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'My career has been destroyed'

Securities scam: Seven years on, the 'small fish' find the dragnet suffocating

A Ganesh Nadar in Bombay

Scene 1: "Why are the small fry called so? Because invariably it is they that get fried, while the big fish escape," says one of the accused in the securities scam case that made big bull Harshad Mehta infamous.

Scene 2: Wednesday, March 3, 1999. Outside the main branch of State Bank of India in Bombay, a token demonstration is on in support of two of their colleagues involved in the case and still under suspension.

Scene 3: Two middle-aged men, "accused in the case", wring their hands in despair at their respective homes. One is a year away from retirement and the other two years away.

Flashback: Four officers were initially suspended in 1992. Sitaram, Bavdekar, Kailasam and Padhey. Sitaram has since been dismissed. The other three seem to have become pawns in the game of the big, bad bulls.

Now: The securities scam is back in the news ever since Central Vigilance Commissioner N Vittal insisted that the scam accused be dismissed immediately.

That stirred the SBI Officers Association into action. S Suvarna, SBIOA secretary, says, "Punishing our men even before the CBI finishes its case will be unfair. SBI has a very weak management. The RBI and Bank of Baroda protected their officers, unlike SBI. There has been no money loss. Their crime was negligence."

Kailasam has two children, a boy and a girl. The latter is married. Kailasam's family has stood by him over the years. His friends and colleagues still respect him. His personal image has remained intact.

''My career has been destroyed. All the officers who worked with me in the same cadre are streets ahead. Many are working in other banks and earn phenomenal salaries. But will anybody give me a job?'' Kailasam's eyes turn moist, reflecting his pain and sorrow. "Once I get over this, I hope to start a small business.''

Kailasam has survived on 75 per cent of his basic salary since 1992. He is resigned to his "fate".

He refused to speak to me first. Only after Suvarna put in a word, did he agree to meet with me at the association office. It is on the tenth floor of SBI Bhavan, opposite Mantralaya in downtown Bombay.

The association did not have Bavdekar's phone number, but they gave me his address.

I walked in unannounced on a Sunday afternoon. Bavdekar was teaching his daughter who was appearing for the secondary school exams.

Bavdekar signalled me to sit. He fetched me a glass of water. He then introduced his son who is studying to be a computer engineer.

Then: "See, I am teaching my daughter. This is more important than talking to you. Why should I waste my time talking to you? What is the use? You know how many times journalists have written about me?"

Even before I can recover from the barrage of questions, Bavdekar returns with a thick scrapbook of newspaper clippings.

"It's pointless... people read the paper, sympathise with me for that one day; the next day, you give them a new headline, and they would have forgotten about me.

"I was an officer. Can you imagine how I have survived all these years? They give us subsistence pay.

"You know, next year I'll retire. I'll be on the streets. They seized my wife's jewellery." Bavdekar pauses, as emotions threaten to get the better of him.

He quickly contains them, ponders, gulps down that lump in the throat. And, in what seems to be an effort at summoning his inner strength, he closes his eyes, remembers something, and resumes narrating his tale.

"In 1973, I bought a flat in Mira Road with a loan of Rs 80,000. They seized that too. All our bank accounts have been frozen. There was less than Rs 400,000 from my 41 years of service, that's all.

'I can't even purchase a book for my elder daughter -- she is doing her pharmacy. She comes running to me, 'Daddy, I need a book'. Seeing the helpless look on my face, she retreats. 'Daddy, don't worry, I'll borrow it from my friends.' "

Bavdekar's voice chokes with pain, again. He holds back his tears.

'This is financial injustice, I haven't even been chargesheeted, the hearing has just begun. And the CVC wants to dismiss us.''

Another pause. During that, Bavdekar is angry.

'I'll give you 20 minutes, I've to teach my daughter, you know,'' he says, politely, nonchalantly.

Flashback: the heady year of 1992, when the stock markets broke through the sky. Bavdekar was then manager of SBI's Chhavani branch in Nagpur. He had already worked for 30 years outside Bombay, in rural areas, in remote areas. Now he wanted to be in Bombay because his children were studying in the megapolis.

SBI's personnel department offered him a posting at the Girgaum branch in Bombay. Then one day, when Bavdekar was with the personnel top brass in Bombay, there was a call from the main branch, Bombay. "Deputy Manager L V Ajinkya is retiring, why haven't you sent somebody as a replacement?" The personnel manager despatched Bavdekar to the ill-fated main branch which got embroiled in the scam.

Now: Like Kailasam, Bavdekar says his friends and colleagues do not believe the allegations against him. ''The family is disappointed with the bank. They feel I have been made a scapegoat. The family has suffered with me. I was an officer. Now, I have to run to the association for my smallest needs. All the officers have donated Rs 100 each for our welfare. You know how I feel.''

How did Harshad Mehta use Rs 7.90 billion of SBI? How did he return it?

The scam took place at the two diagonally opposite corners, 500 ft apart, on the first floor of the SBI main branch in Bombay.

The left corner from which Sitaram operated had a hotline to SBI headquarters in Nariman Point, and a direct line to the outer world. Sitaram's calls didn't have to go through the board. He had eight assistants.

At the right corner was the strong room in which the securities were stored. The statutory general ledgers and bank receipts were kept in Sitaram's cabin. Nobody on the floor knew what Sitaram or the custodian did. Everybody counter-signed cheque and vouchers initialled by Sitaram. Why they did this is anybody's guess. Government staff have a habit of signing papers once they see a familiar initial, say those who know.

Bavdekar was the only one suspended, though all the officers in the section had at some stage counter-signed banker's cheques, vouchers and confirmatory letters prepared by Sitaram.

They say they did this in a hurry because bank-to-bank transaction on sale and purchase of securities had to be done between 2 pm and 2.30 pm. Why? Nobody knows.

From among the 8,000 branches of SBI, only three are into investment banking. The Bombay main branch conducts 80 per cent of the transactions. The other two branches are in Madras and Calcutta.

Investment banking is directly controlled by the central office in Nariman Point. As it is not traditional banking, the officers have to learn by experience. There is no manual to guide them.

A recommendation by Kailasam to have a manual prepared by PricewaterhouseCoopers was rejected.

The first signs of trouble appeared when a shortage of scrips was detected. Memos to the management were ignored.

Then there was a shortage of SGLs (cheques dealing with securities). The custodian was held responsible even though Sitaram used to keep them with him.

The next lacunae noticed was that cheques received were not being deposited. Thus the issuer was benefitting.

Orders to buy/sell shares used to travel from the central office directly to the custodian by phone. Electronic gadgets like modems which leave behind some kind of record, were never used.

Harshad Mehta or his representatives used to bring banker's cheques in favour of SBI. These amounts used to be credited to Mehta's account.

At that time, Kailasam wrote a letter to the law officer mentioning that ''cheques are being deposited at the instruction of the person bringing the cheque and not the issuing bank''. The law officer did not reply.

After the scrips went missing and the SGLs were found short, SBI asked Mehta to pay up. He did. Again with banker's cheques in the name of SBI. These cheques were reportedly issued by the National Housing Board, by an officer, Suresh Babu who has since been dismissed.

SBI was pleased it had got its money back. Then the National Housing Board asked for securities for Rs 7.90 billion it had given in banker's cheques. This despite the fact that SBI had written a letter to all banks, including NHB, saying, ''As on March 31, 1992, according to our accounts, we don't owe you any cash or securities.'' NHB confirmed having got this letter from SBI.

Subsequently, the government asked SBI to pay NHB Rs 7.90 billion.

Whatever happened to the missing scrips and SGLs? Sitaram and Suresh Babu have been dismissed. Kailasam, Bavdekar and Pandhey are under suspension.

The role of the SBI management is vague, say the "small fry". First, the management told the Joint Parliamentary Committee that its officers are innocent. Then it gave the Central Bureau of Investigation permission to prosecute them.

The charge against the accused is that they did not follow the correct norms. The accused insist that there are no written norms.

The SBI association warns of strong action if the officers are dismissed.

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