To the CBI, euphoric over its coup-of getting Bhansali and six family members deported from Hong Kong last week for defrauding the State Bank of India of Rs 58 crore-the disclosures were a bonus. On a name-dropping spree, Bhansali picked out BJP politicians in Maharashtra and Gujarat, including Maharashtra's deputy chief minister Gopinath Munde.
Bhansali, who has been remanded to CBI custody for 14 days, flaunted his closeness to BJP-Shiv Sena politicians like Munde and Kirit Somaiyya and claimed he regularly paid them "lakhs for election campaigns and organising functions". In a statement, the 39-year-old wheeler-dealer blurted: "My only passport in any place was money. Paise ke bina kuch nahin hota (nothing works in this country without money). Major kaam ke liye to crore tak diye (for major projects I even paid crores)." But as he boasted about his affinity to the powers that be, Bhansali kept quiet on the exact amounts he paid for specific favours.
Insiders reveal that Bhansali has been rather cagey about his political links. Rattled at being locked up in the cut cell at Mumbai's White House, Bhansali admitted that he donated heavily to BJP-Sena conventions, operating largely through Mumbai-based fixer Vijay Kallantri. Bhansali told the CBI that Kallantri is close to Congress leader S.B. Chavan, and that he used Kallantri's connections to "develop contacts with all powerful politicians".
Independent CBI raids have also revealed that Bhansali's connections are not limited to BJP politicians alone. Apart from the fact that Bhansali admitted his links with Congress MP Suresh Kalmadi, the CBI has recovered, among other incriminating documents, photographs of Bhansali with Narasimha Rao, H.D. Deve Gowda, Atal Behari Vajpayee, L..K. Advani and controversial godman Chandraswami.
Professing helplessness, Bhansali admitted he "threw money" around to get his work done since he was "neither born with the right connections nor did he have an impressive personality". Giving a hint of his modus operandi, the Marwari businessman told the CBI that he wangled a banking licence from the Reserve Bank of India after the Securities & Exchange Board of India issued a clearance, largely due to the influence wielded by Bhairon Singh Shekhawat, Rajasthan chief minister, and Ghuman Mal Lodha, BJP MP from Pali, Rajasthan. Bhansali hails from Sujangarh village in Rajasthan and is involved in various philanthropic organisations in the state; he paid "a couple of lakhs" to Shekhawat and Lodha's election funds.
Clearly, Bhansali managed a banking licence only because of his top connections. He told the CBI he applied for a licence in April 1994, for which, the RBI, the licensing authority, had to get a SEBI clearance certificate. The SEBI had to clarify that there was no irregularity in the applicant's financial status. In November 1994, SEBI commissioned an inquiry into CRB Mutual Fund's Arihant Mangal Scheme through its auditors M.P. Chitale & Co. The regulatory agency also submitted an 'Action Taken Report' to the RBI in June 1995, pointing out that in view of several in its mutual fund rations, CRB Arihant Mangal had been directed not to launch any new schemes.
In his statement, Bhansali claimed that once he sensed he might not be given a licence easily, he requested both Shekhawat and Lodha to put pressure on D.R. Mehta, chairman, SEBI, to issue a certificate clearing CRB; and ensured it was free to launch new schemes from July 1996. Apparently, Mehta complied and an updated report was passed on to the CBI: Bhansali was given an in-principle licence by S.P. Talwar, deputy governor, Kill, in July 1996.
Without specifically naming politicians, Bhansali alleged that he used both money and political clout in Mumbai to pressure Talwar to grant him the licence. After all, the Tatas and Reliance were not granted a banking licence and I was....I had better connections," he said. Further, Bhansali also told the CBI that he knows D.R. Mehta pretty well and regularly visited him at his home in Mumbai since both of them belonged to the same community. While Bhansali did not claim to have paid off Mehta for any favours granted, he admitted to having donated Rs 7 lakh to the Jaipur Foot Foundation in Jaipur of which Mehta is the chairman.
Bhansali named a host of friendly bureaucrats; he claimed that he enjoyed a personal rapport with most senior SEBI officials, including Pratip Kar, and that they "helped him" regularly. Bhansali also alleged that he regularly spent "a couple of lakhs on organising foreign tickets and providing chauffeur-driven cars to most senior bureaucrats and politicians".
While the CBI is not yet exploring these angles in their Bhansali investigation, the agency is likely to verify the statement to establish a case under the Prevention of Corruption Act. More so, since the present statement--recorded under section 163 of the CrPC-does not constitute evidence but will merely provide the agency with leads for a follow-up probe. "We may register spinoff cases under the Prevention of Corruption Act if these allegations are corroborated by independent evidence," says an insider. For now, what is obvious is that Bhansali used both the religious plank--he belongs to the Shwetambara sect of Jainism--and his proximity to politicians and bureaucrats from home state Rajasthan to further his work.
Given the delicate operation, the CBI has adopted a "soft approach" in handling Bhansali his wife Manjula, who is on the board of directors in CRB Capital Markets, has neither been interrogated nor arrested; he is being allowed home-cooked vegetarian food in the CBI cell and his family is allowed daily visits.
The agency, meanwhile, is examining the role of all regulatory bodies and banks to cull evidence. Sharply under focus is the RBI since, despite a SEBI intimation, the premier bank failed to inspect CRB Capital Markets and CRB Corporation. Both CRB subsidiaries were raising fixed deposits and were governed by Non-Banking Finance Companies (NBFC) rules.
The agency has also summoned records from SEBI and credit-rating agencies like CARE, which had incidentally, accorded Bhansali's company, CRB Capital Markets, an A-plus rating at its meeting in February 1994. CARE's role, according to the CISL, is suspect because the A-plus rating was given despite the fact that the company's cash flow statement, dated March 31, 1996, more than conclusively proved the liquidity crisis in the company. Armed with the records, the CRI is likely to question CARE's rating team which consisted of a virtual who's who of Indian business--S.M. Datta, former chairman of Hindustan Lever; M.R. Mayya, former executive director of the Bombay Stock Exchange; Besant Raja, chairman of ICFAI; and former revenue secretary Nitish Sengupta.
For a man who has the motto "greed is the worst thing for a man to have" printed in his monthly, in-house magazine CRB-Calling, the irony couldn't be greater. Today, the liabilities of his 11-year-old group of companies have mounted to Rs 1,031 crore against its assets. And even if he encashes all his assets--the properties in Mumbai, Calcutta and Jaipur--Bhansali will find it hard to repay the amount.
What means more bad news for Bhansali is the fact that the CBI apart, the Enforcement Directorate, which is looking into his overseas operations, is also hot in pursuit. Bhansali has carried all his prayer books to the dank CBI cell. Meanwhile, a question mark hangs over the politicians he has implicated.