The LIC-Mundhra scam - India’s first financial scam.
While India takes its place as one of the world's largest economies, so do its numbers of fraudsters.
One of the earliest such scams, the Mundhra Scam of 1957, rocked India's financial markets.
Haridas Mundhra was a stockbroker in Calcutta. He used his money to buy British companies listed on the Indian stock exchange.
Using the cash reserves of the company he bought, he acquired another company.
Most of the companies he bought went bankrupt years later. But the story does not end here.
Soon, Mundhra started exercising his political power to force LIC to buy the shares of companies owned by him.
The LIC purchased shares worth ₹1.26 crores in these companies on orders of the Finance Ministry.
LIC purchased these shares in the secondary market at 30-40% above the market price.
It was shocking since the shares were not purchased on the open market.
These transactions happened when the Bombay Stock Exchange and Calcutta Stock Exchange were shut.
Soon the news broke out!
An inquiry was ordered into the entire ruckus.
Haridas Mundhra was jailed for 22 years.
LIC Chairman KR Kamath and finance secretary HM Patel also stepped down from their respective positions.
The past is a great teacher, but it's up to you to learn from it.
By the way, did you get the LIC IPO?