THE JVG SCANDAL
Case code- FINC007
Published-2002
"My only mistake was that
I shot my mouth off without really doing anything. Naturally, the media made me
out to be a joker."
- Vijay Kumar Sharma, Chairman, JVG Group, in 1998.
THE DOOMED DEPOSITORS
In October 1997, the Reserve Bank of India (RBI) banned
all non-banking financial companies (NBFCs) of the JVG Group of companies - JVG
Finance, JVG Leasing and JVG Securities - from accepting deposits from the
public. This was after an investigation revealed that these companies had been
accepting deposits in excess of their stipulated limits.
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Soon after, JVG downed the shutters of several of its
offices in small towns of Maharashtra, Uttar Pradesh and Bihar, claiming
it had detected huge irregularities in the operations. The closing of the
offices created a panic among the depositors and strong voices were raised
against the group in the media. In November 1997, JVG hurriedly rented an
office in Gurgaon (Haryana) to accommodate irate investors. Hundreds of
investors and agents camped on the grounds of the office. The agents (or
the field-workers), who raised deposits from investors on behalf of JVG,
were extremely worried. They said they could not go back to their local
offices without collecting the dues fearing the wrath of the investors.
More and more depositors and field workers teemed over the next few days
with hopes of getting their money back. |
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The situation seemed rather bleak
with rumors of the JVG group being in deep financial crisis. At this point, JVG
Chairman V.K.Sharma (Sharma) dropped another bombshell on the investors. He
claimed that a majority of the certificates were fake and hence they would not
be paid back. For many depositors who had invested as little as Rs 500 and who
could not even dream of taking the dispute to court, it meant kissing their
investments goodbye.
JVG GROUP - THE BACKGROUND
From being a small-time contractor
earning less than Rs 2500 a month, Sharma went on to run a group, which on paper
had an annual turnover of Rs 1000 crore, in just seven years. Known for his
lavish lifestyle - his farmhouse in Delhi, his fleet of expensive cars and the
helicopter he had taken on lease to tap deposits from small towns in north India
were talked about quite often.
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DETAILING
THE FRAUDS
DEFLATED DREAMS
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December 2003, All Rights
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