Recession. Slowdown. Companies across sectors praying for customers. Contrast that with information technology and business process outsourcing firms, where customer count was always a recurrent boast. Before Satyam, that is: investigators into the Satyam scam are now trying to find out, among other things, if the IT major at all had the large customer base it used to claim before promoter B. Ramalinga Raju was caught with his hand in the till.
Among the other things Satyam inflated or is suspected to have inflated: earnings and employee headcount. For the authorities, regulators, investors and industry brethren, the Satyam case has raised a red flag over the entire IT industry and its numbers. The nature of their products make physical verification almost impossible. Conventional methods are more geared to checking how many tables, chairs and equipment exist and not for an equivalent audit of, say, how many customers it has, who they are and what their order size is.
Observers feel that IT companies and their auditors need to devise foolproof ways to measure customers, employee numbers and orders/ sales, even though industry insiders say this is a time-consuming job in a sector traditionally in a hurry to declare quarterly results. The trade-off is between doing things thoroughly and doing things quickly. Apart from land in the Indian context, people form the asset base of an IT company. The focus has been to attract and retain people by “paying more” and offering a campus life that is the envy of other sectors. In IT, the ability to earn revenues is entirely dependent on the headcount, which is akin to plant capacity in manufacturing. One of the first questions emerging from the Satyam scam—till the time the new board members clarified—related to headcount. Did the company actually have as many as it claimed, or was money being siphoned out in the name of fake employees?
The metric system
Then, the metrics, or numbers relating to billing rates, utilisation, dollar size of clients and man-months billed. IT is the most metrics-driven sector across industries—and there lies another danger. Consider what analysts at Edelweiss Securities point out: “Back in 2000-01, when Infosys was the first in the IT sector to make public operating metrics such as billing rates, utilisation, client metrics and man-months billed, little did we know that this consistent and tireless action on the part of Infosys was to usher in a metrics-driven information revolution.’’
Soon enough, other IT companies followed suit. No one questioned the metrics, even though they are self-reported and certainly not audited by external auditors. The Satyam scam will cast a cloud over the metrics claims of all IT outfits, till may be there is an audit in place.
As an Edelweiss report notes: “In theory, metrics such as utilisation, billing rates, onsite-offshore split can be manipulated so as to provide consistency and assurance with the reported revenues.” The report is captioned: “Weighing Consequences of Satyam on Indian IT and India Inc.”
Exports: Zeros & Ones?
After numbers and metrics, comes the biggest black hole: the product or service exports that form the very basis of an IT firm’s revenues. IT exports are not like physical items such as automobiles, garments or ore that can be counted, weighed, valued or even seen by customs and tax authorities as they are shipped. IT exports are software, complex and customised code that travels over broadband to the buyer.
There are checks and balances and IT companies do need to fill in a Software Export Declaration (Softex) form with the Software Technology Parks of India. But there is no way of checking the value, when value lies in the eyes of the buyer, or input costs, when inputs are intellectual. Debanjan Banerjee, Partner at the law firm Fox Mandal Little, says: “In spite of these controls, there are cases of fudging… then the artificial figures of sales and receivables and inflated profits push up share prices, and benefit the promoters as they sell or pledge their shares.”
“The ‘software products’ of IT/ITES firms are predominantly intangible in nature, and, therefore, it is difficult to make an assessment of the price. There are no checks and balances if a firm decides to sell similar packages to different customers at vastly different prices. There may be wide variation between price points depending on the nature of the product, the service provider and the end-customer,” he points out.
Accounting Standard X
That leads to the question of accounting practices and standards. Take a simple case of cost of completion method of accounting where, if you start recognising revenues but do not book all the costs or do not book the real costs, you could constantly have inflated profits. As Tushar Chawla, Partner, Economic Laws Practice, a law firm, says: “The most common malpractice observed in IT companies seems to be the reporting of inflated figures, done by booking fictitious income, i.e., income from nonexistent customers or inflated income from existing customers.”
He cites a multinational IT major that had inflated revenues by booking sales of software licences that were actually transferred to a related distributor. Satyam seemed to have gone a step further by showing fictitious cash and bank balances. So, why should an IT company do all this—book fictitious exports, inflate income etc? Money laundering. “A lot of IT companies are merely incorporated as shell companies that are actually laundering money,” says Chawla. According to him, a nexus has emerged between the export earnings of IT companies and money laundering transactions, with a large number using hawala for showing export incomes.
Without naming any company, he says this could be driven by the fact that, with export earnings and earnings per share shrinking, promoters are more likely to show inflated income either to get good finances or to exit. This again, Chawla says, would not be happening in big companies but in small ones with revenues of $10-100 million. Listed entities, especially. “This also allows the promoters to convert their cash into official export income at a low premium without paying any income tax,” he says.
However, Indian IT does not mean just the Big Four or Big Five. According to NASSCOM’s recent strategic review 2009, the Indian IT-BPO export industry has seven players with revenues over $1 billion each. They accounted for over 47-48 per cent of software and services exports in fiscal year 2008.
Then come 75-80 mid-sized players (revenues $100 million-$1 billion) who account for 35-37 percent of total exports, and 300-350 emerging players (revenues $10 million to $100 million) with a 7-8 per cent share, and over 3,500 small and start-up companies with revenues less than $10 million who account for 8-10 per cent.
Rivers of cash
As Banerjee of Fox Mandal Little says: “The IT sector is export-oriented and very cash rich. Naturally, the cash and receivables management takes a key role. …It makes it easier for the companies to move the liquid cash from one company to another, especially through various investment vehicles and structures.” “There are possibilities of overand under-invoicing and cross border fund mobilisation and movement,” he says. Because of the rapid expansion of the sector and its export-earning capacity, the regulatory system and accounting practices are often not fully operationalised.
“That keeps loopholes for informal movement of currencies through several devices,” he says. Auditors stress the need to be very careful in making an invoice and tracking work-in-progress as well as receivables. Are the IT companies doing so? Four months ago, who knew what was happening at Satyam? There is good reason, therefore, that B.V.R. Mohan Reddy, Chairman and Managing Director of Hyderabad-based Infotech Enterprises, an IT solutions provider, says: “The systems and processes we have at this point are good enough but there has only to be a rigour in following them.” Banerjee points out that the IT majors have “a high degree of internal checks and controls and people like compliance officers, risk assurance officers and revenue leakage assurance in place to ensure that accruals of revenue are genuine and accurate.” Also, it is not as if companies are free from external checks, says Banerjee. IT companies are not totally tax-free.
As the IT sector waits for the Satyam report card, it is ironic that a company whose founder believed in speed and detailed metrics finds itself stuck in netherland. There is no Raju to preach his favourite metrics: the 6 Ps (people, process, product, proliferation, patent and promotion), 5 Rs or the service outcome attributes (faster, better, cheaper, larger and steadier) and the various indexes. The abstract defined. The definable abstracted.
Source
Showing posts with label India's Biggest Scam. Show all posts
Showing posts with label India's Biggest Scam. Show all posts
Wednesday, March 25, 2009
Tuesday, January 13, 2009
India's biggest scams
Ramalinga Raju
The biggest corporate scam in India has come from one of the most respected businessmen.
Satyam founder Byrraju Ramalinga Raju resigned as its chairman after admitting to cooking up the account books.
His efforts to fill the "fictitious assets with real ones" through Maytas acquisition failed, after which he decided to confess the crime.
With a fraud involving about Rs 8,000 crore (Rs 80 billion), Satyam is heading for more trouble in the days ahead.
On Wednesday, India's fourth largest IT company lost a staggering Rs 10,000 crore (Rs 100 billion) in market capitalisation as investors reacted sharply and dumped shares, pushing down the scrip by 78 per cent to Rs 39.95 on the Bombay Stock Exchange.
The NYSE-listed firm could also face regulator action in the US.
"I am now prepared to subject myself to the laws of the land and face consequences thereof," Raju said in a letter to SEBI and the Board of Directors, while giving details of how the profits were inflated over the years and his failed attempts to "fill the fictitious assets with real ones."
Raju said the company's balance sheet as of September 30 carries "inflated (non-existent) cash and bank balances of Rs 5,040 crore (Rs 50.40 billion) as against Rs 5,361 crore (Rs 53.61 billion) reflected in the books."
Harshad Mehta
He was known as the 'Big Bull'. However, his bull run did not last too long.
He triggered a rise in the Bombay Stock Exchange in the year 1992 by trading in shares at a premium across many segments.
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 crore (Rs 40 billion) from the banks to stockbrokers between April 1991 to May 1992.
Harshad Mehta worked with the New India Assurance Company before he moved ahead to try his luck in the stock markets. Mehta soon mastered the tricks of the trade and set out on dangerous game plan.
Mehta has siphoned off huge sums of money from several banks and millions of investors were conned in the process. His scam was exposed, the markets crashed and he was arrested and banned for life from trading in the stock markets.
He was later charged with 72 criminal offences.
A Special Court also sentenced Sudhir Mehta, Harshad Mehta's brother, and six others, including four bank officials, to rigorous imprisonment (RI) ranging from 1 year to 10 years on the charge of duping State Bank of India to the tune of Rs 600 crore (Rs 6 billion) in connection with the securities scam that rocked the financial markets in 1992. He died in 2002 with many litigations still pending against him.
Ketan Parekh
Ketan Parekh followed Harshad Mehta's footsteps to swindle crores of rupees from banks. A chartered accountant he used to run a family business, NH Securities.
Ketan however had bigger plans in mind. He targetted smaller exchanges like the Allahabad Stock Exchange and the Calcutta Stock Exchange, and bought shares in fictitious names.
His dealings revolved around shares of ten companies like Himachal Futuristic, Global Tele-Systems, SSI Ltd, DSQ Software, Zee Telefilms, Silverline, Pentamedia Graphics and Satyam Computer (K-10 scrips).
Ketan borrowed Rs 250 crore from Global Trust Bank to fuel his ambitions. Ketan alongwith his associates also managed to get Rs 1,000 crore from the Madhavpura Mercantile Co-operative Bank.
According to RBI regulations, a broker is allowed a loan of only Rs 15 crore (Rs 150 million). There was evidence of price rigging in the scrips of Global Trust Bank, Zee Telefilms, HFCL, Lupin Laboratories, Aftek Infosys and Padmini Polymer.
C R Bhansali
The Bhansali scam resulted in a loss of over Rs 1,200 crore (Rs 12 billion).
He first launched the finance company CRB Capital Markets, followed by CRB Mutual Fund and CRB Share Custodial Services. He ruled like a financial wizard 1992 to 1996 collecting money from the public through fixed deposits, bonds and debentures. The money was transferred to companies that never existed.
CRB Capital Markets raised a whopping Rs 176 crore in three years. In 1994 CRB Mutual Funds raised Rs 230 crore and Rs 180 crore came via fixed deposits. Bhansali also succeeded to to raise about Rs 900 crore from the markets.
However, his good days did not last long, after 1995 he received several jolts. Bhansali tried borrowing more money from the market. This led to a financial crisis.
It became difficult for Bhansali to sustain himself. The Reserve Bank of India (RBI) refused banking status to CRB and he was in the dock. SBI was one of the banks to be hit by his huge defaults.
Cobbler scam
Sohin Daya, son of a former Sheriff of Mumbai, was the main accused in the multi-crore shoes scam. Daya of Dawood Shoes, Rafique Tejani of Metro Shoes, and Kishore Signapurkar of Milano Shoes were arrested for creating several leather co-operative societies which did not exist.
They availed loans of crores of rupees on behalf of these fictitious societies. The scam was exposed in 1995. The accused created a fictitious cooperative society of cobblers to take advantage of government loans through various schemes.
Officials of the Maharashtra State Finance Corporation, Citibank, Bank of Oman, Dena Bank, Development Credit Bank, Saraswat Co-operative Bank, and Bank of Bahrain and Kuwait were also charge sheeted.
IPO Scam
The Securities and Exchange Board of India barred 24 key operators, including Indiabulls and Karvy Stock Broking, from operating in the stock market and banned 12 depository participants from opening fresh accounts for their involvement in the Initial Public Offer scam.
It also banned 85 financiers from capital market activities.
Suzlon Energy Ltd's Rs 1,496.34 crore (Rs 14.963 billion) public issue (September 23-29, 2005). The retail portion was oversubscribed 6.04 times and the non-institutional portion was oversubscribed 40.27 times. Key operators used 21,692 fictitious accounts to corner 323,023 shares representing 3.74 per cent of the total number of shares allotted to retail individual investors.
Jet Airways's Rs 1,899.3 crore (Rs 18.993 billion) public offer (Feb 18-24, 2005). The retail portion was subscribed 2.99 times and the non-institutional portion by 12.5 times. Key operators used 1186 fake accounts for cornering 20,901 shares repersenting 0.52 per cent of the total number of shares allotted to retail investors.
National Thermal Power Corporation Ltd's Rs 5,368.14 crore (Rs 53.681 billion) IPO (Oct 7-14, 2004). The retail portion was oversubscribed 3.73 times and the non-institutional portion by 11.93 times. Key operators used a total of 12,853 afferent accounts for cornering 2,750,730 shares representing 1.3 per cent of the total number of shares allotted to retail investors.
Tata Consultancy Services's Rs 4,713.47 crore (Rs 47.134 billion) public offer (Aug 19-23, 2004). The retail portion was oversubscribed 2.86 times and the non-institutional portion by 19.15 times. Key operators used 14,619 'benami' accounts to corner 261,294 shares representing 2.09 per cent of the total shares allotted to retail individual investors.
Patni Computer System Ltd's Rs 430.65 crore (Rs 4.306 billion) public issue (Jan 27-Feb 5 2004). The retail portion was oversubscribed 9.36 times and the non-institutional portion by 39.22 times. A lone key operator used 2541 afferent account for cornering 127,050 shares representing 2.71 per cent of the total number of shares allotted to retail investors.
Dinesh Dalmia
Dinesh Dalmia was the managing director of DSQ Software Limited when the Central Bureau of Investigation arrested him for his involvement in a stocks scam of Rs 595 crore (Rs 5.95 billion).
Dalmia's group included DSQ Holdings Ltd, Hulda Properties and Trades Ltd, and Powerflow Holding and Trading Pvt Ltd.
Dalmia resorted to illegal ways to make money through the partly paid shares of DSQ Software Ltd, in the name of New Vision Investment Ltd, UK, and unallotted shares in the name of Dinesh Dalmia Technology Trust.
Investigation showed that 1.30 crore (13 million) shares of DSQ Software Ltd had not been listed on any stock exchange
Abdul Karim Telgi
He paid for his own education at Sarvodaya Vidyalaya by selling fruits and vegetables on trains.
He is today famous (or infamous) for being he man behind one of India's biggest scams.
The Telgi case is another big scam that rocked India. The fake stamp racket involving Abdul Karim Telgi was exposed in 2000. The loss is estimated to be Rs 171.33 crore (Rs 1.71 billion), it was initially pegged to be Rs 30,000 crore (Rs 300 bilion), which was later clarified by the CBI as an exaggerated figure.
In 1994, Abdul Karim Telgi acquired a stamp paper license from the Indian government and began printing fake stamp papers.
Telgi bribed to get into the government security press in Nashik and bought special machines to print fake stamp papers.
Telgi's networked spread across 13 states involving 176 offices, 1,000 employees and 123 bank accounts in 18 cities.
Virendra Rastogi
Virendra Rastogi chief executive of RBG Resources was charged with for deceiving banks worldwide of an estimated $1 billion.
He was also involved in the duty-drawback scam to the tune of Rs 43 crore (Rs 430 milion) in India.
The CBI said that five companies, whose directors were the four Rastogi brothers -- Subash, Virender, Ravinde and Narinder -- exported bicycle parts during 1995-96 to Russia and Hong Kong by heavily over invoicing the value of goods for claiming excess duty draw back from customs.
The UTI Scam
Former UTI chairman P S Subramanyam and two executive directors -- M M Kapur and S K Basu -- and a stockbroker Rakesh G Mehta, were arrested in connection with the 'UTI scam'.
UTI had purchased 40,000 shares of Cyberspace between September 25, 2000, and September 25, 2000 for about Rs 3.33 crore (Rs 33.3 million) from Rakesh Mehta when there were no buyers for the scrip. The market price was around Rs 830.
The CBI said it was the conspiracy of these four people which resulted in the loss of Rs 32 crore (Rs 320 million). Subramanyam, Kapur and Basu had changed their stance on an investment advice of the equities research cell of UTI.
The promoter of Cyberspace Infosys, Arvind Johari was arrested in connection with the case. The officals were paid Rs 50 lakh (Rs 5 million) by Cyberspace to promote its shares.
He also received Rs 1.18 crore (Rs 11.8 million) from the company through a circuitous route for possible rigging the Cyberspace counter.
Uday Goyal
Uday Goyal, managing director of Arrow Global Agrotech Ltd, was yet another fraudster who cheated investors promising high returns through plantations.
Goyal conned investors to the tune of over Rs 210 crore (Rs 2.10 billion). He was finally arrested.
The plantation scam was exposed when two investors filed a complaint when they failed to get the promised returns.
Over 43,300 persons had fallen into Goyal's trap. Several criminal complaints were filed with the Economic Offences Wing.
The company's directors and their relatives had misused the investors' money to buy properties. The High Court asked the company to sell its properties and repay its investors.
Sanjay Agarwal
Home Trade had created waves with celebrity endorsements.
But Sanjay Agarwal's finance portal was just a veil to cover up his shady deals. He swindled a whopping Rs 600 crore (Rs 6 billion) from more than 25 cooperative banks.
The government securities (gilt) scam of 2001 was exposed when the Reserve Bank of India checked the acounts of some cooperative banks following unusual activities in the gilt market.
Co-operative banks and brokers acted in collusion in abid to make easy money at the cost of the hard earned savings of millions of Indians. In this case, even the Public Provident Fund (PPF) was affected.
A sum of about Rs 92 crore (Rs 920 million) was missing from the Seamen's Provident Fund. Sanjay Agarwal, Ketan Sheth (a broker), Nandkishore Trivedi and Baluchan Rai (a Hong Kong-based Non-Resident Indian) were behind the Home Trade scam.
Source
The biggest corporate scam in India has come from one of the most respected businessmen.
Satyam founder Byrraju Ramalinga Raju resigned as its chairman after admitting to cooking up the account books.
His efforts to fill the "fictitious assets with real ones" through Maytas acquisition failed, after which he decided to confess the crime.
With a fraud involving about Rs 8,000 crore (Rs 80 billion), Satyam is heading for more trouble in the days ahead.
On Wednesday, India's fourth largest IT company lost a staggering Rs 10,000 crore (Rs 100 billion) in market capitalisation as investors reacted sharply and dumped shares, pushing down the scrip by 78 per cent to Rs 39.95 on the Bombay Stock Exchange.
The NYSE-listed firm could also face regulator action in the US.
"I am now prepared to subject myself to the laws of the land and face consequences thereof," Raju said in a letter to SEBI and the Board of Directors, while giving details of how the profits were inflated over the years and his failed attempts to "fill the fictitious assets with real ones."
Raju said the company's balance sheet as of September 30 carries "inflated (non-existent) cash and bank balances of Rs 5,040 crore (Rs 50.40 billion) as against Rs 5,361 crore (Rs 53.61 billion) reflected in the books."
Harshad Mehta
He was known as the 'Big Bull'. However, his bull run did not last too long.
He triggered a rise in the Bombay Stock Exchange in the year 1992 by trading in shares at a premium across many segments.
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 crore (Rs 40 billion) from the banks to stockbrokers between April 1991 to May 1992.
Harshad Mehta worked with the New India Assurance Company before he moved ahead to try his luck in the stock markets. Mehta soon mastered the tricks of the trade and set out on dangerous game plan.
Mehta has siphoned off huge sums of money from several banks and millions of investors were conned in the process. His scam was exposed, the markets crashed and he was arrested and banned for life from trading in the stock markets.
He was later charged with 72 criminal offences.
A Special Court also sentenced Sudhir Mehta, Harshad Mehta's brother, and six others, including four bank officials, to rigorous imprisonment (RI) ranging from 1 year to 10 years on the charge of duping State Bank of India to the tune of Rs 600 crore (Rs 6 billion) in connection with the securities scam that rocked the financial markets in 1992. He died in 2002 with many litigations still pending against him.
Ketan Parekh
Ketan Parekh followed Harshad Mehta's footsteps to swindle crores of rupees from banks. A chartered accountant he used to run a family business, NH Securities.
Ketan however had bigger plans in mind. He targetted smaller exchanges like the Allahabad Stock Exchange and the Calcutta Stock Exchange, and bought shares in fictitious names.
His dealings revolved around shares of ten companies like Himachal Futuristic, Global Tele-Systems, SSI Ltd, DSQ Software, Zee Telefilms, Silverline, Pentamedia Graphics and Satyam Computer (K-10 scrips).
Ketan borrowed Rs 250 crore from Global Trust Bank to fuel his ambitions. Ketan alongwith his associates also managed to get Rs 1,000 crore from the Madhavpura Mercantile Co-operative Bank.
According to RBI regulations, a broker is allowed a loan of only Rs 15 crore (Rs 150 million). There was evidence of price rigging in the scrips of Global Trust Bank, Zee Telefilms, HFCL, Lupin Laboratories, Aftek Infosys and Padmini Polymer.
C R Bhansali
The Bhansali scam resulted in a loss of over Rs 1,200 crore (Rs 12 billion).
He first launched the finance company CRB Capital Markets, followed by CRB Mutual Fund and CRB Share Custodial Services. He ruled like a financial wizard 1992 to 1996 collecting money from the public through fixed deposits, bonds and debentures. The money was transferred to companies that never existed.
CRB Capital Markets raised a whopping Rs 176 crore in three years. In 1994 CRB Mutual Funds raised Rs 230 crore and Rs 180 crore came via fixed deposits. Bhansali also succeeded to to raise about Rs 900 crore from the markets.
However, his good days did not last long, after 1995 he received several jolts. Bhansali tried borrowing more money from the market. This led to a financial crisis.
It became difficult for Bhansali to sustain himself. The Reserve Bank of India (RBI) refused banking status to CRB and he was in the dock. SBI was one of the banks to be hit by his huge defaults.
Cobbler scam
Sohin Daya, son of a former Sheriff of Mumbai, was the main accused in the multi-crore shoes scam. Daya of Dawood Shoes, Rafique Tejani of Metro Shoes, and Kishore Signapurkar of Milano Shoes were arrested for creating several leather co-operative societies which did not exist.
They availed loans of crores of rupees on behalf of these fictitious societies. The scam was exposed in 1995. The accused created a fictitious cooperative society of cobblers to take advantage of government loans through various schemes.
Officials of the Maharashtra State Finance Corporation, Citibank, Bank of Oman, Dena Bank, Development Credit Bank, Saraswat Co-operative Bank, and Bank of Bahrain and Kuwait were also charge sheeted.
IPO Scam
The Securities and Exchange Board of India barred 24 key operators, including Indiabulls and Karvy Stock Broking, from operating in the stock market and banned 12 depository participants from opening fresh accounts for their involvement in the Initial Public Offer scam.
It also banned 85 financiers from capital market activities.
Suzlon Energy Ltd's Rs 1,496.34 crore (Rs 14.963 billion) public issue (September 23-29, 2005). The retail portion was oversubscribed 6.04 times and the non-institutional portion was oversubscribed 40.27 times. Key operators used 21,692 fictitious accounts to corner 323,023 shares representing 3.74 per cent of the total number of shares allotted to retail individual investors.
Jet Airways's Rs 1,899.3 crore (Rs 18.993 billion) public offer (Feb 18-24, 2005). The retail portion was subscribed 2.99 times and the non-institutional portion by 12.5 times. Key operators used 1186 fake accounts for cornering 20,901 shares repersenting 0.52 per cent of the total number of shares allotted to retail investors.
National Thermal Power Corporation Ltd's Rs 5,368.14 crore (Rs 53.681 billion) IPO (Oct 7-14, 2004). The retail portion was oversubscribed 3.73 times and the non-institutional portion by 11.93 times. Key operators used a total of 12,853 afferent accounts for cornering 2,750,730 shares representing 1.3 per cent of the total number of shares allotted to retail investors.
Tata Consultancy Services's Rs 4,713.47 crore (Rs 47.134 billion) public offer (Aug 19-23, 2004). The retail portion was oversubscribed 2.86 times and the non-institutional portion by 19.15 times. Key operators used 14,619 'benami' accounts to corner 261,294 shares representing 2.09 per cent of the total shares allotted to retail individual investors.
Patni Computer System Ltd's Rs 430.65 crore (Rs 4.306 billion) public issue (Jan 27-Feb 5 2004). The retail portion was oversubscribed 9.36 times and the non-institutional portion by 39.22 times. A lone key operator used 2541 afferent account for cornering 127,050 shares representing 2.71 per cent of the total number of shares allotted to retail investors.
Dinesh Dalmia
Dinesh Dalmia was the managing director of DSQ Software Limited when the Central Bureau of Investigation arrested him for his involvement in a stocks scam of Rs 595 crore (Rs 5.95 billion).
Dalmia's group included DSQ Holdings Ltd, Hulda Properties and Trades Ltd, and Powerflow Holding and Trading Pvt Ltd.
Dalmia resorted to illegal ways to make money through the partly paid shares of DSQ Software Ltd, in the name of New Vision Investment Ltd, UK, and unallotted shares in the name of Dinesh Dalmia Technology Trust.
Investigation showed that 1.30 crore (13 million) shares of DSQ Software Ltd had not been listed on any stock exchange
Abdul Karim Telgi
He paid for his own education at Sarvodaya Vidyalaya by selling fruits and vegetables on trains.
He is today famous (or infamous) for being he man behind one of India's biggest scams.
The Telgi case is another big scam that rocked India. The fake stamp racket involving Abdul Karim Telgi was exposed in 2000. The loss is estimated to be Rs 171.33 crore (Rs 1.71 billion), it was initially pegged to be Rs 30,000 crore (Rs 300 bilion), which was later clarified by the CBI as an exaggerated figure.
In 1994, Abdul Karim Telgi acquired a stamp paper license from the Indian government and began printing fake stamp papers.
Telgi bribed to get into the government security press in Nashik and bought special machines to print fake stamp papers.
Telgi's networked spread across 13 states involving 176 offices, 1,000 employees and 123 bank accounts in 18 cities.
Virendra Rastogi
Virendra Rastogi chief executive of RBG Resources was charged with for deceiving banks worldwide of an estimated $1 billion.
He was also involved in the duty-drawback scam to the tune of Rs 43 crore (Rs 430 milion) in India.
The CBI said that five companies, whose directors were the four Rastogi brothers -- Subash, Virender, Ravinde and Narinder -- exported bicycle parts during 1995-96 to Russia and Hong Kong by heavily over invoicing the value of goods for claiming excess duty draw back from customs.
The UTI Scam
Former UTI chairman P S Subramanyam and two executive directors -- M M Kapur and S K Basu -- and a stockbroker Rakesh G Mehta, were arrested in connection with the 'UTI scam'.
UTI had purchased 40,000 shares of Cyberspace between September 25, 2000, and September 25, 2000 for about Rs 3.33 crore (Rs 33.3 million) from Rakesh Mehta when there were no buyers for the scrip. The market price was around Rs 830.
The CBI said it was the conspiracy of these four people which resulted in the loss of Rs 32 crore (Rs 320 million). Subramanyam, Kapur and Basu had changed their stance on an investment advice of the equities research cell of UTI.
The promoter of Cyberspace Infosys, Arvind Johari was arrested in connection with the case. The officals were paid Rs 50 lakh (Rs 5 million) by Cyberspace to promote its shares.
He also received Rs 1.18 crore (Rs 11.8 million) from the company through a circuitous route for possible rigging the Cyberspace counter.
Uday Goyal
Uday Goyal, managing director of Arrow Global Agrotech Ltd, was yet another fraudster who cheated investors promising high returns through plantations.
Goyal conned investors to the tune of over Rs 210 crore (Rs 2.10 billion). He was finally arrested.
The plantation scam was exposed when two investors filed a complaint when they failed to get the promised returns.
Over 43,300 persons had fallen into Goyal's trap. Several criminal complaints were filed with the Economic Offences Wing.
The company's directors and their relatives had misused the investors' money to buy properties. The High Court asked the company to sell its properties and repay its investors.
Sanjay Agarwal
Home Trade had created waves with celebrity endorsements.
But Sanjay Agarwal's finance portal was just a veil to cover up his shady deals. He swindled a whopping Rs 600 crore (Rs 6 billion) from more than 25 cooperative banks.
The government securities (gilt) scam of 2001 was exposed when the Reserve Bank of India checked the acounts of some cooperative banks following unusual activities in the gilt market.
Co-operative banks and brokers acted in collusion in abid to make easy money at the cost of the hard earned savings of millions of Indians. In this case, even the Public Provident Fund (PPF) was affected.
A sum of about Rs 92 crore (Rs 920 million) was missing from the Seamen's Provident Fund. Sanjay Agarwal, Ketan Sheth (a broker), Nandkishore Trivedi and Baluchan Rai (a Hong Kong-based Non-Resident Indian) were behind the Home Trade scam.
Source
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