The other scam that Govt won?t talk about

THIS IS the story of another scam that the BJP Government will not like to talk about. The story, like the Rs 700-crore ICD (Inter Corporate Deposit) scam that took place during the Digvijay Government?s time, also relates to Madhya Pradesh State Industrial Development Corporation (MPSIDC).

THIS IS the story of another scam that the BJP Government will not like to talk about. The story, like the Rs 700-crore ICD (Inter Corporate Deposit) scam that took place during the Digvijay Government’s time, also relates to Madhya Pradesh State Industrial Development Corporation (MPSIDC).

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I will narrate the whole story first and then come to the scam part later. In 1999, the MPSIDC floated 14.4 % bonds. Bank of Punjab Ltd, a private bank, which merged with the Centurion bank some time back, subscribed Rs 15 crore worth bonds that were due for redemption on January 31, 2005. Out of this, bonds worth Rs 30 lakh were subsequently transferred by them to someone else.

The money raised through bonds was utilised by the MPSIDC for disbursing ICD to private companies, which defaulted on payment. Since the corporation was in the red, it stopped paying interest to bondholders after October 31, 2001. And the bonds being unsecured became almost worthless.

As a result, the Bank of Punjab entered into negotiations with the MPSIDC and agreed to reduce the rate of interest for the defaulted period to 10 per cent and waive off only the interest on defaulted interest, provided the MPSIDC agreed to redeem the bonds.

On the other hand, other bondholders were told by the MPSIDC to forget about the interest altogether and accept a mere ten per cent of the face value of the bonds to start with.

M. Murlidharan, Vice-President of the Bank of Punjab, negotiated the deal with MPSIDC MD Raghav Chandra and the bank was paid Rs 18.60 crore in June 2004. Other bondholders in similar position would have been offered Rs 1.47 crore only — 10 per cent of the bond’s face value of Rs 14.70 crore — provided they had agreed to waiving off the interest altogether.

Since the MPSIDC did not have Rs 18.60 crore at hand, it forced AKVN (Audhyogik Kendra Vikas Nigam), Indore, to accept a short-term secured loan of Rs 16.70 crore at 6.25 per cent from the Bank of Punjab on the pretext of buying land for the Special Economic Zone (SEZ), Indore. Thus, the Bank of Punjab’s bonds were encashed.

When our Indore correspondent Ramesh Shankar contacted Raghav Chandra, who is chairman of the AKVN in mid-December, 2005, he denied that the loan was taken to buy land for the SEZ, so there was no question of the funds being diverted.

The records, however, tell another tale. The minutes of the AKVN board meeting held in June, 2004 under the chairmanship of Chandra say that the loan is urgently needed to acquire land for SEZ. This found mention in the audit as well.
It says, “the company borrowed short-term loan of Rs 16.79 crore for acquisition of land for SEZ Indore...” Whereas in the notesheet dated June 14, 2004 it was clearly mentioned that MPSIDC requires Rs 16.70 crore for meeting their commitment.

The tearing hurry with which the transaction was done also smacked of some foul play. The full loan amount of Rs 16.70 crore was credited to the Bank of Punjab’s AKVN account (no. 4BCA4521238) on June 26. From this, Rs 16.19 crore was transferred to the MPSIDC account in Bank of Punjab in New Delhi (account no CA11012560) on the same day.

An obvious question arises; when the MPSIDC has to pay over Rs 200 crore to the IDBI towards secured loans and Rs 168 crore plus Rs 100 crore in interest to cooperative banks (figures provided by Raghav Chandra), and a huge amount for payment of provident fund, why did it give a preferential treatment to Bank of Punjab? Did it pay commission, which is the normal practice? And, to whom? Should not Chief Minister Shivraj Singh Chouhan order a probe into this scam the way probe was done in the case of the ICD scam?

When asked, Raghav Chandra told this correspondent that the settlement was done on instructions from the then chief minister Uma Bharti. However, the then Principal Secretary of Industry, Vishwapati Trivedi alleged that the entire operation was managed by Raghav Chandra by deceiving the Board of Directors of the MPSIDC. In his note, Trivedi virtually called Raghav Chandra a liar.