What I Learned Covering Harshad Mehta: Some Things Never Change

My reportage for Navbharat Times on the probes into the scam put me on a steep learning trajectory.

6 min read
While watching the series ‘Scam 1992: The Harshad Mehta Story’, I was left with a feeling that the more things change, the more they remain the same.

I somewhat owe Harshad Mehta for my career as a business journalist.

Before the 1992 Indian stock market scam involving Harshad Mehta was reported, I was trying to create a new beat called ‘economic offences’ or ‘white-collar crime’ in Mumbai. This involved following the ongoings at the Income Tax Department, the Enforcement Directorate, the Directorate of Revenue Intelligence, etc.

My reportage for the Navbharat Times on the probes into the scam and the in-and-out about the country’s economy and its financial sector put me on a steep learning trajectory.

So, naturally, watching the SonyLIV Original web series ‘Scam 1992: The Harshad Mehta Story’ took me back to the early nineties, when I covered the scam in Delhi.
A photo of the reporter from the early nineties in Delhi.
A photo of the reporter from the early nineties in Delhi.

My Kali Zubaan

My strongest memory from back then is about my meeting with the then Central Bureau of Investigation (CBI) Joint Director K Madhavan who shot to fame after his investigation into the Bofors scam.

I met safari-clad, pouch-carrying Madhavan on the very day he was asked to take over the Harshad Mehta scam. It was an informal meeting in his office. I asked him a few questions, shared my perspective on the investigation, and pointed out a few missing links. By this time, we got a sense that it was all too murky and that high stakes were involved in the case. I clearly remember cautioning Mr Madhavan and telling him that he will not be able to complete the probe.

Investigative agencies and the media were still struggling to make a holistic sense of the scam. While some called it the ‘stocks scam’, others named it the ‘banking scam’ or the ‘securities scam’. However, the easy and lazy stuck with the label of ‘The Harshad Mehta Scam’.

Harshad Mehta was ranged against well-entrenched market lords, backed by some of Mumbai’s big businessmen and inefficient regulators. What happened after is a matter of record.

Mehta, with the help of Ram Jethmalani, made the most sensational allegation during a press conference in Mumbai – that he had carried Rs 1 crore cash to the then prime minister Narasimha Rao’s house.

All hell broke loose, and the investigation got heavily politicised. Things got quite complicated, with Mr Madhavan shunted out of the probe. My kali zubaan!

Cleaning Up the System

Watching the web series also took me back to the days of the Joint Parliamentary Committee (JPC) probe. We followed it closely for months, attending its media briefings at 12 am, and sometimes, even later at 2 am, though most newspaper journalists would go to bed by midnight.

This probe grabbed headlines for long. After the Haridas Mundhra Scam (which is touted as newly Independent India’s first financial scam, involving a Calcutta-based stockbroker) and the 1971 Nagarwala scandal (that rocked the banking sector in the early seventies), that generation of Indians saw its first high-profile scam, involving foreign and Indian bankers, brokers, corporates, bureaucrats, and politicians. It was sensational.

Front-page covers of the <i>India Today</i> magazine on the Harshad Mehta Scam.
Front-page covers of the India Today magazine on the Harshad Mehta Scam.
(Photo: Altered by The Quint/Shruti Mathur)

Journalists, including me, would hang out at the Parliament House Annexe building all the time, surviving on batata vada and tea. Three of us – Paronjoy Guha Thakurta (The Pioneer), Sabina Inderjit, and myself – formed our own ‘SIT’ (Sanjay, Inderjit and Thakurta). Our cartel’s aim was to optimise its news gathering efforts by meeting the MPs after the JPC would end and share our notes for regular stories. We would fiercely compete for our own exclusives, too – no cartel there.

The JPC was headed by Congress veteran Ram Niwas Mirdha. The committee consisted of the best of parliamentarians at the time – Jaswant Singh, Yashwant Sinha, S Jaipal Reddy, George Fernandes, Nirmal Chatterjee, Gurudas Dasgupta, Mani Shankar Aiyar, Murli Deora, and Harin Pathak.

The JPCs don’t brief the media as a set practice. However, that JPC was an exception which unanimously briefed the media after every meeting.

It called all powerful biggies, regulators, and probe agencies as witnesses. Many hoped that the probe would not only unearth the scam but also hunt down all ill-gotten wealth and put wrongdoers behind the bar. The whole system will be cleansed. Some did go to jail, then were released on bail, while some who should have, never got caught.

Journalism Meets Activism

I must confess that, at some point in time, if one is passionate about what one does in journalism, the boundaries between reporting and activism do get blurred. I do recall sacrificing a couple of exclusives and sharing some information with some of the members of the JPC who would raise those issues in the meeting – and greater good will be served.

But that was so naive of me. One such story was about a list that I had got from a source. It contained around 90 names of a foreign bank staff who were relatives of powerful politicians and bureaucrats. The idea was to prove a nexus.

Another story was about the lapses by the Reserve Bank of India (RBI). I shared information with a senior Opposition member whom I admired immensely. When he raised these issues, I saw former RBI Governor S Venkitaramanan rushing to this member’s house to explain things.

Despite intense probing by the JPC, like every Indian probe, this too met the same fate.

Dashing all hopes of true and speedy justice, the final report made all the right noises, but finally concluded that it was a “systemic failure” which must be fixed.

Last we gathered from news was that Harshad Mehta’s wife Jyoti and his brother Ashwin were still trying to get the remaining money back from the custodian.


The More Things Change, More They Remain the Same

I used to meet Ram Jethmalani and his son Mahesh frequently. I never met Harshad Mehta, but I did meet Ashwin in Delhi after the famous press conference in Mumbai, where the prime minister’s name came up. A gentle guy. In my meeting, he made a strong case about how Harshad Mehta was being victimised. But I could sense that Ashwin had realised they were on a slippery slope.

While watching this series, I was left with a feeling that the more things change, the more they remain the same. The year of 1992 was an analogue world where financial systems existed in silos. The communication gap allowed frauds to take place. A stockbroker could grease the palms of some mid-level PSU bank staff who would give money to a Harshad Mehta based on fake bank receipts.

By 2000, even though post-reform India had progressed, there was a Ketan Parekh who would fleece a cooperative bank called Madhavpura Mercantile Bank to play in the stock market.

Cut to 2018-19, India's banking and financial markets are digital – fully connected and networked – but then a diamond dealer Nirav Modi and his uncle Mehul Choksi get hold of two junior functionaries at a Punjab National Bank branch in Mumbai. Like bank receipts, they use a piece of paper called the ‘Letter of Undertaking’ without any collateral and manage to access funds.

No checks are done, only a few computer registries in isolation, which are not trackable by the bank or interbank networks but are told to be secure with real-time surveillance. The story doesn’t end here – you have a DHFL (Dewan Housing Finance Corporation), which makes a cooperative bank, like the Punjab and Maharashtra Cooperative Bank, its own piggy bank, and then the bank goes bust because it fell into the regulatory grey area.

Where are the various investigations, punishments, and closures? You are welcome to google them.

Back to the Web Series

The problem with contemporary history is that you end up comparing the reel life with real life. Harshad Mehta was much different from what a bright Pratik Gandhi looks like. Yes, Gandhi’s character stands out for his good acting, and so does actor Shreya Dhanwanthary who plays Sucheta Dalal (though I wish she wore Sucheta’s trademark pearl necklace), as other characters of the real-life story are relegated to margins.

The series shows Harshad Mehta as both the culprit and the victim. He must surely be a likeable guy, but his wrongdoings were far too big to warrant any sympathy. Just because the old-established clans of the bear cartel escaped the trials, tribulations, and the punishment, and that bull Harshad Mehta “suffered”, is not reason enough to be sympathetic towards him.

His misdeeds are a matter of a historical fact. I am a witness.

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