Bhubaneswar Bourse Crisis Takes A Fresh Twist

The crisis at the Bhubaneswar Stock Exchange (BhSE) has deepened with bank documents revealing that scam money from the exchange flowed to the account of a company owned by BhSE president Tulsi Das Bhayana.

The documents show that at least Rs 40 lakh of the Rs 1 crore misappropriated from the Members Welfare Trust of the bourse has gone to the coffers of India Finance Guarantee Ltd (IFGL) owned by Bhayana and BhSE vice-president Ashok Kumar Sardhana.

The money was transferred from the current account No 1003 of Pradeep Investment maintained at the BhSE extension counter of Canara Bank and owned by Babulal Sharma, former vice-president of the bourse, who is accused of defrauding the trust fund of Rs 1.30 crore.

Sharma was sanctioned Rs 99 lakh loan by the trust in "utter violation of the provision of the trust deed" in five instalments of Rs 10.77 lakh, Rs 35 lakh, Rs 22 lakh, Rs 16 lakh and Rs 15.25 lakh between May 21,1999 and January 12, 2000. This was done to tide over temporary financial difficulty in payment of dues of the clearing house of the exchange.

Of the Rs 35 lakh loan given in the second tranche to Sharma on June 7, 1999, Rs 25 lakh was transferred to the account of IFGL on the same date. Similarly of the Rs 22 lakh given to him in the third installment on September 29, 1999, Rs 15 lakh was transferred in favour of IFGL. This is in violation of the objective of the loan issue which specified that the money should be utilised to clear dues of the clearing house and not for making any other payment.

"All issues relating to the financial irregularities are now under the investigation of the Securities and Exchange Board of India. Let them do their job. I don't have anything to say on the matter now," Bhayana said.

A two-member team from the regional office of Sebi in Kolkata led by Jayanta Jash has completed investigation into financial bungling in the bourse. The team is expected to submit its report to the Sebi headquarters shortly.

"We have provided the Sebi officials with all the information they required for their probe", said BhSe executive director, Jay Sadany. He, however, felt a thorough investigation by the Central Bureau of Investigation (CBI) will bring out the truth behind the scam and expose the culprits.

A section of brokers feared that because of the complicity of the current president of the bourse in the irregularities, the probe into the scam "may not be fair". "To make the probe appear free fair and independent, Bhayana should immediately be removed from the post of president", said Rajkumar Khemka, a broker. He also demanded for a CBI investigation into the matter.

Meanwhile, a separate inquiry launched by the directorate of income-tax has found that the Members' Welfare Trust of the bourse is not registered with it as required under Section 11 and 12 of the IT Act.

Similarly, it is also revealed that Rs 78 lakh advance given by the stock exchange to the trust to help it issue loans to Sharma is in excess of the Rs 25 lakh cap fixed on such assistance by the bourse council.

Interestingly, in its annual report for 1999-00, the Rs 78 lakh loan to the trust is camouflaged under the head of other receivables without proper disclosure.

Similarly, the audited account of the trust for the year was omitted from the annual report, as it was done in the previous year, said a council member, adding, the directors' report was also silent on the trust.