In 1998, six years after the inventory market rip-off broke, I met Harshad “Large Bull” Mehta in his Maker Chamber workplace in Mumbai’s Nariman Level. The context: though the broader index – the 30-share Bombay Inventory Change Delicate Index or Sensex– was falling, a number of shares corresponding to BPL, Videocon and Sterlite, have been going up daily. There have been sturdy rumours that Mehta was at it once more, this time as an advisor, since his buying and selling licence had been suspended.
He was late for the assembly. “I spend all the day with one investigative company or one other,” he defined. In any case, he was India’s highest tax defaulter in these days. In truth, in accordance with an Earnings Tax Appellate Tribunal report, he was nonetheless quantity three at Rs 12,000 crore in 2010 – nearly a decade after his loss of life.
As well as, with a whole bunch of prices of a civil and felony nature levelled in opposition to him, Mehta’s was maybe essentially the most high-profile case of the Nineteen Nineties, spiced up with rumours concerning the involvement of senior politicians.
Regardless of the storm round, Mehta appeared calm. He defined that he was simply an advisor now, and had no function in inventory rigging. He even dropped us (a senior colleague was with me) to our workplace, probably within the well-known Lexus, although I used to be then too younger and uncooked to recollect the make of the automobile. Sadly, he died three years later, in 2001, on the age of 47.
Recollections of that assembly have been revived by Scam 1992 – The Harshad Mehta Story, the latest internet sequence about these tumultuous days within the Indian inventory market. Some research on shares meant loads of ‘tip-based’ betting. And anybody who has visited the Bombay Inventory Change constructing or the Rotunda constructing, or simply walked round Dalal Road, would bear in mind the three buzzwords in Gujarati, “tip aapo ne” – give me a tip.
Riches to rags
Because of the present, Mehta’s dream run and fall from grace are being mentioned once more. However whereas everybody remembers Mehta for pushing up the market with the help of cash acquired by fraudulent financial institution receipts, there was one other scheme, a government-backed one, on on the identical time, that ruined traders barely a decade later – the notorious US-64 from the Unit Belief of India.
As a former worker would say: “There was competitors amongst chairpersons to pay increased returns to traders. At one time, the scheme was returning over 15% a 12 months – an almost-impossible feat in these days.”
And scams that worn out traders’ cash haven’t ceased within the a long time since. Whether or not it’s the CR Bhansali scam in 1996 or the K-10 (Ketan Parekh) scam in 2001 and, extra lately in 2013, the National Spot Exchange Limited commodities market rip-off, we’ve seen a minimum of one Rs 1,000-crore plus rip-off per decade and a number of other smaller ones too.
For, the creativity of scamsters has no limits. One offered the concept of farming the emu, the Australian fowl, to traders in Tamil Nadu. Then, the Saradha chit fund scam in West Bengal and Odisha misplaced traders hundreds of crores of rupees. In truth, as a rustic, we’re fairly used to businessmen, builders or chit funds disappearing with financial institution or purchaser cash.
The frequent thread in all these scams is that individuals danger their lives’ financial savings to make an additional buck. India has an especially low annual per capita revenue of Rs 135,000, which works out to Rs 11,250 a month. No marvel, males incomes nearly Rs 20,000-Rs 30,000 a month in Mumbai, barely sufficient to help their households, have been buying and selling daily in small cap shares for a Rs 1,000-Rs 2,000 revenue/loss?
Then, there have been chartered accountants betting their shoppers’ cash on unknown shares, only for the exhiliration of constructing a fast buck. To cite the net present on Mehta, “Threat hai to ishq hai” (the place there may be danger, there may be thrill).
Lack of deterrent
However in addition to poverty and greed, the principle motive why scams have flourished in India is the absence of a powerful deterrent. Earlier than we evaluate elections within the US and India, allow us to take the dual circumstances of Bernie Madoff and B Ramalinga Raju. The previous Nasdaq chairman, whose Ponzi scheme was reported by his personal sons in December 2008, was arrested inside a day. By March 2009, he was handed a 150-year sentence in lower than 150 days.
Across the identical time, in January 2009, Raju, former chairman of Satyam Computer systems (now merged with Tech Mahindra), confessed to cooking his books. Eleven years later, he’s nonetheless out on bail. Just lately, his legal professionals managed to cease Netflix from airing an episode on him within the Unhealthy Boy Billionaire sequence. After all, the legislation must take its course. However rapidly. As a result of, as they are saying, darna zaroori hai. Concern is the important thing.
Joydeep Ghosh is a New Delhi-based enterprise journalist with over 25 years’ expertise. His Twitter deal with is @joyghosh2.