List of Scams

By Nakul Arora | 10 min read

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Forensic accounting & investigation

2020

1. Guru Raghavendra Bank Scam (1,400 crore)

On the basis of human interaction, AI tools can be classified into 4 broad categories.

More than 20,000 people who deposited their hard-earned money in the Bengaluru-based Sri Guru Raghavendra Sahakara Bank were left in the lurch, after the Reserve Bank of India (RBI) restricted the bank from doing business. The bank, which was accused of irregular transactions and non-compliance with RBI rules, among other issues, is under investigation by the RBI, the Enforcement Directorate, Anti Corruption Bureau, Criminal Investigation Department and the Bengaluru police, and former officials of the bank have been arrested as well.

2. PM Kisan Nidhi Scam (110 crore)

PM Kisan Nidhi Scam in Tamil Nadu, Rs 110 crore was siphoned off to ineligible benefeciaries.

The Prime Minister Kisan Samman Nidhi Yojana (PM-KISAN), made keeping in mind the interest of the farmers of the country, is also becoming a victim of fraud. The government has told the Parliament that the money of Pradhan Mantri Kisan Samman Nidhi has gone to the accounts of more than 42 lakh ineligible farmers. Not only this, but the government also suffered a loss of about Rs 3,000 crore.

This information has been given in the Parliament in response to a question from the Ministry of Agriculture. The government has also told that efforts are being made to recover the money from ineligible farmers. The maximum number of such cases have come from the northeastern state of Assam, where more than Rs 554 crore has gone to the accounts of more than 8.35 lakh ineligible farmers.

Similarly, Tamil Nadu is on the second number, where about Rs 340 crore has gone to the accounts of more than 7.22 lakh ineligible farmers. Punjab, which is called the state of farmers, is at number three. In Punjab, an amount of more than Rs 437 crores has gone into the accounts of more than 5.62 lakh ineligible farmers.

On the other hand, if we look at the amount, the maximum loss due to this fraud was in Assam, where more than Rs 554 crore were transferred to the accounts of ineligible farmers. Punjab was at number two where about Rs 437 crore was transferred to the accounts of ineligible farmers. Similarly, Maharashtra was at number three, where Rs 357 crore has been transferred to the accounts of ineligible farmers.

The information of these ineligible farmers came to the notice of the Ministry of Agriculture while verifying the Aadhaar/PMS/Income Tax database of the farmers. All these over 42 lakh people are ineligible for Kisan Samman Nidhi, as well as some of these farmers, are also those who also come under the purview of income tax.

Under the Prime Minister Kisan Samman Nidhi, the government gives Rs 6,000 rupees annually in three installments of 2,000 each to small farmers across the country. This has also benefited the poor and farmers with less land and this scheme has proved to be very helpful in meeting their daily needs.

2019

1. Karvy Scam (2,300 crore)

One of the oldest and reputed financial services company and stock broking firm that catered to lakhs of customers across the country was forced to cease operations almost immediately. The reason – it misused the Power of Attorney (PoA) given to it by the investors and transferred the shares from the investors’ account to another account and then pledged Rs2,300 crore worth of shares of over 95,000 clients as collateral to get loans from banks and NBFCs by pretending that the shares belonged to the company.

Following the unravelling of the fraud, both Bombay Stock Exchange (BSE) and National Stock Exchange of India (NSE) suspended the trading license of Karvy while Sebi issued an order preventing the firm from adding new customers and barring it from exercising the PoA given by its customers.

Investors are yet to recover from the shock and are concerned about their investments.

After the scam came to light, the NSE issued a series of guidelines for investors urging them to take some precautions. It asked them to ensure that pay-out of funds and securities is received in their account within one working day from the date of pay-out.

2. PMC Bank Scam (6,500 crore)

The primary promoters of Dewan Housing Finance Limited (DHFL) were accused for siphoning off more than Rs.31,000 crore of public money through secured and unsecured loans and advances to shell companies, round tripping, tax avoidance and insider trading.

3. DHFL Scam (3,700 crore)

The primary promoters of Dewan Housing Finance Limited (DHFL) were accused for siphoning off more than Rs.31,000 crore of public money through secured and unsecured loans and advances to shell companies, round tripping, tax avoidance and insider trading.

4. UPPCL EPF Scandal (4,100 crore)

More than Rs 4,100 crore of retirement funds of UPPCL was allegedly invested in the embattled Dewan Housing Finance Corporation Limited (DHFL) since 2017, of which only about Rs 1,800 crore has been recovered so far. According to reports, UPPCL Contributory Provident Fund Trust decided to overlook other financial players and chose to strike a deal with DHFL.

Owners of DHFL were probed by the Enforcement Directorate (ED) over charges of terror funding. The company’s future is under a cloud as the Reserve Bank of India (RBI) has imposed several restrictions on withdrawal of funds from its accounts. This has raised serious concerns about safety of deposits from UPPCL.

5. IMA ponzi scheme (4,000 crore)

The multi-crore ponzi scheme run by Karnataka-based IMA and its group entities allegedly duped lakhs of people promising higher returns using Islamic ways of investment.
The CBI had booked Mohammed Mansoor Khan, managing director of the company, and others pursuant to the notifications issued by the Karnataka government and the government of India.

The case came to light when Khan fled to Dubai, leaving behind a video message, saying that he was committing suicide because of “corruption in the state and central governments”.

6. DK Shivakumar money laundering case

Congress Leader DK Shivakumar was arrested by the Enforcement Directorate (ED) on charges of money laundering and tax evasion.

7. Cox&Kiings scam (50 crore)

Rs. 50 crore loan cheating case against Peter Kerkar, promoter of travel firm Cox & Kings Ltd. and others for allegedly submitting forged documents to avail loans, defaulting  on repayment and evergreening of loans.

8. IL&FS scam and fraud (99,334 crore)

IL&FS Financial Services fell short of cash and defaulted on several of its obligations. Even as new infrastructure projects dried up, IL&FS’ running construction projects faced cost overruns amid delays in land acquisition and approvals. It defaulted on repayment of bank loans (including interest), term and short-term deposits and also failed to meet commercial paper redemption obligations. It reported that it had received notices for delays and defaults in servicing some of the inter-corporate deposits accepted by it. Following the defaults, rating agency ICRA downgraded the ratings of its short-term and long-term borrowing programmes. The defaults also jeopardised hundreds of investors, banks and mutual funds associated with IL&FS, and sparked panic among equity investors, even as several non-banking financial companies faced turmoil amid a default scare.

The IL&FS group operates over a hundred subsidiaries and is sitting on a debt of Rs 94,000 crore.

9. Amrapali Aadya Trading Scam (6,000 crore)

Amrapali Aadya Trading & Investment frauded lakhs of investors by using their shares and securities and monetizing it by pledging the shares.

2018

1. Punjab National Bank Scam (11,600 crore)

A fraudulent letter of undertaking worth ₹11,600 crore (US$1.77 billion) was issued at the Punjab National Bank branch in Brady House, Mumbai, making the bank liable for the amount. The fraudulent transactions, linked to Nirav Modi, were first noticed by a new employee of the bank. Two branch employees were involved in the scam, in which the bank’s core banking system was bypassed to raise payment notes to overseas branches of other Indian banks (including Allahabad Bank, Axis Bank and Union Bank of India) with the Society for Worldwide Interbank Financial Telecommunication. Three jewellers (Gitanjali Group and its subsidiaries, Gili and Nakshatra) are also under investigation.

2. Yes Bank fraud (3,700 crore)

Yes Bank had invested Rs.3,700 crore in short-term debentures of DHFL between April and June 2018 for which the Wadhawans allegedly gave a kickback of Rs.600 crore to bank’s former CEO and managing director Rana Kapoor in the form of loans to DoIT Urban Ventures (India) Pvt. Ltd., a company registered in the name of Mr. Kapoor’s daughters.

2017

1. Noida Ponzi Scheme (3700 crore)

A special investigation team (SIT) probing an alleged Ponzi scheme run by Anubhav Mittal, managing director of Ablaze Info Solution, concentrated their efforts on suspicious transactions by nearly 200 gold and diamond dealers.

2. PIL against Adani, Reliance and Essar Group

A public-interest litigation petition was filed against Adani Group, Reliance Group, Essar Group and other mining and energy companies for an investigation of alleged ₹290 billion overcharges for Indonesian coal and imported power equipment from 2011 to 2015.

2016

1. Freedom 251 scam (200 crore)

It was like a ponzi scheme, that was mounted by an entrepreneur named Mohit Goel through a company called Ringing Bells Private Limited. The company promised Mobile phones at 251 Indian rupee to customers and collected money. They failed to meet the obligation.

2. Vijay Malya scam (9,371 crore)

Fugitive Economic offender, Vijay Mallya escaped from India on March 2, 2016, through Jet Airways Delhi – London flight from IGI Airport.

2015

1. Lalit Modi Corruption Case

More than two dozens cases of financial irregularities, money laundering and criminal cases have been filed against Lalit Modi by various investigative agencies in the country.

Till now, ED has issued three showcause notices sent to Lalit Modi in cases of IMG, Cricket South Africa and Performance Deposit issue.

The showcauses are –

  • Lalit Modi, BCCI and few other officials appeared to have contravened the provisions of FEMA, 1999 to the extent of Rs 89 crore.
  • In another case, ED has issued showcause notice against Lalit Modi, BCCI, N Srinivasan and Niranjan Shah under FEMA – by accepting deposit of Rs 20 crore from Emerging Media (IPL) based in UK.
  • Third showcause notice to Modi, BCCI, Shashank Manohar and other BCCI officials was for the payment of Rs 243 crore made by BCCI to Cricket South Africa for IPL 2009.

2. Corporate espionage by officials of Reliance and Essar Group

Officials of Reliance Industries, Reliance Anil Dhirubhai Ambani Group, Essar Group, Cairn India and Jubilant Energy were accused of stealing documents from the Petroleum Ministry

3. NSE collocation scam (50,000 crore)

NSE co-location scam (about ₹50,000 crore) – Insider trading on the National Stock Exchange of India (NSE)[69] from 2010 to 2014[70] The case came to light in 2015.

2014

1. Reliance Jio spectrum auction rigging scam (40,000 crore)

Accusations on Department of Telecommunications and Reliance Jio:

First, it has been alleged that the company obtained spectrum in an illegal manner from another firm or, put another way, the spectrum auction was rigged.

Secondly, it has been claimed that government policies were changed post-auction to allow Reliance Jio to use 4G spectrum not merely for data transfer but for voice services as well. By letting Reliance Jio get a licence for data services at a cheaper rate and then converting it into one that includes voice telephony as well, the government not only created an uneven playing field but also caused a major loss of revenue to the exchequer.

Thirdly, it is alleged that, in a display of favouritism, Reliance Jio was continued to be allowed to pay a lower spectrum usage charge.

A report tabled by the Comptroller and Auditor General of India in Parliament on May 8, 2015, estimated that the “undue benefits” extended by the government to Reliance Jio caused a loss of Rs 3,367 crore to the exchequer. A draft report prepared by the CAG in August 2014 had estimated the same loss to be over Rs 19,000 crore higher, at Rs 22,842 crore.

2013

1. Vodafone tax controversy(Rs.11000 crores)

Vodafone International Holdings bought stakes of Hutchison Telecommunications International Limited for $11.2 billion. OCT IT Dept ordered Vodafone to furnish Rs 11,218 cr under Sections 201 and 201(1A) TDS at source.

Rs 7,900 cr penalty was imposed

2. Saradha Group financial scandal (20,000 crores)

The Saradha scam, also known as Saradha Group financial scandal, was a major financial scam that surfaced in 2013.

The scheme, run by Saradha Group (an umbrella company with 200 private players), was launched in the early 2000s by businessman Sudipto Sen. Aimed at small investors, the scheme became popular in a very short time as it promised high returns. The money was collected through a wide network of agents, who were paid commissions of over 25 per cent.

Problems started in the company in 2012, when SEBI asked the group to stop accepting money from investors and obtain the regulator’s permission to run its schemes.

By January 2013, the company was engulfed in a crisis when for the first time Saradha Group’s cash inflows were found to be lower than its outflows. The scheme collapsed by April, prompting agents and investors to file police complaints.

2012

1. Service Tax and Central Excise fraud (10,000 crores)

In central excise, a total 3,690 cases of fraud or presumptive fraud were found during 2008-11 by the department involving duty of Rs 8,497.06 crore.

In service tax, 6,655 cases involving tax of Rs 10,662.24 crore were detected during the same period.

2008

1. 2G spectrum case (70,000 crores)

India is divided into 22 telecommunications zones, with 281 zonal licenses. In 2008, 122 new second-generation 2G Unified Access Service (UAS) licenses were granted to telecom companies on a first-come, first-served basis at the 2001 price. According to the CBI charge sheet, several laws were violated and bribes were paid to favour certain firms in granting 2G spectrum licenses. According to a CAG audit, licenses were granted to ineligible corporations, those with no experience in the telecom sector (such as Unitech and Swan Telecom) and those who had concealed relevant information. Although former Prime Minister Manmohan Singh advised Raja to allot 2G spectrum transparently and revise the license fee in a November 2007 letter, Raja rejected many of Singh’s recommendations. In another letter that month, the Ministry of Finance expressed procedural concerns to the DOT; these were ignored, and the cut-off date was moved forward from 1 October to 25 September 2007.

On 25 September 2007 the DOT announced on its website that applicants filing between 3:30 and 4:30 pm that day would be granted licenses. Although the policy for awarding licences was first-come, first-served, which was introduced during Atal Bihari Vajpayee Government, Raja changed the rules so it applied to compliance with conditions instead of the application itself.On 10 January 2008, companies were given only a few hours to supply Letters of Intent and payments; some executives were allegedly tipped off by Raja. Although the corporation was ineligible, Swan Telecom was granted a license for ₹15.37 billion (US$220 million) and sold a 45-percent share to the UAE-based Etisalat for ₹42 billion (US$590 million). Unitech Wireless (a subsidiary of the Unitech Group) obtained a license for ₹16.61 billion (US$230 million), selling a 60-percent share for ₹62 billion (US$870 million) to Norway-based Telenor.

2001

1. Calcutta Stock Exchange Scam (2001 Market Crash)

Ketan Parekh purchased large stakes in less known small market capitalization companies, and jacked up their prices through circular trading with other traders, and collusion with these companies and large institutional investors. This resulted in steep hikes in share prices. This set of ten stocks was colloquially referred to as “K-10” stocks and Parekh was playfully referred to as “Pentafour”.

However, the bear cartel in Bombay stock exchange started to hammer his K-10 stocks in February 2001, leading them to fall and precipitating a payment crisis in Calcutta.

On 1 March 2001, just after the Indian Union Budget had been presented, the BSE Sensex crashed 176 points, prompting the then NDA government to set up an inquiry into the market reaction. Subsequently the RBI refused to clear pay orders (POs) that had been given by Parekh as collateral for loans to BOI (Bank of India), as they found them to be suspicious. The RBI commenced an investigation against Parekh. Around the same time, a bear cartel of brokers in Mumbai opposed to Parekh tried to dump their shares of K-10 stocks. Panicking, Parekh sold off his entire ownership of the so called K-10 stocks that he had successfully jacked up over the past two years, especially those of two entities – GTB bank and MMCB bank. He carried out this large scale dump in the evening, after regular trading hours, from 5 PM to midnight at the Calcutta Stock Exchange. This resulted in a stock market crash the next day, resulting in large scale losses for large institutional investors, including insurance companies and mutual funds.

A 30 member Joint Parliamentary Committee (JPC) investigation ensued which found that Parekh had been involved in circular trading throughout the time period from and with a variety of companies, including Global Trust Bank (GTB) and Madhavpura Mercantile Cooperative Bank (MMCB). The JPC found him to have played a major role in rigging the prices of a set of ten Indian companies, from 1995 up to 2001.

Though Parekh was subsequently barred from stock trading, the Securities and Exchange Board of India alleged in 2009 that a variety of companies and other actors were trading on behalf of Parekh. An investigation ensued and 26 entities were banned from trading as a result of that investigation. In March 2014 he was convicted by a special CBI court in Bombay for cheating and sentenced to two years rigorous imprisonment.

1990s

1. Harshad Mehta securities scam (10,000 crores)

Harshad Shantilal Mehta  was an Indian stockbroker. Mehta’s involvement in the 1992 Indian securities scam made him infamous as a market manipulator.

Of the 27 criminal charges brought against Mehta, he was only convicted of four. It was alleged that Mehta engaged in a massive stock manipulation scheme financed by worthless bank receipts, which his firm brokered for “ready forward” transactions between banks. Mehta was convicted by the Bombay High Court and the Supreme Court of India for his part in a financial scandal valued at Rs.100 billion (US$1.4 billion) which took place on the Bombay Stock Exchange (BSE). The scandal exposed the loopholes in the Indian banking system and the Bombay Stock Exchange (BSE) transaction system, and consequently the SEBI introduced new rules to cover those loopholes. He was on trial for 9 years, until he died at the end of 2001.

2. Indian Bank Scandal (1,500 crores)

More than 1500 crores of pblic money was swindled by the Chennai based Indian bank to politically connected shell companies and defaulters for past 20-30 years. These loans were sanctionsed by then MD Gopalkrishnan. Around 20 cases were registered against the banker and his sub-ordinates in 1998.

3. Airbus Scandal

The Indian Government’s top investigating agency today accused the European consortium Airbus Industrie, an American company and four former Indian airline officials of bribery and corruption in the award to Airbus of a contract worth nearly $2 billion for dozens of aircraft.

The agency filed preliminary charges against Airbus directors and partners, whom it did not identify, and against International Aero Engines of East Hartford, Conn.

International Aero, a consortium of such major engine makers as Pratt & Whitney, Rolls-Royce, Japanese Aero, MTU of West Germany and Fiat, makes jet engines used in the A320 planes built by Airbus, which is based in Toulouse, France. The Indian agency said those companies had conspired with Indian officials to fix a 1986 contract for up to 38 of the A320’s, rejecting the Boeing Company’s 757 model.

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