The stamp of a scam

Investigations into the stamp paper scam, which involves several States, have been seriously delayed with the governments soft-pedalling on the issue fearing the political fallout.

in Hyderabad

ACROSS 72 towns and 18 States and over a period of 10 years, the counterfeit stamp paper scam has dealt the Indian economy a shattering Rs.32,000-crore blow. The figure is official. Apprehensions are that it could be much higher.

It was an operation that respected no system and thrived on the brittle moral fabric of the bureaucracy and its political bosses, exposing the inadequacies of the system. Be it in Maharashtra, where it originated, or in Andhra Pradesh, where it spread its net, or in Karnataka and other States, where it flourished, the scam left a trail of stink that every party is trying to cover up. The scam also throws light on the culpability of officials and political leaders and is yet another piece of evidence of the criminalisation of politics.

From West Bengal to Tamil Nadu and from Uttar Pradesh to Rajasthan, several States figured in the scam and each has lost huge revenues. If the revenue loss in Maharashtra was worth Rs.2,200 crores, the loss was said to be of the order of Rs.1,000 crores a year in A.P. The Karnataka government's annual revenue from the sale of stamp paper was worth Rs.250 crores when Abdul Kareem Telgi, the prime accused in the racket, was arrested. After his arrest, the revenue was in excess of Rs.750 crores.

A shortage of stamp paper engineered with the help of a few officials of the Indian Security Press at Nashik enabled Telgi to expand his illegal business throughout the country.

Telgi's agent in the south, who explored the loopholes and established a network in at least four States, Maharashtra, A.P., Karnataka and Tamil Nadu, was Sheik Waheed.

The operation involved the sale of not only counterfeit stamp paper but also related items such as judicial court fee stamps, non-judicial stamps, revenue stamps, special adhesive stamps, notorial stamps, foreign bills, brokers notes, insurance policies, share transfer certificates and insurance agency stamps. The Special Investigating Team (SIT) of the Maharashtra Police put the total value of the scam at Rs.21,28,47,07,824. Later this was revised to Rs.32,000 crores by the Union Home Secretary. The biggest haul was made by the police in Maharashtra when stamps worth Rs.2,500 crores were seized, followed by Delhi (Rs.214 crores), Karnataka (Rs.205 crores) and A.P. (Rs.19.70 crores). The SIT is yet to ascertain the business that could have occurred in Tamil Nadu and in North India. In U.P. the complicity of a senior Indian Police Service officer allegedly led to a business of Rs.5,000 crores.

IN A.P. the counterfeit stamp paper racket began in 1999 with the city police registering a case against four persons. They were allegedly the followers of a Telugu Desam Party (TDP) Minister, C. Krishna Yadav, but the latter's name did not figure in the first information report (FIR). Sheik Waheed later said that he was kidnapped by Krishna Yadav's men for refusing to enter into a partnership deal.

Stamp shortage in the State helped Telgi expand his business rapidly and A.P. turned out to be a goldmine. During 2001-2002, the A.P. government placed an indent for stamps worth Rs.126 crores from the Indian Security Press but was supplied only stamps worth Rs.10.9 crores. For an order of court fee labels for Rs.16 crores, the supply was worth only Rs.2.26 crores.

Surprisingly, the investigations in A.P. fizzled out too soon. There was no progress and the Criminal Investigation Department, which was handling the case, "slept over it". (And this delay is being probed now.) Despite the issue rocking the State Assembly in November 2002, the government confined its attention to countering the charges by the Opposition and highlighting the need to change the Indian Stamps Act.

Krishna Yadav was interrogated on April 29, 2003 by the SIT and on September 6, he was arrested and taken to Pune. He is yet to be charge-sheeted by the SIT of Maharashtra, which booked him under the Maharashtra Control of Organised Crime Act (MCOCA) along with 53 others. Two other key accused, Telgi and Waheed, are in a jail in Karnataka.

The A.P. government has time and again refused to acknowledge the rampant sale of counterfeit stamps. It constituted the SIT to probe the matter but did not take any meaningful steps in that direction. So far the government has not provided it men and material. Even before the SIT could start its work, senior officers such as Director-General of Police R. Sukumara (who was the commissioner of the Hyderabad City Police when the scam broke) and Chief Minister N. Chandrababu Naidu have reiterated that the scam was confined to the Yadav-Telgi nexus. But Krishna Yadav himself told this correspondent that "several other leaders and officials are involved".

Telgi employed a simple method to expand his illegal business. His agents would first talk to the henchmen of politicians. It is said that he never entered into too many deals; he preferred to reach an agreement with an influential politician for the circulation of the stamps initially. He would not contact others without the knowledge of the first contact and would leave to the latter the decision of expanding the trade.

As the next step he would build a chain of `reliable contacts' through the first contact and deals were struck in his presence. Telgi would then offer them a Statewide contract. There were different payments for direct sale, protection, trouble-shooting and so on.

Telgi floated several companies, including a film distribution agency, to facilitate his activity. He recruited umemployed youth to sell counterfeit stamps at 2 per cent discount. Chit companies, along with courts and real estate agencies, were his prime targets.

A smart operator, Telgi knew how to protect his interests in the event of trouble. He regularly recorded his telephonic conversations with politicians and officials after duly making them announce their designations and names by way of casual questions. This is one reason why all those people who were arrested are in real trouble. Telgi is now in a position to blackmail several governments. The State governments concerned are afraid of the political fallout if the taped conversations are made public. At present eight States have filed cases against Telgi. He has managed to keep his name out of some cases, while his associates' names figure in some others.

AFTER the recent assassination attempt on Chandrababu Naidu, the issue has been conveniently swept under the carpet. What is striking in the entire episode is the "attitude" of the various governments. The Maharashtra Police arrested 54 persons, including two MLAs, one from the State itself (Anil Gote of the Samajwadi Janata Dal Party who was elected from Dhule) and Krishna Yadav, who has since been expelled from the TDP. It took an intervention by the Mumbai High Court, following cases filed under Public Interest Litigation (PILs) by some non-governmental organisations (NGOs) and Anna Hazare, the social worker, for the government to open the investigation. Recently, the Mumbai High Court directed investigation against the Mumbai Police Commissioner in view of complaints about his culpability in delaying action against the accused.

As in Maharashtra, the role of the ruling party comes under a cloud in Karnataka too. SIT officials are puzzled that despite launching a drive against the fake stamp papers and conducting investigations leading to several arrests including that of Telgi, Waheed and Abdul Rashid Kuklarni (Telgi's advocate), the Karnataka government has refused to part with audio tapes that could establish the complicity of officials in Maharashtra.

The alleged connections of Karnataka and Maharashtra politicians and the alleged involvement of the TDP MLA have complicated matters.

In A.P., the police maintain that only two cases - one in Hyderabad and the other in Visakhapatnam - were booked in connection with the scam in which fake stamps worth Rs.3.20 crores and Rs.5.6 crores respectively were recovered. Telgi is alleged to be involved in 11 cases in the State.

The A.P. police claims to have suspended four police officials in connection with the 1999 case but the grounds on which they were suspended are not clear. Another irony is that the CID officer who was supposed to have probed the matter is now a member of the SIT. The department blamed the CID for the delay. There is also no mention of the role of a Deputy-Commissioner of Police (DCP) who accompanied the accused to New Delhi.

Soft-pedalling by officials and politicians alike has made the job of the SIT tough. "We have to conclude our probe at some point or the other. There is no use allowing it to meander in the pursuit of all scamsters. We believe that Telgi is just one of the major players in the scam. We could do with some more assistance from the governments," a SIT officer said. On the grounds of anonymity, the officer admitted that there is "tremendous pressure" on the SIT from some quarters "not to widen the net".

Despite having uncovered Telgi's operations in Tamil Nadu, there has not been much progress in digging up the details. Telgi is said to have opened four establishments - Minerva Enterprise, Sahara Enterprise, Milan Enterprise and Bharat Enterprise - as fronts for his clandestine operations in the State.

THERE are two faces to the scam - the counterfeit stamp scam and the disappearance of original stamp papers. The Indian Security Press has also found that stamps worth crores of rupees despatched to various destinations in the country did not reach the addressees. On March 17, 1997, 132 cases of stamps were sent to Hyderabad, out of which only seven reached the destination. In 1996, stamp papers worth Rs.1 crore were found missing when the boxes were opened in Hyderabad. There are reports of missing stamp paper from Surat, Jaipur, Ludhiana, Ambala, Kanpur, Faizabad and Kolkata.

The press maintained no record of serial numbers for the stamp papers. There was also no stipulation that the name of the destination be printed on the stamp paper. These made it possible for the operators to print stamps anywhere they felt like and supply them to any State. Stamp vendors were given illegal licences throughout the country, which led to the lack of a proper control mechanism. There were no specific security features for stamps. Collusion of the officials of the ISP with some police officers was evident, and a shortage of stamp papers caused by the non-supply of the quantity that was ordered by the State governments helped Telgi.

When the A.P. government sought a probe by the Central Bureau of Investigation, the Union Home Secretary disclosed that such a probe was already on in Chandigarh, Delhi and Gujarat. But not all governments were willing to accept such a probe.