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August 13, 2000
Revisiting the securities scam trial and its contrasts
The scene: August 8, the Court of Justice Deepak Trivedi of the Special Court set up to try cases related to the Securities Scam of 1992.
The
case: 3 of 1996. The Central Bureau of Investigation v/s Canbank Mutual
Fund, its officials and a host of top brokers charged in the securities
scam.
Accused No 10 is Ketan Parekh, today among the biggest stockbrokers
in India and dubbed the “one-man army” by a business newspaper.
He makes it to the front pages, not because of the scam-related cases,
but for his ability to move the Sensex or his high-power venture capital
company in association with Australian magnate Kerry Packer. His celebrated
bash is attended by the who’s who in Indian business and politics.
Fittingly, Parekh is represented in court by the flamboyant Mahesh Jethmalani, whose fee per appearance runs into six digits. Jethmalani is at his histrionic best while arguing the innocence of Ketan Parekh. He tries hard hustle the court into several quick hearings which will get his client discharged.
Lending support and offering advice to Ketan and his lawyer are Harshad Mehta’s former employees, his brother Ashwin and several lawyers. Swarming outside the court room were more lawyers, employees and bodyguards to several of the brokers, flashing mobile phones and taking calls for their bosses inside the courtroom.
The power of the wealth flashing around the court room equalled that of the government machinery gathered for the case against Shiv Sena supremo Bal Thackeray, which was being heard on the same day. There is another man shuffling around in Justice Trivedi’s court room. Like Ketan Parekh, he is also a scam accused. In fact, A N Bavdekar even has the dubious distinction of having spent 107 days in jail along with Harshad Mehta. It is another matter that neither Harshad, nor any of the powerful scam-accused even recognise him.
Bavdekar, who shuffles in and out of the court room with his papers wrapped in a plastic bag and in a shirt which is probably as old as the securities scam itself, is one of the many hapless bank employees, who was crushed and victimised by the excruciatingly slow scam investigation and trial. Unlike Ketan Parekh, Bavdekar was not even aware about the complexities of the securities transactions. Forget about a Jethmalani, Bavdekar cannot even afford a lawyer. He has been designated a lawyer by the Court, and counts his blessings that the person assigned to his case seems genuinely interested in helping him.
Bavdekar’s crime and that of his two colleagues (Kailasam and Padhye) was that they unquestioningly counter-signed cheques written out by Sitaraman — the SBI treasury official who was in cahoots with Harshad Mehta. Once the Central Bureau of Investigations (CBI) went on its spree of indiscriminate arrests on June 4, 1992 people like Bavdekar simply watched their lives being destroyed. Unlike the foreign banks or the Reserve Bank, SBI and other nationalised banks simply abandoned their wrongly implicated employees. The top officials were so busy saving themselves that they had neither the courage nor the compassion to differentiate between the guilty and the fall guys.
In the case of Bavdekar, Kailasam and Padhye, SBI initially defended them during the Joint Parliamentary Committee hearings but later gave permission to the CBI to prosecute them without explanation. It ignored the fact that these officials had written to the management warning about missing scrips, cheque-deposit instructions being issued by the brokers representatives and had demanded a duty manual which spelt out their responsibilities.
Two of the banks’ chairmen who I spoke to on behalf of Bavdekar and others pleaded helplessness. Their only support was the SBI Officers Association which helped and stood by them over the last eight years. The Association passed the hat around to pay for their legal expenses in the initial years, but soon ran out of funds. Finally, when Bavdekar and others were due to retire, it decided to get tough and warned the bank that if the three were dismissed without retirement benefits it would initiate strong action and protest. G G Vaidya, the present chairman of SBI, and once in charge of its treasury operations was fully aware of their innocence and probably gave them their first break in eight years. They were allowed to retire with all their benefits. Others have not been as lucky.
The fate and treatment of different people involved in the same scandal is makes for a poignant contrast.
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The rich and powerful brokers and bankers are largely unaffected and continue to thrive. The innocent tiny officials callously caught in the dragnet are simply shattered and broken.
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Harshad Mehta, the best known name of the Scam, almost manages to make a comeback. The media, including the Times of India group, bends over to launch his career as columnist-and-guru. If he has faded out again, it is only because he tried to pull the 1992 trick of rigging up the prices of a few select scrips until the speculative build-up led to a collapse. Two years after the collapse, the stock market regulator has yet to complete the investigation.
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Ketan Parekh goes on to become the most powerful broker in the Indian market; but his is not alone. Ajay Kayan, another scam accused floats a dotcom which was inaugurated by the Finance Minister himself. Most others are back in business and doing equally well, Even if the intervening years have diminished the wealth of some of the accused, their life style, their fleet of foreign cars, trips abroad remain largely unaffected.
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The foreign banks too, took care of their employees. Many moved to highly paid jobs abroad while others were given golden parachutes when asked to leave. The banks have even ensured that none of the key officials are called in as witnesses in their litigation, yet nobody has ever objected.
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In contrast, neither the Central Vigilance Commission, CBI, Reserve Bank nor the nationalised banks have time for their little pawns who were inadvertently caught in the scam dragnet. The biggest irony is that those bank employees who in fact colluded with the scamsters are being looked after by them, it is only those who had nothing to do with the fraud who continue to suffer.