NEW DELHI: The snowballing stock scam issue claimed its first victim when the Minister of State for Commerce P. Chidambaram resigned after owning responsibility for investing in shares of Fair growth Financial services Lid (FFSL They are currently under investigation for alleged involvement in the multi-crore securities scandal.

President R Venkataraman accepted the resignation of Minister of State for Commerce P .Chidambaram on the advice of Prime Minister P.V Narasimha Rao.in his leter written to Prime Minister Rao on July 5 Chidambaram admitted that he was a shareholder in the Fair growth Financial Services Ltd whose assets have been attached following the scam disclosure.

The resignation comes within days of the Prime Minister asking all his ministers to disclose in drifting the investments made by them directly or through their family members during the last few months.

 It is intriguing that Chidambaram who held a key economic portfolio and was an important participant in the Government’s Budget making excise had invested in questionable stock market. He was also one of the Key players in the formulation of the Governments new economic policy.

The FFSL was launched by B.B Ratnakar a former chairman of Canada Bank. A profit of Rs80 crores was announced by the company within one year of its inception. Its paid up capital was a meager Rs 5 crores.

Detailing his interests in the Fair growth Financial Services Ltd Chidambaram said in his leter that in September last year he invested assume of Rs 1 lakh towards purchase of 10000 shares in the FFSL. While these shares were purchased by his own check another 5000 shares worth Rs50000 were subsequently purchased in the name of his wife.

Apart from this Chidambaram wrote an additional sum of Rs 1 Lakh was placed at the disposal of the FFSL also in September last year towards investment in” good equity shares.

Indian Express” had on June 19 exposed the dubious connections between the FFSL and the Andhra Bank Financial Services which had adverted Rs 400 crores of surplus public sector funds to the FFSL. According to reports the Andhra Bank had extended as much as Rs Sorceress o he FFSL against fake security. Even the second part of the Janakiraman committee report states that FFSL owed Rs 104 crores to Andhra Bank Financial Services. Subsequent investigations revealed that the FFSL  Had pledged fake securities.

Chidambaram concluded by saying that it was his sincere hope these all investments will not cause any embarrassment to the government.. “I would have no hesitation in stepping down from the office of Minister” he said

In a rather unusual move Bidambaram drove down to the Principal Information Officers office at Shastri Bhavan to release the letter. He pleaded before newsmen that in   opinion he had done nothing wrong by purchasing the shares. He has been regularly filing his tax returns he emphasized.

Chidambaram said ever since he wrote to the Prime Minister he had been seeking permission to release the letter the public. The Permission was granted hence the step.

He said in his letter that since 1985 his wife Nalin Chidambaram a senior advocate has been managing his inanes as well as her own funds in consultation with their tax consultants In September 1991 his wife availed of the services of FFSL which advised her to make a small investment in their company and offered their services to invest surplus funds in good equity “By my check a sum of RS 1 lakh was invested towards the purchase of 10000sharesof FFSL in my name. By my wife’s check a sum of Rs 50000 was invested towards purchase of 5000 shares of FFSL in her name. There shares have been allotted to us and share certificates issued.”

He further said these investments were made through crossed checks in the normal course of investment surplus funds. “There is nothing we long or illegal about their invesinents. My write had no reason to suspect any wrongdoing. In fact if FFSL has done anything wrong we may stand to lose our investments” he added. The Prime Minister had detailed. The Human Resources Development Minister Arjun Singh the Parliamentary Affairs Minister Ghulam Nabi Azad the Home Minister S.B.Chavan and the Defence Minister Sharad Pawar to collect affidavits from each of his ministers on their shares and related assets.

Article extracted from this publication >> July 24, 1992