Expert Advises Oman Businesses on Fraud Prevention

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Expert advises Oman businesses on fraud preventionBy Staff Reporter

MUSCAT Fraud and corruption are prevalent in all types of businesses, it is merely the extent and magnitudethat differs and financial statement fraud is deemed to be a major contributory factor to the current globalrecession, said Simon Padgett, an expert in forensic accounting and fraud and corruption investigations, onSaturday.

Speaking at a seminar organised by the Association of Chartered Certified Accountants (ACCA) Oman atMuscats Majan Continental Hotel, Simon Padgett said that to be sensitive to fraud, corruption and moneylaundering methodologies is the first step in defence and goes a long way towards establishing anti-fraudprogrammes in our companies. We can only fight the opponent we know.

Padgett, as director, corporate integrity at the Tourism Development and Investment Company, is headingrisk and internal audit for the organisation. He spoke on the ways to combat fraud and corruption andmeans to avoid falling prey to fraudsters.

He spoke on the current fraud trends and fraud prevention techniques and anti-money laundering andprotection.

Mohammed Sajid Khan, country manager, ACCA Oman, said the presentations at the seminar were

important at the time when the Sultanate has entered the era of massive development in all sectors andmeans to prevent fraud have to be kept in mind. He said the ACCA was committed to developing the localskills for auditing and providing safeguards against any possible malpractices in any business house.

Ayisha Al Mawaly, adviser to the Central Bank of Oman and President of Institute of Internal Auditors (IIA)Oman, was Guest of Honour at the event, which was attended by more than 50 accounting and financeprofessionals, including representatives from the Central Bank of Oman, Capital Market Authority and StateAudit Institution.

Oman Tribune

Caution against electronic phishing and fraudMon, 20 February 2012

VIEWPOINT -By Haider bin Abdul Redha al Lawati [email protected] subject of banking and financial fraud has been renewed due to the boom in Internet usagethat occurs in the programs of World Wide Web, and the emergence of more modern electronictechniques that touch various areas of our life. This has given rise to the emergence of new typesof criminals called in Internet jargon as cyber criminals. They exploit the revolution happening in
mailto:[email protected]:[email protected]:[email protected]


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electronic communications and its increasing use in business, financial and banking transactions.Electronic fraud has grown in recent years to represent the largest share of fraud faced by bankcustomers, both locally and globally. The Central Bank of Oman (CBO) repeatedly issuesstatements warning the public of this particular menace that endangers the very fabric of bankingand finance. The CBO is aiming to increase awareness of both Omani citizens and residents byemphasising the need to take necessary caution and watch out for these fraudulent transactions

which inevitably cause huge losses to those who respond and trust the false requests targeted atthem by fraudsters.In a nutshell, electronic phishing and bank fraud take place when scammers send messages via e-mail or other means to people offering to help them in transferring funds to and from abroad withthe promise of a percentage of the specified amount. Fraudsters might also dupe these people byinforming them that they won certain false lotteries or other prizes that require them to giveaway their personal details and bank accounts in order they claim, to finalise processing theirfinancial gains.The CBO sometimes issues statements regarding this issue. It warns the public about someinstances of attempts of phishing and other frauds made by fraudsters on people in Oman. Thisindicates that some have already fallen prey to messages from unknown sources, trusting theycame from genuine banking and financial institutions, or from prominent and well-knowncompanies, or even from international financial institutions such as the IMF or the World Bank,

about which the ordinary citizen might not be fully unaware. It noted that fraudsters contact bankclients through e-mail and other means with inquiries about information or proposals regardingstarting business, joint ventures or other transactions. Such contacts are often made on behalf ofknown banks or financial institutions in the region, with some business enquiry or proposal, usuallymade in the name of the bank itself or through a fake website made to look just like the banksown website.These kinds of transactions are arguably the fastest growing scams and are manipulating the latestmodern banking techniques and methods. They might sometimes be illegally documented bycolluding with phony entities in order to dupe customers into believing that they are entering intolegitimate transactions, thus leading them eventually to fall in their hands. Banks are thusrequired to launch awareness campaigns to educate the public about these surreptitious acts andthus help them protect themselves from scams, financial fraud and cyber crimes as is rampant in

most parts of the world.Many bankers in the region attest to the fact that some of frauds are successful due to severalfactors, but lack of adequate awareness might prove costly for some. Bank clients often desistreporting these messages to their banks. They also fail to respect the instructions issued by theirbanks, warning them of the dangers inherent in these kinds of communications. As some bankclients believe, these transactions are made with ostensibly legitimate institutions and areconducted through professed legitimate channels, they therefore believe them to be safe. Due tothe risks involved in these kinds of transactions, the banks must feel it is obliged to reiterate suchwarnings with the aim of spreading the culture of vigilance and cautiousness when dealing withsuch transactions.The CBO also intends to increase awareness and urge bank clients to comply with the instructionsthat enhances their imperviousness and ensure them against such fraudulent transactionsprevalent in the banking and financial sector. Many people in the Sultanate and the region are still

unaware of the serious damage caused by electronic phishing and financial fraud. Theinternational media have brought out many notorious cases that have resulted in huge losses tobank clients in recent years. That is why the media must be involved to warn the public againstsuch cases. It has been reported that some customers have responded to fraudulent enquiries andshared their accounts, passwords and other confidential information with unknown entities, thushaving money withdrawn from their accounts by fraudsters.Such criminal acts require concerned authorities to emphasise cautiousness and to provideadditional protection to all bank clients. This is emphasised by all bankers in the region. Newtechniques of electronic hacking are evolving every day, rapidly catching up with new


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developments in the field of banking and finance in general and in bank security in particular.Hackers, scammers and cyber criminals are creating new sophisticated and innovative means tosnoop at customer data and steal their accounts information at the first opportunity and with asingle click. This requires the customers to take a series of effective controls to keep safe fromany attempts to entrap or mislead them.Different innovative processes with new modalities are used to exploit weaknesses shown by

customers, especially if they are in a hurry to conclude transactions they unknowingly believerepresent an opportunity they cannot afford to lose.

CBO TO IMPLEMENT FRAUD MANAGEMENT STRATEGY

Our Correspondent

19/03/2011 5:08 am

The Central Bank of Oman (CBO) is working to implement a fraud management strategy with the help of

Hibis Europe, a consulting firm which deals in fraud detection and prevention.

Once the fraud management strategy is in place, CBO will prescribe minimum operating standards for

banks and financial institutions to prevent financial fraud in the sultanate, said Caroline Waddicor,

managing director, Hibis Europe.

Details of the fraud management strategy project were unveiled at a seminar on Wednesday at the Grand

Hyatt Muscat hosted by Grant Thornton Oman, a leading accounting and consulting firm which has

formed a joint venture with Hibis Europe in Oman.

Speaking to reporters after the seminar, Waddicor said that the issue assumes importance as cases of

fraud in the banking sector are on the rise.

"Our mandate is to look at the entire spectrum of fraud, from the perspectives of staff, procedures and

policies. The first stage is to raise the awareness of employees in CBO about the risks of

fraud, so that they understand and address those risks. We have taken initiatives to run a full-fraud

assessment covering every department of the central bank."
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Waddicor added, "Once we complete the fraud risk assessment, we will make departments accountable

for their risks, put in place policies and procedures to prevent fraud, and the analytical tools will be used

to recognise the red flags for the future.

Waddicor said that the central bank wants to involve banks and financial institutions to put in place the

minimum operating standards to prevent fraud. Once we have been able to make the CBO a centre ofexcellence in fraud management, it would then want to share its learning and experience with other

banks."

Waddicor added that Hibis Europe also said that the organisation is helping spread awareness on

counterfeit currency.

"We are working with the Royal Oman Police (ROP) and the Public Prosecution to raise awareness within

banks, and to get them to a stage where if there is an issue, it can be handed to the police in a way it can

be dealt professionally," she said.

Hibis Europe will complete the first phase of its fraud management strategy project of CBO within next

four weeks in which the identification of fraud risks will be covered.

In the next stage of the project, the fraud management strategy will be implemented within the central

bank. This will be followed by an initiative to introduce minimum operating standards in local banks and

financial institutions, said Waddicor.

RCH 2, 2011

Legal Developments in Oman

Audit CommitteesThe Commercial Companies Law requires the board of directors of an Omani joint-stock company to form

various committees from among its members to discharge some of the boards delegated functions.

One such committee is the audit committee, which a publicly listed joint-stock company (an SAOG) is

required to have. The composition and functions of an SAOGs audit committee are prescribed by the

Rules on the Constitution of Audit Committee published by the Capital Markets Authority.

Composition and Purpose of the Audit Committee

The audit committee must consist of at least three non-executive members of the companys board of

directors i.e., directors who are not salaried employees of the company. A majority of the audit

committee members, including the chairman of the audit committee, must be independent directors i.e,

they and their first-degree relatives must not have occupied a senior post in the company (such as Chief

Executive Officer or General Manager) over the past two years. At least one member of the audit

committee must have financial and accounting expertise.
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The purpose of the audit committee is to assist the board in ensuring the:

reliability of financial reporting;

effectiveness of internal controls; and legal and regulatory compliance.

The board decision appointing the audit committee should, inter alia, specify the terms of reference for

the committees functioning, the location and quorum requirements for the committees meetings, and the

methodology for the committees execution of its responsibilities.

The audit committee should specify in its charter for the boards approval its objectives, membership,

powers, responsibilities and liabilities, and the remuneration of its members.

Functions of the Audit Committee

An audit committees predominant function is the oversight of financial reporting and internal disclosure

mechanisms within the company. This is why the Capital Market Authority requires audit committee

members to be non-executive (and majority-independent) directors: an independent audit committee

significantly enhances internal controls, the financial reporting process and corporate governance.

Additionally, the audit committee may also carry out related functions such as supervising the companys

regulatory compliance and business ethics, and developing independent reporting mechanisms that helpthe company detect and combat fraud and financial irregularities.

As described below, the CMA Rules delineate the functions for an audit committee and the specific

responsibilities within each function.

External audit functions include:

Recommending external auditors and overseeing their terms of engagement, independence,

qualifications, and performance; and

Reviewing the external audit plan and ensuring for the external auditors the accuracy and completeness

of, and access to, documentation.

Internal audit functions include:

Oversight of the internal audit plan and the performance of internal audit function and its efficacy; and


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Monitoring the adequacy of internal control mechanisms by analysing periodic reports generated by the

auditors.

Financing reporting functions include:

Developing a financial reporting system to detect financial irregularities and fraud based on best

practices in accounting policies and principles;

Monitoring any change in accounting policies and any significant departure from international accounting

standards or non-compliance with the disclosure requirements prescribed by the CMA;

Ensuring the accuracy of financial reporting generally and the accounting princ iples adopted; and

Reviewing quarterly and annual financial reports and, in particular, the qualifications in the draft reports.

Corporate governance functions include:

Serving as the liaison among the board of directors, external auditors and internal auditors and financial

management;

Reviewing risk management policies and practices;

Reviewing proposed related party transactions and making appropriate recommendations to the board;

and

Formulating rules for small value-related party transactions without requiring the prior approval of the

board or the audit committee.

Finally, many private companies also have audit committees that perform many of the same functions aspublic company audit committees. Although the Capital Market Authoritys Rules on the Constitution of

Audit Committee are not mandatory for companies that are not publicly listed, these rules represent the

type of robust audit framework that every company should have to ensure strong and effective internal

controls and financial integrity

Common Fraud Risks in GulfCountries ?

Money Laundering Risk -- Dealings with

unauthorized money remitters (both individuals

and establishments) who effect money

transferring overseas through the means of

Telegraphic Transfers, pre-signed and postdated


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cash invoices, etc

Benami Transactions Risk -- Offer to deposit

substantial amounts from fictitious accounts from

countries outside GCC, either to the credit of

their bank accounts or to credit of the companies

in local banks, with the promise to pay huge

commissions to the account holders rendering

these services.

Advance fee loan Risk -- Fraudulent promise of

loans in advance being made available against

the surety of bank securities and/or fixed

deposits

Two caught in ticket scam at city theatre

REJIMON K

Wed Feb 29 2012 07:41:39 GMT+0400 (Arabian Standard

Time) Oman Time

Muscat: Two employees of STARS CINEMA, thetheatre located in Ruwi in the capital Muscat city,have been shown the door after being allegedlycaught red-handed in a ticket scam of huge

proportions.

STARS CINEMA, where mostly south Indianmovies are screened, is the most popular joint onthe weekends for Indian expatriates, mainlythose hailing from the south.

The film ticket fraud at STARS CINEMA wasreportedly going on unnoticed for the last sixmonths, and its being assumed that the twocould have pocketed approximately RO200,000and the government was deprived of thousandsof rials, which is supposed to be paid to thegovernment as commission.

No legal actionA senior management official of the theatreconfirmed to Times of Oman that action has beentaken against the fraudsters, albeit themanagement also clarified that no legal actionhad been taken nor a case had been filed as yet.

We have taken action against the fraudsters. One will be sent back today and the other in thecoming week. As they were in the counter, we have to find a replacement before removing them,the official pointed out.

Financial crime: Film tickets, both original andduplicate, carrying the same serial numbers were soldduring the six-month-long scam. The pictures of twotickets, centre, show that both the tickets carrying the

same serial number were being sold by the twoemployees for a single show. Times of Oman

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On the size of the scam, he said that a probe has to be carried out as to how much money has beenpocketed by the two.For the last five to six months, the scam was going on unnoticed, the official added.

However, sources told Times of Oman that during January also the fraudsters were caught red-handed but they continued to do the same.

Hundreds of film tickets, both original and duplicate with the same serial numbers, in possession ofTimes of Oman, show that the scam was going on unnoticed for the last six months and thefraudsters could have made thousands of rials per day.

They were selling tickets issued for film shows at ORCHESTRA, one of the cinema halls, which has700 seats. They used to sell 50 or 60 per cent of original tickets and then they started sellingduplicate tickets. They used to pocket money by selling duplicate tickets and the government wasdeprived of the tax, a source told Times of Oman.

Some of the tickets possessed by Times of Oman even show that two tickets with the same serialnumber for a single show had been sold by the two.

They used to sell duplicate tickets for all the three shows. Even if the 50 per cent tickets sold foreach and every screening are duplicate, they would have pocketed nearly RO1,000 per day.

Even if we consider the minimal amount, it would come around RO200,000 for the last six months,the source said.

There are three shows held daily at ORCHESTRA and on Wednesdays, Thursdays and Fridays, thehall is almost full.

Sources said that even without tickets, the two men used to allow people to enter for the 9:30pmscreening. After 9pm, when the senior management leaves the office, they used to allow people toenter cinema hall without issuing tickets and collected money. Through this alone they would havemade a lot of money, sources assumed.

Poor controlsMeanwhile, Jose Chacko, a certified fraud examiner in Muscat, said that corporate frauds arehappening mainly due to poorinternal controls.

Of late, several financial crimes have been reported. These corporate frauds are happening mainlydue to poor internal controls. Ethical organisational culture and the attitude of the management orowners towards fraud is also an important factor to avoid fraud by employees.

In many cases we recently verified, there was no proper accounting, accounting controls normanagement reporting system in place. Senior managements unawareness to handle fraud casesand unawareness to understand the financial reports make the case worse and, in turn, leads torepeated incidents, the examiner said.

Periodical internal control review should be conducted internally or by external agencies to avoidsuch incidents. Small to medium companies normally facing these challenges and the resultant fraudwill come to light, in many cases in three to five years time. By that time the company will be indeep trouble and in most cases, the main culprit would have escaped from the scene, the examineradded.

(Follow timesofoman.com on Facebook and on Twitter for updates that you can share with yourfriends.)

Oman's Renaissance: Topaz Fraud An IsolatedCase, Amount Provided For


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FILED UNDERFinancial Services,Oman,Muscat SM,UAE

IN THIS ARTICLERenaissance Services

Monday, Sep 12, 2011

DUBAI (Zawya Dow Jones)--Oman's Renaissance Services (RNSS.ON) said Monday that an independent

investigation into financial misconduct at one of its subsidiaries found it was an isolated case and the

amount involved has been fully provided for in its accounts.

Renaissancesaid in August it was investigating the use of $2.9 million in cash at one of its internationalTopaz subsidiaries. Topaz is the Dubai-based oilfield services business, which pulled plans for a $500million London listing earlier this year.

"We are confident this is an isolated case, in one foreign subsidiary, in one business unit, and there is noother similar case in any of the other businesses," according to a statement posted on the Muscat stockexchange regarding the auditor's review.

Renaissancesaid the amount at the centre of the investigation will likely be difficult to recover and that ithas been fully provided for in its accounts.
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The company has also found other breaches of the company's code of business conduct in some othersubsidiaries of Topaz, but said these aren't cases of cash misappropriation and are categorized aspotential business ethics violations.

"We have completed our identification of all such issues and are ensuring they cannot happen again," thecompany said.Renaissancelast month said that in response to the problems at Topaz, and in a bid to reduce costs, itplans to cut 100 jobs and has removed the entire corporate human resources department, while acceptingthe resignation of several senior executives.

Shares ofRenaissance Serviceslast traded Monday down 0.1% at OMR0.69 in a flat overall market.

-By Nicolas Parasie, Dow Jones Newswires; +9714 446-1681; [email protected]

Copyright (c) 2011 Dow Jones & Co.

(END) Dow Jones Newswires

With so many scams and scandals hitting the headlines during 2010-12,

virtually pushing other national issues to the background, an effort has been

made by some public spirited citizens to compile a list of past and present

scams to put the present bunch of scams -- 2G, CWG, IPL, etc -- in

perspective.

According to the compilation, the total amount of money involved in various

scams over the last 12 years alone, since 1992, is estimated to be over Rs

80 lakh crore (Rs 80 trillion) or $1.80 trillion!

While this figure is not claimed to be a definitive calculation, it has been

arrived at on the basis of material published in newspapers over the years.

Here is a check-list of some of the major corruption scandals and corporate

frauds that hit the headlines and the estimated amounts alleged to have

been involved.
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2G spectrum scam: Rs 176,000 crore

At a mind-boggling Rs 176,000 crore (Rs 1.76 trillion), the 2G spectrum

allocation scam is by far the biggest scam in India. The Supreme Court

recently said the spectrum scam has put 'all other scams to shame'.

The incident saw former telecom minister A Raja being forced to resign after

the CAG indicted him in the 2G spectrum scam that resulted in a loss of

about Rs 176,000 crore to the national exchequer.

Even as investigations in to the scam -- which has now become a political

hot potato with the Opposition gunning for the government, demanding a

JPC and the ruling UPA adamant on not giving in -- are on, it has come to

light that politicians, corporate lobbyists, business houses and even the

media might have played a big role in it.

The scandal revolves around the alleged irregularities in allotting wireless

radio spectrum and licences by the telecom ministry to private operators --

some of whom were ineligible -- in 2007. Licences were given and spectrum

allocation was done at an extremely low price leading to a gargantuan loss

to the national coffers.

Ramalinga Raju: Rs 8,000 crore

The biggest corporate scam in India came from one of the best known

businessmen.

Satyam founder Byrraju Ramalinga Raju resigned as its chairman after

admitting to cooking up the account books.

His efforts to fill the "fictitious assets with real ones" through Maytas

acquisition failed, after which he decided to confess the crime.


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With a fraud involving about Rs 8,000 crore (Rs 80 billion), Satyam remains

one of India's biggest ever corporate scams.

Harshad Mehta: Rs 5,000 crore

He was known as the 'Big Bull'. However, his bull run did not last too long.

He triggered a rise in the Bombay Stock Exchange in the year 1992 by

trading in shares at a premium across many segments.

Taking advantages of the loopholes in the banking system, Harshad and his

associates triggered a securities scam diverting funds to the tune of about

Rs 5,000 crore (Rs 50 billion) from the banks to stockbrokers between April

1991 to May 1992.

Harshad Mehta worked with the New India Assurance Company before he

moved ahead to try his luck in the stock markets. Mehta soon mastered the

tricks of the trade and set out on dangerous game plan.

Mehta has siphoned off huge sums of money from several banks and millions

of investors were conned in the process. His scam was exposed, the markets

crashed and he was arrested and banned for life from trading in the stock

markets.

He was later charged with 72 criminal offences.

A Special Court also sentenced Sudhir Mehta, Harshad Mehta's brother, and

six others, including four bank officials, to rigorous imprisonment (RI)

ranging from 1 year to 10 years on the charge of duping State Bank of India

to the tune of Rs 600 crore (Rs 6 billion) in connection with the securities

scam that rocked the financial markets in 1992. He died in 2002 with many

litigations still pending against him.


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Hassan Ali Khan: Rs 3,91,200 crore

Pune-based real estate consultant Hassan Ali Khan was the main accused in

a case involving alleged money laundering to the tune of $80 billion (Rs

391200 crore), and suspected tax evasion.

The Mumbai Income-Tax department had sent him a notice demanding Rs

40,000 crore for not disclosing funds in several foreign bank accounts,

including $80 billion in an account in UBS AG, Zurich.

Money stashed away in Swiss banks: Rs 21 lakh crore

Post-Independence, India lost a staggering $462 billion, or about Rs 21 lakh

crore, in illicit financial flows due to tax evasion, crime and corruption, a

research and advocacy group has said in a report.

The report released by Washington-based Global Financial Integrity (GFI)

found that the faster rates of economic growth since economic reform

started in 1991 led to a deterioration of income distribution which led to

more illicit flows from India.

According to the primary findings of the report titled 'The Drivers and

Dynamics of Illicit Financial Flows from India: 1948-2008', India lost a total

of $213 billion in illicit financial flows (or illegal capital flight).

These illicit financial flows were generally the product of: tax evasion,

corruption, bribery and kickbacks, and criminal activities.

"The present value of India's total illicit financial flows (IFFs) is at least $462

billion. This is based on the short-term US Treasury bill rate as a proxy for

the rate of return on assets.


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India's aggregate illicit flows are more than twice the current external debt

of $230 billion," the report said.

Based on the last five years of the study, 2004-2008, India lost assets at a

rate of US $19 billion per year.

Teak plantation swindle Rs 8,000 crore

The plantation scam took thousands of investors for a ride and is said to be

of the order of Rs 8,000 crore.

Dinesh Singhania: Rs 120 crore

Another major scam involved Dinesh Kumar Singhania, the former president

of Calcutta Stock Exchange.

Singhania was accused in the Rs 120 crore (Rs 1.2 billion) CSE scam.

Singhania was president of the exchange for two terms and also a director

when the scam was unearthed in March, 2001, Mitra said.

Ketan Parekh: Rs 1,000 crore

Ketan Parekh followed Harshad Mehta's footsteps to swindle crores of rupees

from banks. A chartered accountant he used to run a family business, NH

Securities.

Ketan however had bigger plans in mind. He targetted smaller exchanges

like the Allahabad Stock Exchange and the Calcutta Stock Exchange, and

bought shares in fictitious names.


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His dealings revolved around shares of ten companies like Himachal

Futuristic, Global Tele-Systems, SSI Ltd, DSQ Software, Zee Telefilms,

Silverline, Pentamedia Graphics and Satyam Computer (K-10 scrips).

Ketan borrowed Rs 250 crore from Global Trust Bank to fuel his ambitions.

Ketan alongwith his associates also managed to get Rs 1,000 crore from the

Madhavpura Mercantile Co-operative Bank.

According to RBI regulations, a broker is allowed a loan of only Rs 15 crore

(Rs 150 million). There was evidence of price rigging in the scrips of Global

Trust Bank, Zee Telefilms, HFCL, Lupin Laboratories, Aftek Infosys and

Padmini Polymer.

Fertiliser import scam Rs 1,300 crore

The fertiliser import scam cost the national exchequer over Rs 1,300 crore.

Similar scams which cost the nation hugely include:

Sugar import scam of 1994: Rs 650 crore

Meghalaya Forest scam of 1995: Rs 300 crore

Urea scam of 1996: Rs 133 crore

Bihar fodder scam of 1996: Rs 950 crore

Scorpene submarine scam Rs 18,978 crore

In what is billed as one of the biggest defence scandals in India, huge

kickbacks were alleged in the planned purchase of 6 French Scorpene

submarines.


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Other scam that hit the national exchequer include:

Army ration pilferage scam of 2008 Rs 5,000 crore

Bihar land scandal in 1997: Rs 400 crore

Bihar flood relief scam of 2005: Rs 17 crore

Sukh Ram telecom scam in 1997: Rs 1,500 crore

SNC Lavalin power project scam in 1997: Rs 374

C R Bhansali: Rs 1,200 crore

The Bhansali scam resulted in a loss of over Rs 1,200 crore (Rs 12

billion).

He first launched the finance company CRB Capital Markets, followed by CRB

Mutual Fund and CRB Share Custodial Services. He ruled like a financial

wizard 1992 to 1996 collecting money from the public through fixed

deposits, bonds and debentures. The money was transferred to companies

that never existed.

CRB Capital Markets raised a whopping Rs 176 crore in three years. In 1994

CRB Mutual Funds raised Rs 230 crore and Rs 180 crore came via fixed

deposits. Bhansali also succeeded to to raise about Rs 900 crore from the

markets.

However, his good days did not last long, after 1995 he received several

jolts. Bhansali tried borrowing more money from the market. This led to a

financial crisis.


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It became difficult for Bhansali to sustain himself. The Reserve Bank of India

(RBI) refused banking status to CRB and he was in the dock. SBI was one of

the banks to be hit by his huge defaults.

IPO scam: Rs 1,000 crore estimated

The Securities and Exchange Board of India barred 24 key operators,

including Indiabulls and Karvy Stock Broking, from operating in the stock

market and banned 12 depository participants from opening fresh accounts

for their involvement in the Initial Public Offer scam.

It also banned 85 financiers from capital market activities.

Abdul Karim Telgi: Rs 500 crore

He paid for his own education at Sarvodaya Vidyalaya by selling fruits and

vegetables on trains.

He is today famous (or infamous) for being he man behind one of India's

biggest scams.

The Telgi case is another big scam that rocked India. The fake stamp racket

involving Abdul Karim Telgi was exposed in 2000. The loss is estimated to be

Rs 500 crore (Rs 5 billion), it was initially pegged to be Rs 30,000 crore (Rs

300 billion), which was later clarified by the CBI as an exaggerated figure.

In 1994, Abdul Karim Telgi acquired a stamp paper license from the Indian

government and began printing fake stamp papers.

Telgi bribed to get into the government security press in Nashik and bought

special machines to print fake stamp papers.


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Telgi's networked spread across 13 states involving 176 offices, 1,000

employees and 123 bank accounts in 18 cities.

The Jharkhand medical equipment scam Rs 130 crore

Major irregularities were alleged in the UPA government's free healthcare

services programme in Jharkhand.

Other notable scams include:

Punjab's City Centre project scam in 2006: Rs 1,500 crore

Taj Corridor scam of 2006: Rs 175 crore

State Bank of Saurashtra scam in 2008: Rs 95 crore

Rice export scam of 2009: Rs 2,500 crore

Orissa mine scam in 2009: Rs 7,000 crore

Madhu Koda mining scam of 2009: Rs 4,000 crore

Preferential allotment scam of 1995: Rs 5,000 crore

Yugoslav Dinar scam of 1995: Rs 400 crore

Cobbler scam: Rs 1,000 crore

Sohin Daya, son of a former Sheriff of Mumbai, was the main accused in the

multi-crore shoes scam. Daya of Dawood Shoes, Rafique Tejani of Metro

Shoes, and Kishore Signapurkar of Milano Shoes were arrested for creating

several leather co-operative societies which did not exist.


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They availed loans of crores of rupees on behalf of these fictitious societies.

The scam was exposed in 1995. The accused created a fictitious cooperative

society of cobblers to take advantage of government loans through various

schemes.

Officials of the Maharashtra State Finance Corporation, Citibank, Bank of

Oman, Dena Bank, Development Credit Bank, Saraswat Co-operative Bank,

and Bank of Bahrain and Kuwait were also charge sheeted.

Dinesh Dalmia: Rs 595 crore

Dinesh Dalmia was the managing director of DSQ Software Limited when the

Central Bureau of Investigation arrested him for his involvement in a stocks

scam of Rs 595 crore (Rs 5.95 billion).

Dalmia's group included DSQ Holdings Ltd, Hulda Properties and Trades Ltd,

and Powerflow Holding and Trading Pvt Ltd.

Dalmia resorted to illegal ways to make money through the partly paid

shares of DSQ Software Ltd, in the name of New Vision Investment Ltd, UK,

and unallotted shares in the name of Dinesh Dalmia Technology Trust.

Investigation showed that 1.30 crore (13 million) shares of DSQ Software

Ltd had not been listed on any stock exchange.

Virendra Rastogi: Rs 43 crore

Virendra Rastogi, chief executive of RBG Resources, was charged with for

deceiving banks worldwide of an estimated $1 billion.

He was also involved in the duty-drawback scam to the tune of Rs 43 crore

(Rs 430 million) in India.


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The CBI said that five companies, whose directors were the four Rastogi

brothers -- Subhash, Virender, Ravinder and Narinder -- exported bicycle

parts during 1995-96 to Russia and Hong Kong by heavily over invoicing the

value of goods for claiming excess duty draw back from customs.

The UTI scam: Rs 32 crore

Former UTI chairman P S Subramanyam and two executive directors -- M M

Kapur and S K Basu -- and a stockbroker Rakesh G Mehta, were arrested in

connection with the 'UTI scam'.

UTI had purchased 40,000 shares of Cyberspace between September 25,

2000, and September 25, 2000 for about Rs 3.33 crore (Rs 33.3 million)

from Rakesh Mehta when there were no buyers for the scrip. The market

price was around Rs 830.

The CBI said it was the conspiracy of these four people which resulted in the

loss of Rs 32 crore (Rs 320 million). Subramanyam, Kapur and Basu had

changed their stance on an investment advice of the equities research cell of

UTI.

The promoter of Cyberspace Infosys, Arvind Johari was arrested in

connection with the case. The officals were paid Rs 50 lakh (Rs 5 million) by

Cyberspace to promote its shares.

He also received Rs 1.18 crore (Rs 11.8 million) from the company through a

circuitous route for possible rigging the Cyberspace counter.

Uday Goyal: Rs 210 crore

Uday Goyal, managing director of Arrow Global Agrotech Ltd, was yet

another fraudster who cheated investors promising high returns through

plantations.


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Goyal conned investors to the tune of over Rs 210 crore (Rs 2.10 billion). He

was finally arrested.

The plantation scam was exposed when two investors filed a complaint when

they failed to get the promised returns.

Over 43,300 persons had fallen into Goyal's trap. Several criminal

complaints were filed with the Economic Offences Wing.

The company's directors and their relatives had misused the investors'

money to buy properties. The High Court asked the company to sell its

properties and repay its investors.

Sanjay Agarwal: Rs 600 crore

Home Trade had created waves with celebrity endorsements.

But Sanjay Agarwal's finance portal was just a veil to cover up his shady

deals. He swindled a whopping Rs 600 crore (Rs 6 billion) from more than 25

cooperative banks.

The government securities (gilt) scam of 2001 was exposed when the

Reserve Bank of India checked the accounts of some cooperative banks

following unusual activities in the gilt market.

Co-operative banks and brokers acted in collusion in a bid to make easy

money at the cost of the hard earned savings of millions of Indians. In this

case, even the Public Provident Fund (PPF) was affected.

A sum of about Rs 92 crore (Rs 920 million) was missing from the Seamen's

Provident Fund. Sanjay Agarwal, Ketan Sheth (a broker), Nandkishore


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Trivedi and Baluchan Rai (a Hong Kong-based Non-Resident Indian) were

behind the Home Trade scam.

LIC Housing Finance scam

The chief executive officer of LIC Housing Finance Ramachandran R Nair and

seven others, including three top officials of public sector banks, were

recently arrested in connection with a multi-crore housing finance racket

recently.

Apart from Nair, those arrested are Naresh K Chopra, secretary

(investment), LIC; R N Tayal, general manager of Bank of India (Delhi);

Maninder Singh Johar, director (chartered accountant) of Central Bank of

India; and Venkoba Gujjal, deputy general manager, Punjab National Bank

(Delhi).

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