This column that appeared in the Divvya Bhaskar of Gujarat argues the background and education of a white collar criminal makes a big difference to the public perception about his crime, even when the damage inflicted by one category is greater.
Crime and perception
By Sucheta Dalal
It is but natural. When compared to the Rs 30,000 crore (alleged) Thelgi stamp paper scam, an Rs 62 crore fake share investigation is mere peanuts. So the reports about the Central Bureau of Investigation’s (CBI) raids on 27 premises of Ketan Parekh, Shonkh Technologies and Padmini Technologies (called Padmini Polymers before it latched on to the technology boom) and SBI Mutual Fund and Unit Trust of India officials was relegated to the inside pages of most newspaper.
But to those of us who have been following Ketan Parekh’s progress from Big Bull of the markets to discredited scamster, it adds to the number of ways in which he defrauded the system.
It is interesting to compare and contrast the modus operandi of Abdul Karim Thelgi and Ketan Parekh and their impact on people’s minds.
Thelgi , who hails from Khanapur, a sleepy town on the Karnataka border ran a simple fraud. He bought stamp paper presses discarded by the Reserve Bank of India and began to churn out fake stamp paper. He amassed money and evaded arrest by bribing anyone who could halt his operations. In the process, he turned hundreds of politicians and policemen into crorepatis. Who did he defraud? Only the State exchequer! Money that should have gone to provided infrastructure, education and hospitals, or paid the salaries of government officials and policemen was diverted to the pockets of Thelgi and his politician-police friends.One Assistant Police Inspector, D B Kamat reportedly amassed Rs 100 crore while Joint Commissioner of Police Sridhar Vagal has over Rs 30 crore. Meanwhile, State governments used the excuse of poor revenue generation to create more business opportunities for Thelgi by frequently raising stamp duty on real estate, trading and other transactions.Since no individual was cheated directly, the fake stamp racket went on for 15 years or more.
Contrast this with Ketan Parekh’s activities. They caused direct losses to several categories of individuals. The most obvious ones were investors who lost heavily when the stock market collapsed. But the bigger damage by far was caused to innocent investors when two institutions collapsed. One was Unit Trust of India (UTI) and the other was Madhavpura Mercantile Cooperative Bank (MCCB). Both scams gobbled up the savings of people who probably had nothing to do with the stock market.In addition, Ketan’s industrialist friends diverted money borrowed by them from ICICI, UTI and Global Trust Bank to hold up stock prices after the stock collapse had begun; and he even inflicted losses on SBI Mutual Fund by passing off worthless shares to it at inflated prices. None of this money has been recovered.
Yet, notice the difference. Despite his phenomenal wealth, Thelgi has remained a shadowy figure, whose photograph was never in the newspapers until his arrest. He had more money than Ketan Parekh and enriched more politicians and policemen than Ketan ever did.
But Parekh had the social acceptability that Thelgi can never have. Parekh was the toast of society parties, rubbed shoulders with Australian business magnate Kerry Packer (notice how Kerry Packer and his grand investment plans in India are not even heard of anymore) and lesser Indian industrialists, superstars to smaller stars, starlets, newspaper owners, editors and high profile politicians. Even after his stint in jail, his appearance at society parties made news on Page Three of the national dailies.
The difference in the social acceptability of Thelgi and Parekh is probably explained by their background and education. Thelgi is a shady rags-to-riches story, while Parekh, a Chartered Accountant, came from a reputed institutional brokerage firm. That is why; many people continue to see him as a brilliant and ambitious person who made some bad mistakes. They don’t view Thelgi in the same way.
This difference is starker when you compare attitudes to Thelgi and Jt. Commissioner Vagal.Sridhar Vagal was a graduate from IIT-Powai and IIM-Ahmedabad, passed his IAS but opted for the police and rose to the rank of an Inspector General of police. His betrayal of public trust is probably far greater than Parekh or Thelgi, because he was supposed to protect the system. But Vagal’s brilliance and background has inspired some professors and alumni of IIT Powai to start a campaign to support him. Fortunately, it has met with strong opposition.
This positive bias towards qualified and educated white-collar criminals is evident in every scam. Such scamsters always find willing supporters despite the damage that they cause to the system. They often get multiple chances to try new tricks and cheat people over and over again. And all the time, they have the money and the power to hire top lawyers and sometimes even corrupt the judiciary.
We, the people have to recognise that education and brilliance is no bar to a criminal mind and that suave white-collar criminals need to be ostracised as much as petty thieves, thugs and criminals. Only then can we hope for real systemic change in society.