Harshad Mehta was a notorious Bombay-based stockbroker who fraudulently withdrew capital from banks and used it to artificially manipulate the price of shares on the Bombay Stock Exchange (BSE). They took advantage of loopholes in the Indian banking system and stock market to carry out what is considered the largest Indian securities scam to date. Harshad Mehta securities scam worth Rs. Is equal to Rs 4,000 crore. 24,000 crore in 2020. Harshad Mehta was convicted of his crimes and jailed in 1998, and later died of a heart attack in 2001.
Contents
Wiki/Biography
Harshad Mehta was born on Thursday, 29 July 1954 (age at the time of death 47 years) in Panelli Moti, Rajkot, Gujarat. He spent his early childhood years in Kandivali, Mumbai, where his father ran a small textile business. Later, his family moved to Raipur, Chhattisgarh, where Harshad completed his schooling. He returned to Mumbai and graduated with a B.Com degree from Lala Lajpat Rai College in 1976.
family and caste
Harshad Mehta was born in a middle-class Gujarati Jain family.
parents and siblings
His father, Shantilal Mehta, ran a small textile business, while his mother, Rasilaben Mehta, was a housewife. He had three siblings – Sudhir Mehta, Hitesh Mehta and Ashwin Mehta. Harshad’s brother Ashwin Mehta was also a stockbroker in Harshad’s company. Ashwin obtained a law degree at the age of 50 and then fought all the cases pending against him himself.
Harshad Mehta with his brother Ashwin Mehta
Sudhir Mehta, brother of Harshad Mehta
Relationships, wife and children
Harshad Mehta was married to Jyoti Mehta. Harshad had one son, Attur Mehta. Although you can see various family pictures of Harshad Mehta, there are no pictures of his son, as he was never brought into the limelight.
Harshad Mehta’s wife Jyoti Mehta
livelihood
Apart from studying B.Com at Lala Lajpat Rai College, Mumbai, Mehta was engaged in many odd jobs which were often related to selling cement, classifying diamonds etc. He also worked as a salesman in New India Assurance Company Limited. During this time, he became so interested in the stock market that in 1980 he resigned from his current job and started working for P. Ambalal, a stockbroker associated with the Bombay Stock Exchange (BSE). After working there for a year, in 1981, he joined a brokerage firm, Harjivandas Nemidas Securities, in a lower clerical job. It was at this firm where he met broker Prasanna Pranjeevandas, whom he considered his ‘guru’. After accumulating sufficient knowledge about the functioning of the stock market, in 1984, Harshad started his own stock brokerage firm named “Gromor Research and Asset Management”. By 1990, Harshad had already created an aura that inspired a large number of people to invest in his firm and use his services. He became rich from rich in no time and earned thousands of crores of rupees through his deeds. His image in the media grew so much that he received many epithets such as “Amitabh Bachchan of the Stock Market” and “The Big Bull”. Along with a 15,000-square-foot sea-facing penthouse in Worli, Mumbai, he also had a collection of fancy cars, including an imported Toyota Lexus worth Rs 40 lakh at that time.
Harshad Mehta with his Toyota Lexus
1992 securities scandal and exposure
scam: Until the early 90s, banks were not allowed to invest in the stock market. Harshad, who had links with senior officials of the banks, offered banks higher interest rates for transferring the amount directly to his personal account. Banks also issued fake bank receipts (BRs) in his name. After cleverly withdrawing capital from the banks, he would invest huge sums of money in purchasing some selected shares, as a result of which the price of those shares would increase. This will also attract other investors to invest in those particular shares, which will increase the price of those shares even more. After the share price rose rapidly, he would sell his shares anonymously to make huge profits. For example, in 1991, Harshad invested in the shares of Associated Cement Company (ACC) and bought its share at Rs. 200 to Rs. 9,000 in barely three months (a 4,500 percent increase).
Exposure: Many were skeptical about Harshad’s lavish lifestyle; However, it was journalist Sucheta Dalal who went a few steps ahead of others and investigated the sources through which Harshad amassed an incredible amount of money in a short period. Eventually, on 23 April 1992, the Harshad Mehta scandal began to break after Sucheta published a story in a column in The Times of India on the unethical methods used by Mehta to manipulate share prices. He revealed how Harshad Mehta had committed a fraud of Rs. Embezzled five billion rupees from State Bank of India by making SGL receipts disappear.
impact of scam
on the stock market
The 1992 scam had a huge impact on the country’s capital markets and banking system. As soon as the scam came to light, the Sensex which was at 4467 points in January 1992 suddenly fell to 2529 points in the month of August. It wiped out more than Rs. Rs 1,00,000 crore from the money market.
on the banking system
After the scam was exposed, banks were left with illegal BRs and huge sums of money. Loss of Rs 4,000 crore. This led to the death of Shri B.B., former Chairman of Vijaya Bank. Shetty, who had allegedly issued fake checks to Harshad Mehta.
on the political environment
After the scam was exposed, fingers were pointed at many politicians including RBI Governor S Venkataramanan, brokers like Pallav Sheth, Ajay Kayan and industrialists like Aditya Birla. The political atmosphere also heated up when Harshad Mehta held a press conference in which he claimed to have given Rs. The then Prime Minister of India PV Narasimha Rao was given Rs 1 crore to clear himself of the scam case.
Harshad Mehta was showing the suitcase in which he had given the money in front of the media at Taj Hotel in Mumbai. Rs 1 crore to Narasimha Rao
Arrest, conviction and sentence
In November 1992, Harshad Mehta was arrested by the CBI and charged with 72 criminal offenses and over 600 criminal actions taken by various financial institutions and banks. He hired famous lawyer Ram Jethmalani and after three months he got bail.
Harshad Mehta with veteran lawyer Ram Jethmalani at a press conference after coming out of jail in 1993
Then in 1999, Harshad Mehta was convicted by the Bombay High Court in the Maruti Udyog scam and sentenced to 5 years.
Harshad Mehta being taken away after being arrested by Mumbai Police
Death
When Mehta was serving a 5-year sentence, he complained of chest pain and was taken to a civil hospital in Mumbai and died of a heart attack on 31 December 2001.
Medical negligence and ‘collective punishment’ – claimed by his wife
In July 2022, Harshad Mehta’s wife Jyoti launched a website, https://www.harshadmehta.in/, through which she made serious allegations of medical negligence and ‘collective punishment’ on the prison authorities and the system. On the website, his wife accused the jail authorities and police of medical negligence which led to her husband’s death. The website claims,
On that fateful day, after he suffered his first heart attack around 7 pm, the jail authorities ignored his genuine complaint for 4 hours. He immediately reported the unusual pain to his younger brother Sudhir, who was in the next room, from where he could hear Harshad’s voice. But could not see him. The jail doctors saw him but they did not have any medicine for the heart attack. Therefore, Harshad requested him to give Sorbitrate (medicine), which I had given in an emergency kit at the time of his arrest 54 days ago, to the person who was kept in jail custody. Due to his presence of mind, Harshad requested him to give him the sorbitol which kept him alive for about 4 hours. Unfortunately, the jail authorities then did not use that golden time of 4 hours to shift him to the hospital, which could have saved his life.
She further alleges the system of ‘collective punishment’ and says that her family is facing ‘collective punishment’ after the death of her husband Harshad Mehta. She claims,
We are saddened that for the last 30 years our fundamental and other valuable constitutional and human rights have been suspended and grossly violated and our family is being collectively punished even though we have not made a single transaction in securities with the banks. Neither have any banks filed any claims against us.”
Films and book adaptations
books
- Scam: Who Wins, Who Loses, Who Runs Away (1993)
- Scam: From Harshad Mehta to Ketan Parekh (2001)
movies
- Scam 1992: The Harshad Mehta Story is a very popular web series that can be streamed on SonyLIV and is based on his life.
- The scam was also portrayed in various films through characters such as Natwar Shah in “Aankhen (1993)”.
- The 2006 Indian Hindi-language crime drama film “Gafala” is also said to be inspired by the life of Harshad Mehta.
- Another movie”The Big Bull” A film based on the life of Abhishek Bachchan is going to be released soon.
Poster of Big Bull starring Abhishek Bachchan
Facts/General Knowledge
- Harshad Mehta was fond of cricket in his childhood.
- When Harshad Mehta returned to Mumbai in 1973, he had Rs 40 in his pocket. He rose from poverty and created wealth worth hundreds of crores.
- Even after being banned from the stock market, in 1998, Harshad made a comeback as the “Stock Market Guru” by starting his own website, Harshadmehta.com, to share his stock market analysis and investment tips.
- Journalist Sucheta Dalal, who exposed the Harshad Mehta scam, was awarded the Padma Shri in journalism in 2006.
Noted business journalist Ms. Sucheta Dalal receiving the Padma Shri award for journalism from President Dr. APJ Abdul Kalam in New Delhi on March 20, 2006.
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Categories: Biography
Source: vcmp.edu.vn