Scandals & Scams ->> Made in India - Part II

1990's Securities Scandal

Popularly known as "Big Bull" Harshad Mehta scandal, this is perhaps the first large scale security fraud in the independent India. PV Narasimha Rao, then Prime Minister along with Mr Manmohan Singh, Finance Minister (the current Prime Minister) kicked off Indian Economic liberalisation programs.The disinvestment programs and general euphoria associated with the investment friendly policies brought Indian Stock Market into a great attention. Crux of the scandal is, Harshad Mehta a shrew stockbroker manipulated the dis-jointed (vintage) regulatory systems. By using the Ready Forward (RF) deals and fake Bank Receipts (BR's) from two local banks that were not back the Government securities - Big Bull siphoned crores of rupees from the big banks to the tune of Rs 4000 crores (US $ 1.8 Billion at the exchange rates). This was a complex scam that directly or indirectly implicated Indian banking system, regulatory bodies and the of course the political class.  Harshad Mehta alleged that he had paid, Rs 1 crore to then PM, PV Narasimha Rao as donation to the Congress party to get him "of the hook" (though it was never proved).

The iconic darling of the stock market though was charged with various crimes and fraudulent methods to swindle millions, no other individuals in the system at that time in Finance Ministry or Banking system were charged. Manmohan Singh offered resign having admitted in public that "I failed to see this this scam". But then PM rejected his offer.

One good out come of the this scandal was, Indian Securities system was tightened.  We can see significant shades of this scam in 2008 US stock market crash and global recession where, Banking system and Regulators failed to impose the rules that led to collapse of Lehman Brothers and many banks.

Millions of small time investors lost their hard earned fortune during subsequent stock market crash, while many having committed suicides.

Bihar Fodder Scam

In the state of Bihar, about Rs. 950 crores (US $211.85 million) were siphoned off from the animal husbandry department. This scam spanned many years, by the collusion of Bihar state government officials and and elected representatives. On of the prime accused was Lalu Prasad Yadav. The crux of the scam is - over a period of a decade, huge sums of money from the treasury was taken in the name of vast herds of fictitious livestock for which fodder, medicines were brought by the Bihar Government. This scam is one of the first but not the last of the scams that clearly shows unholy nexus between politicians and bureaucracy. Two Chief Ministers, Three Ministers, Elected representatives and at least a dozen IAS officers in all over 50 were charged in this sensational case. Even these charges could not have happened but for the political compulsions (or settlements as it might be termed)

Another hallmark of this scam is federal government in action. As India moved away from the single party rule, the regional parties and independents started wielding huge power and pull at New Delhi. As a result, Federal Government was never keen to take any action on their coalition partners despite being aware of the scandals and scams of this nature through intelligence of press. Most of the case, such allegations "spinned" and were buried in course of time

Another irony is - Lalu Prasad Yadav who has been charged and jailed briefly, subsequently went on to become Federal Railway Minister. In  Bihar, where Caste is one of the key differentiators Lalu is still idolised by his followers and his worship goes on. At one point, Lalu was in fact, in reckoning for the Prime Minister of India.


As the saying at Wall Street "Greed is good", Indian political scene changed from 1990's and "corruption is acceptable" became a kind of norm.

AR Antulay Cement Scandal

By the standards of the current scandals in India, this cement scandal that resulted in the resignation of AR Antulay is not significant in monetary terms. But this is a landmark case in pre-economic liberalised, and a sort of socialist India of 1980's. During 1980's cement was a scarce commodity. Though unbelievable now, quotas were allocated by the Government. Outside the quota, the pricing were very high in the black market even if the commodity was available. AR Antulay, the Chief Minister had power to allocate these quotas. He used a private trust to accept "donations" and in lieu of these, he started allocating more quotas to the builders of booming Bombay city and Maharastra state. When the scandal was exposed by media, Antulay was cornered and he had no option but to resign and went into oblivion.

Typical of many Indian scandals no one charged nor convicted, even though Antulay diverted the cement meant for the public consumption. Perhaps, he was saved due to his close proximity to Indira Gandhi. In 2004, Antulay returned to Federal Government as a Minister.

Part -III continues