SCAMS INDIA INCORPORATED

India can be called a land of scams.  

In a country, where more than half the people live on less than Rs 100 a day, we have ministers and government officials siphoning off funds to the tune of thousands of crores! In a country which proudly calls itself the world's largest democracy, a government was clinging to power by paying legislator's to vote in its favour. In a country where fiscal deficit is causing growing worry among economists and policy makers, states lose Rs 32,000 Crores, at a conservative estimate, to a common counterfeiter with connections. In a country where more than 50 percent of the 120 crore population owns and uses a mobile phone, a loss of Rs 1,76,000 crores is caused by a few telecom companies in cahoots with an obliging telecom minister...

Corruption is not an aberration in India, but a way of life. You pay the municipal authorities when a child is born, to get a birth certificate. You pay the school for a pass certificate. You pay the college for a degree. You have to 'know' somebody to get a job. And even when you die, your dead body can be disposed off only after money changes hands. Between birth and death, you have to make illegal payments to get a driving licence. You have to pay to get a ration card... Why, after retirement, you have to pay to get a certificate every month stating you are alive in order to get your monthly pension...

Corruption has achieved the status of a true national institution in India. But then, this blog is not about corruption. It’s about scams.

Corruption on an organised scale, with the loot running to multiple crores, is a scam. A scam is defined as “a fraudulent or deceptive act or operation”. Indians, particularly the business class, have perfected the fine art of scamming by putting their contacts in politics and the in the bureaucracy to good use right from the time India became a free nation.

Scams are so numerous and come in such a wide variety of sizes and shapes that the average Indian has become impervious to them. Occasionally some shake us. As the 2G Scam did a few years ago. At that time, what really hit us was the sheer magnitude of the money involved. A stupendous One Lakh Seventy Six Thousand Crore rupees, according to the estimate made by the Comptroller and Auditor General of India, who brought the scam into the public domain.

Just as an American greets a perfect stranger with a “Howdy”, or an Englishman opens a conversation with ‘Nice weather today”, “How many zeroes are there in 1,76,000 Crores”, became a familiar conversation opener in India. The figure was a statistical delight for the media as well. One TV channel estimated that if the money was drawn as 1000 rupee notes and packed into shipment containers, it would require 12 large containers to carry the booty. Another speculated if all the money was dumped inside a cricket stadium and set afire, the fire would burn for three months! But that was before Cricket’s very own betting and match-fixing scam erupted.

As we step into the New Year, this blog attempts to identify and record for posterity some of the major scams that shook India over the last 6 decades. Lest we forget. And to be more vigilant in the future. For it is our money that is at stake.

 Jeep Purchase (1948)

Free India's corruption graph begins. V K Krishna Menon, then the Indian high commissioner to Britain, bypassed protocol to sign a deal worth Rs 80 lakh with a foreign firm for the purchase of army jeeps. The case was closed in 1955 and soon after, Menon joined the Nehru cabinet.

BHU Funds (1956)

In one of the first instances of corruption in educational institutions, Benaras Hindu University officials were accused of misappropriation of funds worth Rs 50 lakh.

Mundhra Mess (1958)

The Life Insurance Corporation of India, under the Centre's pressure, bought shares worth Rs 1.2 crore in firms owned by Haridas Mundhra to bale him out of a crunch. The case compelled T T Krishnamachari to resign as finance minister.

Teja’s Ships (1960)

Shipping magnate Jayanti Dharma Teja took loans worth Rs 22 crore, taking advantage of his closeness to Jawaharlal Nehru, to establish the Jayanti Shipping Company. In 1960, the authorities discovered that he was actually siphoning off money to his own account, after which Teja fled the country.

In-laws and Out-laws (1963)

Pratap Singh Kairon became the first Indian chief minister to be accused of abusing his power for his own benefit and that of his sons and relatives. He quit a year later.

Patnaik's Tube Racket (1965)

Orissa Chief Minister Biju Patnaik was forced to resign after it was discovered that he had favoured his privately-held company Kalinga Tubes in awarding a government contract.

Maruti Scandal (1974)

Well before the company was set up, the then prime minister Indira Gandhi's name came up in the first Maruti scandal, where her son Sanjay Gandhi was favoured with a licence to make passenger cars in India.

Quid Pro Kuo (1976)

Indian Oil Corporation signed a Rs 2.2-crore oil contract with a non-existent firm in Hong Kong and a kickback was given. The petroleum and chemicals minister was directed to make the purchase.

Antulay’s Trust (1981)

A R Antulay, then Chief Minister of Maharashtra, had garnered Rs 30 crore as bribe from businesses dependent on state resources like cement and kept the money in a private trust of which he and family members were trustees.

Bofors Pay-Off (1987)

The Bofors scam that took place between 1980s and 1990s had stirred a big controversy in the country as then Prime Minister Rajiv Gandhi and several others were accused of receiving kickbacks from the now defunct Swedish arms company Bofors AB  for clearing a contract to supply India's 155 mm field howitzer.

In March 1986, a $285 million contract between the Govt of India and Bofors was signed for supply of 410 155mm Howitzer field guns. About a year later, in April 1987, Swedish Radio alleged that Bofors paid kickbacks to top Indian politicians and key defence officials to seal the deal. It led to Rajiv losing power when the people overwhelmingly voted against him in the elections that followed.

The middleman associated with the scandal was Ottavio Quattrocchi, was believed to be a major player in the scam. However, after years of legal battle, the Bofors saga came to an end on July 13, 2013 with Quattrocchi's death.

Securities Scam (1992)

Popularly known as the Big Bull, stock broker Harshad Mehta engaged in a massive stock manipulation scheme financed by worthless bank receipts, which his firm brokered in "ready forward" transactions between banks. Mehta was convicted by the Bombay High Court and Supreme Court of India for his part in a financial scandal valued at Rs 5000 Crores, which took place on the Bombay Stock Exchange (BSE). He was tried for 9 years, until he died in the late 2001.

Sugar Import (1994)

As food minister, Kalpnath Rai presided over the import of sugar at a price higher than that of the market, causing a loss of Rs 650 crore to the exchequer. He resigned following the allegations.

Indian Bank Rip-off  (1992)

Aided by M Gopalakrishnan, then the chairman of the Indian Bank, borrowers -- mostly small corporates, film producers and exporters from Tamilnadu -- were lent a total of over Rs 1,300 crore, which they never paid back.

JMM Bribes (1995)

Jharkhand Mukti Morcha leader Shailendra Mahato testified that he and three party members received bribes of Rs 30 lakh to bail out the PV Narasimha Rao government in the 1993 no-confidence motion.

Telecom Scam (1996)

Former minister of state for communication, Sukh Ram, was accused of causing a loss of Rs 1.6 crore to the exchequer by favouring a Hyderabad- based private firm in the purchase of telecom equipment. During a raid, several crores in cash was recovered from Sukh Ram’s puja room at home. He, along with two others, was convicted in 2002.

Fodder Scam (1996)

The accountant general's concerns about the withdrawal of excess funds by Bihar's animal husbandry department unveiled a Rs 950-crore scam involving Lalu Prasad Yadav, then the state chief minister. The scam involved fabrication of fictitious livestock for which fodder, medicines and animal husbandry equipment was supposedly procured. The animal husbandry department is said to have embezzled Rs950 crore through the scheme.

Urea Deal (1996)

CS Ramakrishnan, Managing Director, National Fertiliser Corporation, and a group of businessmen close to the PV Narasimha Rao regime fleeced the government and took Rs 133 crore from the import of two lakh tonnes of urea, which was never delivered.

Jain’s Hawala Diaries (1996)

The scandal surfaced following CBI raids on hawala operators in Delhi in 1991. But it was SK Jain's diaries that had heads rolling.

Match Fixing (2000)

Mohammed Azharuddin, till then India's cricket captain, was accused of match-fixing. He and Ajay Sharma were banned from playing, while Ajay Jadeja and Manoj Prabhakar were suspended for five years. Years later, with the introduction of IPL, match-fixing,betting and insider trading have become the heart and soul of cricket.

Stockmarket Scam (2001)

The mayhem that wiped off over Rs 1,15,000 crore in the markets in March 2001 was masterminded by the Pentafour bull Ketan Parekh. He was arrested in December 2002 and banned from accessing the capital market for 14 years.

Home Trade Scam (2002)

Under the pretext of gilt trading, Rs 600 crore was swindled from over 25 cooperative banks in Maharashtra and Gujarat by a Navi Mumbai-based brokerage firm Home Trade. Sanjay Agarwal, CEO of the firm, was arrested in May 2002.

Stamp Paper Scam (2003)

The sheer magnitude of the racket was shocking -- it caused a loss of Rs 30,000 crore to the exchequer. Disclosures of the mastermind behind it, Abdul Karim Telgi, implicated top police officers and bureaucrats.

Scorpene Deal Scam(2005) 

One of India's largest bribery scandals, in which Rs 500 crore is alleged to have been paid to government decision makers by Thales, the makers of the Scorpene submarine. The amount was channeled through middlemen such as Abhishek Verma. The sacm also involved Ravi Shankaran, a relative of the then chief of navy staff Arun Prakash. He is also the prime accused in the Navy War Room spy scandal.

Cash-for-votes scandal (2008)

The scandal exposed the rampant corruption that prevails at all levels in the country. It involved the Sonia Gandhi-led UPA, which bribed MPs in order to survive a confidence vote on July 22, 2008. The confidence vote was triggered in the Lok Sabha after the Communist Party of India (Marxist)-led Left Front withdrew support from the government, which wanted to pursue the Indo-US nuclear deal.

Bellary mining scam (2008)

The scandal in Karnataka, which led to the resignation of former chief minister BS Yeddyurappa,  involved mining barons, the Reddy brothers. It was alleged that G Karunakara Reddy and G Janardhana Reddy had paid money to bag contracts for their Obulapuram Mining Company, in Bellary. The then Lokayukta of Karnataka, Justice Santosh Hegde said that Yeddyurappa and his family members had accepted bribes in the form of donations to  trusts from mining companies in exchange for issuing mining leases. The Karnataka government suffered a loss of Rs16,085 crore.

Lies and Deception at Satyam (2009)

In the biggest scam ever to hit India’s IT sector, Chairman of Satyam Computers, B Ramalinga Raju, admitted to doctoring the company’s balance sheets. In a letter written to the board, Raju admitted that he inflated the balance sheets to show Rs 5,361 crore at the end of September 2008, which was  300 crore more than the actual amount.

Raja’s Spectrum (2010)

Telecom bandwidth tender was undervalued and offered to a preferred few on a 'First-Come-First-Served' basis at the behest of the then Union Telecom Minister, Andimuthu Raja, instead of a transparent auction system, as advised by the PMO. While the CAG pegs the scam amount at Rs176,000 crore, the CBI estimates it at Rs30,984 crore.

Raja was forced to resign  and booked under the Prevention of Corruption Act for accepting illegal gratification. Apart from Raja, Kanimozhi, the daughter of the then Tamil Nadu Chief Minister, M Karunanidhi has also been named in the case.

Bureaucrats whose names surfaced in the case were former telecom secretary Siddhartha Behura, Secretary of the Department of Telecommunications PJ Thomas, bureaucrat Pradip Baijal and Raja's private secretary RK Chandolia. 

Making Common Wealth of the Games (2010)

Among all the scams in India, the CWG scam is perhaps the only one that drew the attention of media worldwide. A day after the conclusion of the Delhi Commonwealth Games, the Union Government announced formation of a special committee to probe allegations of corruption and mismanagement against the Organising Committee.

Organising Committee chairman and Union Minister Suresh Kalmadi's name surfaced as the main accused for awarding a contract to install Timing, Scoring and Results (TSR) system to Swiss Timing at inflated rates causing a loss of over Rs 90 crore to the exchequer, despite having a cheaper option.

Antrix Devas Deal (2011)

ISRO chairman G Madhavan Nair and three other scientists were accused of entering into a controversial contract between Antrix Corporation and Devas Multimedia Private Limited on January 28, 2005. Under the deal, Antrix was to provide 70 MHz of S-Band wavelength to Devas for broadcasting purposes. This was to be done by ISRO leasing out S-band transponders in two satellites (GSAT6 and GSAT6A) to Devas. A CAG report revealed that the department of space (DoS) had violated rules and policies for approving the agreement. The audit report pegged the loss at Rs 2,00,000 crore.

Tatra Truck Scam (2011)

Top officials of Bharat Earth Movers Ltd (BEML), a defence public sector undertaking,  and the defence ministry siphoned off Rs 750 crore in bribes and commissions over 14 years in the purchase of components for Tatra trucks. BEML flouted defence procurement guidelines and sold Tatra trucks to the army at an inflated price.

No action was taken by the government until former Army Chief General VK Singh, in an  interview, admitted that he was offered bribe of Rs14 crore for clearing the purchase of 600 substandard Tatra-all-terrain vehicles. Following this revelation, the then Defence Minister AK Antony was forced to order a CBI probe into the scam.

Adarsh Housing society scam (2011)

The scam involves the Adarsh Cooperative Housing Society. The building, which was originally meant to be a six-storey structure for Kargil war heroes and war widows, was converted into a 31-storey highrise. The complex now houses members including relatives of former Maharashtra chief minister Ashok Chavan and other politicians, military officials and bureaucrats, who got the flats at a lower price. Former Army chiefs Generals Deepak Kapoor and NC Vij and former Navy chief Admiral Madhavendra Singh and Vice-Chief Gen Shantanu Choudhary also got flats in the society.

An inquiry by the CBI, IT department and the Enforcement Directorate unearthed Sushilkumar Shinde, Late Vilasrao Deshmukh and Ashok Chavan's involvement in the scam, leading to Chavan’s resignation.

Coal Block Allocation Scam (2012)

Dubbed as Coalgate by the media, the scam once again exposed corruption in the highest echelons of power in the country. The scandal involves allocation of the country's coal deposits to public and private sector companies by India’s Mr Clean Prime Minister, Manmohan Singh. The office of Comptroller and Auditor General of India (CAG), in a draft report in March 2012, accused the government of allocating coal blocks in an arbitrary manner during the period 2004–2009, causing a loss of Rs1,86,000 crore.

The scandal caused a furore both inside and outside Parliament due to its sheer magnitude. The scandal got murkier when 43 files containing crucial information on how the coal fields were allocated to private firms went missing.

Chopper scam (2013)

Better known as Choppergate, the scam involves several politicians and defence officers, who have been accused of having accepted bribes from  AugustaWestland to clear a contract to supply 12 AW101 helicopters to India in February 2010. The Rs 3600 crore scam came to light on February 12, 2013, when Giuseppe Orsi, the CEO of Finmeccanica, was arrested by Italian authorities for bribes allegedly paid to secure the sale of helicopters to India. Finmeccanica is the parent company of AgustaWestland.

Investigations revealed that three persons related to the then Air Force chief Shashi Tyagi had bent the rules in the tender to help AgustaWestland secure the contract. Tyagi is the first chief of the Indian Air Force to be named in a corruption or criminal case by the CBI.

Saradha Group Chit Fund Scam (2013)

This financial scam was caused by the collapse of a Ponzi scheme run by Saradha Group, a consortium of companies which was believed to be running a wide variety of collective investment schemes (popularly referred to as chit fund) West Bengal. The group collapsed in April 2013, causing an estimated loss of Rs 200–300 billion to over 1.7 million depositors.

Group chairman Sudipto Sen, in a letter to the CBI,  admitted that he had paid large sums of money to several politicians. He also stated that Trinamool Congress leader Kunal Ghosh had forced him to enter into money-losing media ventures and blackmailed him into selling one of his channels at below market price. Sen fled after posting this letter on April 10. He was arrested in Kashmir on April 23, 2013. His close aide Debjani Mukhopadhdhay was also arrested for her involvement in the scam.

Uttar Pradesh NRHM Scam (2013)

Top politicians and bureaucrats are alleged to have siphoned off Rs10,000 crore from the National Rural Health Mission, a central government scheme, meant to improve health care delivery in rural areas. The CBI is investigating several former ministers of the Bahujan Samaj Party, the then ruling party, in the case. The scam came to the limelight after two Chief Medical Officers (CMO) were shot dead outside their houses. Deputy-CMO, YS Sachan, who was suspected to have had a role in the murders, was arrested, but died mysteriously in prison.

This is by no means an exhaustive compilation. Yet they throw up several interesting issues. The scamsters have not spared any part of India – from North to South, East to West. No department has been immune – be it defence, health, agriculture, education, communications or sports.  Both the Central and State Governments have been equally guilty. Similarly, both national parties and regional satraps have fallen with the trend. The money looted, if totalled, runs to Trillions – enough to position India as one of the richest nations in the world.

Three institutions deserve to be complimented for their vigilantism that has brought these scams to light and for ensuring, in the end, that justice was meted out – the Media, the Comptroller & Auditor General of India and the Courts of Law. Efforts have taken place to subvert these institutions as well. Some individuals have fallen on the wayside to the lure of lucre. 

Yet the majority has stood upright. Signalling hope for the future.