Fraud charge fells Big Bull
Mamata-Cong deal done, seal remains
CBI to probe Midnapore ‘carnage’
Flop Amit & hit Ghai in corporate sermon
Calcutta Weather

New Delhi & Calcutta, March 30: 
History was repeated today when Ketan Parekh, Big Bull II of the stock market, was arrested by the Central Bureau of Investigation following a criminal complaint by the government-owned Bank of India, charging the broker with cheating and fraud.

The CBI arrested him at 4 pm after a special investigating team headed by joint director J.C. Davas raided 11 offices and the residence of the broker and seized papers relating to what has come to be known as the pay-order scam.

Along with Ketan, two other members of the Parekh clan, Kirti and Kanti, were arrested. The three will be produced before a designated court in Mumbai tomorrow.

They were charged under Section 467 of the Indian Penal Code. Another case against them has been filed under Section 420 which relates to cheating and forgery. The interrogation is still on at White House, the CBI headquarters in Mumbai.

Though the arrests took place much too late to have an impact on the market, rumours of impending action against Ketan Parekh had already sent the Bombay Stock Exchange sensitive index plunging 147 points to 3604.38.

Parekh’s fall is reminiscent of the collapse of the original Big Bull, Harshad Mehta, nearly a decade ago when he was brought to heel by enforcement agencies in the securities scam.

As in the Harshad Mehta affair, this time, too, money was taken out of the banking system in a fraudulent manner to play on the stock market. Instead of government securities, the instrument used in the current case is the pay order. A pay order — like a draft — is issued by a bank for a specific amount after a client deposits an equivalent sum with it. This pay order is then presented to another bank, which encashes it after taking a commission.

While Bank of India (BoI) has been defrauded of about Rs 137 crore, it is feared that, once the losses of other banks are toted up, the total amount may run into Rs 843 crore. Punjab National Bank, also owned by the government, is already talking about a loss of Rs 17 crore.

The origin of the fraud lies in pay orders issued by a Mumbai branch of Gujarat’s Madhavpura Mercantile Co-op Bank in the names of three finance companies of Parekh. On March 8, six pay orders worth Rs 62 crore were issued to Panther Investrade, Classic Credit and Panther FinCap. Seven pay orders worth another Rs 75 crore were given out, also in the names of the same companies, the next day.

When these pay orders were presented to BoI, it credited the accounts of these companies with the amount — Rs 137 crore — represented by the papers. The companies then took the money out of the accounts.

After the post-budget market crash, BoI approached Madhavpura Bank to honour its commitments, but the bank did not have the funds. On March 12, the co-operative bank was declared a defaulter, which meant that the pay orders issued by it and encashed by BoI now stood dishonoured. BoI found out later that Madhavpura Bank had released the pay orders without receiving any money from Parekh.

O.N. Singh, the executive director of BoI, said: “We filed a criminal complaint with the CBI against Ketan Parekh stating that there was a conspiracy to cheat our bank.”

Parekh was called by the bank yesterday and told to make good the default of Rs 137 crore. “He pleaded for time. A couple of months,” Singh said, adding: “(But) We cannot remain mute spectators.”

Parekh would perhaps have succeeded in coming up with the cash had the market not crashed, taking the value of his pet shares — known as K-10 — down drastically. It has now come to light that he might have been trapped by a bear cartel, which drove prices down, armed with insider information leaked by top BSE officials.

The CBI suspects the connivance of bank officials in the fraud, which could have been going on for some time — at least from January to March. It believes that other than Madhavpura, one foreign bank and two private banks have issued pay orders to Parekh without cash back-up.


New Delhi & Calcutta, March 30: 
Mamata Banerjee tonight virtually sealed a seat-share deal with the Congress for the West Bengal Assembly elections.

“In a day or two, the chapter (discussion on seat sharing) will be closed and the message will go to the people that we want to fight the CPM together,” Mamata said after a three-hour meeting with Kamal Nath, the AICC general secretary who was despatched by Sonia Gandhi to work out an arrangement.

The meeting, held at Trinamul MP Sudip Bandopadhyay’s house in central Calcutta, ended at 1 am.

Nath, who drove to Bandopadhyay’s residence immediately after arriving by the evening flight from Delhi, described his talks with Mamata as very satisfactory. “We have moved forward positively. Tomorrow, I shall report to my party chief Sonia Gandhi and continue the discussions. We are coming close to our objective,” he said.

Asked how many seats Mamata had agreed to concede, Nath said: “Numbers are unimportant now. The Left Front government, which has done nothing for West Bengal, has no business staying in power. We are very close to a confirmation (on clinching a seat adjustment deal). In the next one or two days, we hope to reach our objective. Everything is moving satisfactorily.”

Trinamul sources said Nath had carried Sonia’s instructions that a poll pact with Mamata would have to be forged even if the party had to make sacrifices.

A day after Sonia indicated to the Bengal unit that some sitting legislators may have to give up their seats, Nath said it in as many words. “Does it happen in any state that all sitting MLAs are renominated and given tickets?” he said in Delhi before leaving for Calcutta.

Party sources said as many as 15 MLAs might lose their seats. Legislators who had defied the party whip in voting against Congress’ Rajya Sabha nominee D.P. Roy last year are the most vulnerable.

Nath and Bengal Congress president Pranab Mukherjee met Sonia to finalise the number of seats to which the party would stake claim. Nath had drawn up a list of 75 seats, but sources close to him said he would be “happy” to net 60-odd seats, including “45 winning ones”.

Nath, the general secretary in charge of Bengal, has all along asserted that the Congress would be satisfied with “40 winning” seats. But the state unit does not agree and wants the high command to ask for at least 97 seats.

Sonia, who yesterday silenced Somen Mitra and others by showing them files of their past statements on the CPM, told Nath and Pranab to act “in accordance with workers’ aspirations”.

Party leaders in Bengal are reconciled to the idea that some sitting MLAs will not get tickets but each one is confident of retaining seats for “loyalists”. As a result, Nath’s Calcutta mission will not be easy.

Party leaders said once the seat-share issue is resolved, the focus will shift to the possible meeting between Sonia and Mamata and the common minimum programme which the Congress wants.

A section of the Congress, however, feels that considering Mamata’s scant regard for “paper work”, drawing up the agenda will be a “futile exercise”. Moreover, the partymen said, the Congress and Trinamul have no differences on social, economic or political issues.


Calcutta, March 30: 
In a blow to the CPM-led government weeks before the Assembly elections, Calcutta High Court today directed the CBI to investigate the alleged massacre of Trinamul Congress workers by suspected CPM supporters at Midnapore’s Chhoto Angaria village in January.

The division bench of Chief Justice A.K. Mathur and Justice Girish Gupta told the CBI to conduct the investigation and submit a report to the court by June. The judges said the inquiry has to be conducted by an official not below the rank of superintendent of police.

The government has decided to move the Supreme Court against the verdict. Chief minister Buddhadeb Bhattacharjee said law and order was a state subject and the CBI should not be dragged into it.

In a strongly-worded judgment which could give the Opposition a stick to beat the government with, the judges passed strictures against the Criminal Investigation Department (CID), the state’s crime detection agency. The Left Front government had earlier rejected the Opposition’s demand for a CBI inquiry.

Lashing out at the government, the judges said: “The court is of the opinion that there was no fair investigation at all. Three months have lapsed, (but) the CID has neither traced the dead bodies nor arrested the accused named in the FIR, except one.”

“Reports submitted by the National Human Rights Commission and the CID were examined by the court which felt that there was a need for a comprehensive investigation by the CBI to uphold the principles of fair justice and restore confidence in the people’s minds.”

It is the second time in four years that the court has censured the government and its law enforcing agencies and asked the CBI to investigate a political issue of public importance. The first was the mysterious disappearance of Bikhari Paswan, a jute mill worker from Hooghly, in 1997.

Today’s order, which came on a public interest litigation filed by the Committee for Protection of Democratic Rights, has given Mamata a shot in the arm and prompted her to coin a new slogan targeting the CPM: “Buddha told a lie, court ordered CBI.”

Claiming that her stand had been vindicated, Mamata said: “It is time that Buddhadeb Bhattacharjee resigned as chief minister.” Mamata had claimed that 11 of her supporters were killed by CPM cadre on the night of January 4 in the village in violence-scarred Midnapore. She had asked for a CBI probe, which was rejected, and had also demanded President’s rule in the state.

The rights panel had sent a delegation to Chhoto Angaria as had the NDA, which was led by its convener George Fernandes. Both teams had concluded that a massacre had taken place in the village, but despite their claims, not a single body of those alleged to have been killed was found.

The PIL was moved by city lawyer and Trinamul leader Kalyan Banerjee.


Mumbai, March 30: 
Both gave it a shot when corporatisation was not the Bollywood buzzword. Now that it is, one calls himself a corporate “failure” and the other a “success”.

As “can-do” minister Sushma Swaraj promised to play the lead role in the film industry’s reform, two titans of tinsel town — Amitabh Bachchan and producer-director Subhas Ghai — narrated the tales of their brush with private enterprise in entertainment.

Bachchan’s ended in tragedy, the saga of ABCL going bust, not quite celluloid material, not for Bollywood at least.

If this was one flop in Bachchan’s hit-studded career, Ghai — for whom the word bust appears only in blockbuster — didn’t miss with his corporate venture either. His company, Mukta Arts, set up in 1982, is a success story ready to be scripted.

At a global convention on entertainment, organised by the Federation of Indian Chambers of Commerce and Industry, Bachchan and Ghai, who have never partnered each other on film, tied their contrasting stories together in a common ending: corporatise or perish.

While the unceasing hit parade of films produced by his company has bolstered Ghai’s faith in corporatisation of an industry funded by the underworld, Bachchan is far from being once-bitten-twice-shy.

“I failed because I was not street-smart and business-type. I could not deal with those street-smart people in the industry,” said Bachchan, who hoisted the flagging fortunes of his company back up again with Kaun Banega Crorepati.

When he tried to launch the company in 1980, Bachchan said, bankers had turned their faces away from him. “They were not forthcoming. They said filming is too risky a business to invest in.”

Finally, he approached them with his wife Jaya and asked for a loan on the basis of their standing as actors. Their “worth” was estimated at Rs 80 crore, he said.

The loans came, but running a private enterprise proved more difficult.

“Our management was new and did not have the experience to deal with those smart tiewallahs in the industry,” he said. He tried, but could not make the twain — “the creative and the business minds” — meet.

“But corporatisation of the industry is essential. So is the development of an efficient marketing and management system,” Bachchan said.

Ghai said he launched Mukta Arts because he wanted to put his experience as a long-time director to corporate use. “I knew I had it in me.”

Since then, Ghai has directed and produced seven films under his company’s banner, most of them hits. “My films like Khalnayak, Pardes, Saudagar and Taal have done exceedingly well.”

Ghai said he succeeded where “others failed” because “I have never wanted to bite off more than I can chew”. Unlike Bachchan’s ABCL, which organised the Miss World in Bangalore, Mukta Arts never went beyond its core competence.

Again, unlike Bachchan, Ghai did not find bank doors shutting on his face. “If the financial institutions know that you have a reliable brand equity, they always come forward.”

Ghai was also the first producer to have his film (Taal) insured. Speaking from experience, he said corporatisation would bring about transparency, keeping “undesirable elements” out of funding.

The convention is taking place at a time when the worms of film financing have come crawling out of the can with the arrest of Bharat Shah, diamond merchant and Bollywood moneybag, who is alleged to have underworld links.




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