The Telegraph
Since 1st March, 1999
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Kamal Parekh embroiled in CSE scam deal

Calcutta, Nov. 14: Kamal Parekh, president of the Calcutta Stock Exchange at the time of the payment crisis in March 2001, is in deep trouble as the police have unearthed incriminating evidence that shows his complicity in the Rs 120-crore scam.

Harish Chandra Biyani, one of the key defaulters, had nearly failed to fulfil his payment obligations on March 7 last year. Thanks to Parekh, he managed to defer it by a day, but it cost the exchange and its 600-odd members dearly.

Biyani and his firm Biyani Securities (two different legal entities, both brokers on CSE) had traded in the shares of DSQ Industries between themselves. Biyani, under police interrogation, has revealed that he had carried out the trades for Dinesh Dalmia, the promoter-managing director of DSQ Software and other group companies.

These deals were conducted through the sell-n-cash scheme of the Stock Holding Corporation of India Ltd (SHCIL). The SHCIL had already paid Biyani Securities — the seller — for the trades. But Biyani—the buyer—had run out of funds. The total payment obligation was in excess of Rs 34 crore and, if he failed to fulfil it, SHCIL would have had to take the hit.

B. V. Goud, the then managing director and CEO of SHCIL, flew down to Calcutta on March 7, and held a meeting with Parekh at Taj Bengal to solve the impending crisis. Parekh, after an extended discussion with Goud and Biyani, agreed to release Rs 2.4 crore from the margin deposits of Biyani Securities to enable Biyani to fulfil his payment obligation on that day.

What Parekh should have done instead is expunge the collusive deals. The exchange has subsequently cancelled such collusive deals in the shares of DSQ Industries between Biyani and Biyani Securities after the two members defaulted on March 8.

Parekh took the decision unilaterally despite resistance from other executives. The executive director Tapas Datta had gone to Mumbai that day to attend a meeting at Sebi. Had Parekh not released Rs 2.4 crore out of the margin deposits of Biyani Securities, the funds could have been used to reduce the loss to the exchange on account of the default.

Biyani and his firm owe close to Rs 31 crore. What is more, Biyani had already defaulted in fulfilling his margin requirement of Rs 9.22 crore, and since March 5, he had been barred from trading on the bourse.

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