From clerk he rose to meteoric
heights
Mumbai, December 31
“Big Bull” Harshad Mehta, who passed away early today, rose from an
insurance clerk to become one of the high profile share brokers till 1992, when
the multi-crore securities scam rocked stock
exchanges in the country with a number of banks and financial institutions
facing the heat.
Following public outcry, the government set
up the Janakiraman Committee to probe the scam, which
broke out between April, 1991, and June, 1992. At least 10 commercial banks,
including Standard Chartered Bank, the SBI and National Housing Bank, an RBI
subsidiary, were hit by the scam.
Mehta began his career as a despatch clerk
in New India Assurance Company before he transformed the securities market into
an active business hub. He then rose to become a stock broker and strove to
drive the market to dizzy heights when economic reforms were slowly being
unfolded.
Mehta, 47, is survived by his wife, two sons
and two brothers, Ashwin and Sudhir.
Both brothers are also facing trial in scam cases.
According to the CBI, he exploited bank
receipt instruments to the maximum and used the money derived to speculate the
share prices of several blue chip companies.
Harshad
perfected the art of diverting money to the stock market from bank’s security
portfolio by exploiting the loopholes in the system, trade circles say.
He took over closed companies, pumped in
cash and boosted their shares on the stock market.
After the scam, Harshad
was arrested by the CBI in several cases registered against him for allegedly
cheating the banks and financial institutions to the tune of several crores of rupees.
He, however, raised a controversy by
addressing a press conference along with his lawyer Ram Jethmalani
by displaying two suitcases in which he claimed to have paid Rs 1 crore donation
allegedly to then Prime Minister Narasimha Rao.
Harshad was
facing trial in altogether 28 cases but was so far convicted in only one case
involving use of Maruti Udyog
Ltd funds to the tune of Rs 30 crore
in the stock market. All other cases are still pending.
He was sentenced to five years rigorous
imprisonment by Justice M.S. Rane in MUL case
although harshad pleaded that the money had been
returned to mul and the latter saying that it had not
lost any amount. He had filed an appeal in the Supreme Court which is still
pending.
Although Harshad
was barred from operating in the market, he offered advice to investors on his
website.
Harshad had
secured bail in all cases registered against him. However, he was recently
arrested on fresh charge of misappropriating Rs 250 crore from 27 lakh “missing”
shares of 90 blue chip companies.
He was placed in judicial custody along with
his two brothers, Ashwin and Sudhir,
till January 4. Harshad and Sudhir
were lodged in Thane jail eight days ago, while ashwin
was admitted to J J Hospital soon after his arrest
for treatment of cardiac problem.
Shares belonging to the Harshad
Mehta group had been attached by a special court. However, Harshad
and his brothers claimed that 27 lakh shares held by
them were “missing” or “stolen” and could not be located. The court ordered a
CBI enquiry into the missing shares.
The CBI held Harshad
and his two brothers responsible for introducing these “missing” shares in the
market surreptitiously in benami names to rig share
prices. Accordingly, a case was registered against them.
The 1991-92 scam
had sent shock waves all over the country and saw many heads rolling. In the
wake of the scam, Chairman of Uco Bank K.M. Margbandhu was sacked and arrested. Planning Commission
member V. Krishnamurthy and SBI Managing Director V. Mahadevan
were forced to quit their offices.