Tehelka Scandal (2001)
Tehelka is an Indian weekly magazine
under the editorship of Tarun Tejpal.
The publication began in 2000 as a news
website, Tehelka.com. In 2001 with an
exposé of matchfixing
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
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
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
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
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
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
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.
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.
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 is an alleged scandal in
which the United Progressive
Alliance, the majorityholding
India, openly bribed Indian MPs
in cash or currencynotes
tune of multimillions
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
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.