|
|
 |
Corporate Scams / Satyam Issue: UPA vs. NDA
 posted by Admin on
4/18/2009 4:12:38 PM |
|
|
The UPA government’s response to the Satyam issue is a fine example of appropriate government action without interference in the functioning of an independent board
· Its also a great example of how a failing company can be rescued for the benefit of all stakeholders; contrast this to the poor handling of companies such as Northern Rock in UK and Lehman Brothers in the US
In contrast to the UPA government’s sound handling of the one corporate crisis during it’s regime, is a long litany of major corporate scandals under the BJP-led NDA government that remain unanswered (e.g., UT-64 Scam, Disinvestment of BALCO, Gujarat Cooperative Bank Scams, Cybertron Technopolis Scam – see details below).
What the UPA Government did in the Satyam Case
The Congress-led UPA Government took timely action to limit the damage caused by the Satyam fraud:
Immediate steps were taken to dissolve the tainted board and reconstitute a fresh one. The Government appointed prominent and qualified individuals-Deepak Parekh, Kiran Karnik and C. Achuthan as Directors to further restore investor confidence.
Inquiries were instituted against top board members and the independent directors immediately resigned. Even the signing partners of the Auditor firm Pricewaterhouse-Coopers were arrested.
In a procedure that was both transparent and aboveboard, independent agencies [SEBI, The ‘Serious Frauds Investigation Office’ of the Central Government’s Finance Ministry, the Registrar of Companies, the Institute of Chartered Accountants of India etc.] were called in to assist the Government in minimising the loss felt by investors.
The Government continued to be involved till the sale of the same through a clear sale process to Tech Mahindra.
Additionally we are in the process of putting in place a comprehensive blueprint to strengthen existing corporate government mechanisms (such as Clause 49 of the Listing Agreement, The SEBI Act 1992) while introducing greater legislative control.
The Report Card of the NDA Government on Corporate Scams
Having stated the above, it would be pertinent to draw attention to the expansive list of Corporate Scams allowed to be perpetrated under the NDA Regime.
A few examples of corporate scams that arose under the leadership and blessing of the NDA Governments include:
1. The UT-64 Scam
2. The Disinvestment of BALCO
3. The Gujarat Cooperative Bank Scams of 2003
4. Cybertron Technopolis Scam
[1.] UT-64 Scam
The US-64 scheme had 2 crore investors, the bulk of whom were small savers, retired people, widows and pensioners.
In 1998, the UTI crashed, and the BJP-led NDA government scrambled to organise Rs. 3,500 crore bail-outs to UTI.
The capital of UTI fell by 33% from 75,000 crores to 50,000 crores, making this a 25,000 crores scam. Additionally public faith in financial institutions was completely eroded.
In a global recession such a mistake would be catastrophic, it would retard and hamper the country’s chances of recovery turning it into a full blown crisis.
[2.] BALCO
Complete erosion of public money in the name of ‘disinvestment’.
The aluminium giant where missiles such as ‘Agni’ and ‘Prithvi’ were shaped, was sold to Sterlite company for a paltry sum of Rs.551 crore at a time when the assets alone were worth Rs.5,000-6,000 crore.
[3.] Gujarat Cooperative Bank Scam 2003
In Gujarat, the Narendra Modi Government had to pay out Rs. 870 Crore to small investors after the Gujarat Bank Scam of 2003 which led to the closure of 9 cooperative banks and 17 other being declared sick.
The administrator of the crisis-ridden Panchamahal District Co-operative Bank even registered a complaint against Gujarat Minister of State Prabhatsinh Chauhan and 28 others, alleging their involvement in the embezzlement of Rs 124 crore (Rs 1.24 billion) from the bank
[4.] Centaur Hotel
In June 2002, the 288-room Centaur Hotel near Mumbai’s domestic airport was sold by the Hotel Corporation of India to Batra Hospitality, for Rs 83 crore.
Within four months, Batra Hospitality sold off the hotel property to the Sahara group for Rs 115 crore, raking in a 35% profit.
This leads to the inescapable conclusion that the bidding process of the hotel was blatantly rigged in favour of A. L. Batra, an industrialist with close ties to the RSS.
Validating the above theory, the Comptroller and Auditor General, in its report-2004, expressed serious doubts on the methods used by the NDA government for computing the valuation of the underlying assets in the matter of disinvestment of Centaur Hotel. CAG stated that the Government had suffered a loss of rupees 145.69 crores in revenue in the sale of Centaur Hotel..
[5.] Cybertron Technopolis Scam
· Another scam of Atal Behari Vajpayee Government relates to laying the foundation stone of a Software Technology Park, named as ‘Cybertron Technopolis’ by Atal Bihari Vajpayee. The park was promoted by the same Johri brothers who were benefited by the UTI scam.
· The RSS man who facilitated this was Pradeep Narayan Mathur, who is a trustee of Vishwa Samvad Kendra in Lucknow and a senior member of VHP. The Rajnath Singh government in UP collaborated in the venture by becoming a partner of the proposed IT park.
· Since the company had the blessings of the Prime Minister, the innocent public invested heavily in the company.
· Evidence of the suspicious and ill-thought out nature of the venture: currently the promoter, Arvind Johri is under investigation by the CBI. |
|
|
|
|
|
|
|
|
|
|
|
What Should be the top Priority of new government?
Join Surveys
|
|
|
|
|
|