In 15 years, ‘scam’ turns case for withdrawal of cases for BJP govt in Madhya Pradesh

When in Opposition, the BJP had accused the then Congress government in Madhya Pradesh of presiding over an alleged scam in which unsecured (without any collateral or security) loans were extended to companies without insisting on a guarantee and made it a major poll plank ahead of the 2003 Assembly elections.

Nearly 15 years later, agreeing to a condition by beneficiaries that cases filed against them would be withdrawn, the Shivraj Singh Chouhan government has now decided to withdraw cases against them if they had repaid the loans under different one-time settlement (OTS) schemes until June 2017.

The Madhya Pradesh State Industrial Development Corporation (MPSIDC) had provided loans to the tune of Rs 714 crore as inter-corporate deposits (ICDs) to several companies during the Congress tenure under Digvijaya Singh. The BJP termed it as an “ICD scam”, and on coming to power, asked the Economic Offences Wing (EOW) to investigate it.

The EOW filed FIRs against 84 individuals, including government officials and beneficiaries.

After a Cabinet meeting on Monday, state Legislative Affairs Minister and government spokesperson Narottam Mishra said, “The Cabinet has decided that cases filed against 42 companies by MPSIDC (Madhya Pradesh State Industrial Development Corporation) who repaid under an OTS will be withdrawn.’’

He did not elaborate on the process after the Cabinet meeting. The unsecured loans were extended to 56 companies in the late-1990s by the MPSIDC. The Corporation itself had raised the money by issuing bonds.

Lured by the promise of a hefty interest rate, many banks, including cooperative banks, and other financial institutions invested in them. While most beneficiaries did not repay the loans, some financial institutions dragged the government to court when they did not get their money back.

While some beneficiaries arrived at a one-time settlement offered by the government along the way, some moved the courts challenging their prosecution.

In 2010, the government set up two special courts to deal with the cases. Congress leader Digvijaya Singh had welcomed the announcement. Singh, other Congress leaders and bureaucrats maintained that it was not a scam but more a case of non-performing assets.

The last OTS announced in 2007 did not come with any deadline and continued for nearly a decade. When it was brought to its notice, the state government announced in March 2017 that the scheme will end in June that year, and promised not to prosecute the defaulters if they returned the money.

Citing the immunity promised to those who paid much later, beneficiaries who had paid before also demanded that the government should not prosecute them, sources said. When the anomaly was brought to the government’s notice, the Cabinet decided not to prosecute companies which had repaid, and continue cases only against those which did not pay anything, or had moved the courts and lost.

A bureaucrat, who was one of the government officials named in the FIR, said the ICD scheme was run in at least four other states, and that it was not a scam.

“Such loans are given across financial world. Some people return money, some can’t, because there are many ups and downs in industries. When they eventually return money they can’t be accused of committing a crime,’’ the bureaucrat argued, admitting that many officials named in the FIR will cite the withdrawal of cases against defaulters in their defence.

Questioning the Cabinet decision, RTI activist Ajay Dubey said the BJP had announced that it will prosecute the alleged fraudsters but has taken a U-turn when it is facing elections again. He said so much money and time was spent in recovering the loans but the efforts have come to a naught.