Monday, May 3, 2010


Tehelka Scandal (2001)

Tehelka is an Indian weekly magazine

under the editorship of Tarun Tejpal.

The publication began in 2000 as a news

website, In 2001 with an

exposé of matchfixing

in professional

cricket in India, it got public attention,

but it was the defense sting, called

Operation Westend that got it the

international attention, which led to the

resignation of Indian Defence Minister.

Operation West End was a sting operation aimed at sensationalizing the corruption

underlying India's large defence contracts. The original investigative piece by Tehelka in

2001 targeted several members of the then ruling coalition, the National Democratic

Alliance, headed by Bharatiya Janata Party's Atal Behari Vajpayee. It showed several

political figures, as well as army top brass, colluding to take bribes that approached 4%

of orders totalling hundreds of crores in order to approve defense contracts.

The minister in charge of Defence, George Fernandes of the Samata Party, resigned after

the tapes were made public, but he was reinstated later. Part of the tapes show the

treasurer of his party talking about accepting bribes of 1 crore or more. However,

subsequent investigation revealed that there was no evidence linking Fernandes to the

impropriety in the deals. Tehelka was accused of fabricating allegations and carrying out

a biased and motivated campaign carried out at the behest of the political foes of George


One source of corruption arises because arms dealers often hire senior armed forces

personnel. For example, Admiral S. M. Nanda, exChief

of Naval Staff, is now associated

with the arms mediating firm Crown Corporation, headed by his son, exNaval

officer LtCmdr

Suresh Nanda. Clearly such people have access to internal processes at the Indian

Ministry of Defence.


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In the Tehelka tapes, the reporter (usually Mathew Samuel) poses as a representative of

the fictitious large arms supplier West End. Tarun Tejpal was the chief editor and

Anirudha Bahal was editor investigation. Both never did any investigations in the initial

stage as they opposed the move of this operation. But the special correspondent Mathew

Samuel insisted on carrying out this operation and he carried out the sting operations

during the entire investigation. There were a total of 105 tapes shot. Mathew Samuel shot

all the tapes.

Shares scam by Ketan Parekh (2001)

Companies, when raising money

from the stock market, rope in

brokers to back them in raising the

share price. Ketan formed a

network of brokers from smaller

exchanges like the Ahmedabad

Stock Exchange and the Calcutta

Stock Exchange, and used benami,

or share purchases, in the name of

poor people living in the shanty

towns of Mumbai. Ketan rose to

fame at the same time as the

worldwide dotcom

boom (19992000)

and he relied primarily on

the shares of ten companies for his dealings (now known infamously as the K10


Ketan had large borrowings from Global Trust Bank, whose shares he was ramping up so

that he could get a good deal at the time of its merger with UTI Bank. He got a Rs 250

crore loan from Global Trust Bank, although Global Trust's chairman Ramesh Gelli, who

was later asked to resign, repeatedly asserted that the amount was less than Rs 100 crore,

which was in keeping with the Reserve Bank of India's normal amount. Ketan and his

associates obtained another Rs 1,000 crore from the Madhavpura Mercantile Cooperative

Bank despite the fact that RBI regulations ruled that the maximum loan a

broker could obtain was Rs 15 crore.

Ketan's modus operandi was to ramp up the shares of selected firms in collusion with

promoters. Interestingly, around the time when Ketan started taking long positions in his

favorite K10

scrips, the Securities and Exchange Board of India (SEBI) concluded a 3year

old case against Harshad Mehta, who had colluded with the managements of BPL,


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Sterlite and Videocon to ramp up their shares.

In Ketan's case, SEBI found prima facie evidence of price rigging in the scrips of Global

Trust Bank, Zee Telefilms, HFCL, Lupin Laboratories, Aftek Infosys and Padmini


Discovery and Arrest:

With the prices of selective shares constantly going up due to his rigging, innocent

investors who had bought the shares at high prices lost heavily. Soon after the discovery

of the scam, the prices of these stocks came down to a fraction of the values at which

they were bought, causing even banks to lose large sums of money.

At the time, a group of traders known as the "Bear Cartel" (Shankar Sharma, Anand

Rathi, Nirmal Bang) were making money from falling stock prices. Bears sell stocks at

high prices and buy back at low prices. Around February end in 2000, this cartel placed

sell orders on the K10

stocks and crushed their inflated prices. All of Ketan's borrowings

could not rescue his scrips. The Global Trust Bank and the Madhavpura Cooperative

went bust when the money they had lent to Ketan sunk with his K10


The information furnished by the Reserve Bank of India to the Joint Parliamentary

Committee (JPC) during the investigation of the scam revealed that financial institutions

like Industrial Development Bank of India (IDBI Bank) and Industrial Finance

Corporation of India (IFCI) had extended loans of Rs 1,400odd

crore to companies

known to be close to Ketan Parekh. Ketan Parekh was arrested on December 2, 2002 in


Stamp paper scam (2003)

While the country was almost certainly going to

migrate from an antiquated stamp paper system to a

demat system, an affidavit filed by Mr Sanjay S.

Barve, Additional Commissioner of Police, Economic

Offences Wing, Mumbai, in response to an order

issued by the Mumbai High Court in connection with

the writ petition filed by Mr Kishan Baburao Hazare

against Maharashtra and others, shed light on the

loopholes in the existing regimen which was so

artfully exploited by Telgi.

In the status report tendered by Mr Barve as part of his

affidavit, the 51 cases registered in Mumbai City since 1991 involving the use of fake


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stamps or other revenue collection instruments, have been divided into three categories:

According to Mr Barve, a study of the Telgi cases reveals that, in the initial phase of his

operations (19941998),

the `syndicate' led by him, in all probability, used chemically

washed stamps. "This was possible because there is no system of branding/cancellation

along with the perforation of the stamps while effecting cancellation/defacement thereof.

This loophole provided an opportunity for the recirculation

of used stamps by washing

them in chemicals to remove the cancellation/defacement markings in ink." Further, the

control mechanism for granting licences to vendors and the inspection of their work was

also very lax, providing an opportunity to unscrupulous vendors to sell special adhesive

stamps which they were not authorized to sell.

And then again, the receipts issued by the Central Stamps Office against the sale of

stamps and other value instruments do not have security features, "thereby, making it

easy for the criminal nexus to replicate such receipts and pass them on as genuine to

unsuspecting or, betimes, conniving clients."

He said, "A discreet review of the above aspects leads me to believe that such a major

and largescale

operation amounting to the usurpation and expropriation of the States'

revenue cannot go unnoticed

by the authorities concerned, especially when these

authorities themselves have launched prosecution and conducted verifications of the

major bulk users/purchasers of stamps."

Mr Barve, in his report, has stressed the need for an assessment of the damage caused to

the revenue of the States by taking a macro view of the collection system.

"As an illustrative example, the Government revenue, through sharetransfer

stamps in

any financial year, has to be 0.5 per cent of the net volume of the actually transferred/sold

shares traded through the mechanism of the stock exchanges. By arriving at the figure of

the States' share as a percentage of the gross volume of transactions, a near correct

estimation of Government receivables through these revenue instruments can be worked

out. If this figure is compared with the sale of sharetransfer

stamps during a specific

financial year, a clear and telling picture with regard to the loss to the Government can

certainly be delineated."

The Special Investigating Team (SIT) probing the allegations of mala fides in the

investigation by the Maharashtra police of the multicrore

Telgi stamp paper scam, made

by Mr S.M. Mushrif, former Additional Commissioner of Police (Crime), Pune, has

described as "proved beyond doubt" his contention that the evidence collected during the

investigation was deliberately not being brought on record and was being misused.

Interestingly, the SIT has criticised Mr Mushrif in connection with the application of the


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Maharashtra Control of Organised Crime Act (MCOCA) to the case.



The oilforfood

program was one of the world's

largest humanitarian aid operations, running from


It allowed Iraq to sell limited and then unlimited

quantities of oil provided most of the money went

to buy humanitarian goods. It was launched to help

ordinary Iraqis cope with U.N. sanctions imposed

after Saddam's 1990 invasion of Kuwait.

But Saddam, who could choose the buyers of Iraqi

oil and the sellers of humanitarian goods, corrupted the program by awarding contracts to —

and getting kickbacks from — favored buyers, mostly parties who supported his regime or

opposed the sanctions.

Tracing the politicization of oil contracts, the report said Iraqi leaders in the late 1990s

decided to deny American, British and Japanese companies allocations to purchase oil

because of their countries' opposition to lifting sanctions.

At the same time, it said, Iraq gave preferential treatment to France, Russia and China, which

were perceived to be more favorable to lifting sanctions and was also permanent members of

the Security Council.

Volcker's previous report, released in September, said lax U.N. oversight allowed Saddam's

regime to pocket $1.8 billion in kickbacks and surcharges in the awarding of contracts during

the program's operation from 19972003.

According to the new findings, Iraq's largest source of illicit income from the oilforfood

program was the more than $1.5 billion from kickbacks on humanitarian contracts.

Volcker's Independent Inquiry Committee calculated that more than 2,200 companies

worldwide paid kickbacks to Iraq in the form of "fees" for transporting goods to the interior

of the country or "aftersalesservice"

fees, or both.

According to the findings, the Banque Nationale de Paris S.A., known as BNP, which held

the U.N. oilforfood

escrow account, had a dual role and did not disclose fully to the United

Nations the firsthand knowledge it acquired about the financial relationships that fostered the

payment of illegal surcharges.


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The report chronicles Saddam's manipulation of the program and examines in detail 23

companies that paid kickbacks on humanitarian contracts including Iraqi front companies,

major food providers, major trading companies, and major industrial and manufacturing


According to the findings, the program was just under 3 years old when the Iraqi regime

began openly demanding illicit payments from its customers. The report said that while U.N.

officials and the Security Council were informed, little action was taken.

The report is the fifth by Volcker and concludes a yearlong,

$34 million investigation that

has faulted Annan, his deputy, Canada's Louise Frechette, and the Security Council for

tolerating corruption and doing little to stop Saddam's manipulations.

The smuggling of Iraqi oil outside the program in violation of U.N. sanctions poured much

more money — $11 billion — into Saddam's coffers in the same period, according to the


The Justice Pathak Inquiry Authority that is conducting a probe into the Iraqi oil scam in the

wake of the Volcker report, has issued a public notice to seek information from any person

having knowledge about the facts and circumstances of the matter.

The oneman

authority, was set up by the government under former Chief Justice of India

R.S Pathak to look into the payment of money by Saddam Hussain regime to former Foreign

Minister K.Natwar Singh and the Congress, as was alleged in the Volcker report, that had

probed the "oilforfood"

scam during the UN sanction on Iraq.

The authority, having its head office at Vigyan Bhawan here, said in the public notice "all

persons having knowledge of the facts and circumstances relating to matters referred to it,

and having interest in the proceedings…or who wish to assist the inquiry authority in making

suggestions…have been asked to submit their statements in prescribed manner… within 15


Singh was removed from the post on November 7, 2005 (though retaining a cabinet role as

minister without portfolio) following a controversy over his alleged involvement in the

United Nations Iraqi Oil for Food scandal. The Independent Inquiry Committee under Paul

Volcker had reported on October 27, 2005 that he and his son Jagat Singh were noncontractual

beneficiaries of the Oil for Food programme. Allegedly, they, along with Jagat

Singh's childhood friend Andaleeb Sehgal, were associated with a company called Hamdan

Exports, which acted as an intermediary for illegal sales of oil to a Swiss firm named

Masefield AG. Allegedly. In return, Masefield had to pay kickbacks, (termed "surcharges")

partly to Saddam Hussein's regime and partly to Natwar Singh and others. It was alleged that


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such surcharges were Hussein's way of securing support from politicians around the world

and that this influenced Natwar Singh to lobby against US policies in Iraq (in particular, US

sanctions on Saddam Hussein). This controversy heated up when Anil Mathrani, then Indian

Ambassador to Croatia, and a close aide to Natwar Singh alleged that Natwar Singh had used

an official visit to Iraq to procure oil coupons for Jagat Singh from Saddam's regime. The

Congress party distanced itself from him and on December 6, 2005, he resigned from the



scandal (2008)


or cashforvotes

scandal is an alleged scandal in

which the United Progressive

Alliance, the majorityholding


alliance of

India, openly bribed Indian MPs

in cash or currencynotes

to the

tune of multimillions

to survive

its very first confidence vote on

22 July 2008 in the Lok Sabha

after the Communist Party of

India (Marxist) led Left Front

withdrew support from the

government over India approaching the IAEA for IndoUS

nuclear deal.

The historic win was marred when 3 BJP lawmakers waved bundles of cash, 30

million rupees (715,000 dollars) amid accusations of votebuying.

BJP also demanded the resignation of Prime Minister Manmohan Singh over

allegations the government was bribing MPs to survive a vote of confidence in

Parliament. The Bharatiya Janata Party (BJP) also offered fresh "documentary

evidence" or videotapes

to back up its charge that three of its MPs were bribed to

save the Manmohan Singh government during the trust vote.

BJP also criticised the TV channel CNNIBN

for not telecasting an undercover

operation that videotaped alleged bribery.Speaker Somnath Chatterjee asked New

Delhi's police chief to investigate the bribery issues.

A day after the cashforvote

panel recommended further probe into the roles of Amar

Singh aide Sanjeev Saxena and BJP activists Sudheendra Kulkarni, Suhail Hindustani,

Lok Sabha Speaker Somnath Chatterjee referred the matter to the home ministry.


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The source of money is yet to be established, with the K.C. Deo panel recommending

that revenue intelligence or income tax department conduct further investigations. The

finance ministry has already said that the banks have no means for ascertaining the

serial number of currency notes issued to customers.

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