IBS TIMES 231st ISSUE

IBS TIMES

ISSUE 231st

TEAM IBS TIMES

Chaithanya N Reddy (Senior Editor Website) Payel Chowdhury (Senior Editor Magazine)

Anant Rai

Ayushi Jain

Aakanksha Murarka

Aanchal Nagpal

Amrita Biyani

Ava Tripathy

Bhasker Yadav

Bhavesh Kataria

Dinesh Reddy Bandi

Gourav Verma

Anwesa Nayak (Editor in Chief)

H K Aishwarya Ungarala

Isha Krishna

Sanket Tiwari

K Suhani Reddy

Lebaka Harika

Manisha Singh Manvi Arora

Namisha Agarwal

Niteksh Gupta

Rajat Maheshwari

Shibasradha Nahak

Sriram Rathi

Reeya Patel

Ruma Koley

Sai Avinash Karri

Sanghamitra Pati

Shubhaishi Chandak

Supratim Mukherjee

Swakrit Banik

Yash Sharma

Designed By

Anwesa Nayak

Chaithanya N Reddy

Payel Chowdhury

EDITOR'S NOTE

Finstreet IBS is an ICFAI Business school Hyderabad-affiliated official capital market club which aims to research the capital market as a whole. At IBS Times we serve our readers information from in and around the world and keep them up to date. We try to aid our readers with information and gauge knowledge with better investment solutions. IBS Times encompasses an independent writers club with unbiased thought and wholesome views, fairness, and honesty. We have recognized that our work can influence decisions or perceptions of our readers towards the capital market. Therefore, we commit to publishing our magazines and journals with the highest level of accuracy and impartiality. We strive to be humble and subtle in carrying out this work. Our team realizes that accuracy in the context provided to readers is imperative. Thus, we always strive to reach that level as best as we can.

This Magazine edition focuses on the various Financial Scams around the world. Financial fraud happens when someone deprives you of your money or otherwise harms your financial health through misleading, deceptive, or other illegal practices. This can be done through a variety of methods such as identity theft or investment fraud.

As an Editor, it gives me immense pleasure to hear from our readers. We intend to improve ourselves at every stage and would like to invite our readers to support the same. Keep following us on www.finstreetibshyd.in as well as. Please write to us and become a part of the discussion.

E-mail ID: editor.ibstimes@gmail.com

Payel Chowdhury (Senior Editor, Magazine)

POC, Team IBS Times.

CONTENTS

NIRAV MODI SCAM WITH PNB

ABG SHIPYARD SCAM

SATYAM COMPUTERS SCAM

INDIAN BANK SCANDAL

WORLDCOM SCANDAL

- AAKANKSHA MURARKA

- AANCHAL NAGPAL

- BHASKER YADAV

- DINESH REDDY BANDI

THE COMMONWEALTH GAMES SCAM 2010

NSE COLOCATION SCAM

HARSHAD MEHTA SCAM

VIJAY MALLYA SCAM

TELGI SCAM

THE HAWALA SCAM

2G SPECTRUM SCAM

KARVY CORPORATE SCAM

DOT-COM BUBBLE

DHFL SCAM

- GOURAV VERMA

- K SUHANI REDDY

- LEBAKA HARIKA

- MANISHA SINGH

- MANVI ARORA

- NAMISHA AGARWAL

- NITEKSH GUPTA

- REEYA PATEL

- SAI AVINASH KARRI

- SHUBHAISHI CHANDAK

- SWAKRIT BANIK

NIRAV MODI SCAM WITH PNB

In 2018, the world was rocked by one of India’s biggest bank frauds in recent memory – the Nirav Modi scandal. This alleged scam involved two of India’s largest banks – Punjab National Bank and ICICI Bank – and its alleged chief perpetrator, diamond merchant Nirav Modi. We will discuss how it happened, who was involved, and what the fallout has been since then. Read on to learn more about the scam that shook India’s financial system.

Who is Nirav Modi?

Nirav Modi is an Indian businessman who is the founder and owner of Firestar Diamond, a multi-million-dollar diamond jewelry company. He has been accused of defrauding the Punjab National Bank (PNB) of over Rs. 13,000 crores ($2 billion). Modi was born in Antwerp, Belgium to a family of diamond merchants. He began his career working in his family's business before starting his own company in 1999. Firestar Diamond quickly became one of India's largest diamond jewelry manufacturers, with annual revenues reportedly exceeding $1 billion.

In February 2018, the Central Bureau of Investigation (CBI) filed a case against Modi and others for allegedly defrauding PNB through fraudulent letters of credit and other means. The case led to an investigation by the Enforcement Directorate (ED), which found that Modi had allegedly funneled over Rs. 13,000 crores ($2 billion) out of PNB through a series of loans that were never repaid.

Modi has denied any wrongdoing and has claimed that he is being targeted by political opponents. He has since fled India and is currently living in London on a valid business visa.

How did the Scam happen?

The scam was perpetrated by Nirav Modi. He colluded with two employees of Punjab National Bank (PNB), who issued Letters of Undertaking (LoUs) on behalf of Firestar Diamond without properly recording them in the bank's central system. This allowed Nirav Modi to obtain short-term loans from other banks based on these LoUs, which were guaranteed by PNB. The total value of the fraud is estimated to be over Rs. 11,000 crores.

Nirav Modi and his companies allegedly began the scam in 2011 and continued it until 2018. During this time, they managed to obtain around Rs. 6,500 crores through fraudulent LoUs from PNB. In addition, they also received around Rs. 4,000 crores through foreign letters of credit and bank guarantees. The remaining amount is made up of interest and other charges accrued on these loans over the years.

“Rather fail with honor than succeed by fraud”.

- Aakanksha Murarka

The fraud came to light in January 2018 when PNB discovered that some LoUs had been issued without proper authorization or recording in their system. An investigation was launched and it was soon discovered that Nirav Modi had been involved in the scam. He fled the country soon after and has since been declared a fugitive economic offender by a special court in Mumbai.

How did the Scam unfold?

The scam began in 2011 when Nirav Modi, the owner of a diamond trading company, approached Punjab National Bank (PNB) for a loan. In order to secure the loan, he provided false documents that overstated the value of his collateral. Once the loan was approved, he used the money to buy diamonds from other companies. He then sold those diamonds at a higher price, pocketing the difference. This scheme continued for several years, with Modi taking out more and more loans from PNB. By the time the fraud was discovered, he had amassed over $2 billion in debt. PNB has since filed for bankruptcy and is struggling to recover from the scandal.

The timeline of the Nirav Modi scam:

In 2011, Nirav Modi obtained a loan from the Punjab National Bank for his company, Firestar Diamond.

In 2013, the Central Bureau of Investigation began looking into allegations that Nirav Modi had defrauded the bank.

In January 2018, it was revealed that Nirav Modi had defrauded the bank of over $2 billion.

In February 2018, Nirav Modi was arrested by the CBI and taken into custody.

He was granted bail and released in March 2018.

Nirav Modi is currently awaiting trial.

Role of PNB in the scam

The Punjab National Bank (PNB) is the main bank involved in the Nirav Modi scam. PNB is a state-owned bank, founded in 1894 and headquartered in New Delhi, India The bank has over 80 million customers and 7,000 branches across the country. PNB was the second-largest public sector bank in India until 2018 when it was surpassed by the State Bank of India.

In February 2018, it was revealed that Nirav Modi, a billionaire jeweler, and owner of the Nirav Modi Group, had defrauded PNB of over $1 billion through a series of fraudulent letters of undertaking (LoUs). An LoU is a guarantee from one bank to another that a letter of credit will be honored. In this case, Nirav Modi used Lou’s from PNB to obtain loans from other banks which he then used to fund his business operations. He also allegedly used the money to buy diamonds and jewelry for himself and his family. The fraud was uncovered by PNB's internal auditors and reported to the Central Bureau of Investigation (CBI), India's federal police force. The CBI subsequently filed charges against Nirav Modi and several others in connection with the scam. As a result of the scandal, PNB has been fined by the Reserve Bank of India (RBI) and its share price has plummeted. The bank has also been forced to set aside $3 billion to cover potential losses from the fraud.

ABG SHIPYARD SCAM

What is being referred to as India's "largest bank scam" is being carried out by a failing shipbuilding company.

Introduction

ABG shipyard was incorporated on March 15, 1985 and has become significant player in India's shipbuilding and repair industry. Their shipyards are in Gujarat, Dahej, and Surat. According to the Times of India, the firm has constructed over165 vessels in the last 16 years. It has gained accreditation and approval from international classification companies like Lloyds, the American Bureau of Shipping, Bureau Veritas, IRS, and DNV.

What is the Scam?

The CBI has accused ABG Shipyard Ltd., its former chairman, managing director Rishi Kamlesh Agarwal, and others of defrauding a group of banks led by State Bank of India out of more than Rs 22,842 crore in its most significant bank fraud case. According to reports, the corporation was severely impacted by the financial crisis of 2007–2008; by 2012, its coffers were empty. The corporation took out substantial loans from numerous banks due to the crash. However, it redirected this money to its foreign subsidiaries and sent funds to several foreign entities.

According to an investigation carried out by E&Y in January2019, this suspected fraud allegedly occurred between April 2012 and July 2017. A network of transactions conducted by the shipping company forms the basis of the scam. According to the FIR, the money supplied by ABG Shipyard was used to pay back debts, cover costs for the ABG Group of Companies, and obtain letters

of credit. These funds were utilized to purchase the properties linked to the company’s funds. The CBI stated that searches were carried out on Saturday at 13 sites in the premises of the accused, including private firms, directors in Surat, Bharuch, Mumbai, Pune, etc. The company owed the following banks: ICICI Bank: 70.89 billion rupees; IDBI Bank: 36.34 billion rupees; State Bank of India: 29.25 billion rupees; Bank of Baroda:16.14 billion rupees; Punjab National Bank: 12.44 billion rupees; and Indian Overseas Bank: 12.28 billion rupees. These figures from the forensic audit were included in the CBI complaint. The forensic audit had been sent to the CBI in a report from the State Bank of India, which handled the ABG Shipyard's financial records—according to the CBI charge published, the fraud involved "misappropriation and criminal breach of trust to gain unlawfully at the expense of the Bank's finances," as well as the diversion of cash.

Complaints filed by various banks

After reviewing annual reports of ABG Shipyard for the financial year 2014-15 and ledgers, it appears that ABG Shipyard had

- Aanchal Nagpal

paid accommodation deposits worth Rs 83 crores in total to companies like Aries Management Services, GC Properties, Gold Croft Properties before the review period (in 2007-08). And these parties were potentially related to ABG SL and its promoters,” reads the FIR. ABG Shipyard has been a client of SBI since 2001. The company said in a statement on February 13 that "many efforts were made to restore the company operations" after the account "became an NPA (non-performing asset) on 30 November 2013 due to unsatisfactory performance". The statement continues, "An attempt to reorganize the account was made in March 2014. However, the business could not be altered due to the company's declining finances. Due to the failure of the reorganization, the account was designated as NPA in July 2016 with a back date of 30 November 2013. Despite being the largest PSB lender and the principal lender in the group of banks that ABG Shipyard did business with, SBI was the one to file the complaint. The initial CBI complaint was submitted in November 2019. The CBI, however, reportedly rejected this charge and requested that the bank conduct an internal probe, according to a Times of India story. After a year had passed, the inquiry was over, and in December 2020, SBI filed a second complaint. According to the newspaper story, the SBI has since December 2020 been independently determining the scope of the scam and took official action on the allegation on February 7, 2022.

Santhanam Muthaswamy, previous directors Ashwini Kumar, Sushil Kumar Agarwal, and Ravi Vimal Nevetia, as well as another business, ABG International Pvt Ltd., have also been named by CBI.

Under various sections of the IPC and the Prevention of Corruption Act, the accused have been accused of crimes related to suspected criminal conspiracy, cheating, criminal breach of trust, and misuse of official position. On February 12–13, the CBI conducted raids at the directors' offices and homes in Surat, Bharuch, Mumbai, and Pune. According to the investigation agency's statement, evidence-gathering materials were found during these operations.

What now?

Action Taken

ABG Shipyard Ltd., its chairman, MD Rishi Kamlesh Agarwal, and numerous others have recently been arrested by the CBI on suspicion of bank fraud. Along with

Almost twice as large as the scandal involving the diamond magnate Nirav Modi in 2018, India's biggest banking fraud at ABG Shipyard has once again highlighted the flaws in the country's banking system. The elements frequently resulting in fraud cases and increased non-performing assets include a lack of regulation, incorrect lending practices, and an ineffective fraud monitoring mechanism (NPA). The Reserve Bank of India (RBI) and the Indian government have made some efforts over the past few years to address the industry's problems, but certainly not enough. The necessity for coordinated measures by authorities to stop the misuse of public funds has intensified due to the shift toward digital banking and the restricted use of technology to find loopholes, particularly when the covid-19 pandemic has compelled employees to work from home.

SATYAM COMPUTERS SCAM

Introduction

India-based global IT company Satyam Computer Services Limited has officially been included in a reputable list of companies involved in illegal financial practices. The chief executive officer of Satyam, Ramalingam Raju, acknowledged responsibility for all accounting errors that inflated the business's sales and profits and a false cash position of roughly $1.04 billion. Satyam won the Golden Peacock Award for the best-governed company in September 2007, September 2009 and September 2008. The fourth-largest firm in India with wellknown clients and the previous IT crown jewel, Satyam Computers, is currently embroiled in the worst corporate controversy in the nation's recent history. Ramalinga Raju committed a $1.47 billion (about 7,800 crores) scam after being caught, Raju and his brother, Mr B. Rama Raju, the company's managing director, are accused of hiding the truth from the board, senior management, and auditors. The IT sector in India's Satyam Computers was once its royal asset, but its founders' financial fraud brought it to its downfall in 2009. A discussion about the Chief Executive Officer's (CEO) role in promoting a company

to new levels of success, as well as the CEO's relationship with the Board of Directors and the creation of essential committees, was generated by the sudden collapse of Satyam. The issue highlighted the significance of corporate governance (CG) in developing audit committee standards and board member responsibilities. The Satyam scam shocked the market, especially Satyam investors, and damaged India's global reputation.

An overview of the Satyam Scam history

Satyam Computer Services Limited was a rising star in the Indian industry for outsourced IT services. The company was founded in 1987 in Hyderabad by Mr Ramalinga Raju. The business had 20 employees when it first started, but it swiftly grew to 65 nations, operating worldwide. The New York Stock Exchange (NYSE), Dow Jones, and EURONEXT listed Satyam as the first company in India to do so.

It was ranked as India's fourth-largest software exporter after TCS, Infosys, and Wipro. The 1990s saw a tremendous expansion for the company. As a result of the same, Satyam Renaissance, Satyam Info way, Satyam Spark Solutions, and Satyam Enterprise Solutions were created. The first Indian internet company listed on the NASDAQ was Satyam Info Way (Sify). Satyam made several acquisitions in the twenty-first century, expanded its reach internationally, and inked memorandums of understanding with numerous multinational organizations. Satyam kept adding achievements to its resume by becoming the first business in the world to launch a Customer-Oriented

- Bhaskar Yadav Kadavergu

Global Organization training programme in May 2000, signing agreements with numerous foreign companies like Microsoft, Emirates, TRW, i2 Technologies, and Ford, taking the title of being the first ISO 9001:2001 company in the world to receive BVQI certification, and establishing a global presence by opening offices in Singapore, Dubai, and Abu Dhabi. Total revenues for Satyam during the fiscal year 2003–2004 were Rs. 25,415.4 million. The company's sales revenue had more than tripled by March 2008. The company expanded at a compound annual growth rate of 38%. Operating profit margins, net profit margins, and cash flows averaged 28, 33, and 35%, respectively. Profits per share (EPS) increased from $0.12 to $0.62 at a compound annual growth rate of 40%. It is evident that Satyam significantly increased business value and shareholder value. The business was a household name and a rising star in the global IT industry. Unfortunately, less than five months after winning the Global Peacock Award, Satyam found itself at the center of significant accounting fraud.

What led to the fraud in Satyam

On December 16, 2008, Satyam's chairman, Ramalinga Raju, announced a $1.6 billion offer for two Maytas companies, namely, Maytas Infrastructure Ltd. and Maytas Properties Ltd., claiming he wanted to use the available capital for the benefit of investors. The two businesses have been supported and governed by Raju's family. He was forced to withdraw within 12 hours after investors and the market rejected him. Share prices of the company fell by 55% due to worries over Satyam's corporate governance.

The World Bank accused Satyam of stealing data and corrupting its staff, and on

December 23, 2008, the international organization barred Satyam from conducting business with it for eight years. US academician Mangalam Srinivasan, one of the company's independent directors, announced his resignation on December 28, 2008, and was followed by Vinod K. Dham (known as the father of the Pentium and a former employee of Intel), M. Rammohan Rao (Dean of the prestigious Indian School of Business), and Krishna Palepu (professor at Harvard Business School). On January 7, 2009, B. Ramalinga Raju announced his resignation as Satyam's chairman after confessing more than Rs. 7800 crores in financial fraud. He said in his letter that the Maytas companies he bought were his lastditch effort to swap out fake assets for real ones. He described it in his letter as similar to riding a tiger and being unsure how to exit without being eaten. The owners of Satyam, B Ramalinga Raju and his brother B Rama Raju, were detained by state police in Andhra Pradesh, and the federal government took over the company.

According to Ramalinga Raju, the assets of Satyam were overvalued on the balance sheet by $1.47 billion. The company stated that it had cash and bank loans totaling around $1.04 billion, but none was real. Similar understatements were made to Satyam's commitments on its financial sheet. To meet analyst expectations over several years, Satyam overstated income almost every quarter. Ramalinga Raju fabricated numerous bank statements to increase the deceit. Ramalinga Raju created false bank accounts to add phony funds to the balance sheet. He exaggerated his income statement by claiming interest earnings from the bogus bank accounts. Further, Ramalinga Raju said that from 2006 to 2008, he created 6,000 false pay accounts

and stole the money as soon as the company deposited it. The company's global head of internal audit created fictitious customer identities and bogus invoices in their names, fake invoices in their name to inflate revenue.

The company's global head of internal audit also received illegal funding and fabricated board decisions. Additionally, it had seemed that the money collected through American Depository Receipts (or "ADRs") in the United States had never been recorded on the company's balance sheets. At first, Ramalinga Raju asserted that he had not diverted any money to personal accounts and that the business had not been as successful as it had stated. However, Ramalinga Raju admitted that he had been shifting a significant amount of money to other companies he owned since 2004 during further interrogations. At first, Ramalinga Raju asserted that he had only committed fraud. However, as previously reported, Indian authorities have also brought charges against Ramalinga Raju's brother, the company's CFO, its global head of internal audit, and one of the managing directors.

Conclusion

The accounting fraud committed by the founders of Satyam in 2009 is evidence that "human avarice, ambition, and passion for power, money, fame, and glory affect the science of conduct in significant part." The requirement for "good behavior based on solid corporate governance, ethics, and accounting and auditing standards is urgently needed" has been clarified by crises. The Satyam shows the need for securities regulations and CG in developing countries. The Satyam fraud "motivated the Indian government to strengthen the CG

regulations to prevent the recurrence of similar frauds in the future. Therefore, to reduce the incidence of such frauds in the future, sizable financial reporting crimes must be examined for "takeaways" and "best practices."

have selective amnesia, and no one wants to bring up the memory of the average person.

Tamil Nadu Congress Safeguarding Swamy

Introduction and Backdrop

Who is Gopalakrishnan? The younger generation may not be aware of what Indian Bank is and its Chairman and Managing Director (CMD)’s frauds in 1980s and 90s.

Gopalakrishnan presided over the public Indian Bank till 1996 and was so influential that his tenure as chairman and managing director were extended seven times. Prior to it, he spent some time as the Bank's Executive Director. He was good friends with P Chidambaram, the former finance minister, and G K Moopanar, the leader of the Tamil Manila Congress. He had access to all Dravidian groups as well as the bank's headquarters were located in Chennai. The Congress and Tamil Nadu political parties would like people of India to ignore the fact that the Chennai-based Indian Bank had been defrauding politically connected shell businesses and defaults of more than Rs.150 crores ($225 million) for the past 20 to 30 years. The obvious causes for this are that when parties are up for election, they

The Congress government in the Center would simply disregard any unfavorable information from the intelligence agency and continue extending extensions to this influential financier. Since Gopalakrishnan offered charitable advertisements, the media also kept quiet about him for a while. In his prime, Gopalakrishnan was featured in virtually every daily newspaper article from Chennai that featured images of him officiating ceremonies and delivering sermons at various events across the state. He served as a sort of Automated Teller Machine (ATM) for various Tamil Nadu media moguls. Additionally, it was well known (and later confirmed by investigations) that Gopalakrishnan approved the majority of the uncollectible loans, totaling more than Rs.1500 crores ($225 million), after receiving recommendation notes from influential political figures. However, the CBI did not pursue the political masters, and in 1998, about 20 cases were brought against the banker and his employees. He has so far been found guilty in three cases dating back to 2009.

Vertical Split in Tamil Nadu Congress

In 1996, the scam involving Indian Bank's loaning money to businesses supported by politicians and shell corporations was exaggerated. Old-timers claim that the expose was the result of two factors. One is

that the new management opted to come clean when bad debts reached Rs.1000 crores ($150 million).(Was the LTTE funded by the bank fraud?) The second was the vertical split of the Congress in Tamil Nadu in 1996 following the launch of the Tamil Manila Congress by Moopanar and Chidambaram, which revealed the grant banking fraud.

to shield his close friend Gopalakrishnan is now legal history. Swamy vs. CBI case on Sanction for Prosecution and Government Rules on Protecting Officers above Joint Secretary from CBI Probes, as well as subsequent orders and judgments of the Supreme Court against the Protection to Corrupt Officers by Political Masters, are now part of the legal history.

Current Status of the Scandal and its aftereffects

Gopalakrishnan is currently being pursued by the long arm of the law for carrying out his political bosses' orders. He is 81 years old, on bail, and suffering from age-related medical problems. He is facing more than ten cases, including appeals from convictions. His political bosses managed to flee the plunder of an Indian bank while continuing to preach to the populace. They all made an effort to drag out and weaken the case of the gullible corrupt banker. It is a truth that Gopalakrishnan's cases were conveniently assigned to normal court to stall the legal system, and each of the political rulers had a hand in this by refusing to set up a daily trial fast track court. The delay in the court process is the best way to evade public limelight.

However, the CBI and the RBI were effectively stopped in their tracks when they tried to take action against the leaders of Indian banks and its CMD Gopalakrishnan. It was an easy explanation. In the Deve Gowda and Gujral-led governments from 1996 to 1998, Chidambaram served as finance minister.

Only after Subramanian Swamy, the thenleader of the Janata Party, launched a case against the CBI did the agencies begin to take action. How Chidambaram attempted

WORLDCOM SCANDAL

report.

Even though they today seem mysterious, long-distance carriers formerly controlled the telecommunications sector. WorldCom, a long-distance and internet service provider, held the title of largest telecom firm in the late 1990s and early 2000s. WorldCom had expanded over the 1990s via a succession of poorly managed acquisitions and mergers into a business with rival divisions, duplicated services and products, and different billing systems—a chaotic atmosphere ideal for fraud and corruption. Not only was WorldCom the largest accounting fraud in American history, but it was also one of the largest bankruptcies ever. At the peak of the dotcom bubble, its market capitalization had grown to $175 billion. WorldCom used accounting gimmicks to keep up the illusion of steadily increasing profitability as the tech boom turned into a collapse and businesses cut spending on communications services and equipment. This was not a sophisticated Fraud . To Hide its Falling Profitability , WorldCom Inflated Net Income by Capitalizing Expenses (by Recording expenses as Investments).

WorldCom had “Cooked the Books' 'Repeatedly Including its Income Statement, Balance sheet, Form 10-K Filing and Annual

A major portion of the 1990s saw WorldCom grow astronomically. This success was largely due to a number of extremely profitable strategic acquisitions of rival telecommunications firms, notably the $37 billion purchase of MCI Communications in 1998, a firm with 2.5 times the sales of WorldCom. The company then made a swift foray into internet communications, handling 50% of the country's e-mail and internet traffic by 2001. However, because of the massive oversupply of telecommunications networks, the company's stock price has declined. To make matters worse, its proposed merger with Sprint Corporation was rejected due to antitrust concerns.

Ebbers and top management were thus quite worried that WorldCom's earnings would fall short of what Wall Street experts had predicted. In response, WorldCom started faking its financial reports to hide its poor performance and create the appearance that it had surpassed those experts' expectations. It did the same with operational expenses that reflected the sums paid by WorldCom to other telecommunications firms to use their

- Gourav Verma

networks, "hiding" those costs as long-term capital investments, and lowered the amount it retained in reserve by $2.8 billion. WorldCom received an extra $3.85 billion as a result of the reclassifications, which provided the impression that the business had made $1.38 billion in earnings and had greatly inflated its assets. By providing the market with falsified data and creating the false impression that WorldCom was a booming business internally as well as externally to the board of directors and workers of WorldCom, Ebbers continued to meet Wall Street forecasts of double-digit growth. However, the information he was getting inside, notably from CFO Sullivan and WorldCom's controller, David Myers, was completely at odds with that notion. In fact, Sullivan directed a large portion of the fraudulent operations. Sullivan persisted in fabricating accounting entries to make it look as though the corporation was meeting the financial objectives set by Ebbers even while those targets were consistently missed. Myers, who also oversaw the creation of unsupported entries, provided him with competent assistance.

The debt of WorldCom was subsequently downgraded by rating agencies, with Moody's downgrading it to junk status. Despite resistance from Sullivan and Myers, the WorldCom Internal Audit Committee also conducted an assessment of the company's capital expenditures. On June 25, 2002, WorldCom informed the public and

the U.S. Securities and Exchange Commission (SEC) that it had discovered that certain transfers totalling $3.852 billion from "line cost" expenses to asset accounts for 2001 and the first quarter of 2002 had not been made in accordance with generally accepted accounting principles (GAAP). Only one month after its auditor, Arthur Andersen, was found guilty of obstructing justice for destroying records relevant to its audit of Enron, WorldCom declared bankruptcy on July 21, 2002. It was later discovered that Arthur Andersen disregarded memos from WorldCom executives warning them that the business was exaggerating earnings by inappropriately accounting for costs. (Arthur Andersen had audited WorldCom's 2001 financial results and evaluated WorldCom's books for Q1 2002). In 2005, Bernard Ebbers was found guilty on nine charges of securities fraud and given a 25-year jail term. After pleading guilty and giving a false testimony against Ebbers, former CFO Scott Sullivan was given a five-year prison term. When the firm emerged from bankruptcy in 2003 as MCI—a telecom company WorldCom had bought in 1997—it would continue as a going concern because of "debtor-in-possession financing" from Citigroup, J.P. Morgan, and G.E. Capital. The erstwhile banks of WorldCom, including Citigroup, Bank of America, and J.P. Morgan, would pay $6 billion to resolve disputes with creditors without admitting guilt. About $5 billion of that sum went to the company's bondholders, while the remaining amount was distributed to former stockholders. The newly created MCI agreed to pay shareholders and bondholders $500 million in cash and $250 million in MCI shares as part of a settlement with the Securities and Exchange Commission.

Verizon Communications bought MCI in January 2006.

The Sarbanes-Oxley Act, which enhanced disclosure standards and the penalties for false accounting, was passed in response to this wave of corporate crime in July 2002. Accounting businesses, investment banks, and credit rating organisations' reputations were permanently tarnished as a result of WorldCom.

THE COMMONWEALTH GAMES SCAM 2010

- K Suhani Reddy

The Commonwealth Games are an international sporting competition that takes place every four years and is open to teams from across the Commonwealth. It has been ongoing since 1930, with the exception of the wartime years of 1942 and 1946. The British Empire Games were held from 1930 to 1950; however, as athletes from the Commonwealth of Nations will be competing, the name has been changed to the Commonwealth Games. The Commonwealth Games are not only among the most well-known multi-sport competitions in the world, but they are also among the most inclusive. The medals won by disabled athletes are counted alongside those won by their nation because they are regarded as full members of their national teams. The number of men's and women's events is equal for the first time at a major international sporting event. However its very unfortunate that a competition which holds such a great legacy, has a negative mark in its history. One of the largest scams in recent memory is the Commonwealth scam. Suresh Kalmadi was the brains behind the amazing theft of 70,000 crores that was the Commonwealth scandal. The exceptional intentions made at first by the organizing committee under Suresh Kalmadi ended up being a national disgrace.

The Commonwealth Games were staged for the first time in India and for the second time in Asia after Kuala Lumpur, Malaysia in 1998. It was the biggest Commonwealth Games ever, with 4352 competitors from 71 Commonwealth countries and dependencies competing in 21 sports and 272 events.

In addition, it surpassed the Asian Games in 1951 and 1982 as the largest international multi-sport event ever held in Delhi and India. The major stadium for the event, Jawaharlal Nehru Stadium, hosted both the opening and closing ceremonies.

Prior to the 2010 Commonwealth Games in New Delhi, India, a number of issues and controversies emerged, and both India (the host country) and the rest of the world received extensive media coverage. Numerous well-known Indian politicians and social activists harshly criticized the Commonwealth Games because millions of dollars were spent on the athletic event despite India having one of the highest concentrations of underprivileged people in the world.

Prior to the 2010 Commonwealth Games in New Delhi, India, a number of issues and controversies emerged, and both India (the host country) and the rest of the world received extensive media coverage. Numerous well-known Indian politicians and social activists harshly criticized the Commonwealth Games because millions of dollars were spent on the athletic event despite India having one of the highest concentrations of underprivileged people in

the world. Investigative organizations and media outlets in India have also called attention to a number of other issues with the 2010 Commonwealth Games, including alleged corruption on the part of Games officials. Fraud and bad administration at the 2010 Commonwealth Games in New Delhi hurt India's reputation as a nation rife with extensive fraud and abuse. Rs. 70,000 crores were rounded off in one of the biggest frauds in Indian history. Only 50% of the budget was anticipated to go to Indian athletes. The athletes reportedly forced to move out of the official housing units that were given to them and into run-down flats. Although a budget of Rs. 1620 crores were projected, it ultimately cost more than expected by Rs. 11500 crores. Additionally, an astounding Rs. 70,000 crores are the estimated cost.

The conspiracies were as follows:

Infrastructure and General Security: In order to improve the infrastructure, security, and development of 20 cities for the Commonwealth Games, the Indian government stated in 2010 that significant financial resources had been expended. The purpose of this expense was to make the cities more appealing as travel destinations, but the cost estimate was never made public. Brutal working hours, unfair pay reductions, and poor working conditions were used to take advantage of the workers hired for the infrastructure. Twelve days before the tournament, a footbridge collapsed at the venue of the games. This incident generated a lot of media attention and raised concerns about the spectators' and athletes' safety.

Grievances from athletes: According to the Host City Contract, a team from abroad visited India for an inspection and was taken aback by the lodging options. They discovered unclean restrooms, dog paw prints on the bedsheet, and human excreta laying on the floor. It became even more embarrassing for the country because all of this was covered by headlines in other nations.

Other discoveries: Around 1,00,000 families were requested to leave some locations, while an additional 30,000 families were relocated from the Commonwealth Games' infrastructure area. Additionally, according to the RTI filing, the committee withdrew money totaling 263 crores from the "Schedule Caste Sub plan."

Ballon Cose & Service: All attendees had access to a special attraction during the CWG opening ceremony. This aerostat really cost 40 crores rather than its estimated cost of 70 crores. The Commonwealth Games would be complex web of unethical business practices—the majority of which involved inflated contracts—were uncovered as a result of the Games.

Instead of choosing those that offered the best rates, facilities, and equipment, companies that overquoted were employed. For unexplained reasons, companies that offered better deals were regularly eliminated.

In order to investigate the situation, the then-Union Government assembled a highlevel commission that included former Auditor General Shungloo. The committee was tasked with investigating every facet of the CWG organizing committee and

submitting a report to the Prime Minister's Office within three months.

According to the investigation, Kalmadi paid the company Rs 141 crores to purchase TRS systems. In comparison to what MSL Spain, another bidder, had promised, the price paid to the company was Rs 95 crores higher. Interestingly, the same contract was put up to bid on November4, 2009, but Swiss Timing had previously been given the go-ahead on October 12. According to reports, he and his assistant VK Verma eliminated the competition in exchange for payments. It was discovered during the examination that the CWG Organizing Committee had overpaid for planning and purchases. The cost to host the CWG in India was initially estimated at Rs 296 crores, but the actual amount spent was about one hundred times more at Rs 28,054 crores. According to reports, more over 100 crores were spent on road beautification, but of that amount, 30 crores could have been simply saved because certain highways didn't require the importation of lights. Many things were obtained or purchased for a very high cost.

The courts mandated that Suresh Kalmadi pay a $500,000 security deposit in 2019 following his ten-month detention. Suresh Kalmadi was detained for ten months. On July 13, 2012, a Delhi court granted Kalmadi permission to go to London to compete in the 2012 Olympics. However, the Delhi High Court barred him from participating in the opening ceremony of the London Olympics on July 25, 2012, on the grounds that his presence may "embarrass" the nation. When questioned in the Tihar jail, he showed signs of dementia. Medical research hasn't indubitably backed up his assertion. Aside from the financial fraud, the 2010 CWG was tarnished by human rights issues, a bad

socio-political impact, and participating countries threatening to boycott due to the fraud.

The economy and social standing of a nation are harmed by corruption, money laundering, theft, and other illegal activities. All of these issues are discussed but not resolved. While the majority are deprived of their benefits and left as bystanders, powerful authorities blatantly abuse their positions of authority to advance their places.

Yes, dealing with such scams can be stressful, and reading about them can be depressing. At such situations, it's crucial to keep in mind that the past is behind you and that a magnificent future is just around the corner.

Colocation facilities function as a sort of data center that rents equipment space and bandwidth at a fair price to businesses and organizations that require a network service provider. Organizations could invest a significant amount of money in building their own infrastructure, but by utilizing colocation facilities, those same businesses can rent the services they require without building their own communications equipment.

Organizational data is kept by organizations in a colocation facility, which is a safe and controlled third-party location. It offers businesses a rented server with high bandwidth and connection to the Internet. They are essential for removing delay and adding redundancy to the system. Although these facilities offer extensive bandwidth and server room, it's vital to keep in mind that colocation facilities are not online-only. These facilities are actual buildings that are ideally situated close to significant power centers so they may access the available connectivity.

Businesses that use colocation facilities might get a lot of advantages:

The colocation center's structure is quite safe, with cages or lockable cabinets often encircling each company's server rack. Additionally, the majority of facilities provide security with access permitted based on identity, video surveillance, and 24/7 closed-circuit television monitoring by security personnel.

- Lebaka Harika

These facilities employ a variety of power backups, including diesel generators and batteries, which kick in when there are power outages. Second, redundant systems are used in colocation facilities to produce multiple backups of all the data kept on the servers. These servers produce considerably more heat when they are placed in a single structure in huge numbers. Because of this, colocation facilities have strong air conditioning systems that help maintain the air at the proper temperature and dry.

The financial advantage of hiring a colocation facility for the enhanced bandwidth it offers is one of the biggest advantages for small enterprises. Small businesses would not be able to afford the cost of duplicating the physical and technological advantages of a colocation facility due to its prohibitive cost.

Market manipulation at India's top stock exchange, the National Stock Exchange of India, is related to the NSE co-location scam. Allegedly, a small number of players were able to access market price information before the rest of the market, potentially violating the robust transparency-based system and demutualization exchange governance goals of the NSE.

The NSE started providing members with a co-location facility in August 2009. For a charge, members could set up their servers on the Exchange's property. This gave them

"A charge sheet against the former CEO of the National Stock Exchange has been submitted to a special court by the Central Bureau of Investigation."

quicker access to the buy and sell orders that were being distributed by the trading engine of the exchange. The setting where the broker's computer is situated close to the stock exchange's server is referred to as co-location. The use of computer systems that have the capacity to execute thousands of orders on the stock exchange in less than a second is known as high-frequency trading, also known as algorithmic trading. The tick-by-tick data broadcast a user receives in a co-location facility is not available to retail investors tracking prices, therefore they are susceptible to a delay. Unusually, the SEBI did not release a discussion paper to solicit comments from the market before approving the facility's construction. Regarding HFT performed on the NSE, no public records exist. For such market developments, SEBI must confer with the Technical Advisory Committee (TAC). However, SEBI did not inform anyone that it had given approval for all exchanges. The co-location data center is a cutting-edge, highly reliable, resilient, and secure infrastructure that meets international standards.

According to the letter from the whistleblower, it took some time for the more industrious people to understand what was going on in the system after NSE started the co-location. By the end of the year, shrewd individuals had all realized that the key to gaming the system was to connect to the server first, ideally the one that was fastest. The co-location case was started after some HFT members reportedly banded together and collaborated for roughly four years, from 2010 to 2014, disobeying market regulator SEBI's laws and regulations. In July 2017, 12 out of 14 prominent current and former top executives of the NSE, including Ravi Narain and Chitra

Ramakrishna, filed an application with SEBI to resolve the co-location problem through the consent process after getting show cause notices from the regulator. An alleged offender may settle a pending dispute through the use of the consent process, an alternative dispute resolution mechanism, without admitting or denying guilt. During this time, in July 2017, Vikram Limaye assumed leadership as the NSE's MD and CEO. He assured them that he would approach SEBI to resolve the co-location issue and would track down the root of the problem. However, once the CBI inquiry gained steam and a consent application from the exchange was submitted, it was later returned in March 2018.

NSE began offering colocation facilities under the moniker of Direct Market Access, albeit without official SEBI clearance. A few FIIs who were allegedly linked to P. Chidambaram were granted access to the DMA facility. Thus, with P Chidambaram's consent, CB Bhave, Ravi Narayan, and Chitra Ramakrishna constructed the essential conduit that carried out colocation facilities at NSE. Additionally, in order to set up a colocation facility, dark fiber was laid between the NSE and BSE exchanges with the intention of providing exclusive access to the facility and information to its chosen members.

It should be noted that placing such dark fiber in the exchanges is equivalent to entering the Bhabha Atomic Research Centre's (BARC) nuclear reactor or the mint of the Reserve Bank of India, and it is not possible to do so without the approval of the finance minister, who holds the highest position in the Ministry of Finance.

These HFT traders were linked to the same server when NSE colocation facilities were established, working together for five years

to rig the market. Ajay Shah, a professor at the National Institute of Public Finance and Policy (NIPFP) and a former consultant in the Finance Ministry, is one lobbyist whose participation is also revealed by the chain. NIFTY50 was created by Ajay Shah, who was also known as P.Chidambaram's blue-eyed lad and K P Krishnan's close aide. Ajay Shah was an expert in the algorithm.

As stated in the whistleblower's letter, these participants used brokers like OPG, Alpha Grep, and others to manipulate the market by using complete granular time series data obtained from the NSE under the guise of research. And because they had access to knowledge before the competition, they were able to outperform them in the market.

On April 30, 2019, SEBI issued orders retaliating against the co-location scam's participants. In addition to ordering NSE to pay $6.25 billion with 12% interest, SEBI also forbade NSE from directly or indirectly obtaining capital on the securities market for a period of six months. Additionally, it demanded that two previous NSE CEOs, Ravi Narain and Chitra Ramakrishna, forfeit 25% of their wages earned during a specific time period. For a period of five years, Narain and Ramakrishna are also not permitted to associate with any listed firm, market infrastructure institution, or other market intermediary.

Ajay Shah, Infotech Financials' two directors

Sunita Thomas and Krishna Dagli, as well as Suprabhat Lala, were all prohibited by SEBI from working with any organizations it has approved for a two-year term.

Similar findings were made about OPG Securities Limited and its Directors, who would have to forfeit 157 million in unjustified gains along with 12% interest starting on April 7, 2014. Five years of capital

market access are prohibited for the brokerage firm. Eight NSE personnel, including former CEO Chitra Ramakrishna, have been given a four-week deadline by the Securities Appellate Tribunal (SAT) to submit rebuttals to their complaints against SEBI punishing them in the co-location issue. The order was contested by these officials at the SAT on May 21.

On January 16, 2020, SEBI cleared nine past and present officials in the case. According to the available evidence, it was determined that it was impossible to conclude that these authorities were involved in any misconduct.

On February 10, 2021, SEBI fined NSE Rs. 1 crore and punished Ravi Narain and Chitra Ramakrishna with Rs. 25 lakh each. Dean V. R. Narasimhan of the SEBI-managed National Institute of Securities Markets (NISM) is expected to leave his position on February 1, 2022. In a recent judgment regarding Chitra Ramkrishna, SEBI held Narasimhan guilty of failing to perform his duties while serving as the NSE's senior regulatory officer and fined him Rs. 6 lakhs. As a result, his position at NISM has caused controversy.

For her part in ignoring the unauthorized installation of black fiber connections to the exchange's co-location trading engines, Chitra Ramkrishna was fined 5 crores by SEBI on June 29, 2022. OPG Securities MD Sanjay Gupta was detained in the NSE colocation case on June 22, 2022.

The Securities and Market Board of India has approved Ashishkumar Chauhan's appointment as the new Managing Director and CEO of the National Stock Market, the country's primary stock exchange, effective July 18, 2022. Former NSE CEO Chitra Ramkrishna's request for bail in a case involving money laundering was turned down on August 30, 2022.

HARSHAD MEHTA SCAM

- Manisha Singh

Introduction

Harshad Mehta is the largest financial and stock market con artist in India. Because of this man's deception, many wealthy people have suffered, and some of them have even committed suicide. His deeds caused numerous banks to lose money and go bankrupt. When it came to misleading people about the stock and financial markets, he was an intelligent and knowledgeable man.

He became famous in India in the early 1991–1992 for his knowledge of the stock and financial markets. Nowadays, people are more rigorous about checking the share markets and learning about them online because it is easy to do so. That was not the case in 1991-1992 because the internet was not popular at that time.

Harshad was the richest man between 1991 and 1992, beating out wealthy professions like actresses and other wealthy professionals. The countless scams perpetrated by this guy are well known. He has tricked many wealthy persons and even had political support for him. He had two arrests. He defrauded banks, stole money, and conned stockbrokers to live a lavish lifestyle in India. He was knowledgeable about every facet of financial marketing and share marketing He acted as a financial intermediary between banks.

About Harshad Mehta

Harshad Mehta was born on July 29, 1954, in a middle-class Gujarati Jain family. His father ran a small textile company.

In 1976, he graduated with a B.Com degree from Bombay's Lala Lajpatrai College after working for close to eight years in a variety of odd jobs. He once had the chance to work for an insurance firm. His goal was to participate in the stock market. He left every job he had and began working for a broker to learn about the stock market. He was known for taking calculated risks and never letting danger get in the way of his goals of accumulating fortune and expanding his company. He had a lavish home and a net worth of approximately 3542 crores.

1st Scam by Harshad Mehta

Through his employment, Harshad Mehta gained knowledge of the stock market and its strategies. He did not learn them from books or the internet—he learnt them through his own experience. He was a clever individual who quickly became knowledgeable about the stock market. He was well-versed in the ups and downs of the stock market. He founded his own brokerage company in 1986 called "Grow More Research and Asset Management" to acquire and sell public shares in particular

companies. His clients started coming to him for guidance on where to make investments or buy stock. He chose a shell company that is useless, where the businesses don't even have an address, or a business that doesn't even exist in real. He was referred to as both the "Amitabh Bachchan of the Indian stock market" and the "Red Bull of Dalal Street." The stockholders erred by failing to verify the information he provided. They bought those shares because they had complete faith in him. The tactic used to boost these companies' share market valuations was to present them as successful businesses that provide advantages for their shareholders. This was his first scam because there was no internet in the 1990s to check. He made a lot of money from the stock market. Later, he required additional funds to participate in the stock market but lacked the proceeds to do so.

2nd Scam by Harshad Mehta

Harshad Mehta then decided to go forward by choosing to work as a broker for banks in the financial arena. By pretending to be a broker to several of the banks, he deceived them. In order to lend money and receive money when a bank needs it using the bank's securities, bank brokers connect two banks. In order to transfer money to the receiving bank, Harshad Mehta gave the lending bank instructions to deposit the money into his personal account. Similarly, he triggered and received unlawful funds from various well-known banks, including National Housing Bank, State Bank of India, and UCO Bank, by utilizing forged bank receipts. He started by crediting these payments to the banks, and over time he subtly started to defraud those banks by fraudulently crediting funds to his accounts. Through this fraudulent scheme, he was

able to gain additional funds in the millions, which he then put into his little firm. The bank’s money is the people’s money that was handed to the bank for safety or security. Those funds were not managed effectively and were delivered to him, where he spent it. He gave money and manipulated people to support him and not to disclose his scam. But everyone started to pay attention to his behavior, especially Times of India journalist Sucheta Dalal.

She started keeping track of Harshad's actions once she discovered all of his falsehoods. She posted the news in the article about the Harshad scam and all shareholders became aware of the fraud and they started selling all their shares at a low price. The shareholders’ firm began to lose money, and the RBI began to investigate and found Harshad’s fraudulent scam. He had committed a $1 billion scam to buy stocks from the Bombay Stock Exchange, which caused a serious collapse of the Indian stock market and a loss to the financial system of Rs. 3500–4000 crores, known as the scam 1992.

He was taken into custody and eventually released on bail. 74 criminal cases were brought against Harshad Mehta. Later, he was put behind bars after being accused of yet another financial crime.

Conclusion

Harshad Mehta died while on trial at Thane jail on December 31, 2002, of a heart attack. Thoughtful and ambitious, Harshad Mehta chose the incorrect road to achieve his goals. This course ultimately resulted in his demise. This scam exposed a number of flaws in the financial markets, one of which was the total lack of transparency in the financial markets. The prevalence of irregularities of all kinds was so great that

even very irregular transactions drew little attention. This is the ideal setting for a scam to take form and develop to dangerous dimensions. The worst financial scandal to ever occur in India was the Harshad Mehta scam, which was extremely public. Numerous people had passed away, and some had even killed themselves. Due to this scam, all of the wealthy people were exhausted both mentally and physically. He was a daring stock broker by nature and was knowledgeable about both the flaws in the financial system and strategies for taking advantage of them.

The Rise of Vijay Mallya

At the age of 27, Vijay Mallya succeeded his father Vithal as chairman of United Breweries Ltd. ("UB GROUP"), a firm that specializes in the production of alcoholic beverages.

Even the company's most seasoned personnel agreed that this young man has a strong sense of determination that will propel the business to new heights of success. Similar to his father, he tried to invest in several enterprises during his chairmanship in an effort to increase his wealth. But after trying his luck in all the other areas, he discovered that the beer and liquor industries are the only ones with the most potential for financial gain, and upon discovering this, he completely refocused on UB Group.

Making 'Kingfisher' a brand: When advertising Liquor was not legalized

He learned that alcohol advertising was illegal in India, a nation where the brewing industry had the potential to grow significantly, just as he was about to expand his firm.

He purchased a home and gave it the name "KINGFISHER VILLA", which frequently appeared in press reports and thus led to the home's promotion. He supported numerous events, such as "The Kingfisher

Ball event," to advertise his business. To increase the popularity of his business, he even purchased IPL teams like the Royal Challengers Bangalore. After undertaking multiple such actions, the "UB Group" rose to the position of second-largest liquor producer in the world in 2015.

The Rise & Fall of Kingfisher Airlines

On Siddharth Mallya's 18th birthday, Vijay Mallya entered the aviation industry by launching his own airline, Kingfisher Airlines, in the year 2005.

Mr. Mallya had no prior experience in civil aviation at the time, but he nevertheless wanted to grow the airline industry as much as the UB Group. He told his employees to treat customers like guests and provide topnotch services, and as a result of this strategy, "Kingfisher Airlines" was recognized as the premium name in domestic travel. It quickly rose to the position of second-largest domestic airline, accounting for one-fourth of all domestic travelers in India. This success urged in him the desire to expand his airlines to the international route as well. This led to his demise and the scam worth 9000 crores.

Acquisition of Air Deccan

The desire for expansion led Mallya to apply for aviation on international routes but he was rejected because as per the norms of the aviation sector one cannot enter into the international route without having 5 years of prior experience in the aviation sector.

A turning point in his life occurred when he made the decision to take over the Air Deccan airlines, which was already operating

- Manvi Arora

on international routes. Kingfisher Airlines was undoubtedly in second place among domestic flights at the time of the acquisition of Air Deccan, but unlike other airlines, it was making a loss. But instead of focusing on profitability, Mr. Mallya sought to grow, and in order to do so on an international scale, he borrowed money to buy Air Deccan, which added to the company's mounting debt. He gradually became overextended with debt as a result of his efforts to sustain his current business while expanding to international lines.

The Beginning of Bad Times for Kingfisher

He changed the name of Air Deccan to Kingfisher Red, and it was essentially split into two groups: Kingfisher Red for low ticket fares and Kingfisher for premium fares and luxury.

Despite being a low-cost airline, Kingfisher Red offered excellent amenities in every way. People began to question the need to pay Kingfisher Airlines such a high price for a little extra luxury as a result of this. It gradually caused passengers to switch from Kingfisher to Kingfisher Red, which caused Kingfisher Airlines' market share to fall. The company was not able to recover even the operating costs which led to more debt burden. In such a situation it became necessary to increase the ticket fare of Kingfisher Red for the continuation of good facilities. But as the ticket fare started rising, simultaneously people started to shift to more cheap airlines which led to even the failure of Kingfisher

Red.

The other factors that too contributed to the failure of Kingfisher Airlines were high fuel prices and the 2008 recession Even the fuel supplying companies like Hindustan Petroleum and Bharat Petroleum refused to further supply any fuel to Kingfisher due to

such outstanding debts and the delayed payment policy.

In the face of such difficulties, Mallya made the decision to attract international investment. He even persuaded the foreign airline "ETIHAD AIRWAYS" to invest in his business. His attempts to persuade the government to change its policy were futile since at the time, Foreign Direct Investment (FDI) was not permitted in India's civil aviation industry.

As things got worse for Mr. Mallya, he was no longer able to pay the employees' salaries. The government revoked Kingfisher Airlines' license in December of 2012. The Kingfisher was already shattered when the government later approved FDI involvement in airlines, a few years later.

Increasing Debt

In order to tackle the increasing operating expenses and still keep the sinking ship afloat, Kingfisher airlines took a series of loans (9000 crores) from 17 different banks most of which PSUs.

What motivated the Banks to keep sanctioning loans?

It is commonly known that Mr. Vijay Mallya served in the Rajya Sabha. It is extremely likely that the bank's officials were under political pressure because of his strong political connections.

Additionally, the firm sought to issue preferred shares to raise additional capital, but due to banking regulations, it needed a NOC from the State Bank of India-Bangalore

(As when a bank gives loan upto a certain limit then further if the company wants to raise fund it requires NOC from that bank to raise such funds).

However, the State Bank of India-Bangalore

officials who initially rejected MR Mallya's proposal and even refused to host a meeting with him later relaxed their banking standards to grant a NOC to Mr. Mallya, which again raises the possibility that the officials' decision was influenced by political pressure.

The banks to which the Kingfisher Airlines (KFA) owes money

are

identified as a fugitive economic offender in January 2019. Mallya has refuted all accusations and made a public pledge to pay back the lenders the entire principal sum owed.

In 2016, Mallya published an open letter justifying himself right before he left the country. Neither Kingfisher Airlines nor I have misappropriated money, according to all investigations, Mallya claimed. "A successful disinformation effort has guaranteed that, despite promising bluechip securities and depositing large sums in court, I am quickly becoming the face of all bank NPAs," the defendant said.

The Indian government is doing all in its power to have Mallya returned from the UK. The extradition was accepted by the UK Home Secretary in February 2019. Mallya appealed the decision and the issue is still pending before the London High Court. A three-day hearing on the appeal is scheduled to begin on February 11, 2020. Mallya's extradition was approved by the UK high court in April 2020, but according to Indian officials, the case has been on hold for the past 2.5 years for unspecified reasons.

17 Different banks Kingfisher Airlines has to pay Rs.9000 crore (including Interest)

The Situation as of now

Following the airline's demise and under pressure from lenders, Mallya moved to the UK in 2016. Mallya has made a public promise to pay off his debts.

On March 2, 2016, a number of public-sector banks filed a complaint against Mallya with the Debt Recovery Tribunal. On that day, Mallya departed the country. According to the Fugitive Economic Offenders Act, he was

Introduction

Scams that included the entire country of India have a history. Following the biggest fraud of 1992 by Harshad Mehta, a greater fraud surfaced in 2003. The scam is popularly referred to as the "Stamp Paper Scam." Around the world, stamp paper is frequently used to collect taxes on papers that need to be stamped, including leases, agreements, receipts, court documents, and many more. The fraud involved manufacturing and producing counterfeit stamps and stamp paper. Abdul Karim Telgi was the genius behind this fraud. He began his career as a vendor before moving on to work for travel agencies and developing the concept of bogus stamps.

About Abdul Karim Telgi

At the Mumbai railway station, Abdul Karim Telgi sold fruits and vegetables. He was born into and raised in a middle-class family. His father worked for the railways as a Class IV officer. Despite multiple financial crises, the family managed to make ends meet. They made enough money selling fruits and vegetables at Khanapur railway station to meet their necessities. In the 1970s, the station served as a stop for 12 trains. Telgi completed his education at Sarvodaya Vidyalaya before enrolling in Gogte College

of Commerce to pursue a B.Com degree. After finishing his education, he looked for work first in Mumbai. He was hired as a Sales Executive at Fillix India. He was forced to resign from his work due to his consistently poor performance. He then went to South Mumbai and was hired as a Manager at Kishan Guest House. He was still dissatisfied with his employment, and due to his idleness, he was forced to resign. He wanted to make more money in less time, so he decided to travel to the Middle East and start working there.

He moved to Saudi Arabia in the 1980s and stayed for seven years. After these seven years, he realized he couldn't stay any longer and returned to Mumbai.

The desire to make more money in less time drove him to perform simple tasks in order to save time. This eventually led him to the underground. He was able to establish contacts with the mafia, politicians, and bureaucrats. His seven years in Saudi Arabia influenced his interest in tourism frauds. He witnessed travel agencies illegally sending people to Saudi Arabia for jobs. He then established Arabian Metro Travel Company as a travel agency. His usual criminal activities included forging phoney passports and scamming clients. He also tried forgery to transfer people to Saudi Arabia, but it had some questionable credentials that made him more vulnerable to being found.

He had his staff make a slew of fraudulent documents, such as ECR (Emigration Check Required) passports. In seven years, he built up enough relationships to move individuals illegally abroad and earn easy money. His market demand increased again, and those

- Namisha Agarwal

with ambitions of traveling to a faraway nation were willing to pay any price to do so. However, as time passed, the procedure for moving people outside became more stringent. The procedure was no longer simple and straightforward. People became stranded since they did not acquire clearance and were therefore unable to travel abroad. Several people sued him for his actions in 1991.

He was arrested and imprisoned in 1993 for VISA racketeering. In jail, he established contact with another fraudster, Ratan Soni, who was arrested for stock exchange fraud in India. The meeting sparked the concept of one of India's biggest cons.

The Stamp Paper Scam

When Telgi met Ratan Soni in jail, he acquired new tricks and methods for committing crimes and making enormous money. Ratan Soni was able to persuade him to commit major crimes rather than minor offenses. They developed concepts for several profitable ventures.

Telgi discovered that the Stamp Paper Office was the most unmonitored government department at the time. They came up with the notion of making bogus stamps and producing a proxy currency. The proceeds from such frauds were measured in crores at the time. Both had ties to the underworld, as well as to government officials and politicians. They realized that this was enough to launch India's largest con. Both learned in the 1980s that stamp papers were required of a host for legal purposes. At the time, they sold it for less than Rs. 100. They understood that they could attain their goals through politicians and government officials. The only criterion was that they remain pleased and impressed.

Telgi approached Anil Gote, MLA of the

Samajwadi Janata Party. Telgi requested that he set up a meeting with Maharashtra's then-Revenue Minister, Vilasrao Deshmukh of the Congress party. In 1994, Telgi obtained a license and opened a stamp paper office in Mumbai. He opened several bank accounts and offices in Mumbai to be on the safe side and have access to larger resources.

Through his contacts, he obtained scrap machinery from the Indian Security Press auction in Nasik. He took advantage of these machines for dishonest purposes. He made extensive use of his contacts, even purchasing all their raw materials from the Indian Security Press. He bought the same ink and everything from Nasik Press to make the phony stamps look legitimate. Using this technology, he began making perfect replicas of stamps printed by the Indian government.

He built a large network and gave vendors 20% to 30% commissions. Previously, the government only provided 3% of the commission. This attracted vendors, and the distribution of stamps was simplified. Even the vendors were taken aback and could not tell the difference between real and fraudulent stamp papers. His duplicate stamp papers were sold to banks, insurance companies, and corporations by over 350 vendors.

He was able to generate a scarcity of original stamp paper thanks to the contacts he formed. As a result, he began selling his own duplicate stamp papers on the market. Using this technology, he began making perfect replicas of stamps printed by the Indian government.

He diverted the supply of original stamp paper to a fictitious address and injected his duplicate stamp sheets into the market in place of the original. The market was

flooded with counterfeit stamp papers at the time. He obtained counterfeit stamps for nearly every function, including revenue stamps and share transfer certificate stamps.

He expanded his company into 13 states and 74 cities. He had over 170 offices and over 900 people to help him with his fraud. He set up 120 bank accounts in order to commit fraud.

The Arrest Of Telgi

Someone told the police about the influx of fake stamp papers in the year 2000. Two Telgi couriers were apprehended while traveling in the state of Karnataka. His phone was tapped, and detectives were watching him. Telgi was apprehended on his way to Ajmer. The mastermind behind the stamp paper hoax was apprehended and imprisoned.

The Bund Garden Police Station investigated a crime in Telgi in June 2003. All the duplicate and phony stamp papers were collected, and a Special Investigation Committee was formed, led by senior department officers. India Security Press was also discovered to be implicated in the scam throughout the investigation. They discovered that government personnel from the department assisted in the transfer of printing technology to Telgi. The Special Department took no action against the press at the time. The scam has been going on since 1994, and the magnitude of the

swindle was enormous. Further research revealed that politicians, government officials, and powerful leaders associated with the Nasik Press were also implicated in the scheme. Anil Gote, MLA from Dhule, was imprisoned for four years. However, the accusations against Anil Gote were dropped because several other significant personalities were also involved in the scam. The Special Department ran a NARCO test on Telgi and got to know these significant names. Telgi named Chaggan Bujhbal, Maharashtra's Deputy Chief Minister, and Sharad Pawar, Union Agricultural Minister, in the NARCO Test. To avoid liability, Telgi propagated the rumor that he was frightened and conscious during the test, which resulted in the removal of these two names from the probe. The matter was then moved to the CBI department.

The CBI also found MLAs, an Andhra Pradesh Minister, the Mumbai Police Commissioner, a former Joint Commissioner of Mumbai Police (Crime Branch), a former Deputy Commissioner of Mumbai Police, and a suspended IPS officer. The CBI filed numerous cases against these officers. Telgi pleaded guilty and was found guilty in 2006. He was sentenced to 30 years in prison and fined Rs. 202 crore. Later, the sentence was reduced to 13 years. He was also given VIP treatment while incarcerated. Because he was already a mastermind with powerful connections, he was able to arrange for a pleasant existence in prison In 2007, he was on trial for CBI cases in Chennai for offenses under Sections 255, 248, 259, 420, 467, 468, 471, Section 474, and 475 of the Indian Penal Code, as well as Section 13(1) read with Section 13(2) of the Prevention of Corruption Act, 1998.

Telgi’s Death

Telgi was afflicted with several ailments. In 2002, he was diagnosed with HIV. In 2005, he claimed that he was injected with the virus by those afraid of his authority and that he was denied treatment for diabetes and HIV. He had diabetes and hypertension for around 20 years. He died on October 23, 2017, at Victoria Hospital in Bangalore from meningitis. He died before the end of his prison term. He was barely 56 years old then. Following his death, all accusations and claims were dropped, and people were released.

Many people became interested in the hoax after his death. In order to educate and reveal insights into the Stamp controversy, the filmmakers chose to develop a Hindilanguage thriller titled "Mudrank: The Stamp," directed by Shakir Shah, in 2009. The web series "Paper," featuring Rohit Roy as Telgi, premiered in 2020. One episode of an eight-part documentary series titled "Fake Stamford Papers" featured Telgi's deception. Hansal Mehta has also decided to release Scam 2003 as a follow-up to Scam 1992.

Conclusion

Even after Telgi was convicted and imprisoned, there were several complaints and charges filed against him. The swindling had a significant impact on the government, which took efforts to strengthen rules. Many well-known and high-level individuals were also involved in the scam, demonstrating how our system has been seriously harmed and corrupted from the inside. The government took steps and tightened security checks to ensure that such a large swindle does not occur again in the future. There was also a government backdrop because the Stamp Department was not

properly regulated at the time. This was a significant lesson for the government in terms of adequately regulating and monitoring each and every department. The scam resulted in a rise in the number of counterfeit stamps on the market, making it difficult for even vendors to identify and remove them once the scam was discovered.

THE HAWALA SCAM

One of the most unusual occurrences in Indian politics occurred when nearly all of the demagogues from eminent parties joined together, not for the sake of a coalition or the welfare of the populace (this is still a dream that has not yet been realized), but rather for a cause. social cause? economic cause? Intellectual cause? Oh no, friends, we're discussing "Politics" here, and these are the last issues that our darling demagogues care about. The reason was somewhat contradictory to their current position (as always). It was done cunningly to prevent the Supreme Court from officially naming them as criminals in order to get a clean bill of health and keep their jobs in one of the most egregious frauds in history, the Hawala Scam of 1991. Trust is the primary meaning of the word hawala. Hawala is an unauthorized and shady method of sending actual cash from one nation to another.

The 1991 Hawala Scam is regarded as one of the largest scams the world has ever seen. Why? Because the people the public had put their trust in to reduce corruption and illegal activity were none other than our Legislators. In this illegal activity, more than 115 so-called "public officials" participated.

The Hawala scandal, also known as "the scam," was an Indian political scandal involving money reportedly obtained by influential politicians and bureaucrats between February 1988 and April 1991 through Hawala agents, specifically the 4 Jain brothers, with Surindra Kumar Jain serving as the main player. A significant bribery case involving approximately US$18 million (almost 650 million Indian rupees) brought some of the nation's top lawmakers to light.

The Hawala controversy also alleged— without offering any evidence—that money was going to Kashmiri Hizbul Mujahideen fighters. L. K. Advani, V. C. Shukla, P. Shiv Shankar, Sharad Yadav, Balram Jakhar, and Madan Lal Khurana were the politicians charged in the Hawala fraud. Being the largest democracy in the world, India's political climate was completely poisoned, forcing seven ministers from the Congress Party, which was in power at the time, and the other three major political parties in the country to resign. A public interest petition (by Vineet Narain) essentially set off the tribunal that followed the charge sheet against the political leaders, but even after a protracted, in-depth investigation, the accused were not punished, and the Hawala scandal court cases ultimately all fizzled out without verdicts.

Seven members of the Congress, which was the then-ruling party, as well as L.K. Advani, the leader of the Bharatiya Janata Party (BJP), were forced to leave the Lok Sabha Assembly as a result of the Hawala scandal. The chief minister of Bihar, Laloo Prasad Yadav, took over for S.R. Bomai, the Janta Dal president, who was forced to quit due to his involvement in the scandal. Eleven lawmakers who were accused of accepting bribes in the Hawala scheme were ordered to be arrested by the jury. The climate of Indian politics has been completely destroyed by the Hawala scam. Because Surendra Kumar Jain was always eager to make money, he and his brother had to grease the palms of ministers and other influential figures in the government in order to accomplish their goals.

- Niteksh Gupta

The opposition party accused the previous prime minister of accepting a bribe of Rs. 3,000,000. After the scheme was discovered, it was claimed that the Jain brothers used to transport the Hawala money to powerful people on their own or, occasionally, through their dependable staff. Even on occasion, funds were moved to accounts at international banks. The Jain brothers kept a list of all the recipients of the Hawala money and recorded their names in the diary. Amir Bhai, an Indian who operated currency exchange counters in several nations, was instrumental in receiving a sizable bribe and accepting funds on behalf of Indian officials and bureaucrats. Amir Bhai allegedly served Kashmiri activists and those who detonated bombs in Bombay in 1991, which has a very nasty background. Due to the detention of two Kashmiri terrorists, the FIA conducted a search on the homes of influential political figures in March 1991. Somnath Chatterjee, who is known for his party's ability to retain its appeal, brought up the matter in the Rajya Sabha even though he and his party knew they could force the resignation of the government in any way. He did so in the hopes that doing so would at least have some moral force and damage the reputation of the ruling party's high standing. Kuldeep Nayar, another renowned journalist, also highlighted the connection between the Hawala fraud and the Kashmir conflicts that gained momentum in 1991.

Vineet Narayan filed a complaint that led to the arrest of Surindra Kumar Jain. It was he who revealed the entire incident, and an official report of approximately 120 pages was drafted as a result. Vineet Narayan also complained to the Prime Minister for interfering in the investigation. The court therefore ordered the CBI to refrain from disclosing any information about the

investigations to any higher authorities or political figures. Although the CBI was directly under the jurisdiction of the Government, the court deserves praise for issuing a severe order to them. The thenIndian Prime Minister, Mr. Narsimha Rao, steadfastly refused to concede that he or any of his colleagues had ever meddled in the Hawala issue. He maintained that everyone who was thought to be implicating in the case ought to be taken as innocent unless proven guilty.

In August 1993, Vineet Narayan uncovered the Jain Hawala Scheme using the Kalchakra video news cassette. Using this, he was able to conclusively show that all the leading Kashmiri terrorists and senior Indian politicians were complicit in the scam by receiving exorbitant amounts of cash as payment.

The then-ruling party of the Indian Government barred the video cassette from the censor board while the CBI was still involved in the release of the video cassette. Vineet Narayan wouldn't let this slide, either, or even went as far as to appeal to the Film Certification Appellate Tribunal. The ban on the Kalchakra video cassette was lifted by the Chairman of the Tribunal, Hon. Justice B. Lentin, who stated in his ruling very clearly that it shows that a number of politicians, ministers, and high-ranking officials have not exactly appeared as chevaliers in shining white armor but rather as what they have developed into overtime. Hon. Justice B. Lentin stated plainly that the cassette unveiled the democratic principle where investigative media was free to explore so that people might exercise their democratic rights.

The 2G spectrum case involves a political dispute in which members of the United Progressive Alliance coalition government in India were involved in selling or allocating 122 2G spectrum licenses under terms that benefited particular telecom providers. A. Raja, who was the telecom minister at the time, was charged with selling 2G spectrum licences for a pittance causing the government to lose $1.760 trillion (about $25 billion) in revenue. Raja was charged with breaking norms and regulations as well as failing to heed recommendations from the Indian Ministries of Finance, Law, and Justice when granting 2G spectrum licenses to telecom providers. Allegations from the Central Bureau of Investigation and others about the allocation of 2G spectrum licenses were made. Following an investigation into the claim that Raja knowingly advanced the deadline (from 01/10/2007 to 25/09/2007) in order to favor a few particular companies (Unitech Wireless and Swan Telecom), which were allegedly ineligible to apply for telecom licenses and were allegedly doing so in exchange for bribes.

After carefully examining the evidence and hearing from the CBI, the special court in New Delhi exonerated all defendants in the 2G spectrum case, including the primary suspects Raja and Kanimozhi, on December

21, 2017. This lawsuit was found to be without merit by the court. According to the ruling, "Some people ingeniously arranged a few selected facts and exaggerated them beyond recognition to astronomical amounts to construct a hoax”.

The Delhi High Court received pleas from the Enforcement Directorate and the CBI against this decision on March 19 and 20, respectively.

When the defendants asked for extra time to submit their reply to the appeal that was contesting their acquittal in the case, Justice Najmi Waziri issued an order in February 2019 requiring them to plant 3,000 trees apiece.

The High Court's daily hearings, which were originally scheduled to start on January 14, 2020, will now start on October 5, 2020.

Parties Accused of Involvement

Politicians involved:

A. Raja - Minister of Communications and Information and Technology.

M.K. Kanimozhi - Rajya Sabha MP

P. Chidambaram - Minister of Home Affairs.

Bureaucrats involved:

Siddharth Behura - Former Telecom Secretary.

R.K. Chandolia - Raja’s Private Secretary

Corporate Executive Involved:

Gautam Doshi - Managing Director of Reliance Anil Dhirubhai Ambani Group

Surendra Pipara - Vice-President of Anil

Dhirubhai Ambani Group & Reliance Telecom.

- Reeya Patel

Hari Nair-Senior Vice - President of Anil

Dhirubhai Ambani Group

Sanjay Chandra - Managing Director of Unitech Wireless (Tamil Nadu) Ltd

Shahid Balwa - Swan Telecom Promoter

Vinod Goenka - Swan Telecom Promoter

Sharath Kumar - Managing Director of Kalaignar TV

Rajiv Agarwal & Asif Balwa - Chief Executives of Kusegaon Fruits & Vegetable.

Film and Entertainment persons Involved:

Karim Morani - Cineyug Media and Entertainment Ltd’s Director

Corporations Involved:

Unitech

Swan Telecom

Videocon Telecommunications Limited

S Tel

Reliance Communications

Businessmen Accused:

Ratan Tata - Chairman of Tata Sons

Anil Ambani - Chairman of Reliance

Telecommunications

Journalists Accused:

Barkha Dutt - Group Editor, English News, NDTV

M.K. Venu - Senior Business Journalist

Vir Sanghvi - a Hindustan Times Editor

Prabhu Chawla - Editor of India Today Magazine

Shankar Aiyar - then with India Today Group.

Nira Radia Tapes Controversy.

Response to the allegations

The Indian opposition parties unanimously urged the creation of a joint parliamentary committee to probe the claims after Indian media started reporting the CAG report that put the loss at 1.76 trillion rupees (short scale). The opposition again pushed for a JPC when the winter session of Parliament convened on November 9, 2010, but the government again rejected their request. The CAG report was presented to Parliament on November 16, 2010, which gave the call for a JPC even more momentum. The government once more rejected the opposition's call for a JPC, causing the opposition to halt the proceedings. Meira Kumar, Speaker of the Lok Sabha, tried in vain to break the deadlock. The Parliament's winter session ended on December 13, 2010.

Media Persons Accused:

Nira Radia- a corporate lobbyist whose conversations with politicians and corporate entities were recorded by the government and leaked, creating, the

Even though 23 pending laws were passed, 22 new measures were intended to be introduced, and 3 bills were withdrawn, Parliament only met for nine hours. After defying the opposition's requests for more than three months, the administration finally decided to create a JPC on February 22, 2011. The CBI was criticized by the JPC for being lenient with the Prime Minister, the Attorney General, Dayanidhi Maran, and Chidambaram and for refusing to look into their actions on July 24, 2012, according to the report. The CBI claimed that the Maran brothers amassed an illegal 5.50 billion by selling Sun Direct TV shares at significantly "inflated prices" after questioning the former telecom minister Dayanidhi Maran, his brother Kalanithi, and the CEO of Maxis Communications.

Jayalalithaa demanded Raja's resignation in early November 2010 after she accused

state chief minister M. Karunanidhi of shielding Raja from corruption accusations. Raja submitted his resignation around the middle of November. At that time, comptroller Vinod Rai sent show-cause letters to Unitech, S Tel, Loop Mobile, Datacom (Videocon), and Etisalat asking them to answer to his claims that the 85 licenses these businesses had been awarded were invalid due to a lack of money or another reason. It was predicted that these businesses will face significant fines but keep their licenses despite offering some consumer services.

In June 2011, Manmohan Singh, the prime minister, chastised the CAG for making statements about public policy and urged it to "restrict the office to the duty stipulated in the constitution.

The CAG undertook a "rigorous internal evaluation" in response to Singh's complaint and upheld its conclusions, citing new events as confirmation. The 3G auctions, as well as the Swan and Unitech deals, were used to calculate the "undeniable loss to the exchequer," which the CAG underlined. It highlighted the Supreme Court's 2 February 2012 decision that Raja and Department of Telecom employees' conduct were "completely arbitrary, capricious, and against the public interest, in addition to being against the equality concept. The evidence presented for the quotation indicated that the Minister for C&IT desired to Favour select businesses at the expense of the public coffers."

It claimed that their estimate of a loss of $1.76 trillion was warranted since the reserve values for 2G spectrum as compiled by the TRAI in May 2012 were nearly identical to those in the CAG report from November 2010. In comparison to the 3G value of 167.50 billion for 5 MHz used by the

CAG to arrive at a loss figure of 1,760 billion, TRAI had suggested a reserve price for 2G spectrum of 180 billion for a pan-India 5 MHz license. It came to the conclusion that it was just looking at the "application of policy" and that creating policy belonged to the government.

Conclusion

The judgement has generated a number of difficulties across several industries, general administration, and policies, all of which are likely to have long-term effects, thus it is clear that the issue is far from resolved. The way the judgement is interpreted and the subsequent actions that the different actors take will have a significant impact. A full TRAI consultation paper is anticipated. Currently, further research is required to determine the greatest match for the auction as a strategy moving forward in terms of its design and implementation.

KARVY CORPORATE SCAM

- Sai Avinash Karri

Worldwide Ltd was purchased by Karvy Data Management Services, a division of the Karvy Group, for Rs 30 crore.

Karvy Group has the following nineteen subsidiary companies under it.

Group. equity trading, commodities trading, depository and wealth management services, as well as the distribution of other financial goods, were all part of its scope. Its main office was in Hyderabad. Additionally, Thad outposts outside of India in Malaysia, the Philippines, Bahrain, Dubai, and the United States.

History

Karvy Group was established in the year 1983 and was headed by Mr. C. Parthasarathy as Chairman. The company employs about 30,000 people across 900 offices in around 400 cities and towns. Karvy entered the stockbroking and advising industries in the middle of the 1990s. Later, at the start of the 2000s, Karvy Corporate made a commodity trading investment. With the advent of currency trading, Karvy Corporate

entered the Forex market as well.

Karvy Stock Broking Ltd. - Wealth Management Services, Currency Derivatives, Portfolio Management Services, Depository Participant, Distribution of Financial Products (Mutual Funds, FDs, and Bonds), Equity Broking.

Karvy Comtrade Ltd. - Commodities Broking

Karvy Capital Ltd. - NBFC & Portfolio Manager

Karvy Investment Advisory Services Ltd.Investment Advisory Services

Karvy Holdings Ltd. - Core Investment Company

Karvy Middle East LLC - Products for Wealth Management for NRIs

Karvy Realty (India) Ltd. - Realty Services

Karvy Financial Services Ltd. –NonBanking Financial Services

Karvy Insurance Repository Ltd.Insurance Repository services

Business

The Karvy Group offered loans for both individuals and corporations as well as financial services like financing, insurance, brokerage, and investment banking. Karvy launched its e- commerce company on Karvyclick.com to help small and mediumsized businesses sell their goods online on different ecommerce platforms. In 2017, the call center operation of Media Matrix

Karvy Forex & Currencies Private Ltd.Currency and forex services

Karvy Consultants Ltd. - Consultancy and Advisory Services, Publications

Karvy Data Management Services Ltd.Data Management Services

Karvy Investor Services Ltd. -Merchant Banking and Corporate Finance

Karvy Insights Ltd. - Market Research

Karvy Analytics Ltd. - Analytics

Karvy Global Services Ltd. - Business Process Outsourcing

Karvy Global Services Inc, USA - Business Process Outsourcing

Karvy Inc, USA

Funding

The corporation fraudulently issued shares of its clients to group companies like Karvy Realty, the Registrar of Companies, in August 2020 to raise $1,100 crore.

Controversies

Karvy Stock Broking Limited was prohibited by the Securities and Exchange Board of India from buying shares in delivery and from taking on new clients until a forensic examination in November2019. By pledging the securities holdings of its clients, Karvy has forfeited investor cash of Rs. 2000 crore, according to SEBI. Based on a thorough report by the National Stock Exchange, action was taken. Up to May 31, 2019, the corporation sold surplus securities (not in their DP account) for Rs 485 crore through nine connected clients. Up till May 31, 2019, they also transferred surplus securities worth Rs 162 crore to six of the nine associated clients. Later, it attempted to overcome the shortfall between June and September2019 by repurchasing the securities in the amount of 228.07 crores. Its group company Karvy Realty Private Limited received 1096 crore in transfers from April 2016 to October 2019.

Why has SEBI prohibited Hyderabadbased Karvy Stock Broking from accepting new clients?

Over two lakh transactions are carried out virtually daily on behalf of Karvy Stock

Brokerage's customers, who number over a million in the retail broking market. Due to complaints from some of its clients about delayed payouts, the broking firm has been int he news for the past few weeks. The third day after the transaction is when a person should typically see the money in his account, but some clients said they did not receive the money until more than a week had passed after they executed the deals.

Why was the payout delayed?

A preliminary investigation by SEBI and the NSE revealed that the late transfer was due to a suspected misuse of customer securities, contrary to the broking firm's initial claim that the delay in reimbursements was caused by technical problems. The broking firm credited cash generated by pledging client securities into its account by the SEBI directive issued on November 22. Karvy Stock Broking is not permitted to take on new clients by SEBI. Additionally, between April 2016 and October 2019, $1,096 crore was moved from the brokerage firm to its group company Karvy Realty. By pledging customer securities, the broking firm obtained funding from organizations like Bajaj Finance, ICICI Bank, HDFC Bank, and IndusInd Bank, according to appeals submitted to the Securities Appellate Tribunal (SAT). For instance, Bajaj Finance is owed more than 300 crores by Karvy Stock Broking. Karvy Stock Broking even assured the lenders that the securities being pledged were it’s own and not the clients.

What happens to the clients who are impacted?

Most of the clients who were impacted have received their shares. The depository has already transferred the securities of about

83,000 clients from the broking firm's account to the corresponding client accounts, even though it is believed that a total of about 95,000 Karvy Stock Broking clients have been impacted. Since SAT has halted all future transfers of stocks from Karvy's account to client accounts, the remaining clients will have to wait. This order was made in response to appeals filed by the lending organizations Bajaj Finance, ICICI Bank, HDFC Bank, and IndusInd Bank, who claimed they were entitled to the shares because the securities were pledged to them. SAT has instructed SEBI to allow the lenders a chance for a hearing before deciding by December 10th.

What is the situation right now?

Karvy's broker membership has been suspended by the NSE and the Bombay Stock Exchange. To learn more information about the suspected misappropriation of client securities, the NSE is launching a forensic audit. Karvy Stock Broking appealed the ban at SAT; however, the appeal was denied, and Karvy was told to appeal to the NSE instead. The appeal submitted by the lenders from whom Karvy Stock Broking obtained funding by guaranteeing client securities would be decided by the regulator in the ensuing week. Since the former order was simply an ex-prate interim order, the capital market watchdog will also take additional action against Karvy Stock Broking.

How can investors escape this situation?

While Karvy Stock Broking's clients have a good right to be concerned, the SEBI order makes it plain that the broking firm will not be able to continue misusing its clients' securities—even if it has the power of attorney—because the depositories have

been given explicit instructions in this regard. More importantly, the majority of the clients who were impacted have already received their securities in the appropriate accounts. However, according to market analysts, Karvy Stock Broking clients should make sure that all of their assets are reflected in their Demat accounts. By login into the Demat account and looking at the portfolio, you mayaccomplish this quickly.It is best to contactthe stock exchanges, the Bombay Stock Exchange or NSE, as they have an internal dedicated investorgrievance redressal process to handlesuch matters if an investor has not received the dividend for a trade done more than 3–4 days ago. Additionally, because Karvy Stock Broking's broker license has been stopped, its customers will need to transfer their accounts to another broker, which is a simple process.

BUBBLE

Introduction

The dot-com bubble was a sharp increase in the value of U.S. technology stock values caused by investments made in web-based businesses during the late 1990s bull market. The Nasdaq index, which was heavily influenced by technology, increased from less than 1,000 to more than 5,000 between the years 1995 and 2000, demonstrating the exponential growth of equities markets during that time. In 2000, things began to change, and between 2001 and 2002, the bubble burst, causing the stock market to enter a bear market.

The Nasdaq index fell by 76.81% during the crash from a peak of 5,048.62 on March 10, 2000, to 1,139.90 on October 4, 2002, a fivefold increase between 1995 and 2000.

The majority of dotcom stocks collapsed by 2001's conclusion. Even the share values of well-known technology companies like Cisco, Intel, and Oracle decreased by more than 80%. The Nasdaq wouldn't reach its peak again for 15 years, but on April 24, 2015, it did.

The so-called "dot-com bubble," often referred to as the "Internet bubble," resulted from a confluence of factors including the prevalence of speculative or trend-based investing, the abundance of venture capital funding for startups, and the inability of dotcom to generate a profit. In the 1990s, investors poured money into Internet firms in the hopes that they might someday turn a profit. Fearing they would miss out on the lucrative opportunity presented by the increasing use of the Internet; many investors and venture capitalists abandoned a cautious approach.

Start-ups were in a race to become hugely successful because capital markets were flooding the sector with cash. Without any unique technology, businesses abandoned financial accountability. They sunk a lot of money into marketing to create brands that would differentiate them from the competitors. Some new businesses allocated up to 90% of their money to advertising.

The Nasdaq had record capital inflows beginning in 1997. By 1999, Internet businesses received 39% of all venture capital funding. The majority of the 457 initial public offerings (IPOs) that year, including 91 in only the first quarter of 2000, concerned Internet startups.

The largest merger failure in history, the AOL Time Warner megamerger in January 2000, set the bar at that point.

In the end, the bubble burst, leaving many investors with significant losses and several Internet businesses bankrupt. Amazon, eBay, and Priceline are just a few of the wellknown companies that managed to avoid the bubble.

In many areas, the 1990s saw rapid technological advancement. However, the nation's greatest capital growth was brought

about by the Internet's commercialization. Even though high-tech leaders like Intel, Cisco, and Oracle were organically growing the technology industry, upstart dotcom companies were fueling the 1995 stock market surge.

The next five years saw the formation of a bubble that was fueled by easy access to finance, overconfidence in the market, and pure speculation. Any business with a ".com" after its name attracted venture capitalists looking for the next big score. Investors were all too willing to disregard conventional fundamentals because valuations were based on earnings and profits that, even if the business model worked, would not come for several years.

Companies went public with IPOs that saw their stock prices triple and double in a single day, generating a feeding frenzy for investors. These companies had yet to generate revenue, profitability, and, in some cases, a finished product.

On March 10, 2000, the Nasdaq index reached its peak, reaching 5048, nearly doubling from the year before. When the market reached its peak, a number of the top high-tech firms, including Dell and Cisco, issued huge sell orders on their stocks, causing panic selling among investors. The stock market lost 10% of its value in a matter of weeks. The source of life for cashstrapped dot-com enterprises began to dry up as investment funding started to decline. Dotcom businesses with market capitalizations in the hundreds of millions of dollars quickly lost all of their value. By the end of 2001, the majority of dotcom companies that were publicly traded had gone out of business, wiping out trillions of dollars' worth of investor capital.

The companies that crashed but survived the dot-com bubble

The start-ups that were backed by venture capital also disappeared after they did. A dot-com longevity was closely tied to its burn rate, or how quickly it was depleting its capital, which led to the collapse of numerous dot-com businesses. Additionally, as demand decreases, supporting industries like shipping and advertising reduce their activities. For squandering shareholders' money, numerous Internet companies and their leaders have been charged with (or found guilty of) fraud. In addition, investment companies like Citigroup (NYSE: C) and Merrill Lynch were hit with significant fines by the U.S. Securities and Exchange Commission (SEC) for misleading investors. However, a select number were able to adapt and survive the surge thanks to organizational changes, new leadership, and a revised business strategy. A few businesses that succeeded in doing so are Shutterfly, Priceline, eBay, and Amazon (NASDAQ: AMZN, AMZN).

Priceline

Priceline was the business that best represented the dot-com era. Jay Walker created Priceline in 1998 with the goal of addressing the issue of unfilled airline seats. The solution Priceline came up with was to make these tickets available to internet clients who could specify the price they

wanted to pay.

Customers received cheaper flights as a result, and airlines sold more inventory. In short, market inefficiencies were eliminated, and Priceline received payment for optimizing the procedure.

The business became a dot-com phenomenon, growing from 50 to more than 300 people, and in its first seven months of operation, selling more than 100,000 plane tickets. By 1999, more than a thousand tickets were being sold each day. By creating a brand through aggressive marketing, Walker aimed to saturate the market. Therefore, the company invested more than $20 million in advertising within its first six months, and by 1998, it had overtaken AOL, Yahoo, Netscape, and Amazon to take fifth place in online brand awareness.

Priceline, which had a market value of $9.8 billion when it went public in March 1999 at $16 per share before settling at $69, was the largest first-day valuation of an internet company up to that point.

At the same time, Priceline incurred losses of $142.5 million in its initial financial reporting periods. Additionally, it lost almost $30 on each ticket it sold because it purchased tickets on the secondary market to satisfy client bids. In addition, consumers of Priceline frequently spent more at an auction than they would have by using a conventional travel agency.

Investors, however, were unconcerned by this because they were more focused on snatching up some of the buzzes. For venture investors, it didn't matter either because that's how they got paid to support businesses like Priceline, eToys, and Kozmo.com.

The corporation ultimately suffered a $1.1 billion loss in 1999, and its shares

plummeted from $974 to $7 per share. Following 9/11, the travel sector as a whole was dealt another hit. However, when Jeff Boyd took over as CEO in 2002, things started to change. He rebuilt the Priceline brand around hotels rather than on airfares and increased its European market.

Takeaways

The late 1990s investments in Internetbased businesses led to a sharp increase in the valuations of U.S. technology stock shares, which was known as the "dotcom bubble."

During the dot-com bubble, the value of equities markets increased dramatically, with the Nasdaq jumping from less than 1,000 to over 5,000 between 1995 and 2000. After the bubble burst in 2001, the market for stocks went into a bear phase.

The Nasdaq, which increased fivefold between 1995 and 2000, experienced a decline of over 77%, costing billions of dollars.

A number of Internet businesses also failed as a result of the boom.

Founder: Rajesh Kumar Wadhawan

Promoter: Kapil Wadhawan, Arunav

Wadhawan & Dheeraj Wadhawan Year of Incorporation: 11th April, 1984

Year of delisting: 14th June 2021

India's largest fraud is the DHFL (Dewan Housing Finance Corporation Limited) scam. ₹13,000 crores were involved in Neerav Modi's fraud. The APJ Shipyard scam cost ₹20,000 crores, and the promoters of DHFL were just found guilty of committing a ₹31,000 crore fraud. This essay seeks to present to you all the information regarding this fraud's facts and figures, as well as its most critical lessons for retail investors. The promoters of DHFL had siphoned away over ₹31,000 crores by giving away bogus loans to dubious, shell and bogus entities belonging to the promoters of the company. Because of such loans huge amount of money was siphoned away which was utilized to create hidden, illegal, benami assets in both India and abroad for the promoters. Diversion of money had taken place which was taken place through sweetheart loans which were given to these bogus entities. Sweetheart loans are the once where there is no intention to recover it. This scandal was made public by

Cobrapost (a non-profit Indian news website) and as a reaction to this, the share price of DHFL fell drastically. The reaction and response of the promoters of the company were in expected lines. The promoter said that there is no truth in whatso ever allegations made by cobrapost. They said that the report issued by the news site is a mere figment of imagination and that all loans given by the company have been genuine. They also denied that there were any kind of shell and bogus companies that belonged to the promoters and were used to launder money. The point to note is that the report issued by cobrapost was based on information available on public domain like certain government websites. The question that arises in everyone’s mind was that if cobrapast can bring out such a huge scam merely on the basis of information available on public domain, then why couldn’t the auditors when they have direct access to the books of accounts and records of the company for all these years.

This scandal came immediately after the IFHL scam was unearthed, just a few months after that it also coincided with Rana Kapoor being thrown out from YES Bank by the RBI (Reserve Bank of India).

DHFL was not a small entity. It was the 4th largest housing finance company of India with an asset base and loans of ₹1,00,000 crore. Banks, FI, MF and many other entities had given loans which summed up to ₹90,000 crore. Banks like SBI have reposed trust in the company by giving loans of ₹11,000 crore and so did BOB, which gave loan of about ₹4,000 crore. After this report

- Swakrit Banik

of cobrapost, things started going down for DFFL.

Windup and liquidate the entity.

The tribunal also ordered the company to conduct a transaction audit, which was audited by Grant Thornton (GT). The mandate of GT was to look into the transactions and find out all the frauds committed in the company by the promoters. The findings of GT have been coming out from time to time. GT conducted a thorough audit focusing more on the loan transactions that took place and from time to time they reported frauds that have taken place within DHFL in a huge way.

DHFL started defaulting on its loan repayment and very soon the company under the administration by the RBI. Later on, the RBI referred the company to the NCLT (National Company Law Appellate Tribunal) for resolution. The option was

Either have the company taken over by another entity or

The promoters of the company were found to open 2.6 lakhs of bogus loan accounts in its Mumbai branch which were open in the name of those borrowers who had already repaid the loans to the company and money was siphoned away. Extremely sophisticated software's were use in order to camouflage and hide this fraud. This fraud involved

preferential transaction related party transactions and transactions with substantial undervaluation.

Piramal purchased DHFL for Rs 34,250 crore, which was made up of cash and nonconvertible debentures. The total consideration consists of an upfront cash payment of about Rs 14,700 crore and an issuing of debt instruments of about Rs 19,550 crore (10-year NCDs at 6.75% p.a. on a semi-annual basis).

Wealth Erosion

A decline in the share price of Dewan Housing Finance Ltd. had reduced ace investor Rakesh Jhunjhunwala's wealth by 178.29 crore. One of the most important lessons for individual investors is that even large investors can lose money if top-level management is subpar. The biggest loser in this entire event is the retail investors.

Ace investors were also invested in to DHFL, as stated above. Now when any share falls down and if that involves any big name like big bull or any big investor that this man invested in DHFL, he is putting more, he lost money. Automatically it got spread in news and in big quantity retail investors started investing in it. This can be demonstrated using the shareholding pattern shown below:

In March 2019, public holding in DHFL was 38.37%. In June 2019, it shot up to 45.64%. This shows how news spreads like fire and on top of that the shares were available at a very cheap price. This process continued and public holding stood at 57.09% at June 2021, at the time of delisting.

FII’s shareholding was 19.43% in 2018 which came down to 0.25%.

Basically, FII’s and DII’s left the game in right time. Who lost the most in this situation? Well, the answer is quite obvious¾Retail investors.

Key Takeaways

Never catch a falling knife i.e. investors should not be induced by the fact that a well-known companies shares are available at a cheaper price thinking how

more can it fall. Most of such companies fail and many did.

There is a risk that runs in stock market. It very difficult to distinguish and identify the fraudulent companies. Every industry has a risk and so does this market has. However, it is a very minuscule risk but still some pops up.

Retail investors should avoid the tips which gets circulated in the market because most of the time they never work.

"The merged entity combines Piramal’s financial strength, core values and institutional credibility with DHFL’s geographic footprint and distribution network of 301 branches and 2,338 employees catering to ~1 million lifetime customers across 24 states - making it one of the leading housing finance companies in the country," Piramal Group said.

FINANCIAL TRIVIA Money For Thought

Financial Scams can be defined as hidden activities happened inside any business without following specific legal procedures to achieve profit to individuals or company. When any company is involved in illegal activities, then it starts hiding some information from its customers and provide false accounting, miss printing or services to its customers, investors. Corporate fraud can be conducted in various types inside corporate sector business. We can see huge impact of corporate fraud on Indian economy. Indian economy is very large in size and many people from inside and outside India have invested their money in Indian economy. If any type of corporate fraud is conducted inside India, then investors start losing trust from Indian economy. Corporate fraud will reduce the trust of investors from Indian economy and this will directly show impact on the development of Indian economy.

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