Last week, investigations into the fraud at Stock Holding Corporation of India Ltd (SHCIL) took another decisive leap with the appointment of KPMG’s Fraud Detection and Forensics Advisory team to investigate a slew of management decisions that we have exposed in the past months. Two independent directors have also been inducted to the SHCIL Board — G Ramamurthy who is reportedly a corporate ethics expert and N Balasubramaniam, a corporate governance and strategy expert.

Meanwhile, SHCIL’s senior vigilance officer Pramod Kumar Pramanik, a former police officer, has finally resigned. He was appointed to the highly sensitive vigilance function at SHCIL despite being suspended from the police on the charge of having helped the mother of notorious gangster Dawood Ibrahim to secure a fake passport. His appointment at SHCIL and his continuance even after his earlier record was exposed bear investigation. But then, there are plenty of questions about almost everything that happened at SHCIL over the last year. These bizarre shenanigans had the potential of being a sequel to the Telgi scam, but were exposed before the damage was done and prevented by quick government action.

SHCIL is India’s largest Custodian and Depository Participant (DP), with almost every top public sector financial institution as its client and shareholder. SHCIL bagged a prestigious contract for electronic stamping of revenue documents as part of the post-Telgi move towards paperless stamping. SHCIL was to be the record-keeping agency for this Rs 50,000 crore market that is growing rapidly. It tied-up with Singapore-based CrimsonLogic for the technology and arranged to route its payments through two entities, the last of which was set up in Singapore by SHCIL’s professional managers. The mischief of SHCIL’s management has to be seen in the context of the potential damage and losses that their actions could have caused.

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