TEHELKA PROBE

Seeing the market angle

In an affidavit before the Venkataswami Commission, the government accuses Tehelka of producing the tapes with a view to manipulating the stock markets and making profits.

NAUNIDHI KAUR
in New Delhi

EVEN as the Justice K. Venkataswami Commission moves ahead with its inquiry into the Tehelka affair, more and more evidence pertaining to the making of the tapes is presented before it apparently with the objective of bringing into disrepute the investigations conducted by tehelka.com. Under Clause (d) of its terms of reference, the commission is empowered to inquire into all aspects relating to the "making and publication of the allegations and any other matter which arises from or is connected with or incidental to any omission or transaction." In short, the commission can inquire into the motives, if any, of tehelka.com in making the expose.

R.V. MOORTHY
Samata Party activists and their slogans in New Delhi.

In its latest affidavit, presented by Additional Solicitor-General Kirit N. Raval on August 30, the Government of India has attributed financial motives to the making of the Tehelka tapes. Its argument is that Operation West End was a calculated attempt by Tehelka and its financiers to make a killing in the stock market. It was a business venture aimed at making profits and Tehelka had succeeded in it, the affidavit said. It identifies bear operator Shankar Sharma and his associate Nirmal Bang as having brought about a stock market crash. "After the release of the tapes, panicky conditions were generated in the market and a fear psychosis was created resulting in a situation where a large body of investors started selling the shares and the share prices further depressed. This trend was especially noticed in the momentum stock where a steep decline in the rates took place. This kind of situation helped First Global and their associates and other members of the bear cartel to manipulate the market in their favour," said the affidavit. It links First Global Stock Investing Company, owned by Shankar Sharma, with Buffalo Network Private Limited of Tarun Tejpal, chief executive officer and editor of Tehelka.

According to the affidavit, Shankar Sharma and his wife Devina Mehra took over a shell company, UD and MD Agencies Private Limited, in February 2000 and Tarun Tejpal, Aniruddha Bahal and Kunwar Jit Tejpal floated Buffalo Network. On June 30, 2000, Buffalo allotted 2,500 shares of Rs.10 each at par to Shankar Sharma. The next month Buffalo took over the operations, assets and liabilities of UD and MD agencies. The transfer included tehelka.com.

The government has further charged in its affidavit that on December 1, Shankar Sharma bought 6,117 shares of Buffalo Network at a premium of approximately Rs.5,700 a share. On the same day, it transferred 2,500 shares of Buffalo Network without any premium. This, according to the affidavit, was to create an impression that First Global controlled only 10 per cent stakes in Buffalo Network, whereas 98 per cent of the finances of Buffalo came from First Global. According to the affidavit, about Rs.6 crores was invested by First Global in Buffalo Network. It quotes First Global as admitting that between January and March 2001, more than Rs.2 crores was generated in cash by First Global.

The affidavit, which runs into more than 200 pages, has annexures that include copies of e-mail messages and statements of accounts of expenses. There are details of e-mail messages that were allegedly sent by Satjit Singh Dhillon, chief executive officer of First Global, to potential clients, stating that tehelka.com has a good track record in both the print and television media. The brief, identical e-mail messages were sent in October 2000, that is, much before the official release of the Tehelka tapes on March 13, 2001. The messages had attachments citing evidence for the financial soundness of Tehelka. These are presented as evidence of Shankar Sharma's control of the finances and expenses of Buffalo Network and tehelka.com. An informed source in the commission said that the affidavit's stress has been to "show that Operation West End was a business venture which was plotted with the stock markets, and not investigative journalism, in mind."

Tehelka has refuted the charge. Talking to Frontline, Aniruddha Bahal, who headed Tehelka's investigative team, said: "How could we have devised and plotted Operation West End for such a long period of time? We could not have known what was to happen in the future and whether Operation West End would be successful. We did not know what would happen in the end when we started our investigation. We did not know if all those whom we were approaching would accept the money that was offered." Bahal termed the government affidavit as little more than garbage. It saw conspiracies where there was none, he said.

The government's affidavit states that before the release of the Tehelka tapes Shankar Sharma and his associates had started building up bear positions in the share market with a view to making profits when the market fell. It states: "Documents seized by the Directorate of Income Tax, Mumbai, in the course of a raid on First Global indicate that a cash aggregate of 96.6 lakhs was received on different dates from Bang during the period January-March 2001 by First Global. Material available indicates that Shankar Sharma and Nirmal Bang were business associates and were acting together in hammering down the share prices during the period. In addition to the above, cash in excess of Rs.2.9 crores had been generated during January-March 2001 in the hands of First Global. The fact that First Global was aware of the imminent release of the Tehelka tapes and the fact that the timing of the release of the tapes was dictated by First Global solely for the purpose of making profits is evident from the figures of the large volume of transactions made by First Global and Nirmal Bang."

According to the affidavit, the volume of the operations of First Global in the share market was approximately Rs.6,200 crores between January and April 2001. The volume of its operations in the previous year was Rs.6,000 crores. In 2000-2001, it was approximately Rs.14,200 crores. Raval, presenting the affidavit before the commission, said: "As a result of this massive scale of operations, immediately after the Tehelka expose share market crashed and the total loss of capitalisation of the stock market was approximately Rs.1,01,700 crores. BSE Sensex fell by 227 points on March 13, 2001 and by 604 points in the next 30 days."

Tarun Tejpal described these charges as false. He said: "Ours is a venture capital-funded company. It is normal that you get a bright idea which is funded in this manner. In any case, the valuation of the company wasn't done by Shankar Sharma. Nobody knew about the story until the day we broke it. In fact, Sharma wasn't even present at our annual board meeting in November, which was attended by Amitabh Bachchan and V.S. Naipaul."

The government is continuing its probe against Shankar Sharma and his associates and has indicated that it will file another affidavit before the commission as and when it gathers additional details.

Giving a fillip to the government's stand, the Securities and Exchange Board of India (SEBI) has in its interim report on the stock market scam of 2000-01 blamed Sharma and Bang for market manipulation. The report says that Shankar Sharma issued false contract notes worth Rs.2.9 crores to certain clients. SEBI has decided to enlarge the scope of its investigations by going into the activities of Bang and Sharma.

ANOTHER aspect that will be scrutinised by the commission under Clause (d) would be the use of sex workers by Tehelka in its sting operations. The Tehelka issue took a new turn when the wives of two Army officers caught in the tapes accused the portal of resorting to blackmail after video-taping their husbands. Kiran Sehgal, wife of Colonel Anil Sehgal, and Sucheta Singh, wife of Brigadier Iqbal Singh, made this charge in their letters to Roopa Padmanabhan, wife of the Chief of the Army Staff, General S. Padmanabhan, and president of the Army Wives' Welfare Association (AWWA). Kiran Seghal's letter says: "This blackmailing was in the form of seeking the setting up of meetings with the officials concerned. My husband has been living with a constant threat of exposure since Rajiv Sharma and Samuel Mathew first told him about the filming of certain scenes that he had with the prostitutes... Caught on the horns of a dilemma he finally caved in to the demand for fixing a meeting. To get rid of the pressure of Sharma and Mathew and also without affecting the interests of the organisation (Army), he referred them to Narender Singh - a junior level officer in the Ministry of Defence - who was not concerned with the equipments which their company was apparently selling."

Tehelka has termed the charges false. Said Bahal: "Why was the issue not raised by the officers' wives before? They kept silent about the blackmail in the Army inquiry. In fact, when the Army inquiry was on, the officers kept harping that the tapes were doctored. Now, all of a sudden they say that they were blackmailed. Now at least they are admitting that it is they who are in the tapes. This is a welcome change. Until now the officers were not even willing to admit that they were on the tapes with sex workers."

Another charge against Tehelka is that it has doctored the tapes. This is the line taken by former Samata Party chief Jaya Jaitley and former Bharatiya Janata Party president Bangaru Laxman in their affidavits.

The Tehelka tapes and transcripts are said to have some discrepancies, and lawyers appearing against Tehelka hope to draw strength for their arguments from these. One of the discrepancies cited is in tapes 73 and 74, which show the entry of the Tehelka team into Defence Minister George Fernandes' house at night. However, the tape shown on Zee television showed them enter the house in bright sunlight. "This indicates the existence of more tapes. We will take up some of these anomalies before the commission," said a lawyer.

It is obvious that as the work of the commission progresses, Tehelka would have to come clean on several aspects of the making of the tapes. With the National Democratic Alliance government managing to ensure that the murky issues relating to the procurement of arms by the Defence Ministry remain unaddressed, the Tehelka affair is in danger of remaining confined to the conduct of some Army officers and the investigative methods of the Tehelka team.