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“Starting with zero awareness we built an accurate picture of the scam”
Ravi Srinivasan, Associate Editor, The Hindu Business Line, recalls how he accidentally stumbled upon the infamous securities scam in 1992 and the events that followed thereafter
Issue Date - 30/04/2012
B&E: How did you come to know about the Securities Scam involving Harshad Mehta?
Ravi Srinivasan (RS): It was completely accidental. The scam was in operation for more than a year before it came out in the open. The tip-off came from a source in SBI which was the key player involved. But he too didn’t have a clear idea. He actually came looking for Kiran Kasbekar who was my former boss at TOI. During a chat he said that auditing was going on in SBI treasury branch and Harshad Mehta was there. When I asked how he knew that the Big Bull was there, he said, Harshad Mehta’s car – a Lexus – was parked outside. Mehta had brought the first Lexus in Bombay then. The tip-off was that the scam was to the tune of Rs.2.5 billion.

B&E: That’s how you had the story?
RS: No. I didn’t understand much initially as it was about treasury bills. But I decided to check out. Sucheta Dalal, who was Bombay-based and covered markets, started tapping her contacts and asked me if I could help her out with the SBI angle.

B&E: Did you get a confirmation from SBI?
RS: I walked to SBI’s Treasury branch and told the guard that I was from down south and wanted to meet my uncle Nair saab who was a union leader. Once inside, I found the official sitting with big ledgers, in a serious discussion. I hung around. When Nair came, we went out for tea. He told me that efforts to reconcile the books were on. A lot of treasury bills were missing. He said the magnitude of the scam was Rs.450 crore involving ready forward transactions. As per him, there was big gap. Harshad Mehta was with the-then SBI Chairman (M. N. Goiporia) and I went back to office without knowing the implication of forward trading etcetera.

B&E: So, where did your investigation lead you next?
RS: The scam was committed by not entering the Ready Forward bills in the register. Ready Forward is a secured short-term loan (for 15 days) from one bank to another. The borrowing bank sells the securities to the lending bank and buys them back at the end of the loan period, typically at a slightly higher price. In those day everything was manual, so it was easy – you don’t enter the transaction, deal happens, and the money is floating around. It does not even show in bank accounts. Mehta was using this loophole to manipulate the stock market. Meanwhile, Sucheta found out the problem was not limited to SBI alone.

B&E: How accurate was the story?
RS: Starting with zero awareness we built an accurate picture of the scam. We got the names of key players, modus operandi and the magnitude of the scam right. It was the first story printed next day in TOI front page; the figure was Rs.7.5 billion. We were very close to the final figure that was arrived at by the Janakiraman Committee set up by the RBI which investigated the scam.

B&E: What kind of excitement was there in your office?
RS: Even though we got the story, the issue was how to get it into print. Resident Editor Dina Vakil said as she had little idea about the subject she would need clearance from the Editor-in-Chief Dilip Padgaonkar. Late that night, Padgoankar contacted us. He wanted the proof for the story. We said we are sure and offered to resign if the story went wrong. Convinced, he agreed to publish it.


K. S. Narayanan           

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