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From clerk to broker, Harshad rose to meteoric heights

'Big Bull' Harshad Mehta, who passed away early on Monday, rose from an insurance clerk to become one of the most high-profile share brokers till 1992, when the multi-billion-rupee securities scam rocked the stock exchanges in the country with a number of banks and financial institutions facing the heat.

Following public outcry, the government set up Janakiraman Committee to probe the scam, which broke out between April 1991 and June 1992. At least 10 commercial banks, including the Standard Chartered Bank, State Bank of India and National Housing Bank, a Reserve Bank of India subsidiary, were hit by the scam.

Forty seven-year-old Mehta began his career as a despatch clerk in New India Assurance Company before he transformed the securities market into an active business hub. He then rose to become a stockbroker and strove to drive the market to dizzy heights when economic reforms were slowly being unfolded.

He is survived by his wife, two sons and two brothers, Ashwin and Sudhir. Both the brothers are also facing trial in scam cases.

According to CBI, he exploited bank receipt instruments to the maximum and used the money derived to speculate the share prices of several blue chip companies.

Harshad perfected the art of diverting money to the stock market from bank's security portfolio by exploiting the loopholes in the system, according to trade circles.

He took over closed companies, pumped in cash and boosted their shares on the stock market.

After the scam, Harshad was arrested by CBI in several cases registered against him for allegedly cheating banks and financial institutions to the tune of several millions of rupees.

He, however, raised a controversy by addressing a press conference along with his lawyer Ram Jethmalani by displaying two suitcases in which he claimed to have paid Rs 10 million donation allegedly to the then Prime Minister Narasimha Rao for the Congress party.

Later, a special court ordered a CBI probe into the allegations made by Harshad Mehta that donations of Rs 10 million from the scam money were indeed paid to Congress.

Harshad was facing trial in altogether 28 cases but was so far convicted in only one case involving use of Maruti Udyog Ltd funds to the tune of Rs 300 million in the stock market. All other cases are still pending.

He was sentenced to five years rigorous imprisonment by justice M S Rane in MUL case although Harshad pleaded that the money had been returned to MUL and the latter saying that it had not lost any amount. He had filed an appeal in the Supreme Court which is still pending.

Although Harshad was barred from operating in the market, he offered advice to investors on his website.

Harshad had secured bail in all the cases registered against him. However, he was recently arrested on fresh charge of misappropriating Rs 2.50 billion from 2.7 million 'missing' shares of 90 blue chip companies.

He was placed in judicial custody along with his two brothers, Ashwin and Sudhir till January four. Harshad and Sudhir were lodged in Thane jail eight days ago, while Ashwin was admitted to J J Hospital soon after his arrest for treatment of cardiac problem.

Shares belonging to Harshad Mehta group had been attached by a special court. However, Harshad and his brothers claimed that 2.7 million shares held by them were 'missing' or 'stolen' and could not be located. The court ordered a CBI enquiry into the missing shares.

CBI held Harshad and his two brothers responsible for introducing these 'missing' shares in the market surreptitiously in benami (fake) names to rig share prices.

Accordingly, a case was registered against them.

The 1991-92 scam had sent shock waves all over the country and saw many heads rolling. In the wake of the scam, chairman of UCO Bank K M Margbandhu was sacked and arrested. Planning Commission member V Krishnamurthy and SBI managing director V Mahadevan were forced to quit their offices.

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