Cobbler Scam

 The Cobbler Scam is one of the biggest multi million dollars scam in Indian History, is nicknamed The Great Cobbler Scam. What really happened in this Great Cobbler Scam was that various businessman & politicians had siphoned around $600 million US dollars from a scheme that was floated by the Government of India meant to benefit the poor cobblers of Mumbai. Instead, it went into the pockets of the elites who used this money to built luxury homes for themselves and also brought luxury cars, boats, arts, etc. The money of the scheme was meant to provide low interest loans and tax concessions to the Mumbai’s poorest – cobblers who work 16-hours a day for less than $2. Not a single penny reached these cobblers.

The modus operandi of the mastermind was to float a cooperative society of cobblers to avail of soft government loans through various schemes. Several bogus societies of cobblers were formed only for the purpose of availing these soft government loans. The main heads Daya of Dawood Shoes, Rafique Tejani of Metro Shoes and Kishore Signapurkar of Milano Shoes created fictitious cooperative societies for cobblers. On behalf of these non existing cooperative societies they availed loans of crores of rupees from different banks. The accused created a fictitious cooperative society of cobblers to take advantage of government loans through various schemes. The banks involved in giving loans were also charge sheeted.

The primary accused in the multi-crore shoe scam is Sohin  Daya, son of former Sheriff of Mumbai. The people involved in this racket were Saddrudin Daya, former sheriff of Mumbai and owner of Dawood Shoes, Rafique Tejani, owner of Metro Shoes, Kishore Signapurkar, proprietor of Milano Shoes, and Abu Asim Azmi, president of Samajwadi Party’s Mumbai unit and partner in Citywalk Shoes. Beside them various officials of banks and financial institutions were also involved in this multi million dollars scam.

The Banks whose officials were involved in this scam are: Maharashtra State Finance Corporation, Citibank, Bank of Oman, Dena Bank, Development Credit Bank, Saraswat Co-operative Bank, and Bank of Bahrain and Kuwait.

This scam cost the Government of India around $600 million US dollars. This was one of the worst scam in India that cheated the poorest people of the society and benefited a lot of rich and elite people. This is one of the reasons why poverty in India is difficult to eliminate. The scam was exposed in 1995

HOW THE SCAM UNEARTHED:

The following is an article by the Express News Service on how the Cobbler Scam was exposed:

VIGILANT AGENCIES EXPOSED SHOE SCAM

Express News Service

MUMBAI, June 1: The unearthing of the Rs 1600-crore cobbler’s scam that closed in on bigwigs of the shoe industry was expected, caused as it was by three agencies working towards its exposure.

Officials of the Brihanmumbai Municipal Corporation’s octroi department had lodged complaints about raw materials being brought into the city on a large scale. These materials had octroi concessions as they were brought in lieu of the cooperative societies. On the basis of the complaints, the police carried out its own investigations, and a diligent officer in the office of the Registrar of Cooperative Societies decided to do a complete survey of registered societies in Mumbai.

Immediately after taking charge in 1995, Sudhir Thakre, the joint registrar of the Cooperative Society for Mumbai division, ordered a survey of the registered societies. “Our officers, especially auditors of each of these societies complained that most of these societies did not exist at the registered addresses furnished to this office,” Thakre said in an exclusive interview to Express Newsline, narrating the process of investigation into the big business’ way to success through fictitious cobbler societies.

Thakre decided to survey all the societies that had been formed. “Normally, since most of the cobblers were poor and illiterate, we did not like to harass them with too much inspection. “This leniency on the registrar’s part was misused by the businessmen,” he admitted.

The BMC, meanwhile, complained to the police about huge consignments of raw materials (used for the purpose of shoe-making) being brought into Mumbai. Worth around two crores, these materials obtained octroi concessions. The police started making their own investigations, and both the agencies got suspicious when “all the cobblers’ societies were found missing.”A clearer picture emerged by January 1996 when flying squads with the registrar were given specific orders to follow a society to its very last. A report on prima facie evidence was made for the police by March 1996.

“My boys worked for five months, sometimes without the societies themselves realising it, and by August 1996, we got the complete picture,” he said.

DCP Sanjay Pandey, who had taken over the Economic Offences Wing then approached him asking for details, since he too was working on the case. “By September 9, a report of 80 to 90 pages was ready for the police. “Till then, we had completed 19 raids and 51 societies were being investigated.” The rest, as they say, is history.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.

People Affected by the Scam

•The poor Cobblers of Mumbai are the one who are majorly affected by the Scam as they were not benefited by a single rupee of the Scheme which was meant only for them.

•Government of India was also affected by the Scam as the scam  cost  the  Government  around  1200  crores  Indian rupees.

•The Banks whose officials were involved in the scam like Maharashtra State Finance Corporation, Citibank, Bank of Oman, Dena Bank, Development Credit Bank, Saraswat Co-operative Bank, and Bank of Bahrain and Kuwait, spoiled their reputation.

•Politicians,  bureaucrats  and  top  shoe  manufacturers  in Maharashtra were also affected as the Shoes manufacturers have to shut their shoe outlets and their business was lost.

Politicians Implicated in the Scam

The boot may well be on the other foot now. While it was former sheriff Sadruddin Daya of Dawood shoes, Rafique Tejani of Metro Shoes and Kishore Signapurkar of Milano Shoes who were held as the prime accused in the Rs 1,000-crore cobbler scam, fresh investigations have revealed the full-fledged compliance of Maharashtra politicians in the fraud.

Leaders from all three prominent parties the Congress, the BJP and the Shiv Sena appear to have been involved in the diabolical siphoning of public funds under the garb of setting up cooperative societies for poor cobblers. Meanwhile, allegations are flying thick and fast. Among the political links being investigated is that of former Maharashtra chief minister, Sharad Pawar. Though there is no direct evidence implicating the Congress leader, investigations have revealed Tejani to be a director of the  Rs500-crore Dynamix Dairy Products Pvt Ltd in which Pawar is believed to have a stake through the holdings of family members. According to sources, the sole milk supplier to Dynamix, the Baramati Milk Cooperative, is controlled by Pawar. Sources hint that a good amount of themoney from the shoe scam may have been diverted to Dynamix. However, the Pawar link still remains tenuous. What is not tenuous, however, is that it was during Pawar’s regime that Congressmen had a field day. It was at this time that Sushil Kumar Shinde, chief of the Maharashtra Pradesh CongressCommittee (MPCC), floated the Chakrayu society which flouted every rule in the book. It dealt in machine-made goods against the mandatory rule of handcrafted leatherwear. So while the project report guaranteed employment to 2,000 cobblers, only about 50 were actually employed.

Further, the rules say that 10 per cent of the total funds should be contributed by members of the society; 60 per cent should come from financial institutions and the state government should loan the remaining 30 per cent. However, according to the Accountant General’s report, member contribution to the Rs 133-lakh Chakrayu project was just Rs 4.75 lakh. Of this, Rs 4.25 lakh was contributed by 200 members who were shown as “people of repute”. Investigations reveal that they included Kripashankar, vice-president, MPCC and Ramdas Phutane, a Congress MLC,among others.

With the cobblers being too poor to contribute even the token Rs 100 to join cooperatives,  it is usually the Mahatma Phule Vikas Mahamandal which pays their membership fee. However, in the case of Chakrayu, the Mahamandal refused to give the funds. In 1992, Shinde, then state finance minister, got the government to sanction Rs 44.5 lakh for the society in three instalments. In a further flouting of rules, Shinde got the Maharashtra State Finance Corporation to sanction Rs 60 lakh. Once Chakrayu was formed, the cobblers’ interests were given a back seat, say sources. Normally, every member of a cooperative society has equal voting rights, but Chakrayu modified the rule only members with a contribution of Rs 1,000 or more were entitled to vote. This virtually alienated the cobbler members of the society. The Congress involvement has given enough ammunition to the BJP and the Shiv Sena against the previous regime, although both parties cannot deny the involvement of some of their own members.

For the moment, however, it is Pawar and his party men who are being accused of turning a blind eye to the looting of public money. Points out Kirit Somaiya, MLA and Mumbai city president of the BJP: “The previous government cannot be absolved of the responsibility of letting such activity flourish for over 10 years.” Nor does that absolve the Shiv Sena-BJP government. The present deputy chief minister, Gopinath Munde, who held the finance portfolio for about three months and presented the ’96-’97 budget, is also under the cloud of suspicion. Mrs.Maharuk Keravala, a friend of Tejani’s wife and a prime suspect in the scam, has alleged that she, along with BJP MLA Sadashiv Lokh-ande and others, approached Munde to help them out. Munde obliged by raising the sales tax exemption limit to Rs 50 lakh and doing away with the need for societies to get a certification from the Khadi Village Industries Commission (KVIC).The KVIC had laid down in 1987 that only societies located in villages were entitled to benefits from it. By doing away with the need for certification, Munde made it possible for cooperatives located in Mumbai to enjoy the benefits of KVIC subsidies. As investigations continue, lesser known politicians are also being pulled into the net. Money to prime accused Sadruddin Daya was sanctioned by the chairman of Saraswat Cooperative Bank, Suresh Prabhu, who is now a Shiv Sena MP. Bomb blast accused Abu Azmi of the Samajwadi Party has also been found to have links with the scam-sters. The Economic Offence Wing has identified Shiv Sena legislator Baburao Mane among those who may have been aware of the scam. The BJP claims it is looking into the involvement of its members. The Sena has not been as categoric.

But with the interrogation of the accused revealing names of leading lights in the political firmament, the cobbler scam is likely to have a fallout whose repercussions will be felt by all parties, be it the Congress, the BJP or the Shiv Sena.

What treatment was given at the end of the scam?

•Based on the complaints of BMC, the police started investigations. The banks whose officials were involved in this scam are : Maharashtra State Finance Corporation, Citibank, Bank of Oman, Dena Bank, Development Credit Bank, Saraswat  Co-operative Bank, and Bank of Bahrain and Kuwait were charge sheeted.

• Officials of Bank of Baroda, Saraswati Co-operative Bank and the Bombay Mercentile Co-operative Bank are also facing charges for fraudulent manipulation of government funds.

• After the inquiry, Dawood, Metro, Milano, Citywalk  and a host of other shoe shops were sealed. They opened only after a long battle.

• At present, the shoe scam is in queue of cases waiting to be taken up by the court of the 19th additional chief metropolitan magistrate. All the accused are out on bail.

•Files on the multiple cases of the shoe scam are gathering dust on court shelves.

•The case is still waiting for a trial .

•The Economic Offences Wing (EOW) of Mumbai police filed seven charge-sheets against 28 accused in the Rs 1,600-crore cobbler scam at the 37th metropolitan court.

•Apart from Sadruddin Daya, the prime accused in the scam and former sheriff of Mumbai, his wife Shauheen, two international banks and five co-operative  banks have also been charge sheeted under various sections of the Indian Penal Code (IPC). The charge-sheets were filed before the additional chief metropolitan magistrate, Sharad N Chimade.

Surprisingly, Rafique Tejani of Metro Shoes, Kishore Signapurkar of Milano Shoes and Abu Asim Azmi of Citywalk Shoes have not been charge-sheeted.

EOW officials said the role of the three companies in the scam was still being investigated.

•Others who have been charge-sheeted are: Anwar Merchant, Salim Merchant,  Abdul  Memon,  Bashir  Inamdar, M Z Kerawala, V V Chandy, Arshad Wahedna, B.B Trivedi, R Krishnan, D K Sabawala, S Yogeshwaran and R V Bhatt, M GRamakrishnan, V P Khurana, S N Gokhale, T A Khan, Manohar Surve, Siddique, P K Sukhtankar, D J Raikar, N J Ghotage, D NKamath, P P Deshmukh,V N Dalal, J P Shah and  SiddharthShirali.

•Special public prosecutor P R Namjoshi told the court that the EOW is preparing 26 sets of the charge-sheets to be given to the accused. He requested the magistrate to grant prosecution six weeks’ time to furnish the same. His request was granted.

•The sections of IPC included in the charge-sheets cover criminal conspiracy, forgery, preparing and using duplicated documents for financial benefits, criminal breach of trust, cheating, jumping bail limits, fraudulently setting up fake co-operative societies and making money.