The government of India has ordered a detailed probe into the goings-on at Stock Holding Corporation of India Ltd (SHCIL) that have been detailed in these columns over the last six weeks. IDBI Bank (which owns over 16 per cent of the shares) has been asked to lead the investigation and on Friday night, the chief general manager, R K Bansal, was asked to take charge at SHCIL as the interim head and also told to back up its Information Technology (IT) system and ensure that no data and information is tampered with. SHCIL’s chairman and managing director Jayaraman Iyer has been asked to go on leave. We learn that two more directors are being appointed over the weekend to conduct a detailed investigation into SHCIL’s operations, its subsidiaries and its e-Stamping contract. Meanwhile, ICICI Bank, another 16 per cent shareholder of SHCIL had already sent out a notice requisitioning a board meeting to discuss revelations by this newspaper. The board meeting, which is to be held on 25th April is expected to go into the dilution of 76 per cent of the shares of SHCIL Services Ltd (licensed as a broker of the Bombay Stock Exchange) to individuals and foreigners and the setting up of four subsidiaries with the prefix SHCIL — all with unconnected entities and individuals as substantial shareholders. All these companies were set up in under a year. The board will also investigate the structure of SHCIL’s contract as the Central Record Keeping agency for the e-stamping project.
The crux of the shenanigans at SHCIL over the last few months is the lucrative picking expected from Central Record Keeping for the e-stamping project in collaboration with Crimson Logic Pte Ltd of Singapore. Some numbers explain why this is such a juicy contract. The total stamp duty collected by all the states during 2004-05 has been estimated at Rs 17,644 crore, of which five states, viz Maharashtra, Uttar Pradesh, Karnataka, Tamil Nadu and Andhra Pradesh, accounted for a total collection of Rs10,201 crore, ie almost 60 per cent of the total duty. Maharashtra is reported to have collected Rs 3,375 crore, Uttar Pradesh Rs 2,564 crore, Karnataka Rs 1,600 crore, Tamil Nadu Rs 1,350 crore and Andhra Pradesh Rs 1,312 crore. The maximum stamp duty in the country is collected from Mumbai, which is considered the financial capital. The SHCIL management has quietly worked to ensure that the oversight of this project is completely diffused, by routing the technology contract through two layers of subsidiaries.
Meanwhile, the dubious deals at SHCIL do not stop at tampering with the shareholding or spawning clandestine subsidiaries. Our sources reveal that its sr. vigilance manager, PramodKumar D Pramanik, a former police officer, has been accused in a case connected with the issue of an illegal passport to Aminabi Kaskar, the mother of gangster Dawood Ibrahim. The matter relates to 1995 and documents available with us show that a CBI inquiry led to a case being filed before the additional chief metropolitan magistrate on 19th June, 2002. Since 2005, Pramanik and two others have been fighting to have the criminal cases filed against them quashed. The first filed a criminal revision application before the Sessions court, which was rejected in May 2006. The same year they filed an application (3701 of 2006) before the Bombay High Court. We had brought this to the attention of Sebi over a week ago. Interestingly, Mr Pramanik had joined SHCIL on a contract and was later taken on as its permanent staff member. It will be interesting to find out if there was ever a background check by the personnel department or his antecedents cross-verified with a former police commissioner who is a consultant to SHCIL. More pertinently, does the government ensure that organisations, which are handed sensitive contracts such as e-stamping, have proper HR policies. After all, the Telgi scandal, which has led to the e-stamping initiative, exposed the deep involvement of several senior police officials cutting across state boundaries.
Can’t pay anymore
Cooperative Bank depositors who lost their hard-earned savings would recall that Ketan Parekh, named the chief architect of the securities scam of 2000, has been out on bail, based on a promise before a Gujarat Court that he would repay over Rs 780 crore that he siphoned off in connivance with the bank’s late Chairman, Rameshbhai Parikh. After paying back around Rs 223 crore and even accelerating the pace of repayment, the bull operator now says that he is unable to pay any more. The matter has wound its way to the Supreme Court, where Ketan’s lawyers apparently pleaded for a moratorium and an extension of repayment time. The apex court was, however, in no mood to listen. It may be recalled that Ketan and his cronies had bled the bank for over Rs 1,030 crore, inflicting losses to tens of thousand depositors. Meanwhile, the Central Bureau of Investigation claims to have tracked $6 million in a UK account belonging to another Ketan Parekh crony called Dharmesh Doshi.