1992 securities scam: Mumbai court convicts 5 senior bank officials
A special court in Mumbai convicted five persons, including senior bank officials, in the 1992 securities scam. Justice Shalini Phansalkar Joshi, who presided over a bunch of the scam-related cases, convicted R Lakshminarayanan and S Srinivasan of Financial Fairgrowth Services Limited (FFSL), and Tharian Chacko, Y Sundara Babu and R Kalyana Raman of Andhra Bank Financial Services Ltd (ABFSL), a subsidiary of Andhra Bank.
ABFSL officials sentenced to 4 years of imprisonment
While the Mumbai court sentenced Lakshminarayanan and Srinivasan, Executive Director and Senior Vice-President respectively of FFSL at that time, to imprisonment up to three years, the officials of ABFSL were sentenced to four years. According to the judgment passed on Thursday, those convicted had knowingly conducted fraudulent transactions between FFSL and ABFSL between July 1991 and May 1992.
FFSL borrowed heavily from ABFSL and other firms
As per the prosecution's case, FFSL, a private firm, was facing an acute cash crunch and was desperately in need of additional funds. FFSL, thus, began to borrow heavily from ABFSL and other banks and financial firms. Those convicted had facilitated such borrowings without ensuring that the transactions were made against credible securities and stocks of the FFSL.
ABSFL issued illegal security receipts to FFSL
ABFSL officials convicted in the case issued illegal security receipts to the FFSL for these transactions, and FFSL in-turn made wrong declarations to other lenders by giving these security receipts that had been issued against securities and stocks that the FFSL did not really possess. The court, however, acquitted Gopal Shankar Iyer and P Chandrashekhar, two other officials of FFSL, and share-broker Pallav Seth.
Judge calls scam fallout of Harshad S Mehta financial scam
"This special case is a fallout of the financial scam that rocked the economy of the nation in the era of Harshad S Mehta," Justice Phansalkar Joshi said.
Court rejects leniency plea on basis of convicts' old age
The court also rejected the plea for leniency pressed by the convicts on account of the long trial, their old age, and that they did not make any personal gains out of these transactions. "Considering the serious nature of the offense and the repercussions it had on the nation's economy, taking a lenient view can have a counter-effect," Joshi said.
Such scams hit the public's hard-earned money: Justice Joshi
Over the argument that the convicts did not make any personal gains, Justice Phansalkar Joshi said, "Such scams result in the loss of hard-earned money for many innocent members of the public. Some victims even lose their lives." The court, however, suspended the sentence of all the convicts for four months to permit them to file their respective appeals in the Supreme Court.
