Whether Shankar Sharma and his First Global group ever owned shares of Dilip Chhabria Designs (DCD) is turning into a regular mystery. In his deposition, before the Joint Parliamentary Committee (JPC), Shankar Sharma had said that DCD was one of three unlisted companies in which he held a stake. In fact, he said that he owned around 10 per cent of the equity, which was purchased at the rate of Rs 9,000. The shares were purchased three years ago and had been sold nearly a year and a half ago. Last week we had wondered whether the 15 per cent stake owned by Himachal Futuristic Communication Ltd (HFCL) had come from First Global’s holding. But Dilip Chhabria insists that no shares were ever sold to Sharma or his companies. In fact, he says that First Global only acted as broker to the HFCL sale, which took place at Rs 6,000 a share. DC however admits that Sharma did indeed want a stake in DCD, but since he was demanding the shares at Rs 3,000 each, Chhabria had turned him down and the two subsequently fell out. As for buying the shares from HFCL, Chhabria says that since a small portion of the share price is still owed to him the shares are not yet fully paid up and have not been handed over to HFCL. “When I have never transferred a single share to them (First Global) in my life, how can they claim to own the shares?” asks Chhabria. He says he has no clue why Sharma should claim that he owns a stake in DCD in his deposition and challenges First Global to produce any record that he had ever held the shares. Since Sharma’s claims before the JPC are on oath, the issue is indeed getting rather mysterious.
The messenger returns
The Bombay Stock Exchange (BSE) top brass is all a-flutter. Sources at the bourse tell us that the judicial inquiry by a retired Supreme Court Judge has virtually exonerated A.A. Tirodkar, the former director in charge of the BSE’s surveillance. It would be recalled, that Tirodkar, was accused of having leaked the tapes of former BSE president Anand Rathi’s conversation with the supervision department, during which he had asked for sensitive market information which ought not to be available to a broker director. Sources at Sebi say that the inquiry report will have to be tabled before the BSE governing board, and if it has indeed exonerated Tirodkar the bourse will have to reinstate him. Sebi has no role in these developments since it has withdrawn its nominees from the BSE board. This would mean that the same public representatives who had aggressively demanded that Tirodkar be thrown out on the basis of ‘termination simpliciter’, may have to order his reinstatement. The bigger irony is that these public representatives have completed their own terms but continue on the board, which remains in suspended animation ever since the broker representatives were sacked and the finance ministry decided to corporatise bourses.
Where are the shares?
Remember MS Shoes, the company owned by Pawan Sachdeva whose dreams crashed when he was accused of ramping up his stock prices? While the investigation is in limbo and the company is barely heard of, industrialist Ramesh Chauhan has a curious problem. Chauhan says that has been looking to purchase one-lakh shares of the company as a part of an old transaction with Sachdeva. He assumed that a beleaguered company, whose stock was not even traded regularly, would be available for the asking at just a couple of rupees or so. To his astonishment, he found that there are simply no shares of MS Shoes available at all and leading brokerage firms in Mumbai could also not procure any shares for him. Even the break-up of the shareholding pattern is hard to come by, or the list of its shareholders. Could one call it another dimension of the vanishing companies syndrome when the company remains but its shares vanish?
Arthur Levitt’s entire term as chairman of the Securities Exchange Commission (SEC) was marked by his fight for transparency in corporate accounts, and to force audit firms to separate their auditing business from their consultancy services. In fact, he was so tough that his successor Harvey Pitt had to promise audit firms a more benign SEC. Yet, the biggest bankruptcy in US corporate history had exactly the kind of accounting that Levitt had warned against—cozy relationship between company and auditor and the conflict between the consultancy and auditing responsibilities of the big accounting firms. Isn’t it astonishing then that under Levitt the SEC had granted to exemptions to Enron from making some key disclosures in its accounts.