Big Bull', because he was said to have started the bull run. On April 23, 1992, journalist Sucheta Dalal exposed Mehta's illegal methods in a column in The Times of India. Mehta was dipping illegally into the banking system to finance his buying.
The game went on as long as the stock prices kept going up, and no one had a clue about Mehta's modus operandi. Once the scam was exposed, the banking system had been swindled of a whopping Rs 4,000 crore.
The Chairman of the Vijaya Bank committed suicide by jumping from his office roof. He knew that he would be accused if people came to know about his involvement in issuing cheques to Mehta.
Mehta made a brief comeback as a stock market guru in 1998, giving tips on his own website as well as a weekly newspaper column. This time around, he was working with owners of a few companies and recommended only the shares of those companies. This game, too, did not last long.
By the time he died, Mehta had been convicted in only one of the many cases filed against him.

Telecom Scam (1996)

In 2009, former telecom minister Sukh Ram was convicted by a Delhi court of accepting bribes to grant licences and purchase equipment from companies during his 1993-96 tenure at the Centre. In 1996, raids at Sukh Ram's properties in Delhi and Himachal had unearthed 3.6 crore cash and jewellery stuffed in bags and suitcases.
Sukh Ram, now 84, is still doing the rounds of the courts, 14 years after the CBI first charged him with corruption.
The case in which he was convicted of amassing over Rs 4 crore disproportionate assets during his tenure in the Narasimha Rao government is still pending in the Delhi High Court, after an appeal was filed in 2009.
In the second case, in which he is accused of causing a loss of Rs 1.68 crore by favouring ARM Pvt Ltd in a contract for purchase of telecom equipment, Sukh Ram was convicted and handed a jail term on July 5, 2002, by a sessions court.
But in this case, too, the wheels moved slowly after the appeal was filed.

Lalu Prasad and the Fodder Scam (1996)

The Fodder Scam involved the alleged embezzlement of about Rs 950 crore from the government treasury of Bihar. The alleged theft spanned many years, was engaged in by many Bihar state government administrative and elected officials across multiple administrations (run by opposing political parties), and involved the fabrication of "vast herds of fictitious livestock" for which fodder, medicines and animal husbandry equipment was supposedly bought. Although the scandal broke in 1996, the theft had been in progress, and increasing in size, for over two decades.
Besides its magnitude and the duration for which it was said to have existed, the scam was and continues to be covered in Indian media due to the extensive nexus between tenured bureaucrats, elected politicians and businesspeople that it revealed.
As it became evident that Bihar Chief Minister Lalu Prasad would be engulfed in the scandal and its prosecution, demands for him to be removed from the chief ministership had gained momentum. On July 25, 1997, Lalu resigned from his position, but was able to install his wife, Rabri Devi as the new chief minister on the same day.
Due to the multiplicity of cases, Lalu Yadav, Jagannath Mishra (Bihar chief minister in the 1970s and accused of knowing involvement in the scam), and the other accused have been remanded several times in the years since 2000. So far, about 200 people have been punished with jail terms of between 2 and 7 years.
Since it broke into public light, the fodder scam has become symbolic of bureaucratic corruption and the criminalization of politics in India generally, and in Bihar in particular. Lalu Prasad is the only person on whom the Lok Sabha debated for a complete session as the official agenda.
Hawala Diaries (1996)

The Hawala scandal involved payments allegedly received by politicians through hawala brokers, the Jain brothers. It was a Rs 70 crore bribery scandal that implicated some of the country's leading politicians. There were also alleged connections with payments being channelled to Hizbul Mujahideen militants in Kashmir.
The accused included LK Advani, VC Shukla, P Shiv Shankar, Sharad Yadav, Balram Jakhar and Madan Lal Khurana. Many were acquitted in 1997 and 1998, partly because the hawala records (including diaries) were judged in court to be inadequate as the main evidence. The failure of this prosecution by the Central Bureau of Investigation has been widely criticised.

Ketan Parekh and the Stock Market (2001)

A chartered accountant by training, Ketan Parekh came from a family of brokers, which helped him create a trading ring of his own. Between 1999 and 2001, as the technology bubble was engulfing the rest of the world, the stock market in India sprang to life too.
Be it investment firms, mostly controlled by promoters of listed companies, overseas corporate bodies or cooperative banks, all were ready to hand the money to Parekh, which he used to rig up stock prices by making his interest apparent. In no time, scrips like Visualsoft rose from Rs 625 to Rs 8,448 per share and Sonata Software from Rs 90 to Rs 2,150. But the vicious cycle of fraud did not end with price rigging. The inflated stocks had to be dumped onto someone in the end, for which Parekh used financial institutions like the UTI.
Parekh's party ended rather abruptly a day after the Union Budget was presented in February 2001. A bear cartel started disrupting Parekh's party by hammering prices of the K-10 stocks, precipitating a payment crisis in Kolkata.
As SEBI investigated, it was evident that bank and promoter funds were used to rig the markets. In March 2011, the mayhem wiped off over Rs 1,15,000 crore from the markets.
Parekh was arrested in March that year and was in custody for 53 days. Currently he has been debarred from trading in the Indian stock exchanges till 2017.
In the aftermath of the scam, many gaping loopholes in the market were plugged. The trading cycle was reduced from one week to one day. Badla was banned and operators could not carry forward trade in its primitive form. Forward trading was formally introduced in the form of exchange-traded derivatives to ensure a well-regulated futures market. Broker control over stock exchanges was demolished.
It's perhaps thanks to the Pentafour Bull that India's stock markets are today considered safe. And to his credit, Parekh forced lethargic policy-makers to institute reforms in the financial system.

Defence expose and Tehelka (2001)

It was India's Watergate. Tehelka launched its Operation West End, a sting operation aimed to expose the corruption underlying India's large defence contracts. The original investigative piece by Tehelka in 2001 targeted several members of the then ruling coalition, the NDA, headed by BJP's Atal Behari Vajpayee.
It showed several political figures, as well as army top brass, colluding to take bribes that approached 4% of orders totalling hundreds of crores in order to approve defence contracts. Tehelka also accused the MoD officials of accepting alcohol and services of the prostitutes, although the journal itself was criticised for the procurement of protitutes.
Indeed, in September 2001, Tehelka's editor-in-chief, Tarun Tejpal, was charged with "immoral trafficking" for offering prostitutes to the MoD officials during the sting operation.
The then Defence Minister, George Fernandes, resigned after the tapes were made public, but he was reinstated later. Part of the tapes show the treasurer of his party talking about accepting bribes of 1 crore or more from arms dealer ex-Naval officer Lt-Cmdr Suresh Nanda, son of ex-Chief of Naval Staff Admiral S. M. Nanda.
Initially the government, instead of acting on the evidence, accused Tehelka of fabricating allegations. However, five years later, in October 2006, the CBI filed charges against George Fernandes, former Chief of Naval Staff Admiral Sushil Kumar, and others in the Barak missile case, claiming that there was reasonable basis to suspect corruption and criminal conspiracy. In March 2008, the Nandas were arrested. Fernandes was interrogated in May 2008.

Stamp Paper Scam (2003)

Abdul Karim Telgi began printing fake stamp paper in 2003. He appointed 300 people as agents who sold the fakes to bulk purchasers, including banks, FIs, insurance companies, and share-broking firms.
His monthly profits have been estimated as being in the neighbourhood of Rs 202 crore. The size of the scam was estimated to be more than Rs 43,000 crore.
The Telgi case brought corruption in the Karnataka police force to light, causing a national scandal in India. A videotape emerged in September 2006 of Abdul Karim Telgi taking a Narco Analysis test. Under the influence of the supposed truth serum, Telgi is said to have blurted out the names of NCP leaders Sharad Pawar and Chaggan Bhujbal.
Pawar has never been publicly linked to the case, but was forced to go public with a denial.
On June 28, 2007 Telgi was sentenced to rigorous imprisonment for 13 years and fined a whopping Rs 202 crore on various counts in one of the main cases of the scandal.

2G Spectrum Scam (2008)

The 2G spectrum scam involved allegations of underpricing of 2G spectrum by the Telecom Ministry of India, resulting in loss to the exchequer and illegal manipulation of the spectrum allocation process to favour a few select companies.
According to a report submitted by the Comptroller and Auditor General based on money collected from 3G licenses, the loss to the exchequer due to underpricing of 2G spectrum was Rs 1,76,379 crore.
The CAG report holds A Raja, the Union Telecom Minister in 2008, when the 2G licenses were doled out, as personally responsible for the loss to the exchequer.
On February 2, 2011, the CBI arrested Raja, RK Chandolia, Raja's personal aide, and Siddharth Behura, the former Telecom Secretary.
On February 8, 2011, the CBI arrested Mumbai based Dynamix Balwas (DB) group managing director Shahid Usman Balwa in connection with the 2G spectrum allocation scam. The CBI has evidence from the Income Tax department that Shahid Usman Balwa, considered close to A. Raja, was instrumental in channelling the kickbacks allegedly received by the former telecom minister.
On March 29, 2011, in Delhi, the CBI arrested Asif Balwa, Shahid Balwa's brother, and Rajeev Agarwal for their alleged involvement in money transfer to DMK's Kalaignar TV channel.
On April 02, 2011, the CBI filed its first 80,000 page chargesheet in the 2G spectrum scam before a Special Court in Delhi naming nine individuals and three companies. It said the wrongful acts of the accused deprived the government exchequer of possible revenues amounting to Rs 30,985 crore. It named the following people and companies:
1) A Raja, arrested former Telecom minister
2) Siddharth Behura, arrested former Telecom Secretary
3) RK Chandolia, A. Raja's arrested former personal secretary
4) Shahid Usman Balwa, arrested former Director of Swan Telecom (now Etisalat DB)
5) Sanjay Chandra, Managing Director of Unitech Ltd and Unitech Wireless
6) Gautam Doshi, Group MD, Reliance Anil Dhirubhai Ambani Group
7) Hari Nair, Senior Vice-President, Reliance Anil Dhirubhai Ambani Group
Cool Surendra Pipara, Senior Vice-President, Reliance Anil Dhirubhai Ambani Group and Reliance Telecom Ltd
9) Vinod Goenka, Director, Swan Telecom and Managing Director of DB Realty
The three companies named are:
1) Swan Telecom
2) Unitech Wireless
3) Reliance Telecom
In the first chargesheet, the CBI had named lobbyist Niira Radia and 124 others as witnesses.
On 25th April, 2011, in its second chargesheet in the scam, the Central Bureau of Investigation (CBI) named five more accused individuals:
1) Kanimozhi, Rajya Sabha MP (DMK) and daughter of Tamil Nadu Chief Minister M Karunanidhi
2) Sharad Kumar of Kalaignar TV
3) Karim Morani of Cineyug Films
4) Asif Balwa of Kusegaon Realty
5) Rajiv B Agarwal of Kusegaon Realty

Satyam Scam (2009)

Ramalinga Raju founded Satyam Computers in 1987. A botched acquisition attempt involving Maytas in December 2008 led to a plunge in the share price of Satyam. In January 2009, Raju indicated that Satyam's accounts had been falsified over a number of years. He admitted to an accounting dupery to the tune of Rs 7,000 crore rupees and resigned from the Satyam board on January 7, 2009.
Raju and his brother, B Rama Raju, were then arrested by the Andhra Pradesh police. Raju was convicted of cheating six million shareholders and is being held in Hyderabad's Chanchalguda jail on charges including embezzlement, insider trading, breach of trust, conspiracy, cheating, and falsification of records.

Black Money and Hasan Ali Khan (2009)

Germany had officially handed over the list to the Indian Government on 18 March 2009 and Tehelka accessed and brought out 16 names:
1. Manoj Dhupelia
2. Rupal Dhupelia
3. Mohan Dhupelia
4. Hasmukh Gandhi
5. Chintan Gandhi
6. Dilip Mehta
7. Arun Mehta
8. Arun Kochar
9. Gunwanti Mehta
10. Rajnikant Mehta
11. Prabodh Mehta
12. Ashok Jaipuria
13. Raj Foundation
14. Urvashi Foundation
15. Ambrunova Trust
However, only one person has so far been questioned: Hasan Ali Khan
Hasan Ali is allegedly worth $9 billion or more, according to law authorities. This figure has been verified from a letter written by UBS (Zurich) to Khan. The Government of India has also confirmed the existence of this account in UBS, and ordered him to pay Rs 50,000 crore in taxes on that wealth.
However, according to Khan, he is a scrap dealer with an annual income of Rs 30 lakh. Some sources claim that he might be the fourth richest person in India and amongst the world's dollar billionaires.
The Enforcement Directorate, Income Tax department along with the Economic Offences Wing (EOW) of Maharashtra are probing the illegal investments and charges of money laundering against Khan.
The Supreme Court of India questioned the Central Government's inertia on this issue: "What the hell is going on in this country? There are instances when minor offenders are shot down for violating Section 144 CrPC, but you don't take any action against these people. We are very sorry. All these people are now free. What is in the way of taking action against Hasan Ali? How many years will investigations continue against Ali?"
Despite this, the Central Government doesn't intend to prosecute Khan under India's money laundering law simply because it hadn't gone into effect at the time the alleged crimes were committed.

CWG Scam (2010)

On 28 July 2010, the Central Vigilance Commission released a report showing irregularities in up to 14 CWG projects.
The detailed preliminary findings included the award of work contracts at higher prices, poor quality assurance and management, and work contracts awarded to ineligible agencies.
There were also allegations of widespread corruption in various aspects of organising the games including procurement and awarding contracts for constructing the game venues. The CWG Organising Committee, on Aug 5, 2010, suspended joint director T S Darbari and deputy director general Sanjay Mahendroo following the report of the three-member panel which was probing the financial irregularities related to the Queen's Baton Relay.
Also, Organising Committee treasurer Anil Khanna resigned from the post in the wake of allegations that his son's firm had secured a contract for laying synthetic courts at a tennis stadium.
Among the alleged corruption and defrauding of the games budget, toilet paper rolls valued at $2 were costed at $80, $2 soap dispensers at $60, $98 mirrors at $220, $11,830 altitude training simulators at $250,190.
CWG Organising Committee Chief Suresh Kalmadi's conduct also came under scrutiny, with the CVC asking the CBI to probe certain aspects of the games' organisation.
On April 25, 2011 after being questioned over alleged irregularities in the conduct of Queen's Baton Relay (QBR) held in London in 2009, CBI arrested Kalmadi under Sections 120 B and 420 (criminal conspiracy and cheating) of the Indian Penal Code in the Commonwealth Games Time Scoring Equipment scam.

Adarsh Housing Society Scam (2010)

In 2010, Indian media brought to public the violations of rules at various phases of construction in the Adarsh Society - an apartment complex reserved for the war widows and veterans of the Kargil War.
Questions were raised on the manner in which apartments in the building were allocated to bureaucrats, politicians and army personnel who had nothing to do with Kargil War and the way in which clearances were obtained for the construction of the building of the Adarsh Society.
The exposure of the infamous nexus between politicians, bureaucrats and builders in this scam is said to be only the tip of the iceberg. It had led to resignation of the then Chief Minister, Ashok Chavan.
Several inquiries have been ordered by the army and the Government to probe into the irregularities.
Environment minister Jairam Ramesh formally set the ball rolling for the demolition of the entire 31-story scam-tainted Adarsh building in Coloba's eco-sensitive zone on Friday November 12, 2010. Ramesh sent a show cause notice to the Adarsh housing society, saying that "all options under the law are open except regularisation of the structure".
Source: India Syndicate

2 Re: List and Details of Scams in India on Wed 10 Oct 2012 - 10:41


CSoC Master
CSoC Master
Wonderful artcle Smile


3 Re: List and Details of Scams in India on Wed 10 Oct 2012 - 10:54


CSoC King
CSoC King
Nice post.

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