Scam 1992 the Harshad Mehta Story - S01 E07

[Harshad] 'What a lovely house you've made, my lady!' We'll build a terrace garden here.  You know, with those miniature plants and trees?  Bonsai. [Harshad] 'Bonsai. We'll plant those too. I've heard they are very lucky.' What is it? Is everything okay? What do I say? You tell me. Is everything okay at work? What do you mean? Your business is beyond my understanding. But I do understand that all the newspapers are writing about you. So let them. It's worthless news. Many homes run thanks to your husband, my lady. News reporters are amongst them.  So, let them earn too.  I'm scared. It feels different this time. What's different?  You think too much.  Hey! [Title Montage] 'I won't take up too much of your time.' 'I know that most of you are here to listen to just one man.

' According to me, he's a scientist. Einstein of the share market. Harshad Mehta. Please, come. [crowd applauding] Thank you. To be honest, I can't even spell 'Einstein'. [laughter] But that's okay. It's new. These days, people are also calling me the thief of the stock market. The newspapers refer to me as "Big Bull" "Big Bull has run away with 500 crores from SBI." They mean I have swallowed up SBI's 500 crore. If at all I had to swallow money, why just 500 crores? Huh? The money market sets up a daily buffet of two lakh crores. So imagine. What Harshad Mehta's daily transactions would be! But they aren't taking my name. They just write "Big Bull". Well, everyone knows, I am the Big Bull. [Harshad] 'Hmm?' But what does my being the Big Bull have to do with the reconciliation of security transactions? Indirectly what they're trying to say is,that I am responsible for the bull run in the market. Okay. That's fine. But that also means if it wasn't for me,the market would be lumbering along at the pace of a bullock cart? [Harshad imitating sound of a bullock cart] [laughter] The truth is that the newspapers have no proof. 

That's why they aren't taking my name openly. Because there's no truth in what they're saying. I took 500 crores from SBI. Yes, it's true. I did. But I also returned it. How about printing that? Hmm? But they won't. Because, if it's not negative, it's not news. The newspaper needs to sell, right? They too have homes to run, don't they? But their baseless and biased news doesn't scare me. Why should I be scared? Because I've broken the monopoly of foreign banks in the money market? In Mumbai,every morning when the gong is struck at the stock market,my name is chanted along with it. This is Bombay. Here, everything will change,but the ocean will always be there. So, I am the ocean of Dalal Street. If you have the guts, you can taste the salt. [crowd applauding] They say the market will reopen on the 28th. The strike will be over. If the SEBI chairman had already accepted their demands,then what was the point of stretching the strike on for so long?  Ashwin Bhai, I think  Your thoughts are absolutely right, Bhushan. The publishing of this article, the extension of the strike It's all been too well planned and timed. So that, as soon as the market opens the sentiment is low and it crashes You and I get it, but we are duffers, right? 

But this fellow,a genius, "Einstein" of the market. His brain has stopped working. Look at him. You should've heard his speech. That Sucheta Dalal didn't take any names. But he he confessed publicly "I am the Big Bull of the market."  A round of applause for him.  Confessions are made by criminals. I only stated facts. And that too, only so that nobody can take a stand against us. And what is wrong with what I said? What do we have to hide? What should I hide? Now, even SBI has confirmed that they've received their money. So? What's the issue? Then, why don't you also tell everyone where the money to repay SBI came from?  Right?  Ashwin Bhai [Rajdeep] 'Therefore, I was saying it's not a front page story.' What will the follow up story be? Harshad is admitting that he took money from SBI. 'Even to me, it seems like a daily deal that he does regularly with banks.' 'Even SBI officials are saying the same thing.' Soon, people are going to question us,about our motive! Harshad is making us look like a f*****g gossip magazine. 

 But Harshad needs to be brought to justice  Listen to me, Sucheta. Harshad is a hero. A hero for the common man. His clients, his investors. He's making profits for them. People are inclined to believe whatever he says,in spite of what we write against him. [Rajdeep] 'Instead, why don't you write about the never ending brokers' strike at the BSE?'  What are you even saying, Rajdeep?  Yeah. No. This is a good story and you know it. I'm sure you've read the article that appeared in Times of India? Yes, sir. The Big Bull and the securities reconciliation issue.  Big Bull! [smirks] Great! So, what's new? We knew this could happen. And yet, we did nothing. We were suspecting this for a year, now. Sir, we had issued guidelines last year, sir but What What guidelines are we talking about? This one? "Any instance of return of SGL form from the PDO " " for want of sufficient balance in the account " " should be immediately brought to the Reserve Bank's notice " " with the details of the transactions." I'm sure, half the people didn't even get it. And the rest They just wiped and flushed it. [Mukherjee] 'Sir ' How do we proceed, sir? Use your sources with every bank. [Venkitarajan] 'And Conduct a rough audit.

' Find out how far this garbage has spread,and then we will know the extent of this scam Sucheta Look,Rajdeep is right. Please don't mind, but,I think we rushed the story. We? Why "we"? You can blame me directly. I'm not blaming you, Sucheta. I'm not blaming. I was just saying, that maybe,if we had investigated more,researched a bit more then we could've See, what I mean is that if we could have found someone,who was willing to go on record then we'd have Debashis, I work for a daily newspaper. I don't work for a magazine, like you,that I can sit back and think because I have a few weeks. I have a deadline, daily. If I'd have waited, I wouldn't have had a story. You know Harshad Mehta is a bloody scamster. You know what? If they want a goddamn follow up   I am gonna find one.  Sucheta, listen. Sucheta Look, you [Debashis] 'If you are mad at me, I'll leave.' Why are you leaving your own house? [door thuds] Come on, Sucheta. [Sucheta] 'Finally the market opened.' 'I still had no paper evidence against Harshad.' 'But he had gone ahead and admitted that the article was about him.' [crowd shouting] [Sucheta] 'He was trying to downplay his problems with SBI in the hope that the markets would not react but it seemed that the people had lost trust in Harshad.' [crowd shouting] [Sucheta] 'It was a free fall for the shares in which Growmore was investing ' If it doesn't hold at 4000, it will drop further. 

 Huh?  Not you. The Sensex. This is too much. There's no chance, Rakesh. Even if it holds today,in a few days, it'll drop below 3000. The downward trajectory has only just started, brother. Wait and watch. This time, Harshad is finished. [Maheshwari chuckles] We shouldn't be hasty and go on a buying spree. We have to be stealthy, like a fox. Look. This time, we were lucky. All our losses will get converted into profits. True Our a***s were on fire! It's good we only singed some p*bes. You have no control over your tongue, nor your bladder.  I was just  What nonsense! I We scraped through this time but this can't go on. I think,this is the right time to get out of this casino and retire.  Retire?  What are you saying? We planned all this, only to stay in the market. And you're talking of leaving the market? I'm not talking about leaving the market. Today, I have decided,to free myself from this trading mess. If I need excitement, thrill, I'll go to Vegas. Right? From now on, only value investing. Just value investing. 

And I'll pick good companies, good shares,invest big amounts,and just wait for long term. Day to day trading is nonsense. Focus on the big dream,and make millions.  Maybe billions.  Maybe trillions. What are you guys talking about? This is the perfect time to trade in the market. Look, Mehta will soon be out of the market. Sensex will drop from 3000 to 2500. And after that, the profit lies in buying. See, I can't explain the story of long term in short. In 20 to 25 years, the market will rise to,35,000 to 40,000. It's not going to go from 3000 to zero. This is the time to be a bull. Gone are the days of playing Bears and nibbling peanuts.  Hey, Bhai  Don't "Hey Bhai" me, I'm talking sense. If my prediction is correct,then who knows, I could be the next Big Bull. Sure. [Bhushan] 'We're past 4000 now.' The market has sunk so low,the Sensex is scraping the floor. The share market has turned into a fish market. Are you listening? Up until last year, everyone was buying. And today, all of a sudden, the whole world is selling. Our jobbers were petrified. As if they were going to be bashed up by the angry crowd.  Everyone is scared. [Ashwin] 'Of course they are scared.' 'Why won't they be scared?' The market has dropped by more than 500 points. And Polo Polo has dropped to 510 from 300 in a snap.  Brother, we need to think of a strategy soon.  Strategy? What kind of strategy? All we are running on, is hope. 

And we're slowly losing that too. Now start thinking how will we repay NHB's money? Is this the first time you are seeing the market fall? [Harshad] 'It has opened after a long time. It's obvious it'll dip.' It'll lick some dust and rise again. And have you forgotten? We started with a crash. [Harshad] 'What's new about it?' What's new, Harshad, is that this time,we are the reason for the crash. Even better. We're the kings of the market. If we can cause it to fall, we can make rise it too. The wind is blowing in Harshad's favour. And it will change its course on our command. And now after this crash, how will we return Pherwani's money? You do know how big the amount is, don't you? [knock on the door] [Kashmira] 'May I come in, sir?' Kashmira, I told you I don't want to get disturbed today. Sorry, sir. But, Mr. Rahil is on the other line,and he insists on talking to you.  Connect me.  Okay, sir. Hello, Rahil.  How are you?  I'm I'm fine. Have you seen the condition of the market? Yes. So? [Rahil] 'No, I mean your men asked me to invest ' and I did. I invested all I had. I'm deep in it now. Rahil, I call the stock market, shock market sometimes. It can deal a real blow. At times you make a profit, at times you incur a loss. That's what business means, right? You're lecturing me about the market? What do I know about the stock market? 

You said, your men said 'Invest, invest, invest ' So, I did. [Rahil] 'It's all over now.' Rahil, this is the stock market not a treasure chest,that you dip your hand and pull out a fortune, when you like. And this money that you invested, you earned it in the market, right? So, the market took some of it back. [Harshad] 'I didn't take your money.' I I get your point, but Look Rahil, you are a friend,so I'm explaining patiently. I have many clients. I can't explain to each one, can I? We'll talk peacefully some other time. Bhushan, don't smoke here! [Tyagi] 'So, how much did the Sensex fall today?'  Fell by 570 points.  [Tyagi] 'Wow.' That's 12.77 per cent to be precise. Never before in the history of BSE,has it dropped so much in a single day. [AK] 'That's more than 10 percent investor wealth wiped out.' And I believe, most of them are Harshad's investors. 

Hmm And yet, Harshad managed to repay SBI. All 500 crores. I just wonder who funded him? Whoever it was, will be exposed soon. I believe the sensex will be discussed in the Parliament too.  Are you sure?  Pretty sure. Politicians are on this, AK. Harshad has taken too much money from the market. [Tyagi] 'And he has to return it all. And due to this fall ' his holdings have been halved. It's time to put an end to this Harshad Mehta story. 'Today the members of the parliament debated the sudden crash at the stock market yesterday that resulted in the biggest Sensex fall ever.' 'Under pressure from the opposition leaders the government announced that RBI will probe the event ' 'Today, the members of the ' [phone ringing]  Hello?  Harshad Listen to me carefully. [Pherwani] 'Your 15 days are over.' I need my money back. Pherwani ji, why do you worry so much? Worrying is my job. I owe you the money and you'll get it. Harshad, you are not understanding. RBI has formed an enquiry committee,to inspect your transactions with the SBI. [Pherwani] 'Do you understand what this means?' It means that these guys can land up any time at my doorstep. [Pherwani] 'And I don't want that.' I want my books clean, that's it. [Pherwani] 'Either you organise funds ' or ask Grindlays to give BRs. Look, I've understood the problem. Please trust me. [DT] 'The market was bound to react.' His whole confession of him being the Big Bull from your article,is just another "Harshad Mehta is a liar" trick. [DT] 'I'm telling you, he's already looking at huge losses.' Do you think even after making such losses in the market,he is going to stop? He's not going to stop. No, you're right. He's not,unless you prove that this entire activity is illegal. Now, it seems like Harshad took a loan from the bank,and he returned it. Albeit, a bit late. What if we change the question itself? Maybe then it will be difficult to answer? Look, if people think it was a loan of 500 crores, that's okay. But to return that, where did he get 500 crores in such a short time? He has enough assets, holdings. He literally knows everyone. [DT] 'I mean half of Delhi dances to his tune.' Right. Exactly. So, he must've sold something, right? But he didn't. Officially, Growmore has not done any deals. [Sucheta] 'It's a matter of 500 crores.' 'Everybody in the market would get to know about it.' Are you saying, he went to another bank? If SBI was f*,fooled by him. Then he must have repeated the same thing,with several other banks again and again. B******t. Okay. 

Do you think you can find out which banks he has gone to? I get your point, but,what will you do with just the name of the bank? I want to print just one more headline,that will get imprinted in people's minds forever. I need another Bellary to grab this Big Bull by his horns. 'Mr Mehta, we are talking about an extended line of credit.' 'Under the present circumstances it is impossible for Grindlays to give you this kind of money. ' Then the other option is that Grindlays gives BRs to NHB,for the money that they have paid. It's funny you say that. We credited all the NHB cheques into your account. See, all I am saying is to give BRs worth 500 crores to NHB. They just need it for documentation purposes. And it's just a piece of paper, right? It's not just a piece of paper. Not any longer. We have strict instructions to stop all security transactions. There could be an audit any day. And is this really this urgent? It's Sunday. I don't wanna talk business on a Sunday. I understand that. In fact, I just came here to play some golf. I saw you here, so thought of discussing. Well, why don't you try a shot, Mr. Mehta? Why not? Sometimes, you have to be more delicate. It looks like you don't know how to play golf. Yeah, I play cricket a lot. I think I need to stretch my body a little bit. Mr. Mehta, your mind missed the shot. Not your body. Maybe, you should just stick to the game you are good at. Harshad, we've fallen out of the frying pan into the fire. We don't need to hold our holdings till they hatch. Let's clear NHB's settlement. It's not any other private bank. It's a part of RBI. 

And that governor, he's already pissed at you. Sell the holdings and end this. I've heard that these days you can set up a golf green at home? You find out. We'll get one too. If we have to play their game we'll have to learn it, right? What was that he said? "You have to be delicate." [dog barks] Why should I be scared when you are with me? What will I do single handedly if some goons [knocks] This has all the names. 'I got the list from Growmore.' Thanks. Okay, but my name mustn't appear anywhere.  My job will be at stake.  I don't even know your name. How can I leak it? And don't worry. I know how to protect my sources. Your name won't be revealed. Okay. Let's go, uncle. That's enough for tonight. Sir, Harshad's SBI scam is nothing. Every bank has some irregularities with regard to securities. [Ghosh] 'I think that '  Ghosh How big is it? Number? Sir, the books are in a complete mess. It'll take time to figure out the exact number, sir. What are you waiting for? Get on with this. This is the list of all the banks,with whom Harshad was dealing for the past few days.  And?  And So,is there anyone, who can give us some leads? I mean, someone who works in any of these banks? "Us"? Oh, you mean, someone who can give "you" a lead, right? Debu, this is a potential common lead for both of us. 

You can write a detailed, and well researched article later. But I need to break this story as soon as possible.  But if you don't wanna help me  Okay Okay I'll look for someone who can get us the details. Okay? Okay, thank you. Thank you. I think you gentlemen should also leave now. Sir, you should also rest. You are taking a lot of stress. Yes, of course, I'll just finish this and go home. Should we clear the table? No. I'll manage.  Carry on.  Good night, sir. Soon, it will be Good Morning. Anyway, thank you. [Venkitarajan coughs] [Venkitarajan] 'Sorry to disturb you so early in the morning, sir.' But our estimates were right. My team has just come back after the preliminary enquiries and Yes. It is India's biggest financial scam. Five thousand crores. But Yes, sir I do understand, but Sir, the only way to handle this is to make it public. Y Yes of course. Yes, sir. I will keep it discreet. Yes. Thank you, sir. Sorry I slept Did you find anyone? Yes? Did you find anyone? Here. I didn't. But News Press did. [Debashis] "According to the sources, the extent of the scam " " is expected to be in the region of Rs. 2000 crores." "And they suspect that the remaining 3000 crores gap " " is probably caused by banks including certain securities " " in their report that may not be part of the SGL records." Where is News Press getting these details? I mean I've spoken to a hundred people in the last ten days,and no one's even uttered a word. They may have some confidential source. All the sources are not like your 'Karamchand', right? No. It's a major source. Someone in the system, and very senior. They've netted some big fish. And this big fish has opened his mouth. [Ghosh] 'Sir, I hope you read the news.' Yeah. 

 Sir, Delhi is in panic.  Good morning. The finance minister's office has been calling incessantly.  What do they have to say?  Sir, nothing much. They'll only speak with you, sir. Alright, I'll handle it. This has never happened before, sir. I mean, the RBI governor holding a press conference,in reply to a newspaper article. This could give rise to more speculation and more questions. It's the Press, they are bound to ask questions. And moreover, there could be some questions,which we might not have answers to. [Man1] 'You need not answer every single question.' 'You just need to deny that the scam is of such proportions.' '5000 crores is a number that can shake anyone.' 'Just explain to them that the scam is not as big as this article says.' Honestly, sir, how can I do this? I mean, on what basis do I deny so many facts? Huh? I mean, how can I deny something that is the truth? Something that is now now in my knowledge. [Man1] 'Mr. Governor, the Prime Minister will be very upset if such news hurts our economic reforms.' 'Please, let us figure out a way how to refute these allegations.' Yeah Yes, sir. I understand. [Man1] 'And what's the update on Mr. Mehta?' Uhm Yes. That investigation is on too. 'Good. That should be our focus.' Right, sir. The cheques that Mr. Mehta gave you  Those  Those cheques have been cleared. So, have you cleared them off your books too? Meaning? Meaning, you don't have the cheques, but you must have the details? [Mukherjee] 'Show me the records.' 

There's Mr. Mehta. Look, he has an account with us, he does business with us. He can He can always withdraw as much money as he wants to. But you transfer the money to his account, right? So, maybe you would like to show us,the transactions to his personal accounts then? No, no, I don't mean that. What I mean is that,he had brokered a ready forward transactions a few days back. So, the money came to his account. He must've used it,for some other purposes. And who did you do this ready forward transaction with? As the central bank of the country,we categorically deny that the scam is of such proportions. The details would only be known,after a full investigation by the RBI team,into the security holdings of these banks. So, till then, I request you not to,blindly speculate, and,let the concerned authorities do their job. Sir, how did you arrive at the conclusion,that the scam is not 5,000 crores? We know that there's a problem in unit 64.  Have you sorted it out?  Not yet. Do you know how much problem exists in bonds?  What is the extent of that loss?  We're calculating that. Do you even know the extent of fake BRs,that are circulating in the market, Mr. Governor? [Reporter 1] 'Have you been aware of the fact that fake BRs have been almost '  an established market practice?  We're conducting an audit. Sir, do you know what was happening with portfolio money? Why was so much money from PSUs coming in?  Have those calculations been made?  Not yet. Then on what basis are you saying that the scam is not 5,000 crores?  Why are you downplaying the scam?  Look, this is just an estimation. [Venkitarajan] 'This is our understanding.' We are the specialists and we know our job. So, Mr. Governor, you are admitting that you have no clue. Yet, you are adamant about the fact that the amount cannot be 5,000 crores. Who are we trying to protect here? Sorry, no more questions. Thank you. Sir, NHB? On the one hand, we are trying to save face to contain the havoc,that this scam has created. 

And on the other,NHB, which is a wholly owned subsidiary of the RBI,is rolling out cash to Harshad to save his back! Mehta has made a joke of this system. Sir, do you think Mr. Pherwani might also be involved? Well, I'd like to believe he's not involved. But when an institution like the,NHB deals in such high volume transactions,can't be without Pherwani's nod. Sir, why don't you speak to him directly? We have to find a smarter way to deal with this. [Rajdeep] "Despite his denial " " the RBI governor was unable to answer a single question " " from the press satisfactorily." "The scam is a reflection of the rot in the banking system " " and the inadequate monitoring by the RBI." "Certain sections of the market are extremely critical " " of the ham handed investigation of the RBI " " as they believe that the government is simply trying " " to sweep the matter under the carpet " " as more skeletons are likely to tumble out of the closet." So, now we're also turning the RBI governor into a villain? If you don't want to publish this, why don't I give you the transcript,of the entire press conference and you can print that? No, I like this better.  Thank you.  Finish it. What's with this coffee! It's terrible. 'Today, once again, the opposition made a noise in the parliament about irregularities worth 5000 crores ' 'RBI Governor's press conference was also questioned and there were demands For a Joint Parliamentary Committee to carry out investigations in this matter ' 'The finance minister assured the opposition that the government will soon conduct an unbiased legal investigation.' Once again, TOI is making a difference. Not everyone will have had the guts to first go against Mr. Mehta,and then, the RBI governor.  Sucheta! [applauds] Sucheta, I've gifted you enough books. Next time, I will have to gift you some wine glasses. So why haven't you? You're always here. Anyway, Debu Moshai,what's the occasion for wine? [Sucheta] 'The uproar that the article caused in the parliament?' Uproar in the parliament is no big deal.  Hmm?  That always happens.  They're politicians.  Hmm. Screaming is part of their job profile. Decibel levels are at the top on their CVs,confirming how loud they can be Anyway, leaving that aside We are celebrating in advance. Though the news will be published tomorrow. What's this celebration worthy news? RBI has formed a committee to investigate the scam. And it will be headed by RBI deputy governor R. Janakiraman. Not bad! So the government is finally acknowledging that they have a problem. Officially.  Not bad.  Wait Don't drink yet. I haven't told you the main exclusive news yet. What exclusive news? Listen, I'm the journalist,who's supposed to get exclusive news. Yes, but I too have my sources. I too have my own 'Karamchand'. Okay, sorry. The government has agreed to hand over the investigation to the CBI,and it will be headed by a top rank officer. CBI? They've gotten serious, huh? I'm serious too. Are you? What about? ♪This first flush ♪ ♪Of a tender rhapsody ♪ ♪It's a new love ♪ ♪A sweet new agony ♪ [thud of golf club] [thud of golf club] [thud of golf club] [phone ringing]  Yes?  Mr. Venkitarajan. Pherwani, here. [Pherwani] 'I've heard ' few men from your office are trying to look into our books? Mr. Pherwani, those are not your books. You seem to have forgotten that [Venkitarajan] ' NHB is a subsidiary of RBI.' You can't help your friends just like that. [Pherwani] 'No It was not like that.' 

It was a simple ready forward deal, that's all. Mr. Pherwani It's late. I need to get some sleep. Can we talk about this later? Uh Mr. Venkitarajan I have a suggestion. [Pherwani] 'Allow Harshad to roll over his dues ' for another fortnight. And then you will sleep in peace. [Venkitarajan] 'Mr. Das, I haven't called you here without a reason.' 'I must be having a very good reason to call the chief of CBI directly, right?' This committee that we're setting up to investigate this scam,we'll need some additional help. You see, there are too many parties involved. Too many underhand dealings that are not above board. And,too many complex, high level transactions. We need to clean the system. And for that, we need hard evidence. We can't do anything without the evidence. We will investigate it thoroughly. But CBI has never handled,such a financial case. We'll need your team to constantly,back us up and guide us at every step. Absolutely. We are with you. All that we ask for is,a good officer to handle the investigation. A really good officer. I'll give you the best I have.  Madhavan.  Ma Bofors Madhavan? Yes. Same officer. Well [Song playing]