First scam

In today’s blog, I am going to write about the first major scams which happened  in our country after the independence

The first major scam happened in mid 50s and came to be known as Mundhara Scam. It was the media that first hinted there might be a scam involving the sale of shares to LIC.  Before this scam was unearthed, one thing happened few year earlier, Feroze Gandhi, PM Nehru’s son in Law (husband of Indira Gandhi)  became a prime force  behind the anti corruption movement  and the first casualty of this movement, which resulted  in imprisonment of one of India’s wealthiest men, Ram Kishan Dalmia, for defrauding his life insurance company. Subsequently, the parliament had passed the Life Insurance of India Act on June 19, 1956, under which 245 firms were nationalized and consolidated under the Life Insurance Corporation.

Feroze Gandhi sourced the confidential correspondence between the then Finance Minister TT Krishnamachari and his principal finance secretary, and raised a question in Parliament on the sale of ‘fraudulent’ shares to LIC by a Calcutta-based Marwari businessman named Haridas Mundhra. The  Prime Minister, Jawaharlal Nehru, set up a one-man commission headed by Justice MC Chagla to investigate the matter when it became evident that there was a prima facie case. Chagla concluded that Mundhra had sold fictitious shares to LIC, thereby defrauding the insurance company to the tune of Rs. 1.25 crore, which was a huge sum in those days.

Mundhra was sentenced to 22 years in prison. The scam also forced the resignation of T.T.Krishnamachari.

Nehru, as the leader of the ruling Congress party, wished to have the LIC matter handled quietly since it might show the government in a poor light, but Feroze Gandhi did not listen to him and spoke about this scam openly.

Teja Loan Scam- In the early 60s Dr Dharma Jayanti Teja along with his wife appeared on Delhi social scene, he reportedly informed he is successful NRI having worked long time overseas and earned his fortune with his hard work and enterprising skill. Tejas hosted lavish and glittering parties, where politicians and bureaucrats were invited. Eventually, Tejas had little difficulty in gaining access to PM Nehru, who used to respect the achievers, and was more than happy to welcome them. At this time Teja said ,now after earning so much, he wanted to do something for his motherland, since shipping was his forte, he can do wonders in this field if Govt extend little help to him. Some bureaucrats, particularly in the directorate general of shipping  expressed deep reservations about his claims. Inevitably, the matter was referred to the Cabinet. Nehru told his colleagues: ‘Give him a little something. The government machine translated this into over a crore of rupees. Which was big sum of money at that time. This enabled him to float his company Jayanti Shipping Co, and bought number of ships from Japan by paying 1st instalment, and launched his ships profitably.

After getting the procession of Ships, this enabled him to hypothecate them to acquire more ships or raise money. Jayanti Shipping earnings soared and so did Teja’s reputation. By the time Indira Gandhi became prime minister, Teja was both an international celebrity and a national icon. Soon after becoming prime minister, Indira Gandhi went on an official visit to the United States. Dharma Teja was among the Indian tycoons  and became a known face in Washington and New York for the occasion.

Sooner or later the bubble had to burst and it did with a bang. The Japanese Ship suppliers discovered that, to their dismay, the instalments of due payment were no longer coming in. They therefore wanted to foreclose the sale of ships. Other financial institutions who had accepted these ships as securities and financed Teja, were also up in arms  Crew of various ships owned by Jayanti Shipping started complaining about not receipt of their salaries.

Investgation revealed that Teja’s financial empire was a mirage, Teja through this scam had taken Govt and Japanese Ship manufacturers for a ride. There was no way, by which Govt and other financial institution could recover their loans to Jayanti shipping. In the end Shipping Corporation of India took over the company. Dharma Teja was tried for massive fraud and sentenced to 7 years imprisonment. He died soon after he came out of prison after serving his sentence.

These two scams which were worth few crores of rupees rocked the nation, and Teja scam became the land mark in such way that, future scamsters started believing that it is very easy to fool and loot the govt, and if you play your card carefully nothing will happen to you, and friends you are aware that how scamsters looted the public money in subsequent years.

Awaiting for your views/feed backs/comments.