2/28/2018 Breaking A Bear-Hug

21 FEBRUARY 1996 BUSINESS RELIANCE

Breaking A Bear-Hug
The RIL scrip bulldozes its way out of the bear cartel's grip
SHEKHAR GHOSH

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This is the stuff that stockmarket legends are made of: a juggernaut bull run that only one Indian scrip
cangenerate. Crashing through the Rs 200 barrier, carrying the Rs 210 tollbox with it, storming past Rs 220,
when the Reliance scrip ended its breathtaking stampede, it had hit Rs 230, up 40 per cent from the Rs 160 it
was trading at just a week back. All previous trading volume records had been broken. On February 5, the
National Stock Exchange (NSE) computers could not keep up with the pace. The system choked for a few
minutes.

Just two months ago, under conditions of anonymity, two of the top bear operators of the Bombay Stock
Exchange (BSE), said to be close to Dhirubhai Ambani's arch-rival Nusli Wadia, had arrogantly claimed to
Outlook : "We've just started. Reliance will fall below Rs 150. Just wait and see." The incredible bull run, it
appears, was the Ambanis' answer to the bear cartel. Says NSE member R.G. Bhalla: "At a time when the entire
Reliance group is on the defensive from a multi-pronged attack, the sudden rise of its scrip definit-ely hints
towards forces outside mere fundamentals of demand and supply."

A decade ago, Dhirubhai had smashed the Manu Manek-led anti-Reliance bearcartel, using exactly the same
strategy that seemed to have been applied this time. Reliance has been constantly complaining to the BSE—
and later to the SEBI—about "vested interests at work on the Reliance scrip". Market sources believe the
beleaguered group, tired of complaining, decided to take matters into its own hand. Says Sandeep Ghate, a
director in a non-banking finance company: "It is hardly a secret that Reliance Capital is masterminding the
bull spree in the scrip." Adds investment consultant S.M. Menon: "The Reliance group companies decided to do
circular trading amongst themselves on the RIL scrip. It's a no-gain-no-loss operation where transactions
amongst the group companies offset any worthwhile squaring up."

The buying spree began on Friday, February 2, and continued on Monday and Tuesday. Says an NSE member:
"The idea was to catch the bears unawares. Since Tuesday is the NSE's settlement day, the bulls started making
their buying bids on Friday and peaked it on Monday. Once the price rose to Rs 230, rumours claimed the bears
would fall short by almost 40 lakh shares, which would then have to be auctioned at a hefty price." Which
brought even more buyers into the market.

However, only 3.8 lakh Reliance shares were auctioned at a price of Rs 214.85. Scurrying bears were also helped
by a strange coincidence. The BSE had to postpone its pay-in day for settlement 21A of vyaj badla deliveries of
shares, due to a computer malfunction. While the BSE and software firm CMC are blaming each other for the

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mishap, punters are betting that the 'accident' occurred to help the bears square up on the NSE whose
settlement was just a day later on Tuesday.

Through all this, rumours ran amok. Bears were assisted by wild stories ranging from Dhirubhai's arrest to
Manmohan Singh's resignation to L.K. Advani's assassination, and the bulls by news of FIIs buying Reliance
heavily. Says Rajiv Vij, vice-president (marketing), Templeton India, which has picked up large chunks of RIL
shares recently: "It's quite possible that the news about FIIs picking up Reliance shares was used to create a
demand. We've been mopping up RIL shares over a couple of months and not just in the past week. " However,
despite the rumours, the fact remains that when delivery time neared, orders to square up also started pouring
in. On February 6, in the last one-and-a-half hours of trading, the price crashed to Rs 197.50 on selling
pressure. Says Ghate: "When it was clear that the deliveries would be made, the bulls also gave in." So, at the
end of round one, no clear winner could be spotted.

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2/28/2018 Breaking A Bear-Hug

21 FEBRUARY 1996 NATIONAL POLITICS

Through The Mirror Darkly

A seminar on national unity bypasses the hawala scam, reflecting how deeply entrenched
corruption in the system has become
YUBARAJ GHIMIRE

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February 9, 1974, Chimanbhai Patel had to step down as chief minister of Gujarat under pressure from a
growing student movement against corruption. Soon after,Jayaprakash Narayan emerged and led what came to
be known as the JP movement, which eventually saw the ouster of the Congress from power in 1977—for the
first time since Independence. His main plank: clean politics and probity in public life.

Patel died two years ago. But the forces of corruption live on, multiplying at a furious pace, till almost all those
at the helm of the country stand accused of the biggest national scandal in recent times—the hawala scam.
Unfortunately, unlike in the '70s, there seems to be no protest movement in the offing. Even the convention on
national unity and communalism in the capital last week avoided a direct mention of the haw-ala issue except
for former prime minister Chandra Shekhar's warning that the way it was being handled would only serve to
discredit the entire political system. That the galaxy of politicians present there did not even refer to the
scandal, despite the fact that the convention was held under the shadow of the scam, was in itself revealing.

But in the absence of public initiative, the Supreme Court's current interventionist role promises to act as some
sort of a deterrent. Although generally welcomed, the judicial activism has raised serious doubts, bordering on
cynicism, that its failure at some stage will lead to a state of anarchy.

"The judiciary has its own limitation. It will continue to get public support till it raises some hope. But once the
trend slows down and the end does not match public expectation, it (the judiciary) might meet with the same
hostile public response as the executive gets today," says Janar-dan Dwivedi, a former Congress joint secretary.
More importantly, the conflict between hope and doubt regarding judicial activism fades before the fact that
the hawala scandal has discredited the political system as well as top politicians on a scale like never before.
And intriguingly enough, the response of the various political parties towards the burning issue of corruption
has been one of diminished resistance.

Take the Ramaswami controversy of 1990-92. A demand to impeach Supreme Court justice Ramaswami had
been placed before the Ninth Lok Sabha Speaker Rabi Ray, following audit reports confirming corruption
charges against the judge. P.V. Narasimha Rao met Ray at his chambers and suggested that the speaker take a
lenient view of the whole matter "as the judge was a nationalist". To his credit, Ray did allow a full
investigation. But a couple of years later, when the Congress returned to power with Rao as Prime Minister, the
ruling party abstained from voting on the impeachment motion in defence of corruption. Ramaswami emerged

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the winner. The biggest casualties were the will and effectiveness of Parliament in dealing with corruption—
and the corrupt.

By virtue of its being the ruling party for almost 40 of the 44 years since the first general election, the
Congress, no doubt, is perceived as The Establishment and hence held guilty of perpetrating the inherent
corruption within the system. The hawala scandal stands testimony to this—more than 80 per cent of the
alleged recipients belong to it. With Rao himself at the centre of the controversy, it only confirms the
continuity ofthis unhealthy trend. The collusion of stalwarts from the BJP, Samata Party and the Janata Dal in
the racket also deflates the moral authority of the Opposition parties to launch a crusade against corruption. In
a way, corruption now is the common thread binding politicians of all hues and beliefs.

Nothing explains thissituation better than Janata Dal President Laloo Prasad Yadav's assertion that the hawala
controversy was not going to be an issue during the coming election as no one except the Left was free from its
stigma. Yadav, ironically, had come into the political fore as a member of the steering committee of the JP
movement, essentially against corruption and unemployment, and later became the chief minister of Bihar
riding on the crest of another anti-corruption wave in 1990 when the Congress and its leadership had been tain
-ted by the Bofors brush. And now, because of this conciliatory approach on the part of the Opposition, Rao
stands safe.

"Corruption might be omnipresent. But if politicians have accepted money from haw-ala operators who are
also funding Kashmir terrorists, it only indicates the depth of decline in our character. Something needs to be
done if this nation is to survive," says Jabir Hussain, presiding officer of the Bihar Legislative Council and a
former leader of the JP movement. But Hussain belongs to a fast-disappearing breed.

Most agree that this malaise is deeply rooted in the system. But very few have a remedial prescription. In a
recent interview to the BBC, veteran Gandhian and former parliamentarian B.N. Pande held the acceptance of
industrial donation by politicians as a factor largely responsible for corruption. He noted that when he
contested the Uttar Pradesh Assembly elec-tions in the '50s, Sardar Vallabhbhai Patel had sent him several
reminders to furnish details of expenses of Rs 500—his total election fund from the party. Then, the politicians'
dependence gradually drifted towards industries and black marketeers. A ban on industrial donation might be
an answer to the mess.

The recent CBI chargesheets and selective approach in the hawala case, therefore, do not inspire confidence.
"After all, this case was known for years. By merely charge-sheeting some people on the eve of the elections is
not going to solve the problem. We have to find a credible alternative. Maybe government funding of elections
might be a good idea," says Farooq Abdullah, leader of the National Conference.

BUT there are others who believe the present mess is a byproduct of the "surrender of the national interest
totransnationals". The new economic policy has largely encouraged such a trend whereby the TNCs gain by
discrediting the Indian Parliament, its political system and politicians. "The way the Government has been
handling the hawala case only serves that purpose," feels former prime minister Chandra Shekhar. "By
discrediting possible political alternatives—both inside and outside the Congress—Rao is fast emerging as
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another Gorbachev. He has put his own interest above the Congress and the country," says a senior Congress
leader.

Judicial intervention therefore might not be of much consequence in such a scenario. Given the delay in the
disposal of cases, justice in hawalagate may not be delivered any faster. A speedy trial depends on the
efficiency and will of the executive, especially since a majority of the suspects hold key positions in the
Government and will therefore have vested interest in delaying justice. And those chargesheeted—from BJP
chief Advani to Congress leader Madhavrao Scindia—accuse the Prime Minister of "conspiring" against them in
order to sideline any major contenders for prime ministership.

Apart from the likelihood of a delayed verdict by the Supreme Court, says a former judge of the Patna high
court, what is worrying is that, of late, public figures have taken to adopting a defiant attitude towards court
rulings. Indira Gandhi imposed the Emergency instead of resigning after the Allahabad High Court indicted her
for corrupt electoral practices. Rajiv Gandhi nulli-fied the court ruling in the Shahbano case by using brute
majority in Parliament.

Even when judicial activism was a rare instance, the executive had resorted to nullifying or defying its verdict.
With its frequency on the rise, it is unlikely that it will be able to change the executive's attitude. And despite
increasing censure of the executive by the court, the executive is also shirking its responsibility and passing on
the bulk of its commitments to thejudiciary, even on routine administrative measures like in the telecom
tender case, Ayodhya and now, hawala.

Does the court have to step in where the executive fails? Can there be an overstepping by the court into the
sphere of the executive? Or is it that the court needs to interpret the law and punish the guilty? After all, it is
the basis for a just society. But AICC General Secretary B.P. Maurya's public criticism of the Supreme Court for
having "usurped the role of the executive" only reinforces the fear of a confrontation. After all, the BJP had
already questioned the court's jurisdiction in the case to decide where Lord Rama was born. Its recent
exoneration of Maharashtra Chief Minister Manohar Joshi, by ruling that his (Joshi's) election plank of
Maharashtra becoming the first Hindu state in the country if the Shiv Sena came to power was, at best, a mere
wish and as such did not constitute corrupt electoral practices, has also come in for sharp attack. "How is the
court competent to define what Hindutva is?" asks M.O. Farooqui, veteran CPI leader, adding "if this call does
not constitute corrupt electoral practice, then what does"?

And though these are disjointed threats and grievances at the moment, the going for the judiciary looks tough
in the days to come. In the event of the court's failure to deliver speedy justice in the hawala case the
judiciary's current hour of activist glory may be shortlived.

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YUBARAJ GHIMIRE MANOHAR JOSHI NATIONAL

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