INDIA BUSINESS WORLD - MARCH 2006
THE MONTH THAT WAS

STOCK MKT SCAM: LONDON A/C OF KETAN AIDE FROZEN

IN a fresh development in the investigation into the 2001 stock market scam, the London bank account of Ketan Parekh's associate Dharmesh Doshi, who is wanted in India for allegedly siphoning off Rs 780 crore from a bank, has been frozen.

The UK bank account in Credit Suisse Bank, in which Doshi has “controlling interest”, contains around £6 million, according to the Central Bureau of Investigation (CBI).

Doshi, against whom an Interpol red corner notice is pending, is wanted in India to face trial in an Ahmedabad court for allegedly siphoning out Rs 780 crore from the Madhvapura Mercantile Co-operative Bank (MMCB) in collusion with the bank's top management. Through Interpol, the bank account was identified in the name of Elliot Group Holdings in which Doshi has controlling interest.

The CBI suspects that Doshi is staying in London and is active in UK financial markets.After getting the information from the London Metropolitan Police through Interpol, CBI got a letter rogatory (LR) issued for freezing the account and on the basis of the request, the UK judicial authority has frozen the account.

According to the CBI, the freezing of the bank account in the UK is significant and brings the investigating agency closer to the siphoned off money.

The CBI has filed a chargesheet in the case against stock broker Ketan Parekh, MMCB chairman Ramesh Chandra Parikh, MMCB managing director Devendra Pandya, Doshi and others.

In the 2001 stock market scam, the MMCB, an Ahmedabad-based multi-state co-op bank, suffered a massive loss as the funds of the bank were siphoned out by the accused persons in connivance with the bank's top management. The trail of siphoned funds of the bank led CBI to certain bank accounts in the UK.

According to the CBI, Parekh bought the shares of “K-10” companies, introduced in the Indian market by some overseas corporate bodies (OCBs) with the MMCB funds. The K-10 stocks did phenomenally well in the market between October 2000 and March 2001 due to Parekh's alleged manipulative trade practices but the market eventually crashed on March 8 and 9 leading to investors losing crores of rupees, according to the CBI.

According to the CBI, the brokerage firms of Doshi — Triumph International Finance (India) (TIFIL) and Triumph Securities (TSL) — acted as the brokers for the OCBs and Parekh. During the relevant period, Parekh and Doshi were the directors of TIFIL & TSL.