NEW DELHI: Indian prime minister Narasimha Rao’s son, P.V Prabhakar Rao, 40, through the latter’s company, Goldstar Steel and Alloys Lid, received Rs 2 crore from Hiten P.Dalal, a stock broker of Bombay, as loan in 1992, a few weeks before the biggest financial scandal broke out in India’s history. The Indian Express on March 2 carried details of the transaction to link not only the prime minister directly with the scam but also to allege that the Indian authorities dealing with the scandal have been soft towards Dalal as also to suggest that Prabhakar Rao’s links helped the ailing Goldstar into a prosperous concern through injection of massive public funds.
The money was received by Goldstar from Hiten Dalal by means of two checks which were routed through the Andhra Bank Financial Services Ltd. The checks were No 441856 dated 42192 and 441868 dated 42892. The transactions surfaced two months ago when Goldstar returned the money to ABFS which, in tum, could not keep them hidden from public gaze as under a special law passed some time ago to deal with the scandal requires that any transaction with Hiten Dalal has to be brought to the notice of A.K.Menon, custodian appointed by the special court set up under the special law. Hiten Dalal is a “notified person” involved in the ago described as “main player in the scam” by Ram Niwas Mirdha, Chairman of the Indian parliamentary committee probing the scam, Hiten Dalal’s total turnover is estimated to be the mind-bog-gling Rs 2, 23, 200 crore which is more than Rs 1 Lakh crore then the joint turnover of two other players, Harshed Mehta and Bhupen Dalal.
The newspaper suggested that the Indian authorities dealt with Hiten Dalal rather lightly compared to Harshed Mehta. Harshed spent 111 days in jail while Hiten was let off after 28 days. In the case of Harshed the police registered. The income tax department has raised a demand of Rs 10,000 crore from Harshed Mehta but no such demand has been made on Hiten Dalal. No raids were conducted on the business premises of Hiten Dalal whereas numerous raids were made on Harshed’s offices. Hiten Dalal also docs not face any enquiry on account of possible violations of foreign exchange regulations although sch enquiries are underway in the case of Harshed Mehta.
Significantly, Prabhakar Rao was a small time businessman in 1981 when he started with just Rs 25,000 and floated a small company called Sinclair Electronics Systems Ltd. Now he is a director of several companies and owns three percent equity in Goldstar worth Rs 3 crore. Rao became a director on Goldstar only in 1988 which was earlier known by the name of Priyadarshni Sponge Iron India Ltd. The company with Rao’ association turned the comer with money flowing in from Industrial Development Bank of India (Rs 25 crore), Industrial Credit and Investment Corporation of India (Rs 12 crore) and under the Indian government’s risk mechanism scheme (Deutsche Mark 2.63 million), The two financial institutions mentioned earlier are almost wholly owned by the Indian government.
The Goldstar link with Hiten Dalal is intriguing because the company could have got the amount from a bank. Why should it have approached a stock broker for the purpose? The prime minister’s son has explained that he was not the beneficiary of the Dalal loan. It was some other director who returned the amount to the bank. But despite this explanation, several questions will continue to be posed in the next few months.
Article extracted from this publication >> March 5, 1993
