Media and entertainment companies continue to reel in the aftermath of Scam 2001. The latest to have a complaints filed against it with the Securities and Exchange Board of India (Sebi) is Tabassum International Ltd—the company floated by a pioneering radio and TV star. The complaints—obviously the job of an insider—show how the company barely met the Sebi listing norms which would require it to have at least 2,000 investors for its Rs 10 crore post issue paid-up capital. The complaint is accompanied by a fat pile of 350 application forms almost entirely in serial order for around 200 share each. All shares are paid in cash, the applicants don’t have a middle name, seem to be in the same hand-writing and all want their shares in physical form. The complainant helpfully alleges that the shares have since been transferred through physical transfer and delivery to an associate of the promoter group. But the complaint has a more interesting disclosure with serious implications for other barely-subscribed issues. It seeks to expose, with specific names and addresses a clear ‘money lending’ operation run by an individual and his company to help companies meet listing requirements. The financiers named by the complainant seem to have been a big player in the primary market during the infamous vanishing company era as well. It is now up to Sebi to pursue the lead and to look for a similar subscription patterns in other public issues—it may even lead to a breakthrough in the vanishing company investigation.
The Midas Touch Investors Assocation along with the president of the Kanpur Consumer Forum and others have moved an interesting complaint against Unit Trust of India. The consumers say that capital gains considerations prevented them from selling their units in April 2001 and caused them losses later. Interestingly, apart from the typical demand that UTI allow redemption at Rs 14.25, the investors have made an interesting demand—that the trustees be made individually liable and be asked to make good the loss suffered to investors from their own pocket. Whatever the outcome of this case, it would be interesting to find out if UTI’s trustees—at least those who were appointed after the 1999 debacle and the Parekh Committee report—had ever written to the Trust or objected to its investment practices, asked for changes or even pursued the implementation of the Parekh Committee recommendations.
Tata vs employees
The Tata Finance case is fit to baffle the most diehard Tata admirers. Tata group has sacked six employees and filed charges against them, but the heat seems to be affecting the blue chip business house too. All of a sudden, every deal and every transaction done through the company seems open to question and unfortunately both sides seem equally plausible. For instance—Did Telco dump its dealer financing on Tata Finance or was it TFL managing director Dilip Pendse’s megalomania which made him grab most of Telco’s business? Did Dilip Pendse persuade senior directors to buy Global e-commerce shares (on which they eventually made no money) from his wife or is this just an example of how closely the Tata directors operated as a group in the stock market. Finally, there is the AF Ferguson report which is still a secret. Does it blame the employees or just a flawed business model? All this does not detract from the specific instances of fraud, falsification and cheating that TFL has accused Pendse of, but it does raise serious questions about the famous Tata Corporate Governance and accountability.
Citi’s insurance trick
The powerful email network is buzzing with angry mail about Citibank’s decision to bill its card holders Rs 204 charge for insurance cover (in the August statement) without so much as a by-your-leave. The tie-up with Tata-AIG provides free cover only for the first three months. The catch is that a card holder is automaticaly enrolled unless he/she specifically rejects the cover by calling or writing. This little detail is tucked away in a corner ‘where it is bound to be missed’. Cardholders say that irrespective of the merits of the insurance cover, Citi’s method of getting business are ‘unethical’. One angry cardholder says: “I wonder if Citi would be happy if I send them some 30 mailers in a year, and in one of them, in some innocent corner say that unless Citi gets back to me by the end of this month all Citi properties world wide are mine”. He calculates that if half Citi’s 1.3 million card holders pay Rs 17 every month for one year Citi makes a cool Rs 13.26 crore without the customer knowing he has paid for it and without any value addition. Ironically, the scheme is called - Suraksha twin benefit.