AUTHOR : HASHIM AK , BBA LLB (HONS) STUDENT , GOVERNMENT LAW COLLEGE KOZHIKODE
Abstract
The Telgi Scam, one of India’s most notorious financial frauds, involved the counterfeiting of stamp papers worth approximately ₹30,000 crores. Masterminded by Abdul Karim Telgi, the scam exposed deep-rooted corruption and inefficiencies within the Indian bureaucracy and law enforcement agencies.This article is about how Telgi, a school dropout who sold peanuts at railways stations in the 1980s to make a living, built an elaborate counterfeit operations network worth thousands of crores across several states.This article delves into the intricacies of the Telgi Scam, its background, the investigation and legal proceedings, and its impacts on the Indian legal and financial systems.
Introduction
The Telgi scam or stamp paper scam is one of India’s biggest scam ever happened.The Telgi scam started in 1992 involves the counterfeit stamp paper racket that span over 12 states in India.The Telgi was only discovered in 2003.Abdul Telgi, a fruit vendor created the counterfeit stamp paper network for 10 years without anyone finding any clues.The Telgi scam is a example of how rot and corrupted the Indian administration and enforcement departments were at that time.Telgi scam was sophisticated and involved a network of corrupt officials and insiders.India has become a land of scams due to corruption in Indian bureaucracy and loopholes in Indian laws.
Background
Abdul Karim Telgi, born in Belgaum, Karnataka, on July 29, 1961 started his career as a fruit vendor.Telgi supported his own education by selling fruits and vegetables on trains and eventually moved to Saudi Arabia. He returned to India after seven years. He created fake passports and documents to export labour from India to Saudi Arabia through his company, Arabian Metro Travels.He was arrested on charges of forgery and cheating in 1991.In jail, Abdul Karim Telgi met Ram Ratan Soni, a stockbroker who was serving time for forging share papers.Who told him about the stamp paper.The early 90s saw a shortage of stamp paper throughout the country. Telgi came to know that the Stamp-Paper office was the least monitored government office.
Stamp papers are documents that carry stamp revenue that is legally validated through the Indian Stamp Act 1899.Stamp paper are used when drafting any agreement, such as a rent agreement, gift deed,paying court fees etc.Stamp papers are sold by the government and carry various denominations, including Rs 10,100,500 with the corresponding fee paid to the government.
Once Abdul Telgi spent more than Rs 80 lakh, an amount enough to buy twenty kilograms of gold at that time, on a dancer in a Mumbai dance bar.Telgi attracted attention through this.
Beginning in 1992, Telgi’s scam had two aspects. One was to produce counterfeit stamp documents. The second was to generate a shortage of stamp paper that would create the right opportunity for Telgi to supply the counterfeit.Telgi’s team bribed officials of the Indian Security Press in Maharashtra to help create an artificial scarcity of documents and obtain printing material to create the fake papers.
Using political connections, he acquired a stamp paper license in 1994.Telgi was able to bribe insiders to obtain production programmes of the India Security Press (ISP) in Nashik, Maharashtra. He was able to buy printing machines from the Nashik press which had gone beyond their shelf life, and were meant to be destroyed and sold as scrap. He bought them as scrap. This acquisition was facilitated through bribery and collusion with officials.Using these machines, Telgi’s network produced counterfeit stamp papers that were nearly indistinguishable from the genuine ones.
The fake stamp papers were distributed across India through a well- established network of agents, including vendors, banks, and financial institutions, who were either complicit or unsuspecting.To run smoothly Telgi bribed officials in the police, judiciary, and government. This corruption allowed him to evade detection and continue his activities for several years.His buyers included not only the common people but also banks, brokerage companies and insurance companies.
From 1992 to 2002, at least 12 cases relating to these stamps were registered against Telgi in Maharashtra alone and an additional 15 cases from other states. However, no serious action was taken against Telgi.Jayant Tinaikar is a whistleblower from Khanapur in Belagavi district, who exposed the counterfeit stamp paper scam run by Abdul Karim Telgi in 2001.
In 2003, Abdul Karim Telgi’s net worth stood at an astonishing Rs. 17,000 crore. He reportedly have 36 properties all across the country, which are worth more than Rs. 100 crore.
Investigation
The scam was first noticed in 1995 when a few banks and financial institutions noticed discrepancies in stamp papers. However, these initial alarms were largely ignored.While a case of fake stamp paper was registered in 1991 and another in 1995, the Maharashtra police officers investigated the cases in the most casual way.In 1995, Telgi was arrested in connection with four cases.Through his influence and money,he was freed.
By 2000, rumors and complaints about fake stamp papers circulating in the market started to gain attention.Investigative Journalist began probing the issue and publishing reports on the suspicious activities surrounding stamp papers. Their work brought public and official attention.
On August 19, 2000, a pivotal breakthrough occurred when two individuals transporting counterfeit stamp papers were apprehended in Bengaluru. Under interrogation, they revealed the intricate details of the scam, prompting swift action from law enforcement agencies. Consequently, a series of raids were conducted across Bengaluru, unearthing a large amount of counterfeit stamp paper worth more than Rs 9 crores.At that time, Telgi was just one of the suspects who had absconded..
Telgi was finally arrested in November 2001.He initially told the police that he was a small part of a scam that involved many high-ranking officials, including police and politicians.After this in 2002, the Maharashtra government formed a Special Investigation Team (SIT),”STAMPIT” to probe the irregularities in stamp papers and sale of fake stamp papers.The SIT conducted a series of raids in cities, uncovering vast quantities of counterfeit stamp papers. These raids revealed the scale of the fraud and the involvement of numerous individuals.The Special Investigation Team (SIT) conducted an enquiry report, also known as the Jaiswal report, in November 2002, looking into Telgi’s connection. However, no issue was raised.
In 2003, Social Activist Anna Hazare filed a Public Interest Litigation (PIL) with the Bombay High Court,alleging the SIT for improperly handling the Telgi case.This led to S.S. Puri, a Retired Director General of Police heading the case.The SIT would go on to arrest 54 people, including Commissioner Sharma was arrested one day after his retirement for allegedly protecting Telgi by the SIT in 2003.
Recognizing the nationwide expansion of the scam, the case was handed over to the Central Bureau of Investigation (CBI) in 2003.Telgi reportedly continued his operations from prison.In 2017, the High Court convicted two prison officials for supplying mobile phones to Telgi.The CBI’s involvement brought more resources and a broader mandate, allowing for a more extensive investigation across multiple states.The CBI Interrogated Telgi and his associates, uncovering details about the operation.During the interrogation,Telgi made several confessions, revealing the extent of the network and the involvement of various officials.Telgi admitted to bribing officials and revealed the depth of corruption involved.
Actions Taken
Abdul Karim Telgi was arrested in 2001. Multiple cases were filed across different states.Telgi was charged under the Maharashtra Control of Organised Crime Act (MCOCA), which allowed for stringent action and penalties.
In 2005,tax department imposed tax demand of Rs 120 crore against Abdul Telgi.
In 2007, Court sentenced Abdul Telgi to 30 years of rigorous imprisonment with fine of Rs. 202 crores. Several of his associates and complicit officials were also convicted and sentenced over the years.Telgi passed away on October 23, 2017.
A year after his death, on December 31, 2018, the Nashik session court in Maharashtra acquitted Telgi and seven others in the Stamp Paper Scam case. The court ruled that there was a lack of evidence against the accused.
Impacts
- The circulation of counterfeit stamp papers led to a staggering financial loss of ₹30,000 crores for the Indian government, exposing deep-seated corruption and systemic vulnerabilities.
- E-stamping was introduced to reduce the reliance on physical stamp papers,ensuring greater security and transparency and to curb counterfeiting.
- The scam exposed the corruption within the system. It led to stricter anti-corruption measures.
- Legitimacy and authenticity of official documents and agreement were questioned.
- Foreign Investment in India affected due to this scam.
- The scam highlighted severe loopholes and poor management in India’s administrative and regulatory systems.
Critical Analysis of the Scam
- Many secrets remain unearthed with his death relating to the scam, as Telgi often said that he was a very small player in the scam, and many big politicians and bureaucrats were involved in the execution of this scam.With Telgi’s death,he took his personal and professional secrets to the grave.
- India’s criminal justice system could do nothing to unearth the specifics of his financial collaboration with police officers, bureaucrats and heavyweight political figures in Maharashtra and other states.
- What happened to the money trail of the scam.30,000 crores is just a assumed figure.The real figure of scam may be larger than this.
- SIT had conducted narco-analysis test and brain mapping test on Telgi.In that tests Telgi mentioned many big figures of Indian politics, police department,Indian railway and Indian security press.Telgi claimed to have made payments to them.The narco test became redundant after Telgi recorded his statement before a chief judicial.There is no investigation conducted on that names mentioned during the tests.
- The SIT and CBI mentioned in its report that there was involvement of some of the officials from the India Security Press (ISP), Nasik in the transfer of the printing technologies used by the ISP.No action was taken Against them.The Investigation team give the ISP officials a clean chit. They were clearly protected and show as ‘witnesses’ despite clear evidence about their complicity.
- The involvement of high-ranking police officials and politicians in the scam remained veiled in secrecy, sparking concerns about the extent of corruption and collusion among those in power.
- Even the death of Telgi was in suspicious.Everything cleared after his death.Even he was acquitted just after one of year of his death by citing lack of evidence.
Conclusion
The discovery of the Telgi Scam highlighted the critical role of investigative journalism, whistleblowers, and diligent law enforcement in uncovering large-scale corruption.The Telgi Scam serves as a stark warning about the devastating consequences of systemic corruption and the imperative of vigilant oversight in public administration.The Telgi Scam remains a cautionary tale of how systemic corruption can enable massive frauds and the importance of vigilance in public administration.The Telgi Scam remains a stark reminder of the vulnerabilities and corruption in India’s financial and administrative systems.The scam served as a catalyst for change, laying bare the entrenched corruption and inefficiencies that had enabled the fraud to occur. In significant development the government implemented sweeping reforms designed to prevent similar scams from happening in the future, thereby strengthening the country’s financial systems and institutions.
FAQ
1.How big was the Telgi scam?
A. Telgi scam or Telgi stamp paper scam is considered to be one of the largest financial scam in Indian history.Scam is estimated to be worth 30,000 crore rupees in the early 2000s.
2.Who is the master mind of the Telgi scam?
A. Abdul Telgi is considered as the mastermind behind the notorious stamp paper scam.But he was acquitted by session court after his death citing lack of evidence.
3.What were the impacts of the scam?
A. The scam cost 30,000 crore rupees of government revenue.Massive corruption in Indian legislation , administration and judiciary has been exposed.People lost faith in government and in stamp paper.It also give ay to the introduction of e-stamping.
4.What is really the Telgi stamp paper scam?
A. It is a large scale financial scam in the india.One of the largest in its history.By illegally producing stamp paper and distributing it throughout the country cause massive revenue loss to government and financial institutions.Also the scam attracts corruption in all levels of government and other agencies.
5.How did Telgi executed this scam?
A. At first Telgi acquired materials and machines from Indian security press.And through his associate network,he created a demand for the stamp paper.Then he distributed the fake stamp paper along the real and alone.By bribing several people he created a huge network and carried this scam for 10 years without anyone to interfere.
