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Home Trade charged with doctoring balance sheet

BS Markets Bureau

Home Trade, the company accused of being at the heart of the gilts scam, reported a profit of Rs 629 million for 2001-2002, by window-dressing its accounts and bogus transactions, Kirit Somaiya, MP and president of the Investors' Grievance Forum, told journalists in Mumbai on Thursday.

Of its gross income of Rs 678 million, Rs 629 million was earned from buying and selling the shares of Ways India Ltd and other unlisted group companies, he said.

Somaiya presented a copy of the company's balance sheet, and pointed out that Home Trade showed a book entry of 1,08,50,000 equity shares of Rs 2 each of Ways India, sold at Rs 60 each.

In 2000-2001, Ways India shares were purchased from group companies at Rs 2. And in 2001-2002, they were resold to group companies at Rs 60 a share -- a profit of Rs 58 for a company, which does not have a business or office assets.

Somaiya said Home Trade CEO Sanjay Agarwal and Ketan Seth of Giltedge had similarly window-dressed accounts in 1999-2000.

"It is surprising that the regulators, inspectors, auditors of co-operative departments, the Reserve Bank of India, the Pune Stock Exchange and several bankers accepted such profit-loss accounts and balance sheets."

Home Trade, he said, had also made provision for income tax, dividend tax and service tax in the previous year, and subsequently wrote these back. Moreover, it changed its auditors every year in the last three years.

The Maharashtra government's investigation into the recent Home Trade-cooperative bank imbroglio had not made any headway, he said.

"No investigation is on at the moment, and the state government has not yet approached the Securities and Exchange Board of India, the Reserve Bank of India, NABARD or the investigation agencies," he claimed.

"More than 35 days have gone by. The investigation agencies do not know the magnitude of the scam. The police and the co-operative department do not know how many accounts Sanjay Agarwal or Ketan Seth were operating, and nobody is trying to find where the money has gone," Somaiya added.

He said the state government's investigation arms did not have a copy of the balance sheet of Home Trade for the year 2001-2002.

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