Govt finally wakes up to SHCIL’s dubious acts

SHCIL was originally set up as a potential Central Depository of shares and over 83 per cent of its shares are held by government-owned banks and insurance companies including SUTI, ICICI, IDBI, IFCI, GIC and LIC. For many years now, SHCIL has been attempting to diversify into capital market related business, often with disastrous results. In the Ketan Parekh scam of 2000, its MD was arrested and five senior employees were charge-sheeted for dubious lending to a Kolkata broker connected with the DSQ Software Group. Yet, the institution (because of the composition of its shareholding) was unaffected and allowed to carry-on without any serious reorganisation or restructuring and many charge-sheeted employees remain at its helm.

In just over a year, SHCIL (as reported earlier) first sold off 76 per cent of the equity in its subsidiary SHCIL Services Ltd (SSL) to a clutch of private individuals and foreigners, without informing its shareholders or board of directors. It also created four domestic subsidiaries, with strange private partners and in another clandestine move, set up a subsidiary in Singapore called Unitech Value Solutions Pvt Ltd. More about that later.

Meanwhile, even as SHCIL was indulging in its series of clandestine activities, the personal friendship between the top brass of SHCIL and that of Sebi (Securities and Exchange Board of India) ensured that nobody probed any of this mischief. Indeed, a senior vigilance official of SHCIL was implicated in a passport forgery case involving Dawood Ibrahim’s mother. This too was brought to Sebi’s attention. In fact, SSL was allowed to become a broker of the Bombay Stock Exchange (BSE) without an investigation into its shareholding since it projected SHCIL as the promoter. Despite all this information being in public domain for weeks now, Sebi has not launched any investigation into SHCIL and its affiliates registered with the regulator.

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