Haridas Mundhra was a Calcutta-based industrialist and stock speculator who was found guilty and imprisoned in the first big financial scandal of free India in the 1950s. India, officially the Republic of India (भारत गणराज्य inc-Latn Bhārat Gaṇarājya; see also other Indian languages) is a country The Mundhra scandal exposed rifts between the Prime Minister Jawaharlal Nehru and his daughter Indira Gandhi's husband Feroze Gandhi, and also led to the resignation of India's Finance minister T. T. Krishnamachari. Jawaharlal Nehru (जवाहरलाल नेहरू ʤəʋäɦəɾläl nɛɦɾu (14 November 1889 27 May 1964 was a major political leader of the Congress Party Indira Priyadarshini Gandhi ( Indirā Priyadarśinī Gāndhī) ( Née: Nehru (19 November 1917 - 31 October 1984 was the Prime Minister of the Feroze Gandhi ( 12 August 1912 - 8 September 1960) was an Indian politician and journalist Tiruvellore Thattai Krishnamachariar ( 1899 - 1974) was the Indian Finance Minister from 1956 - 1958 and from 1964 -
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Life
Born into a trading family, Mundhra started life as a light-bulb salesman, and pyramided his holdings by "fast deals and stock juggling"[1] into a Rs. 4 crore (USD 10 million) empire. However, by the mid-50s, his business empire was unravelling, and he came to be known for his somewhat questionable ethics. In 1956, he was indicted by the Bombay Stock Exchange for selling forged shares. The Bombay Stock Exchange Limited (मुंबई शेयर बाज़ार Mumbaī Śeyar Bājār) (formerly The Stock Exchange Mumbai; popularly called [2]
In 1957, Mundhra got the government-owned Life Insurance Corporation (LIC) to invest Rs. The Life Insurance Corporation of India (LIC is the largest Life insurance company in India and also the country's largest investor 1. 24 crores (about USD 3. 2 million at the time) in the shares of six troubled companies belonging to Mundhra: Richardson Cruddas, Jessops, Smith Stanistreet, Osler Lamps, Agnelo Brothers and British India Corporation. Jessops is Britain's largest specialist photographic retailer with 233 stores nationwide The investment was done under governmental pressure and bypassed the LIC’s investment committee, which was informed of this decision only after the deal had gone through. In the event, LIC lost most of the money. [2]
The Mundhra Scandal
The irregularity was highlighted in 1958 by Feroze Gandhi of the Indian National Congress party, who represented the Rae Bareli seat in the Parliament of India. Feroze Gandhi ( 12 August 1912 - 8 September 1960) was an Indian politician and journalist Indian National Congress-I (also known as the Congress Party and abbreviated INC) is a major Political party in India. WikipediaWikiProject Indian cities for details --> Raebareli ( Hindi: रायबरेली Urdu: رائے بریلی, also The Parliament of India (or Sansad) is the federal and supreme Legislative body of India. Jawaharlal Nehru was Prime Minister at the time, and Feroze was married to his daughter Indira Gandhi. Jawaharlal Nehru (जवाहरलाल नेहरू ʤəʋäɦəɾläl nɛɦɾu (14 November 1889 27 May 1964 was a major political leader of the Congress Party Indira Priyadarshini Gandhi ( Indirā Priyadarśinī Gāndhī) ( Née: Nehru (19 November 1917 - 31 October 1984 was the Prime Minister of the Nehru, as the leader of the ruling Congress party, wished to have the LIC matter handled quietly since it might show the government in a poor light.
However, Feroze Gandhi was the primary force behind an anti-corruption movement that in 1956 resulted in imprisonment of one of India's wealthiest men, Ram Kishan Dalmia, for defrauding his life insurance company. Subsequently, the parliament had passed the Life Insurance of India Act on June 19, 1956, under which 245 firms were nationalized and consolidated under the Life Insurance Corporation. Hence, he looked upon the LIC as a "child of Parliament". He would have no softpedalling on the matter, and took the case directly to parliament:
- "Parliament must exercise vigilance and control over the biggest and most powerful financial institution it has created, the Life Insurance Corporation of India, whose misapplication of public funds we shall scrutinise today. " Feroze Gandhi, Speech in Parliament, 1957-12-16. Year 1957 ( MCMLVII) was a Common year starting on Tuesday (link displays the 1957 Gregorian calendar) Events 755 - An Lushan revolts against Chancellor Yang Guozhong at Fanyang, initiating the An Shi Rebellion [3]
However, the matter was dramatized further in the public mind by the tense relations between Feroze and his father-in-law.
Feroze Gandhi vs. Nehru
Feroze Gandhi had married Indira over initial objections of Jawaharlal, but Indira had gotten him to agree to the marriage, and relations between the men were cordial. Indira often helped her father in his duties, acting as official hostess, and helping run the huge residence. In 1949, Indira and their two sons Rajiv Gandhi and Sanjay Gandhi moved to Delhi to live with Jawaharlal, while Feroze continued alone in Lucknow. Sanjay is a male given name in Indian and may refer to: Sanjay Gandhi, son of former prime minister of India Indira Gandhi Dr Lucknow is also a mansion in New Hampshire Lucknow ( लखनऊ لکھنؤ Lakhnaū) is the capital city of Uttar Pradesh In 1952, after Feroze Gandhi was elected to Parliament (his campaign was managed by Indira), he also moved to Delhi, where he was assigned an MP quarters, but "Indira continued to stay with her father, thus putting the final seal on the separation. ". [4]
This rift was well known and it lent drama to the already sensational matter when Feroze Gandhi raised the Mundhra question on the floor of the parliament. Standing from the treasury benches, he asked the government if the newly formed Life Insurance corporation had used premiums from 5. 5 million life-insurance policyholders to buy up shares at above-market prices in companies controlled by the notorious stock speculator named Haridas Mundhra?
Thus the prime minister was confronted by his own son-in-law. The fiery Finance minister, himself a noted industrialist, initially snapped "That is not the fact,",[1] but had to admit later that this was the case.
Commission of Enquiry: M. C. Chagla
Given the public spotlight, the government was forced to appoint a committee to examine the matter. The retired Bombay High court Justice M. C. Chagla was appointed as a one-man committee. Mahommedali Currim Chagla ( MCChagla ( 30 September 1900 - 9 February 1981) was a renowned Indian Jurist, Diplomat, and Chagla held that a transparent and public enquiry was a "very important safeguard for ensuring that the decision will be fair and impartial. The public is entitled to know on what evidence the decision is based. ". [5] Consequently, large crowds would attend the hearings which were concluded in just 24 days. Several leading stockbrokers who were on the LIC Investment Committee testified that the investment could not have been made for the purpose of propping up the market, as was claimed by the Finance Ministry, and that had the LIC consulted the Investment Committee, they would have pointed out Mundhra's forged shares episode from 1956.
Justice Chagla determined that the Finance Secretary, H. M. Patel, along with two LIC officials, L S Vaidyanathan,[6] may have colluded on the payment, and should be tried. The Finance Minister T. T. Krishnamachari, in his testimony tried to distance himself from the LIC decision, implying that it may have been taken by the Finance Secretary, but Justice Chagla held that the Minister is constitutionally responsible for the action taken by his secretary and he disown his actions. Tiruvellore Thattai Krishnamachariar ( 1899 - 1974) was the Indian Finance Minister from 1956 - 1958 and from 1964 - Eventually, Krishanamachari had to resign. The Nehru government suffered considerable loss of prestige in the incident. [1]
Haridas Mundhra was arrested from his luxury suite at the Claridge's Hotel in Delhi, and sent to prison. Claridge's is a luxury hotel in Mayfair, central London. It is located at the corner of Brook Street and Davies Street
It turned out that Mundhra’s manipulations were not restricted to LIC. The income tax department had curiously withdrawn certain notices pending against him having entered into "some understanding" about the payment of arrears. [5]
In recent times, Mundhra is often noted as the forerunner of other financial scamsters of modern India, including Harshad Mehta and Abdul Karim Telgi, who also operated with considerable political connivance. Harshad Mehta was an Indian Stockbroker and is alleged to have engineered the rise in the BSE stock exchange in the year Abdul Karim Telgi (born 1961 son of late Shariefabee Ladsaab Telgi (mother is a convicted-counterfeiter from India. However, unlike in the Mundhra case, the government response in appointing an honest and competent judge, and also the judicial investigation (24 days of public hearings) has been far from transparent. [5] This lack of transparency has also been commented upon in the public investigation of the Bofors Scandal, one of India's largest scandals, which involved Feroze Gandhi's son Rajiv Gandhi, the Prime Minister at the time. The Bofors scandal was a major corruption Scandal in India in the 1980s the then Prime Minister Rajiv Gandhi and several Rajiv Gandhi राजीव गांधी (raːdʒiːv gaːnd̪ʰiː born in Bombay, (20 August 1944 – 21 May 1991 the elder son of Indira and Feroze [7]
References
- ^ a b c "The People's Premiums", Time (magazine), 1958-03-03. Time (trademarked in capitals as TIME) is a weekly American Newsmagazine, similar to Newsweek and Year 1958 ( MCMLVIII) was a Common year starting on Wednesday (link will display full calendar of the Gregorian calendar. Events 1284 - Statute of Rhuddlan incorporated the Principality of Wales into England 1575 - Indian Retrieved on 2007-12-19. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Events 324 - Licinius abdicates his position as Roman Emperor.
- ^ a b Sucheta Dalal. Sucheta Dalal (born 1962 is a Finance Journalist from Mumbai, India "The first scam of free India, extract from the book A. D. Shroff: Titan of Finance and Free Enterprise", The Tribune, 2000-04-09. The Tribune, now published from Chandigarh, New Delhi, Jalandhar and Bathinda started publication on February 2 1881 in Lahore 2000 ( MM) was a Leap year that started on Saturday of the Common Era, in accordance with the Gregorian calendar. Events 193 - Septimius Severus is proclaimed Roman Emperor by the army in Illyricum (in the Balkans) Retrieved on 2007-12-19. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Events 324 - Licinius abdicates his position as Roman Emperor.
- ^ Shashi Bhushan, M. P. (1977). Feroze Gandhi: A political Biography. Progressive People's Sector Publications, New Delhi,. p. 75
- ^ Tariq Ali. Tariq Ali ( Arabic: طارق علی) (born October 21, 1943) is a British - Pakistani historian novelist filmmaker The Nehrus and the Gandhis: An Indian dynasty. Pan Books, London 1985, Revised edn 1991. Pan Books is an Imprint which first became active in the 1940s and is now part of the British-based Macmillan Publishers owned by German publishers p. 134
- ^ a b c Sucheta Dalal. "The more things change…", suchetadalal. com, 2001-08-08. Year 2001 ( MMI) was a Common year starting on Monday according to the Gregorian calendar. Events 1220 - Sweden is defeated by Estonian tribes in the Battle of Lihula. Retrieved on 2007-12-18. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Events 218 BC - Second Punic War: Battle of the Trebia - Hannibal 's Carthaginian forces defeat those of the
- ^ Rediff On The Net, Life/Style: V Gangadhar dials M for murder
- ^ Sudheendra Kulkarni. "What if Sonia had to face her father-in-law", Indian Express, 2006-02-12. For bi-furicated southern edition see The New Indian Express The Indian Express is an Indian newspaper owned by Ramnath Goenka Year 2006 ( MMVI) was a Common year starting on Sunday of the Gregorian calendar. Events 1429 - English Forces under Sir John Fastolf defend a supply convoy carrying rations to the army besieging Orleans from attack by the Retrieved on 2007-12-19. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Events 324 - Licinius abdicates his position as Roman Emperor.
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