A financial scam relating to Initial Public Offerings (IPO) at the Stock Market, as reported on the CNBC-TV18 news channel: Uncovered
The CBI is fast on the trail of the Yes Bank and IDFC IPO scamsters but what is shocking is that, even legitmate banks and brokerages were involved.
In the wake of the Yes Bank and IDFC IPO demat scam, on December 15, 2005 Sebi concluded its preliminary investigations and flashed the names of Roopalben Panchaal, Purushottam Budhwani, Sugandh Estates and various other entities, which had been accused of illegally cornering these shares. After that, there was silence - no first information report, FIRs no interrogations and each of these individuals had simply vanished.
When an Uncovered reporter visited Sugandh Estates, he found an abandoned office in a dilapidated building. When he visited the house of Roopalben and Deepak Panchal at the address listed by Sebi and they weren't there either. It was the same stories at the house and office of Purushottam Budhwani.
But this year, it seems like some progress has been made on this case. On February 20, 2006, two months after Sebi published its report on its website, and local enforcement agencies remained clueless, it finally handed the case over to the Central Bureau of Investigation, CBI. The result was that the CBI raided 27 premises in three cities.
The searches began at six in the morning on February 22 and interrogations lasted for seven hours each. And at the end of it, the faces were flashing on national television. On the morning of February 23, the CBI arrested seven people accused in the scam and it is probably closer to smoking out the people, who had pumped crores of rupees through frontmen like Deepak Panchal and Budhwani.
Some of these people, who had so much money to play with, are not well known names or celebrities, but have now gained notoriety. Two of them are Rita Thacker and Dushyant Dalal. Rita Thacker is believed to have given Deepak Panchal Rs 30 crore to invest. Dushyant Dalal was an unknown name till now, but he was arrested in Mumbai along with Budhwani. The CBI believes he was one of the main financiers, for many of the shares that were cornered in Mumbai.
But this is nowhere near the end. The names on the FIR runs long. Till today, the Sebi report hinted that the thousands of multiple demat accounts was a slip up by authorities but the FIR states otherwise.
The FIR mentions broking houses, bank officials, individuals, financiers and private entities. It says that, "Certain bank officials of Bharat Overseas, HDFC, ING Vysya, Vijaya Bank, Karvy Stockbroking and Pratik Stock Vision appear to have entered into a criminal conspiracy, through illegal means, of opening fictitious benami bank accounts and demat accounts. They aided and abetted the illegal act by knowingly opening such accounts. The bank officials allowed finances to these fictitious accounts and the depositary participant, DP officials allowed the transfer of shares."
When these initial spate of arrests are over, sources in the CBI say, that the heat will be turned on bank and government officials. The judiciary is also not taking this alleged crime lightly. This is what Justice Mehra had to say, while handing over the accused to the CBI for a week's custody, "The court has to realise the gravity of the situation and keep in mind the interest of the small investors. This is a serious crime and we should allow the state sufficient time to unearth the matter. I am handing over the accused for further questioning, keeping in mind, that the co-conspirators are public servants."
The next few days will be spent sifting through documents that CBI officials have picked up, over the past two days. But has precious evidence already been lost? Has the trail of the hundreds of crores of rupees pumped in by financiers, meandered into untraceable bank accounts? It seems only time will tell.
Dhruv Bonnerjee
