On 8th December, as this column goes to print, the Income-Tax Department (ITD) and the Enforcement Directorate (ED) were both hunting for controversial stockbroker Nirmal Kotecha.
Is the noose finally tightening around Nirmal Kotecha whose name has often figured in stock marketmanipulations? Sources who knew him well say that he frequently changes his telephone number, keeps away from his home at Matunga (a mid-Mumbai locality) and lurks in fancy hotels close to the domestic airport. Apart from the ED and ITD, Mr Kotecha ought to be under the Central Bureau of Investigation’s scanner, since it is the primary agency investigating the 2G scam. Also, as Moneylife has frequently reported, the Intelligence Bureau (IB), which has a virtual licence to tap anybody’s phone, has been tracking Nirmal Kotecha, Sanjay Dangi and Ketan Parekh for over a year. Let’s not forget that, despite being under the IB scanner and facing a SEBI (Securities and Exchange Board of India) ban, Mr Kotecha operated in the capital market with impunity.
And the charges against him are not insignificant. In the Pyramid Saimira Theatre case, a company he had co-founded, SEBI found outrageous price-manipulation, forgery, bribery and influencing of the media. He was found to have bribed a SEBI officer (who has only been suspended) for forging a fake order to Pyramid Saimira on the regulator’s letterhead. He also bribed journalists and induced two leading newspapers to carry a false story based on the forged letter to push up Pyramid Saimira’s stock prices to get a good exit price.
But Mr Kotecha clearly had powerful protectors. Despite the seriousness of these charges, he remained active in the capital market and was known to control Mavi Investment Fund, a controversial Mauritius-based mutual fund which operated through a sub-account of MM Warburg Bank (Schweiz) AG registered as a foreign institutional investor (FII). Finally, Mavi was also barred from the capital market, but only in September 2011. As recently as July 2011, two years after he was barred from the capital market, Business World magazine had put his net worth at Rs1,821 crore. It ranked him next only to Rakesh Jhunjhunwala, in a list of India’s non-promoter billionaires.
Even today, highly placed sources say that Mr Kotecha may not have responded to the ED summons of 14th November in connection with money laundering charges and involvement in the 2G scam. Isn’t it hard to believe that a market operator under the scanner of four of India’s elite investigation agencies remains unchecked? The 35-year-old Nirmal Kotecha is a self-confessed admirer of late Harshad Mehta, the central figure in the 1992 securities scam. Clearly, he hasn’t learnt much from his idol’s mistakes.