LANDMARK CORPORATE CRIMES CASES IN INDIA

Corporate Crime is the offence committed by the Corporation, as a separate legal body, varies from that of a normal individual, and the Corporation is responsible and guilty for the act.
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Introduction

A company can only act by human beings, and a human being who commits an offence on behalf of or for the profit of a company is personally liable. The meaning of incorporation is that “it makes the company responsible in such cases, as well as the human beings”.[1]. In Simple terms, a company is a group of people who come together to operate a business. A company is a legally recognised enterprise. The evolution of the definition of corporate crime, which was described by judges as a way to address the problem of criminal liability being applied to fictitious organisations. The doctrine of respondent superior is the foundation of corporate crime. Our society’s most critical aspect is corporations. Natural persons run corporations, and their acts can be illegal in nature, but they may also result in economic and human losses to society. As a result, knowledge of the history, nature, and types of corporate crimes is required for a better understanding. With the advancement of technology, corporate crime, also known as corporate crime, has a negative impact on society. This article will list landmark corporate crimes in India.

Landmark Corporate Crime Cases in India

  1. Harshad Mehta Securities Fraud

Harshad Mehta was a stockbroker who founded Grow More Research & Asset Management Limited, a security firm, in 1990. Investors blindly followed Mehta’s footsteps because he was a well-known name in the stock market and was dubbed the “Sultan of Dalal Street.” He obtained a large bank loan and purchased the scrips at inflated prices, thereby creating a fictitious market. He took advantage of his position and manipulated the stock prices of certain companies for personal gain. This resulted in the unnatural pumping of money in the stock markets causing an abnormal rise in the price of these shares. Harshad Mehta’s action, while immoral, was not illegal.

The issue arose when Mehta misappropriated the bank’s funds in order to invest in the stock market. Money laundering is the term used to describe the misappropriation of funds. He made billions of dollars of around 5000 crores.   Sucheta Dalal, a well-known journalist at the time, exposed the fraud. The market lost 0.1 million in a single day as a result of this unrelenting selling. This was the biggest stock market crash in India’s history. SEBI has made a number of changes to its rules and regulations in order to prevent such transactions.

2. Satyam Scandal

The scam was exposed on January 7, 2009, when B. Ramalingam Raju (Founder and Chairman of Satyam Computers Services Limited) published a confession letter in the Times of India. In the letter, he admitted to falsifying his financial records by overstating assets and understating liabilities.

The financial position of the company is reflected in the books of accounts. They act as an important tool on which investors can rely on before investing their money. Accounts books were manipulated to cheat investors and shareholders. The total cost of the scam is estimated to be around 14,000 crores, and it is regarded as a major contributor to the 2009 recession.

SEBI retaliated strongly in this scandal, charging Ramalinga Raju and nine major associates with insider trading and engaging in fraudulent and unfair trade practices. The accused were ordered to pay approximately 3000 crores within 45 days, as well as be barred from accessing the securities markets in any capacity for the next 14 years by SEBI. SEBI was able to retaliate forcefully, ensuring that such a scam would never happen again.

3. Ketan Parekh Security Scam

From 1999 to 2001, Parekh was a part of a stock manipulation and circular trading scheme. He took out loans from banks like Global Trust Bank and Madhavpura Mercantile Co-operative Bank and used them to manipulate a variety of K-10 stocks. Approximately Rs. 1,250 crore was involved in the scandal. He was only in prison for a year, but he was banned from trading in the Indian stock market until 2017.

Despite the fact that he has been accused of playing from behind the scenes, his name continues to haunt the streets. Parekh and his associates were accused of engaging in circular and insider trading through front companies, according to a report from the Intelligence Bureau.

4. Saradha chit fund case

The collapse of a Ponzi scheme run by Saradha Group, a consortium of 200 private companies believed to be running collective investment schemes popularly and incorrectly referred to as Chit Fund, resulted in a major financial scam and alleged political scandal. This organisation took in between $200 billion and $300 billion from over 1.7 million depositors, promising a large sum in return in the form of cash, real estate, and other assets.

At least ten Saradha group entities have been accused of defrauding the public through public money-pooling schemes. Despite widespread public outcry over the group’s alleged fraudulent activities, SEBI has barred Saradha Realty India and its managing director Sudipta Sen from the securities market until all Collective Investment Schemes (CIS) are wound up and the refund is made, as the same amounts to CIS Violation.

The income tax department and the Enforcement Directorate of the central government launched a multi-agency investigation into the Saradha Scam and other Ponzi schemes. The Supreme Court of India later referred the case to the CBI, India’s federal investigation agency, in May 2014, alleging possible international money laundering, severe regulatory failures, and alleged political nexus. Many prominent people have been arrested for their roles in the scam, including two members of Parliament, Kunal Ghosh and Srinjoy Bose, a former West Bengal director general of police, Rajat Majumdar, a top football club official, Debabrata Sarkar, and the Trinamool Congress government’s Sports and Transport Minister, Madan Mitra.

The Sanchayita investment scam, a multi-crore rupees scam that occurred in West Bengal in the 1970s, prompted the formation of the Prize Chits and Money Circulation Schemes (Banning) Act, 1968, in response to complaints about it.

5. Punjab National Bank Fraud

Nirav Modi is a diamond tycoon, a high-end jewellery designer, and India’s 85th richest man. Modi and companies linked to him allegedly conspired with bank officials to obtain guarantees or Letters of Undertaking to help fund buyer’s credit from other foreign banks, according to the bank.

According to the preliminary findings of PNB’s investigation, two bank officials fraudulently issued Lous to the aforementioned firms without following the proper procedure. These Los were then sent through the SWIFT messaging system, and the credit was extended to the companies.

The funds ostensibly raised for the purchase and sale of diamonds, according to PNB, were not used for that purpose. ]The stock exchange received a PNB regarding the detection of fraudulent and unauthorised transactions. PNB has been hit with a $1.8 billion fraud, one of the largest in the Indian banking sector.

6. 2G SCAM

The sale of 2G spectrum licences at a fixed price is the subject of this scam. And A Raja did so because auctioning yielded less profit. He granted licences to those who were otherwise ineligible. These applicants not only lied, but they also provided false documents, submitted incomplete information, and concealed it. As a result, a loss of 1.76 lakh crore rupees was incurred.

On November 16, 2010, the Comptroller and Auditor General of India released a report on their crime. Furthermore, the crime was so heinous that the charge sheet was 80,000 pages long. Furthermore, the CAG report stated that these significant stakes were sold at a high premium to both Indian and foreign companies. They also did so in a very short amount of time. Finally, they also claim that the real value of the spectrum and the value earned by these ineligible applicants were totally the same.

7. Commonwealth Scam

The Commonwealth Games is an international sporting event in which athletes from Commonwealth nations compete in a variety of sports. It only happens once a year. It is organised by the Commonwealth Games Federation. The Commonwealth Games fraud was perpetrated by Suresh Kalmadi. He was the Chairman of the Games’ Organizing Committee. As a result, he awarded Swiss Timings a contract worth 141 crore rupees. And these timing equipment by Swiss Timings were costly by 95 crore rupees.

The Commonwealth Games is an international sporting event in which athletes from Commonwealth nations compete in a variety of sports. It only happens once a year. It is organised by the Commonwealth Games Federation. The Commonwealth Games fraud was perpetrated by Suresh Kalmadi. He was the Chairman of the Games’ Organizing Committee. As a result, he awarded Swiss Timings a contract worth 141 crore rupees. And these timing equipment by Swiss Timings were costly by 95 crore rupees.

8. Agusta Westland Scam

In the Agusta Westland VVIP chopper scam, former Air Chief Marshal S P Tyagi and Christian Michel were key figures. They bought 12 Agusta Westland helicopters by paying middlemen and politicians. Finmeccanica, an Italian defence manufacturing giant, built these helicopters at a cost of 3600 crore rupees. These special helicopters would be used by the President of India, other important people, and the Prime Minister of India. And, surprisingly, Italy uncovered one of the top white-collar crimes in India. Further, the Congress government canceled the deal in the year 2014.

CBI arrested S P Tyagi in the year 2016 because he suggested the decrease in the operational ceiling from 6000 meters to 4500 meters. And, CBI also mentioned in the report that the IAF opposed these changes. But when the Tyagi became the chief, he highly recommended it. Finally, they also arrested Christian Michel is the middleman hired by Agusta Westland along with Guido Haschke and Carlos Gerosa.

9. Case of the National Herald

National Herald case is one of the white-collar crimes that falls under the category of corruption and is still being investigated. Subramanian Swamy is an Indian economist and politician who sued Sonia Gandhi and Rahul Gandhi in a Delhi court. He did so because the Associated Journals Limited (ALJ) had taken out a loan from the Indian National Congress for 90.25 crores. Furthermore, this loan was interest-free.

In addition, in 2010, a company called Young Indian was founded. It also had a 50 lakh rupee capital. Not only is the 50 lakh rupee capital surprising, but so is the fact that this company purchased ALJ shares. These shares were valued at Rs. 5000 crore. Finally, the Gandhis’ properties were permanently attached by the Enforcement Directorate in 2019. These properties had a total value of 64 crore rupees. As a result, it is one of India’s white-collar crimes involving a large sum of money.

Conclusion

Corporate crimes is a major global concern that is rapidly increasing.Various studies have shown that corporate crimes crime causes far more financial harm to society than other crimes. India is a developing country, and corporate crimes not only hinders the country’s economic growth but also tarnishes its image. It is understandable that eliminating corporate crimes is difficult due to the fact that it has existed for centuries; however, we, along with government and legal entities, should try to reduce such crimes. As previously stated, strict laws and special tribunals should be enacted and implemented so that the offender is afraid of the consequences and thinks twice before committing any crime. Furthermore, government agencies should work together to eradicate such crimes from our country.


[1] Corporate criminal liability in india,https://blog.ipleaders.in/corporate-criminal-liability-in-india/amp

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