Haridas Mundhra was a Calcutta-based industrialist and stock speculator who was found guilty and imprisoned in the first ever big financial scandal of free India in 1957. The Mundhra scandal also exposed the growing rifts between the then Prime Minister Jawaharlal Nehru and his son-in-law Feroze Gandhi, and also led to the resignation of India's then finance minister T. T. Krishnamachari. Haridas Mundhra scandal is the biggest example - that the branches of corruption grows thicker if their roots are not destroyed at very beginning.
In 1957, Mundhra with his nefarious intentions got the government-owned Life Insurance Corporation (LIC) to invest Rs. 1.24 crores (about USD 3.2 million at the time) in the shares of six troubled companies belonging to none other than Mundhra: Richardson Cruddas, Jessops & Company, Smith Stanistreet, Osler Lamps, Agnelo Brothers and British India Corporation. The investment was done under governmental pressure and it also bypassed the LIC’s investment committee, which was informed of this decision only after the deal had gone through. In the series of events of the first scam of India, LIC suffered loss to most of the money.
During Investigations, the Justice M.C. Chagla (a one-man committee for Commission of Enquiry) determined that the then Finance Secretary of India, Haribhai M. Patel, along with two Life Insurance Corporation of India officials, L S Vaidyanathan, may have colluded on the payment, and should be investigated. Subsequent inquiry committee headed by Retired Justice Vivian Bose cleared the names of two civil servants but passed strictures against finance minister for “lying”. The Finance Minister T. T. Krishnamachari, in his testimony tried to distance himself from the LIC's decision, implying that it may have been taken by the Finance Secretary, but Justice Chagla held that the Minister is constitutionally responsible for the action taken by his secretary and he disown his actions. Eventually, Krishanamachari had to resign. The Nehru government suffered considerable loss of prestige with the exposure of this incident.
Haridas Mundhra was arrested from his luxury suite at the Claridge’s Hotel in Delhi, and sent to prison.
It turned out that Mundhra’s manipulations were not restricted to LIC. The income tax department had curiously withdrawn certain notices pending against him having entered into “some understanding” about the payment of arrears.
In recent times, Mundhra is often noted as the forerunner of other financial scamsters of modern India, including Harshad Mehta and Abdul Karim Telgi, who also operated with considerable political connivance.
Reference : http://en.wikipedia.org/wiki/Haridas_Mundhra
In 1957, Mundhra with his nefarious intentions got the government-owned Life Insurance Corporation (LIC) to invest Rs. 1.24 crores (about USD 3.2 million at the time) in the shares of six troubled companies belonging to none other than Mundhra: Richardson Cruddas, Jessops & Company, Smith Stanistreet, Osler Lamps, Agnelo Brothers and British India Corporation. The investment was done under governmental pressure and it also bypassed the LIC’s investment committee, which was informed of this decision only after the deal had gone through. In the series of events of the first scam of India, LIC suffered loss to most of the money.
During Investigations, the Justice M.C. Chagla (a one-man committee for Commission of Enquiry) determined that the then Finance Secretary of India, Haribhai M. Patel, along with two Life Insurance Corporation of India officials, L S Vaidyanathan, may have colluded on the payment, and should be investigated. Subsequent inquiry committee headed by Retired Justice Vivian Bose cleared the names of two civil servants but passed strictures against finance minister for “lying”. The Finance Minister T. T. Krishnamachari, in his testimony tried to distance himself from the LIC's decision, implying that it may have been taken by the Finance Secretary, but Justice Chagla held that the Minister is constitutionally responsible for the action taken by his secretary and he disown his actions. Eventually, Krishanamachari had to resign. The Nehru government suffered considerable loss of prestige with the exposure of this incident.
Haridas Mundhra was arrested from his luxury suite at the Claridge’s Hotel in Delhi, and sent to prison.
It turned out that Mundhra’s manipulations were not restricted to LIC. The income tax department had curiously withdrawn certain notices pending against him having entered into “some understanding” about the payment of arrears.
In recent times, Mundhra is often noted as the forerunner of other financial scamsters of modern India, including Harshad Mehta and Abdul Karim Telgi, who also operated with considerable political connivance.
Reference : http://en.wikipedia.org/wiki/Haridas_Mundhra
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