REPORT ON RESEARCH PROJECT

OF
FINANCIAL SCAMS IN INDIA
Submitted in partial fulfilment of the requirement of the
Masters in Business Administration Programme
Offered by Jain University during the year 2013-14

BY

MOHAMMED MAAZ
3
rd
Semester MBA

UNDER THE GUIDANCE OF
PROF.SHRUTI AGARWAL


# 319, 17
th
Cross, 25
th
Main, JP Nagar 6
th
Phase Bangalore 560 078
Phone : 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 MAAZ
Sem : 3
rd

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 Indias 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 Ltds 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 2
Common 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 3
rd
to 14
th
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 Relay

The 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 didnt 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 Kalmadis 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 wasnt 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 Queens 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-mans 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 yams 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 founders 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 investors .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 1980s 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 Computers 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 companys 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 Rajus 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 Rajus
communiqu 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 Satyams shareholders that there were accounting
irregularities in the company. Here, it was stated that Satyams 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, Rajus statement
to the board (Rajas 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 companys
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 16
th
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 Satyams 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 managements 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 brokers 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 1
st
, 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 Rathis 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 30
th
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 KPs 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 Parikhs 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.

SEBIs 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 BSEs 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 Gandhis 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.caseplace.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/