0

0

0

0

0

0

0

0

0

This article is more than 8 month old.

BACKSTORY: The spectacular rise of Dinesh Dalmia and the all-too-familiar fall of a scamster

Mini

Market manipulation, cooking of books, defaulting on bank loans, using the Mauritius route to move money out, dealing in fake shares, there wasn’t a dirty trick in the book the man didn’t pull.

BACKSTORY: The spectacular rise of Dinesh Dalmia and the all-too-familiar fall of a scamster
India’s IT industry has produced men and women of such distinction it is hard to believe that it also produced some of the biggest scamsters in corporate India. Ramalingam Raju of course is the name that springs to mind first for his skullduggery at Satyam, but the man who deserves the trophy for corporate jiggery-pokery has to be Dinesh Dalmia.
Market manipulation, cooking of books, defaulting on bank loans, using the Mauritius route to move money out, dealing in fake shares, there wasn’t a dirty trick in the book the man didn’t pull.
His launch vehicle was DSQ Software, one of the hottest Indian software companies in 2000. That year, less than a decade after it was set up, the company posted over $100 million in revenues largely on the back of lucrative orders from clients like AT&T-Istel in the US and BMW and Mercedes in Europe.
Yet a ring of suspicion always surrounded the company. That he was playing his own stock was common knowledge on the street. The price of the DSQ scrip soared from Rs 250 in October 1999 to Rs 2631 in March 2000, but by March 2001, it had dropped to around Rs150. These price movements were accompanied by large trading volumes.
It is possible that the company would have continued on its merry ways but in between, it became embroiled in the infamous Ketan Parkeh bull run. DSQ’s name figured in the list of the K10 stocks used by Parekh to manipulate the market as part of his “pump and dump” strategy. Eventually, the Sensex tanked spectacularly and along with Parekh, Dalmia too came under the scanner.
The next few years saw the unraveling of the DSQ story and by 2003, the company’s sales had fallen off the cliff. His India game over, Dalmia now decamped to the US where he was quickly back to his old games, despite an Interpol red corner notice against him by the Central Bureau of Investigation (CBI). Using an alias Nick Mittal, he set up another outsourcing company Allserve Systems which operated with impunity in the Indo-US corridor and had offices in Gurgaon. As Sucheta Dalal wrote in a brilliant piece for the Indian Express he engineered a “complex web of obfuscation created by setting up ‘mirror companies’ around the world and often in the same city to confuse and confound any investigator.”
By the time the FBI got onto his tail and started investigations, Dalmia’s US business went bankrupt and he hot-footed back to India.
Sadly for him, it was comeuppance time.
In 2006 Dalmia a New Jersey court handed him a 16-charge indictment on charges of conspiracy to defraud. Meanwhile, CBI had also moved against him and in 2013 he was arrested in multiple cases.
next story